Sun Chemical Corporation v. Fike Corporation (082815)(Statewide) ( 2020 )

SYLLABUS
This syllabus is not part of the Court’s opinion. It has been prepared by the Office of the
Clerk for the convenience of the reader. It has been neither reviewed nor approved by the
Court. In the interest of brevity, portions of an opinion may not have been summarized.
Sun Chemical Corporation v. Fike Corporation (A-89-18) (082815)
Argued March 17, 2020 -- Decided July 29, 2020
SOLOMON, J., writing for the Court.
In this case the Court considers, in response to a question of law certified to
the Court by the United States Court of Appeals for the Third Circuit pursuant to
Rule 2:12A-3, whether a Consumer Fraud Act (CFA) claim can be based, in part or
exclusively, on a claim that also might be actionable under the Products Liability
Act (PLA).
Sun Chemical Corporation (Sun) purchased an explosion isolation and
suppression system (Suppression System) from Fike Corporation and Suppression
Systems Incorporated (collectively, Fike) to prevent and contain potential explosions
in its new dust collection system. On the first day that the Suppression System was
operational, a fire occurred, and an alarm on the Suppression System’s control panel
activated but was not audible. An explosion sent a fireball through the ducts of the
dust collection system, injuring seven Sun employees and damaging Sun’s facility.
Sun brought a single-count complaint under the CFA in federal court alleging
that Fike made oral and written misrepresentations about four aspects of the
Suppression System: (1) the Suppression System would prevent explosions; (2) the
Suppression System would have an audible alarm; (3) the Suppression System
complied with industry standards; and (4) the system had never failed. The District
Court granted Fike’s summary judgment motion, finding that Sun’s claims would be
governed by the PLA and that it could not avoid the requirements of the PLA by
crafting its claims under the CFA. Sun appealed, and after determining that extant
New Jersey case law was not sufficiently on point to guide its determination of
which of the two statutes to apply, the Third Circuit certified its questions to the
Court, which the Court reformulated and accepted. N.J. (2019).
HELD: The Court answers the certified question in the affirmative. A CFA claim
alleging express misrepresentations -- deceptive, fraudulent, misleading, and other
unconscionable commercial practices -- may be brought in the same action as a 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 PLA precludes the separate causes of action. In other
1
words, the PLA will not bar a CFA claim alleging express or affirmative
misrepresentations.
1. There is no authority directly addressing the interplay between the CFA and PLA
in this setting, but their statutory language, legislative history, and the Court’s
relevant jurisprudence regarding both statutes inform the Court’s answer to the
question before it. The CFA prohibits deceptive, fraudulent, misleading, and other
unconscionable commercial practices in connection with the sale of any merchandise
or real estate. The language of the CFA evinces a clear legislative intent that its
provisions be applied broadly. In Lemelledo v. Beneficial Management Corp. of
America, 150 N.J. 255, 259-60, 271-73 (1997), a consumer brought a class action
under the CFA against a financial services company for loan packing and the
defendant argued that the CFA was preempted by other statutes regulating consumer
loans. The Court rejected that argument, holding there is a “presumption that the
CFA applies to a covered activity,” and the presumption can be overcome only when
a court is satisfied “that a direct and unavoidable conflict exists between application
of the CFA and application of the other regulatory scheme or schemes.” Id. at 270.
In Real v. Radir Wheels, Inc., 198 N.J. 511, 514, 526 (2009), the Court applied the
principles set forth in Lemelledo and held that the Used Car Lemon Law did not
preempt a CFA claim for fraudulent advertisement brought by the purchaser of a
used automobile from a private seller. (pp. 8-13)
2. The PLA imposes liability upon the manufacturer or seller for a product’s
manufacturing, warning, and design defects. Under the PLA, a claimant can recover
damages against the manufacturer or seller of a product upon proof that the product
causing the harm was not reasonably fit, suitable or safe for its intended purpose. In
In re Lead Paint Litigation, 191 N.J. 405, 436-37 (2007), the Court scrutinized a
nuisance-based pleading and, based on a pleading-to-statute comparison, held that
the PLA subsumed the plaintiffs’ common law public nuisance causes of action that
were fundamentally PLA claims. The Court determined that the theory of liability
claimed by the plaintiffs was, in reality, a PLA claim and was therefore actionable
only under the strictures of the PLA. Id. at 440. In Sinclair v. Merck & Co., 195
N.J. 51, 54 (2008), the Court considered whether plaintiffs who used the drug Vioxx
could maintain both CFA and PLA claims. The Court determined, after considering
the nature of the plaintiffs’ allegations, that the plaintiffs sought “to avoid the
requirements of the PLA by asserting their claims as CFA claims,” even though
“[t]he heart of [their] case [was] the potential for harm caused by Merck’s drug.” Id.
at 65-66. (pp. 13-18)
3. The CFA and PLA are intended to govern different conduct and to provide
different remedies for such conduct. There is thus no direct and unavoidable
conflict between the CFA and PLA. The PLA governs the legal universe of products
liability actions as defined in that Act and the CFA applies to fraud and
2
misrepresentation and provides unique remedies intended to root out such conduct.
