## Facts

- Ten-month-old Daniel L. Boone suffered severe burns while sleeping in a Kolcraft “Playard” playpen pad made with polyurethane foam.
- Kolcraft used fire-retardant-treated foam for playpen pads sold in California but used untreated foam for pads sold elsewhere; after the accident, Kolcraft began using treated foam in all pads.
- Boone’s mother previously sued the landlord; that case settled on Boone’s behalf.
- First Premier Bank, as guardian ad litem and limited conservator, brought a products-liability action alleging (1) defective and unreasonably dangerous design and/or (2) failure to warn.
- Trial evidence included references to the parents’ smoking and an allegedly nonfunctioning smoke detector in the apartment.
- Before trial, the parties filed motions in limine concerning, among other matters, the prior landlord settlement and Kolcraft’s post-accident change in foam.
- During opening statement, defense counsel disclosed the earlier settlement; later, the court granted a motion excluding settlement evidence but denied a new trial based on the opening disclosure.
- The court excluded evidence of Kolcraft’s post-accident switch to fire-retardant foam under a Rule 403-type analysis.
- The jury returned a defense verdict, and the trial court denied a new trial; plaintiff appealed.

## Issues

1. Whether allowing defense counsel to disclose a prior settlement in opening statement, despite a pending motion in limine and a later exclusion order, was an abuse of discretion requiring a new trial.
2. Whether the jury instructions defining “defective condition” in strict products liability misstated the law or misled the jury, impairing the right to a fair trial.
3. Whether the court’s evidentiary rulings on (a) subsequent remedial measures and (b) evidence of parental conduct were erroneous and, if so, prejudicial.

## Decision

- The South Dakota Supreme Court affirmed in part, reversed in part, and remanded for a new trial.
- The trial court abused its discretion by permitting disclosure of the prior settlement in opening statement; the error was prejudicial.
- The jury instructions on “defective condition” were confusing and misleading, contributing to an unfair trial.
- The combined effect of the settlement disclosure and instructional error required reversal and remand.
- Excluding evidence of Kolcraft’s post-accident switch to fire-retardant foam was not an abuse of discretion under Rule 403-type balancing.
- The court indicated evidence of parental smoking and a nonfunctioning smoke detector could be admissible for limited purposes, but limiting instructions were necessary to prevent improper use.

## Legal Principles

- Evidence of prior settlements is generally inadmissible to prove liability or the amount of a claim; disclosure to the jury is ordinarily improper due to substantial risk of unfair prejudice.
- Motions in limine serve to prevent prejudicial matters from reaching the jury; permitting mention of potentially excluded material in opening statements can defeat that purpose.
- In strict products liability, accurate and clear jury instructions defining “defective condition” and “unreasonably dangerous” are essential; misleading instructions on core elements can require a new trial.
- Subsequent remedial measures evidence may be excluded when its probative value is outweighed by dangers such as delay, confusion, or waste of time under Rule 403-type balancing.
- Evidence concerning third-party conduct may require limiting instructions to ensure the jury does not treat it as impermissible fault allocation in a products-liability claim brought for a minor.

## Conclusion

The court ordered a new trial because the jury was exposed to a prior settlement through defense counsel’s opening statement and received misleading instructions on defectiveness, errors that together undermined the fairness of the verdict, while upholding the exclusion of post-accident design-change evidence under discretionary evidentiary balancing.


First Premier Bank v. Kolcraft Enters., Inc., 686 N.W.2d 430 (S.D. 2004)