235 A.3d 145
N.J.2020Background
- Sun Chemical bought an explosion isolation/suppression system from Fike for a new dust-collection system; on its first day an inaudible alarm and ensuing explosion injured seven employees and damaged Sun’s facility.
- Sun sued in federal court under New Jersey’s Consumer Fraud Act (CFA), alleging Fike made material misrepresentations about the system: it would prevent explosions, had an audible alarm, complied with industry standards, and had never failed.
- The District Court granted summary judgment to Fike, holding Sun’s claims were governed by the Products Liability Act (PLA) and that plaintiffs cannot evade PLA requirements by framing claims as CFA claims.
- The Third Circuit certified questions to the New Jersey Supreme Court about whether and when CFA claims based on affirmative misrepresentations are precluded by the PLA.
- The New Jersey Supreme Court held that express/affirmative misrepresentation claims under the CFA may be pursued alongside PLA claims; whether the PLA bars a claim depends on the nature of the theory (manufacturing, design, or warning defect) — not the nature of the damages sought.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a CFA claim based on affirmative misrepresentations about a product can be brought when the harm results from the product’s failure | Sun: CFA covers misrepresentations and can be used even if damages arise from product failure; some losses are purely economic and outside PLA | Fike: Claims are essentially product-defect claims; PLA governs regardless of how pled and prevents CFA from supplanting PLA | Held: CFA claims alleging express/affirmative misrepresentations may proceed alongside PLA claims; PLA does not bar separate CFA misrepresentation claims |
| Whether the PLA subsumes CFA claims when both statutes touch the same product-related conduct | Sun: CFA’s broad remedial reach should apply; economic losses may be recoverable under CFA | Fike: PLA is the exclusive vehicle for product-defect harms; courts look to the claim’s essential nature | Held: No absolute subsumption; if claim rests on product defect it must be PLA; if it rests on deceptive/misleading conduct it may be CFA |
| Significance of the nature of damages (physical injury vs. economic loss) in deciding PLA vs CFA | Sun: Damages sought are primarily economic (repair cost, lost workhours) and thus outside PLA scope | Fike: Plaintiff’s alleged harms (employee injuries, property damage) fit PLA definitions; cannot avoid PLA by labeling damages economic | Held: Nature of damages is not dispositive; the underlying theory of liability controls characterizing the claim |
| When a complaint alleges mixed harms (some within PLA, some not): is the entire CFA claim subsumed? | Sun: Distinct harms should be severable; PLA should apply only to harms it covers | Fike: The complaint’s essential nature can trigger PLA coverage for the whole claim | Held: Claims are severable; PLA precludes CFA only to the extent the claim is truly a PLA-based product-defect theory; separate CFA counts may proceed for misrepresentation theories |
Key Cases Cited
- Lemelledo v. Beneficial Mgmt. Corp. of Am., 150 N.J. 255 (1997) (presumption that CFA applies to covered activity; displaced only by direct and unavoidable conflict)
- Real v. Radir Wheels, Inc., 198 N.J. 511 (2009) (applies Lemelledo; CFA not preempted by Used Car Lemon Law)
- In re Lead Paint Litig., 191 N.J. 405 (2007) (PLA subsumed plaintiffs’ nuisance-based claims that were, in essence, failure-to-warn/product-defect claims)
- Sinclair v. Merck & Co., 195 N.J. 51 (2008) (plaintiffs cannot evade PLA requirements by recasting core product-harm allegations as CFA claims)
- Dean v. Barrett Homes, Inc., 204 N.J. 286 (2010) (PLA does not encompass contract-based claims; distinguishes tort/contract remedies)