Although the Court has rejected the idea that contract-based claims could be pled
under the PLA, the Court has not yet considered the question at the center of this
matter: whether tort-based claims that can be pled under the PLA can also -- or
instead -- be pled under the CFA. The failure to warn of a product defect is
cognizable under the PLA, while an affirmative misrepresentation that a specific
flaw did not exist, or a product had never failed may be brought under the CFA. If a
claim is premised upon a product’s manufacturing, warning, or design defect, that
claim must be brought under the PLA with damages limited to those available under
that statute; CFA claims for the same conduct are precluded. But nothing about the
PLA prohibits a claimant from seeking relief under the CFA for deceptive,
fraudulent, misleading, and other unconscionable commercial practices in the sale of
the product. Indeed, the CFA is expressly “in addition to and cumulative of any
other right, remedy or prohibition accorded by the common law or statutes of this
State.” N.J.S.A. 56:8-2.13. (pp. 18-20)
4. Said differently, if a claim is based on deceptive, fraudulent, misleading, and
other unconscionable commercial practices, it is not covered by the PLA and may be
brought as a separate CFA claim. PLA and CFA claims may proceed in separate
counts of the same suit, alleging different theories of liability and seeking dissimilar
damages. Had the Legislature intended for the PLA to preempt, displace, or
subsume the CFA, it would have said so. Neither the Federal Rules of Civil
Procedure nor the New Jersey Court Rules preclude separate claims premised upon
separate theories of liability from being advanced in the same pleading and sought at
the same trial. (pp. 20-21)
5. How a given claim must be pled depends on the underlying theory of liability.
The phrase “the essential nature of the claim[]” in Lead Paint is best understood not
as an assessment of whether a claim is for harm caused by a product, but of whether
the claim is based upon a product’s manufacturing, warning, or design defect and
therefore covered by the PLA. Significantly, it is the nature of the action giving rise
to a claim that determines how a claim is characterized. Sun is mistaken in its heavy
reliance on the nature of the damages it seeks. The nature of the 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 determines the recoverable
damages. (pp. 21-24)
CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, ALBIN, and
FERNANDEZ-VINA join in JUSTICE SOLOMON’s opinion. JUSTICES
PATTERSON and TIMPONE did not participate.
3
SUPREME COURT OF NEW JERSEY
A-89 September Term 2018
082815
Sun Chemical Corporation,
Plaintiff-Appellant,
v.
Fike Corporation and Suppression
Systems Incorporated,
Defendants-Respondents.
On certification of question of law from the United
States Court of Appeals for the Third Circuit.
Argued Decided
March 17, 2020 July 29, 2020
Lance J. Kalik argued the cause on behalf of appellant
(Riker Danzig Scherer Hyland & Perretti, attorneys;
Lance J. Kalik, of counsel and on the briefs, and
Jeffrey A. Beer, Jr., on the briefs).
Gino P. Mecoli argued the cause on behalf of
respondents (Reilly, McDevitt & Henrich, attorneys;
Gino P. Mecoli and Suzanne I. Turpin, on the brief).
Christopher M. Placitella argued the cause on behalf
of amicus curiae New Jersey Association of Justice
(Cohen, Placitella & Roth, attorneys; Christopher M.
Placitella, Jared M. Placitella, and Michael Coren, of
counsel and on the brief).
1
Kevin R. Jespersen, Assistant Attorney General,
argued the cause on behalf of amicus curiae Attorney
General of New Jersey (Gurbir S. Grewal, Attorney
General, attorney; Jason W. Rockwell, Assistant
Attorney General and Janine N. Matton, Assistant
Attorney General, of counsel, and Zachary N. Klein,
Deputy Attorney General, on the brief).
JUSTICE SOLOMON delivered the opinion of the Court.
New Jersey’s Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -224, and
Products Liability Act (PLA), N.J.S.A. 2A:58C-1 to -11, are remedial statutes
that target different wrongs, address distinct types of harm, and provide for
divergent remedies.
