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Volume X, Number 264

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Certain Express Misrepresentation Consumer Fraud Act Claims and Product Liability Claims May Coexist According to NJ Supreme Court

In the case on certification from the Third Circuit, the New Jersey Supreme Court ruled that claims for express or affirmative misrepresentations under New Jersey’s Consumer Fraud Act (NJCFA) may be brought simultaneously with claims under the New Jersey Product Liability Act (NJPLA).

In Sun Chemical Corp. v. Fike Corp., plaintiff Sun Chemical Corporation purchased an explosion suppression system from defendant Fike Corporation. The system was to prevent and contain potential explosions in a new dust collection system. On the system’s first day of operation, a fire occurred, and the system’s alarm was activated but inaudible, resulting in an explosion that injured Sun Chemical employees and damaged its facility.

Sun Chemical filed suit in the U.S. District Court for the District of New Jersey, alleging a single count under the NJCFA. Specifically, Sun Chemical alleged that Fike made oral and written misrepresentations about the system. Fike moved for summary judgment, arguing that Sun Chemical’s claims would be governed by the NJPLA and that the NJPLA’s requirements could not avoided by crafting the claim as one under the NJCFA. The District Court granted Fike’s motion, and Sun Chemical appealed. The Third Circuit then certified questions to the New Jersey Supreme Court.

The Supreme Court found there is “no direct and unavoidable conflict between” the NJPLA and the NJCFA because the NJPLA governs the “legal universe of products liability actions” and the NJCFA “applies to fraud and misrepresentations and provides unique remedies intended to root out such conduct.” In so differentiating, the Court “stressed that the [NJ]PLA cannot be stretched to encompass claims sounding in contract” because its definition of harm “draw[s] a clear line between remedies available in tort and contract.” However, the Court noted that, prior to this decision, it had not yet “considered the question at the center of this matter: whether tort-based claims that can be pled under the [NJ]PLA can also – or instead – be pled under the [NJ]CFA.”

Analyzing the statutes’ legislative histories, the Court found that amendments made to the NJCFA after the adoption of the NJPLA demonstrate “the statutes’ complementary nature since both concern product safety.” The Court found that

[i]f a claim is premised upon a product’s manufacturing, warning, or design defect, that claim must be brought under the [NJ]PLA with damages limited to those available under that statute; [NJ]CFA claims for the same conduct are precluded. But nothing about the [NJ]PLA prohibits a claimant from seeking relief under the [NJ]CFA for deceptive, fraudulent, misleading, and other unconscionable commercial practices in the sale of a product. . . . Said differently, if a claim is based on deceptive, fraudulent, misleading, and other unconscionable commercial practices, if is not covered by the [NJ]PLA and may be brought as a separate [NJ]CFA claim.

The Court held that NJPLA and NJCFA claims “may proceed in separate counts of the same suit, alleging different theories of liability and seeking dissimilar damages.”

The Court then turned to the issue of how a given claim must be pled. It found this depends on “the underlying theory of liability.” The Court held “it is the nature of the action giving rise to a claim that determines how a claim is characterized,” and as a result, Sun Chemical was “mistaken in its heavy reliance on the nature of the damages it seeks.” The nature of a plaintiff’s damages does not determine whether the claim falls under the NJCFA or the NJPLA.

Accordingly, the Court held

A [NJ]CFA claim alleging express misrepresentations — deceptive, fraudulent, misleading, and other unconscionable commercial practices — may be brought in the same action as a [NJ]PLA claim premised upon product manufacturing, warning, or design defects. It is the nature of the claims brought, not the nature of the damages sought, that is dispositive of whether the [NJ]PLA precludes the separate causes of action. In other words, the [NJ]PLA will not bar a [NJ]CFA claim alleging express or affirmative misrepresentations.”

Justice Solomon’s opinion was joined by Justices LaVecchia, Albin, Fernandez-Vina and Chief Justice Rabner. Justices Patterson and Timpone did not participate.

Impact on Existing New Jersey Law

Before Sun Chemical Corp., New Jersey appellate courts reached divergent outcomes regarding whether the NJPLA subsumed NJCFA claims rooted in various forms of misrepresentation. See, e.g., McDarby v. Merck & Co., Inc., 401 N.J. Super. 10 (App. Div. 2008) (NJPLA subsumed claims that defendant misrepresented the safety of the medicine Vioxx originally alleged under NJCFA); Wendling v. Pfizer, Inc., Slip Op No. L-348-04, 2008 WL 833549 (App. Div. Mar. 31, 2008) (NJPLA did not bar NJCFA claim that plaintiffs were misled by defendant’s advertising). Sun Chemical Corp. represents the New Jersey Supreme Court’s first specific clarification on the interplay between the NJCFA and the NJPLA to date. Sun Chemical Corp. establishes that claims for express or affirmative misrepresentations alleged under the NJCFA may be pled in the same complaint as claims premised upon product manufacturing, warning, or design defect under the NJPLA.

© 2020 Faegre Drinker Biddle & Reath LLP. All Rights Reserved.National Law Review, Volume X, Number 216

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About this Author

Daniel Carroll, Litigation lawyer, Drinker Biddle
Partner

Daniel B. Carroll represents clients in a wide range of litigation with a primary focus on pharmaceutical products liability defense. His experience in products liability litigation encompasses mass torts involving latex gloves, cough and cold medications, antibiotics, food flavorings, hypertension medications and anti-coagulants. Dan is co-chair of the Products Liability and Mass Tort Group.

Dan’s practice also includes breach of contract actions, commercial litigation, insurance coverage litigation and personal injury defense.

Prior to...

(973) 549-7296
Kaitlyn E. Stone, litigation attorney, Drinker Biddle
Associate

Kaitlyn E. Stone represents major pharmaceutical companies in products liability cases involving prescription medications in individual cases, class actions, multidistrict litigation, and coordinated state proceedings. Kate also demonstrates an unwavering commitment to serving her community by maintaining an active pro bono practice focused primarily on securing the expungement of clients’ records so as to enable clients to obtain improved employment and a higher quality of life for themselves and their families.

Prior to joining Drinker Biddle, Kate’s practice focused on advising clients in a combination of complex business, commercial and land use and zoning matters, including antitrust, class actions, insurance defense, business tort, redevelopment, environmental, and public contract disputes. She has represented client interests in both state and federal court, as well as before local planning and zoning boards. She also served as a law clerk to the Honorable Clarkson S. Fisher, Jr., P.J.A.D. in the Superior Court of New Jersey, Appellate Division for the 2013-2014 term.

(973) 549-7014