Oct 29, 2020
Supreme Court Clarifies Claim Concerning Consumer Fraud Act and Products Liability Act
In a case involving the Consumer Fraud Act, the Supreme Court recently held that a CFA claim alleging express misrepresentations may be brought in the same action as a Products Liability Act claim premised upon product manufacturing, warning or design defects. Sun Chemical Corp. v. Fike Corp., - N.J. – (2020).
Plaintiff, Sun Chemical Corporation, operated an ink manufacturing business in New Jersey and purchased an explosion isolation and suppression system from defendant Fike Corporation. Sun had installed a new dust collection system at its facility and the Fike system was designed to prevent and contain potential explosions in that dust collection system.
Ultimately, there was a fire in the dust collection system and an explosion sent a fireball through the ducts of the dust collection system, injuring seven Sun employees and causing damage to Sun’s facility.
Plaintiff filed a single count Complaint under the CFA alleging that defendant had made material and oral misrepresentations about numerous aspects of the suppression system. Defendant was granted summary judgment on the grounds that plaintiff’s claims would be governed by the Products Liability Act. The case was filed in Federal Court, but the Third Circuit certified the question of which statute applied to plaintiff’s claim. The New Jersey Supreme Court held that both statutes could apply.
The Consumer Fraud Act generally prohibits deceptive, fraudulent and other unconscionable commercial practices in connection with the sale of any merchandise. N.J.S.A. 56:8-2. Its history is one of constant expansion of consumer protection and its provisions are to be applied broadly.
The Products Liability Act is intended to protect users from harm caused by defective products by establishing clear rules in actions for damages for harm caused by products. N.J.S.A. 2A:58C-1(a).
The Court held that its review of both statutes revealed that they are intended to govern different conduct and to provide different remedies for such conduct. Thus, there is no direct and unavoidable conflict between the CFA and PLA and claims under each statute could co-exist. However, the Court pointed out that the nature of plaintiff’s damages does not determine whether the cause of action falls under the CFA or PLA; rather, it is the theory of liability underlying the claim that demonstrates the recoverable damages. In essence, the PLA will not bar a CFA claim alleging express or affirmative misrepresentations.
DISCLAIMER: This Alert is designed to keep you aware of recent developments in the law. It is not intended to be legal advice, which can only be given after the attorney understands the facts of a particular matter and the goals of the client.