The CFA is to be expansively read to proscribe unconscionable business
practices. The PLA’s reach is more limited -- it permits pursuit of product
liability claims brought by “claimants” for “harm,” as those terms are defined
in the statute. Just as the PLA is more limited in scope, it is more limited in
remedy: it provides only for damages traditionally available in tort actions,
such as remuneration for destroyed property, emotional distress, and loss of
consortium; the CFA on the other hand entitles successful plaintiffs to treble
damages, costs, and attorney’s fees.
In this case we consider, in response to a question of law certified by the
United States Court of Appeals for the Third Circuit pursuant to Rule 2:12A-3,
2
whether “a Consumer Fraud Act claim [can] be based, in part or exclusively,
on a claim that also might be actionable under the Products Liability Act .”1
1
In accepting the certified question, ___ N.J. ___ (2019), we exercised our
authority under Rule 2:12A-2 to reformulate as the single question indicated
above the following questions posed by the Third Circuit:
(1) When a court decides a CFA claim based on
affirmative and material misrepresentation about the
features of a product, but the plaintiff is seeking
damages for harm caused by the product’s failure to
conform to those features, what criteria should the court
consider to determine whether the claim may proceed
as a CFA claim or is subsumed under the PLA?
(2) In determining whether a claim may proceed under
the CFA or is subsumed under the PLA, what
significance should a court place on a plaintiff’s
assertion that its harm resulted primarily from physical
injury to third parties (like employees) rather than
property damage or personal physical injury?
(3) Where a complaint pleads a single CFA claim that
asserts multiple harms, some of which fall within the
ambit of the PLA, and others which do not, is the entire
claim subsumed by the PLA or should the distinct
categories of harm be deemed severable claims, some
of which would not be subsumed and could instead be
pursued under the CFA?
(4) Under the CFA, when can a commercial purchaser
of a product recover consequential economic losses --
such as workers’ compensation payments, attorneys’
fees incurred in litigation, fees incurred in government
investigations, and increased labor or production costs
-- based on alleged misrepresentations the seller made
about the features and capabilities of the product?
3
We conclude that, irrespective of the nature of the damages, a CFA
claim alleging express misrepresentations -- deceptive, fraudulent, misleading,
and other unconscionable commercial practices -- may be brought in the same
action as a PLA claim premised upon product manufacturing, warning, or
design defects. It is the nature of the claims brought, and not the nature of the
damages sought, that is dispositive of whether the PLA precludes the separate
causes of action. In other words, the PLA will not bar a CFA claim alleging
express or affirmative misrepresentations.
I.
A.
We rely upon the following facts provided by the opinions of the Third
Circuit and the United States District Court for the District of New Jersey.
Sun Chemical Corporation (Sun) has long operated an ink manufacturing
business in New Jersey. In 2012, Sun installed a new dust collection system at
its facility. Sun then purchased an explosion isolation and suppression system
(Suppression System) from Fike Corporation and Suppression Systems
Incorporated (collectively, Fike) to prevent and contain potential explosions in
that dust collection system.
On the first day that the Suppression System was operational, a fire
occurred in the dust collection system and an alarm on the Suppression
4
System’s control panel activated but was not audible. Sun employees
attempted to extinguish the fire, but an explosion sent a fireball through the
ducts of the dust collection system, injuring seven Sun employees and causing
damage to Sun’s facility.
B.
Sun brought a single-count complaint under the CFA alleging that Fike
made material oral and written misrepresentations about four aspects of the
Suppression System: (1) the Suppression System would prevent explosions;
(2) the Suppression System would have an audible alarm; (3) the Suppression
System complied with industry standards; and (4) the system had never failed.
Following discovery, both parties moved for summary judgment. The District
Court granted Fike’s motion, finding that Sun’s claims would be governed by
the PLA and noting that “a plaintiff may not avoid the requirements of the
PLA by artfully crafting its claims under the CFA.”
Sun appealed, and the Third Circuit noted that, although “the
resemblance of Sun’s claim to a product liability action” suggests it would fall
under the PLA, the plain text of the CFA seems potentially hospitable to Sun’s
argument that “affirmative misrepresentations can be brought under the CFA
. . . even though the damages claimed for those representations involve[]
personal injuries to third parties and some property damage.” After
5
determining that extant New Jersey case law was not sufficiently on point to
guide its determination of which of the two statutes to apply, the Third Circuit
certified its questions to this Court.
After reformulating and accepting the question, we granted motions by
the New Jersey Attorney General and the New Jersey Association for Justice
(NJAJ) to participate as amici curiae. We consider their arguments along with
those of the parties.
II.
Sun concedes that five percent of its losses result from damage to its
facility and are “physical damage to property” -- a “harm” specifically
identified in N.J.S.A. 2A:58C-1(b)(2)(a), a section of the PLA. Sun maintains
that the PLA is nevertheless inapplicable to those losses because they resulted
from Fike’s misrepresentations, not alleged defects.
Sun argues that the cost of the failed Suppression System likewise does
not fall within the PLA, which explicitly excludes from its definition of
“harm” in N.J.S.A. 2A:58C-1(b)(2)(a) any “damage . . . to the product itself.”
According to Sun, the cost of the Suppression System is a purely economic
loss outside the scope of the PLA but specifically cognizable under the CFA.
Sun further contends that lost workhours and workers’ compensation
benefits paid as a result of injuries to its employees are purely economic losses
6
and thus do not establish “loss deriving from” personal injury within the
meaning of N.J.S.A. 2A:58C-1(b)(2)(b) or (b)(2)(d) of the PLA. In support,
Sun notes that the PLA codified the economic loss doctrine, 2 which provides
that economic loss resulting from harm to employees is not a cognizable “loss
deriving from” personal injury. In any case, Sun suggests that it should be
able to proceed with a PLA count for its PLA damages and a separate count for
its non-PLA damages.
Fike argues that the cost of the Suppression System does not qualify as
“damage . . . to the product itself” under N.J.S.A. 2A:58C-1(b)(2)(a) because
the Suppression System was not defective and was not damaged during the
explosion. Fike further contends that the losses resulting from injuries to
Sun’s employees constitute “loss deriving from” personal injury under
N.J.S.A. 2A:58C-1(b)(2)(b) and (b)(2)(d). Fike asserts that Sun cannot avoid
application of the PLA by pleading only economic damages. Rather, Fike
argues, New Jersey courts look to the “essential nature of the claim” and will
apply the PLA where appropriate, regardless of how the claim is pled.
2
The economic loss doctrine prohibits the recovery in a tort action of
economic losses arising out of a breach of contract. See Dean v. Barrett
Homes, Inc., 204 N.J. 286, 296-97 (2010). Thus, under the economic loss
doctrine, “the [PLA] and common law tort actions do not apply to damage
caused to the product itself, or to consequential but purely economic losses
caused to the consumer because of a defective product.” Ford Motor Credit
Co., LLC v. Mendola, 427 N.J. Super. 226, 240 (App. Div. 2012).
7
Amicus curiae NJAJ argues that CFA and PLA claims should be able to
proceed concurrently if both are supported by the facts. NJAJ asserts that the
correct reading of the two statutes is that, “[s]ince representation-based claims
and products liability claims deal with two distinct categories of unlawful
conduct rather than two different theories covering the same underlying
conduct, the PLA does not subsume representation-based claims.” (quoting
Francis E. Parker Mem’l Home, Inc. v. Georgia-Pacific LLC, 945 F. Supp. 2d
543, 556 n.5 (D.N.J. 2013)).
The Attorney General argues that recovery under the PLA is limited to
those tort-based theories of recovery for losses that fit the PLA definition of
harm. The Attorney General also asserts that losses premised on non-tort
theories of recovery and losses that do not fit the PLA definition of harm can
proceed in separate counts of the same suit as PLA counts.
III.
There is no authority directly addressing the interplay between the CFA
and PLA in this setting. Nevertheless, their statutory language, legislative
history, and this Court’s relevant jurisprudence regarding both statutes inform
our answer to the question before us. We therefore begin by reviewing the
pertinent provisions of the CFA and PLA, their purposes, and cases applying
them.
8
A.
The Legislature passed the CFA in 1960 “to permit the Attorney General
to combat the increasingly widespread practice of defrauding the consumer.”
Cox v. Sears Roebuck & Co., 138 N.J. 2, 14 (1994) (quoting S. Comm.
Statement to S. 199 (1960)). In so doing, the Legislature “intended to confer
on the Attorney General the broadest kind of power to act in the interest of the
consumer public.” Kugler v. Romain, 58 N.J. 522, 537 (1971).
The CFA prohibits deceptive, fraudulent, misleading, and other
unconscionable commercial practices “in connection with the sale . . . of any
merchandise or real estate.” N.J.S.A. 56:8-2. “Merchandise” is broadly
defined to “include any objects, wares, goods, commodities, services or
anything offered, directly or indirectly to the public for sale.” N.J.S.A. 56:8-
1(c). For the purposes of this certified question, the parties do not dispute that
the Suppression System is a product offered to the public for sale.
In 1971, the Legislature amended the CFA to provide for private causes
of action by consumers to recover for an “ascertainable loss of moneys or
property, real or personal.” Weinberg v. Sprint Corp., 173 N.J. 233, 247-51
(2002) (quoting N.J.S.A. 56:8-19). The amendment also enabled successful
private plaintiffs to recover treble damages, reasonable attorneys’ fees and
costs, and “any other appropriate legal or equitable relief.” Id. at 250 (quoting
9
N.J.S.A. 56:8-19). The private right of action “is integral to fulfilling the
[CFA’s] legislative purposes,” Cox, 138 N.J. at 16, and by allowing recovery
of attorneys’ fees and costs, private attorneys are incentivized to bring CFA
claims, thus reducing the enforcement burdens that otherwise would fall on the
State, Weinberg, 173 N.J. at 248-49.
The CFA’s history “is one of constant expansion of consumer
protection.” Gennari v. Weichert Co. Realtors, 148 N.J. 582, 604 (1997). The
statute has been “repeatedly amended and expanded . . . often by adding
sections to address particular areas of concern and to include them specifically
within its protective sweep.” Czar, Inc. v. Heath, 198 N.J. 195, 201 (2009)
(listing statutory changes).
In addition to its ever-growing scope, “[t]he language of the CFA
evinces a clear legislative intent that its provisions be applied broadly.”
Lemelledo v. Beneficial Mgmt. Corp. of Am., 150 N.J. 255, 264 (1997).
“[L]ike most remedial legislation, the [CFA] should be construed liberally in
favor of consumers.” Cox, 138 N.J. at 15.
And, by the plain terms of the statute, “[t]he rights, remedies and
prohibitions” created by the CFA are “in addition to and cumulative of any
other right, remedy or prohibition accorded by the common law or statutes of
this State.” N.J.S.A. 56:8-2.13. Courts are therefore reluctant “to undermine
10
the CFA’s enforcement structure . . . by carving out exemptions for each
allegedly fraudulent practice that may concomitantly be regulated by another
source of law.” Lemelledo, 150 N.J. at 270.
This Court considered the reach of the CFA in the context of other
regulatory laws in Lemelledo v. Beneficial Management Corp. of America and
Real v. Radir Wheels, Inc. We review those decisions in turn.
1.
In Lemelledo, a consumer brought a class action under the CFA against
a financial services company for loan packing -- increasing a loan amount by
including related services like credit insurance. Id. at 259-60. The defendant
argued that the CFA was preempted by other statutes regulating consumer
loans. Id. at 271-73. We rejected that argument, holding there is a
“presumption that the CFA applies to a covered activity,” a presumption that
can be overcome only when a court is satisfied “that a direct and unavoidable
conflict exists between application of the CFA and application of the other
regulatory scheme or schemes.” Id. at 270.
Tying the claim in Lemelledo to the CFA’s purpose, we noted that,
[i]f the hurdle for rebutting the basic assumption of
applicability of the CFA to covered conduct is too
easily overcome, the statute’s remedial measures may
be rendered impotent as primary weapons in
combatting clear forms of fraud simply because those
11
fraudulent practices happen also to be covered by some
other statute or regulation.
[Ibid.]
With respect to other remedial statutes specifically, we noted that “[i]t is
not readily to be inferred that the Legislature, by enacting multiple remedial
statutes designed to augment protection, actually intended that parties be
subject only to one source of regulation.” Id. at 271. We nevertheless held
that, in applying statutes that cover the same conduct as the CFA, courts
should avoid statutory interpretations that impose overlapping or conflicting
duties and obligations:
Conflicting applications of the respective statutes and
regulatory schemes can be avoided if courts are
cognizant of the obligations created by other statutes
and if they interpret the scope of the broad language of
the CFA so as not to impose conflicting duties or
duplicative financial obligations on the regulated party.
[Id. at 273.]
2.
Later, in Radir Wheels, we applied the principles set forth in Lemelledo
in considering whether the Used Car Lemon Law, N.J.S.A. 56:8-67 to -80,
preempted a CFA claim for fraudulent advertisement brought by the purchaser
of a used automobile from a private seller. 198 N.J. 511, 514 (2009). The
Appellate Division held that the consumer failed to state a cause of action
12
under the CFA because the “commercial activities of a casual seller . . . d[id]
not fall within the CFA’s private civil cause of action.” Ibid. We disagreed.
Discussing the standard for displacing the CFA set forth in Lemelledo,
we noted that “[t]he measured application of those principles has led to few,
very limited exceptions to the CFA’s reach.” Id. at 523 (citing Macedo v.
Dello Russo, 178 N.J. 340, 345-46 (2004) (explaining that the CFA does not
apply to “learned professionals . . . operating in their professional capacities”);
Daaleman v. Elizabethtown Gas Co., 77 N.J. 267, 272-73 (1978) (holding the
CFA inapplicable “to public utility rates subject to the Board of Public
Utilities’ exclusive rate-setting jurisdiction”)); see also id. at 523 n.9
(collecting examples of additional settings in which the CFA did not apply).
Ultimately, we held that the consumer’s CFA claim was not preempted
by the Used Car Lemon Law, which expressly provides that “[n]othing in this
act shall in any way limit the rights or remedies which are otherwise available
to a consumer under any other law.” Id. at 526 (quoting N.J.S.A. 56:8-75).
B.
The PLA was enacted in 1987, nearly three decades after the CFA. See
Dewey v. R.J. Reynolds Tobacco Co., 121 N.J. 69, 94-95 (1990). As a New
Jersey tort-reform statute, the PLA codified certain issues relating to the
13
common law governing product liability actions and “establish[ed] new rules
regarding the burden of proof and the imposition of liability.” Id. at 95.
The PLA is intended to protect users from harm caused by defective
products by “establish[ing] clear rules” in “actions for damages for harm
caused by products.” N.J.S.A. 2A:58C-1(a). Specifically, the PLA imposes
liability upon the manufacturer or seller for a product’s “manufacturing
defects, warning defects, and design defects.” Assemb. Ins. Comm. Statement
to S. Comm. Substitute for S. 2805 (L. 1987, c. 197) (June 22, 1987);
Sponsor’s Statement to S. 2805 (L. 1987, c. 197) (Nov. 17, 1986); see also
N.J.S.A. 2A:58C-2.
Under the PLA, a claimant can recover damages against the
“manufacturer or seller of a product” upon proof “that the product causing the
harm was not reasonably fit, suitable or safe for its intended purpose.”
N.J.S.A. 2A:58C-2. A “claimant” is “any person who brings a product liability
action,” N.J.S.A. 2A:58C-1(b)(1), and a “product liability action” is a claim
for harm caused by a manufacturing, warning, or design defect, “except
actions for harm caused by breach of an express warranty,” N.J.S.A. 2A:58C-
14
1(b)(3).3 In addition to the exception for breach of an express warranty, the
PLA excludes environmental tort actions. N.J.S.A. 2A:58C-6.
Damages recoverable under the PLA for “harm” caused by the product
are:
(a) physical damage to property, other than to the
product itself; (b) personal physical illness, injury or
death; (c) pain and suffering, mental anguish or
emotional harm; and (d) any loss of consortium or
services or other loss deriving from any type of harm
described in subparagraphs (a) through (c) of this
paragraph.
[N.J.S.A. 2A:58C-1(b)(2).]
This Court has considered the kinds of claims covered by the PLA in In
re Lead Paint Litigation and Sinclair v. Merck & Co. We review those cases
below.
1.
Twenty years after enactment of the PLA, this Court decided Lead Paint
in which we scrutinized a nuisance-based pleading and, based on a pleading-
to-statute comparison, held that the PLA subsumed the plaintiffs’ common law
public nuisance causes of action that were fundamentally PLA claims. 191
3
The PLA and its legislative history, to which the Legislature expressly
encourages reference, makes clear that the PLA did not intend to wholly
supplant the products liability case law in New Jersey. See N.J.S.A. 2A:58C-
1(a). Thus, our focus must be on the PLA’s defined theories on which claims
of harm may be actionable against a manufacturer or seller. See id. at -2.
15
N.J. 405, 436-37 (2007). In Lead Paint, twenty-six municipalities and counties
asserted common law public nuisance claims against manufacturers and
distributors of lead paint, in part for the costs of medical care for lead
poisoning and for the detection and removal of the paint. Id. at 408-09. In
doing so, the municipalities sought to apply the environmental tort exception
to the PLA, N.J.S.A. 2A:58C-6. Id. at 437.
We found that the harms attributable to the lead paint -- physical damage
to property and personal physical illness or injury -- were of the type intended
to be remedied through the PLA. The common law claims asserted by the
plaintiffs essentially sounded in “product liability” for failure to warn and
were therefore also covered by the PLA. Id. at 436-40.
The central focus of plaintiffs’ complaints is that
defendants were aware of dangers associated with lead
-- and by extension, with the dangers of including it in
paint intended to be used in homes and businesses --
and failed to warn of those dangers. This classic
articulation of tort law duties, that is, to warn of or to
make safe, is squarely within the theories included in
the PLA.
[Id. at 437.]
Thus, we determined that the theory of liability claimed by the plaintiffs was,
in reality, a PLA claim and was therefore actionable only under the strictures
of the PLA. Id. at 440.
16
2.
One year later, in Sinclair, we considered whether plaintiffs who used
the drug Vioxx could maintain both CFA and PLA claims. 195 N.J. 51, 54
(2008). In that case, the plaintiffs sought certification of a nationwide class of
individuals who took the drug “for at least six consecutive weeks” and “who
had not sought to recover damages for personal injuries caused by Vioxx .” Id.
at 55. The plaintiffs alleged that “as a result of their direct and prolonged
consumption of Vioxx” they were at increased risk of future cardiac disorders
like heart attack or stroke; they therefore sought medical monitoring and
punitive damages. Id. at 55-56.
Unlike the present case where Sun brought CFA and PLA claims in the
same count of a single-count complaint, in Sinclair the CFA and PLA causes
of action were brought in separate but nearly indistinguishable counts. First
Amended Class Action Complaint for Damages and Equitable and Injunctive
Relief ¶¶ 119, 123, Sinclair v. Merck & Co., ATL-L3771-04 MT (N.J. Super.
Ct. Law Div. Mar. 17, 2015). Further, the relief the plaintiffs sought under the
CFA count of the complaint matched the PLA count word-for-word. Compare
id. ¶ 124 with id. ¶ 133.
The focus of Sinclair was whether the plaintiffs’ claimed risk of future
cardiovascular injury was cognizable under the PLA despite their failure to
17
allege present physical injuries. We found that the plaintiffs’ claimed risk of
future cardiovascular injury was not cognizable under the PLA because the
statute “require[s] a physical injury.” Sinclair, 195 N.J. at 64; see ibid.
(“Nothing in the legislative history of the PLA suggests that the Legislature
intended to eliminate that physical component.”). More importantly, we
determined, after considering the nature of the plaintiffs’ allegations, that the
plaintiffs sought “to avoid the requirements of the PLA by asserting their
claims as CFA claims,” even though “[t]he heart of [their] case [was] the
potential for harm caused by Merck’s drug.” Id. at 65-66. That claim, we
explained, “does not fall within an exception to the PLA, but rather clearly
falls within its scope.” Id. at 66.
IV.
A.
As our review of the statutes reveals, the CFA and PLA are intended to
govern different conduct and to provide different remedies for such conduct.
There is thus no direct and unavoidable conflict between the CFA and PLA.
The PLA governs the legal universe of products liability actions as defined in
that Act and the CFA applies to fraud and misrepresentation and provides
unique remedies intended to root out such conduct.
18
We have stressed that the PLA cannot be stretched to encompass claims
sounding in contract, noting that the PLA’s definition of harm “draw[s] a clear
line between remedies available in tort and contract.” See Dean v. Barrett
Homes, Inc., 204 N.J. 286, 305 (2010). Although we have thus rejected the
idea that contract-based claims could be pled under the PLA, we have not yet
considered the question at the center of this matter: whether tort-based claims
that can be pled under the PLA can also -- or instead -- be pled under the CFA.
Legislative intent to allow certain CFA claims to co-exist with separately
pled statutory PLA claims may be found in the CFA’s 1990 and 2007
amendments requiring notice and prohibiting the sale of certain defective,
hazardous, or dangerous children’s products. See N.J.S.A. 56:8-20, -51,
and -53.1 to -53.5. Those post-PLA amendments to the CFA evidence the
statutes’ complementary nature since both concern product safety and the
protection of child consumers. Violation of either amendment would give rise
to a CFA claim irrespective of whether a product defect caused injury
actionable under the PLA. The failure to warn of a product defect is likewise
cognizable under the PLA, N.J.S.A. 2A:58C-2 (identifying as actionable the
failure to provide adequate warnings or instructions for a product), while an
affirmative misrepresentation that a specific flaw did not exist or a product had
never failed may be brought under the CFA, N.J.S.A. 56:8-2 (identifying as
19
actionable a “misrepresentation or the knowing[] concealment, suppression or
omission of any material fact”).
If a claim is premised upon a product’s manufacturing, warning, or
design defect, that claim must be brought under the PLA with damages limited
to those available under that statute; CFA claims for the same conduct are
precluded. But nothing about the PLA prohibits a claimant from seeking relief
under the CFA for deceptive, fraudulent, misleading, and other unconscionable
commercial practices in the sale of the product. Indeed, the CFA is expressly
“in addition to and cumulative of any other right, remedy or prohibition
accorded by the common law or statutes of this State.” N.J.S.A. 56:8-2.13.
Said differently, if a claim is based on deceptive, fraudulent, misleading, and
other unconscionable commercial practices, it is not covered by the PLA and
may be brought as a separate CFA claim.
We agree with amici that PLA and CFA claims may proceed in separate
counts of the same suit, alleging different theories of liability and seeking
dissimilar damages. As we noted in Lemelledo, CFA rights and remedies are
“cumulative to those created by other sources of law,” 150 N.J. at 264, 268,
and the presumptive application of the CFA is overcome only if “a direct and
unavoidable conflict exists between application of the CFA and application of
the other regulatory scheme or schemes,” id. at 270.
20
 And as we pointed out in Sinclair, had the Legislature intended for the
PLA to preempt, displace, or subsume the CFA, it would have said so. 195
N.J. at 65-66; see also DiProspero v. Penn, 183 N.J. 477, 494-95 (2005)
(“[T]he Legislature knows how to incorporate into a new statute a standard
articulated in a prior opinion of this Court.”); Miah v. Ahmed, 179 N.J. 511,
520 (2004) (explaining that judicial interpretation begins with the plain
language of the statute). Instead, as noted above, the Legislature has
announced the opposite -- the CFA supplements any other right or remedy
available. See N.J.S.A. 56:8-2.13.
Neither the Federal Rules of Civil Procedure nor the New Jersey Court
Rules preclude separate claims premised upon separate theories of liability
from being advanced in the same pleading and sought at the same trial. See
Fed. R. Civ. P. 8(d)(3) (“A party may state as many separate claims or
defenses as it has, regardless of consistency.”); R. 4:5-6 (“As many separate
claims or defenses as the party has may be stated regardless of their
consistency and whether based on legal or on equitable grounds or on both.”).
B.
How a given claim must be pled, in turn, depends on what is at the
“heart of plaintiffs’ case” -- the underlying theory of liability. Sinclair, 195
N.J. at 66.
21
The phrase “the essential nature of the claim[]” was referenced by this
Court in Lead Paint when we were engaged in a review of the pleadings to
determine whether the theory pled on the facts presented, although denoted as
a nuisance claim, was in fact one of the three codified theories made
exclusively actionable under the PLA. 191 N.J. at 437. If so, then the claim
was supplanted by the PLA. Although helpful in explaining our analysis in
that matter, it is not to be regarded as the interpretative guide to the PLA. It is
best understood not as an assessment of whether a claim is for harm caused by
a product, but of whether the claim is based upon a product’s manufacturing,
warning, or design defect and therefore covered by the PLA. See Sinclair, 195
N.J. at 54, 62 (finding the “essential nature” of the disputed pleading to be a
product defect claim); Lead Paint, 191 N.J. at 437 (finding the disputed
pleading to be essentially a failure to warn claim).
We noted in Sinclair that the Legislature intended that the defined
products liability actions remain “within the scope of the PLA,” 195 N.J. at 65,
and expressly excluded from that “actions for harm caused by breach of an
express warranty,” id. at 62 (quoting N.J.S.A. 2A:58C-1(b)(3)). Notably,
breach of an express warranty may be covered by the CFA as a misleading
commercial practice. See N.J.S.A. 56:8-2 (declaring unlawful the use of a
“false promise . . . in connection with the sale or advertisement of any
22
merchandise”). Thus, aside from breach of express warranty claims, 4 claims
that sound in the type of products liability actions defined in the PLA must be
brought under the PLA.
Significantly, it is the nature of the action giving rise to a claim that
determines how a claim is characterized. Sun is mistaken in its heavy reliance
on the nature of the damages it seeks, claiming they are economic losses rather
than damages for injury to persons or property. The nature of the 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 determines
the recoverable damages.
Therefore, a CFA claim alleging express misrepresentations -- deceptive,
fraudulent, misleading, and other unconscionable commercial practices -- may
be brought in the same action as a PLA claim premised upon product
manufacturing, warning, or design defects. In other words, the PLA will not
bar a CFA claim alleging express or affirmative misrepresentations.
V.
For the reasons set forth above, we answer the certified question in the
affirmative. A CFA claim alleging express or affirmative misrepresentations
4
As explained previously, environmental tort actions are also excepted from
the PLA. N.J.S.A. 2A:58C-6.
23
-- deceptive, fraudulent, misleading, and other unconscionable commercial
practices -- may proceed in separate counts of the same pleading as a PLA
claim alleging product design, manufacturing, or warning defects.
CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, ALBIN, and
FERNANDEZ-VINA join in JUSTICE SOLOMON’s opinion. JUSTICES
PATTERSON and TIMPONE did not participate.
24