New Jersey Supreme Court Holds That CFA and PLA Claims Can Be Pleaded in the Same Action
In a recent decision answering a question certified to it by the Third Circuit, the New Jersey Supreme Court held that claims brought under New Jersey’s Consumer Fraud Act (CFA) may be brought in the same action as claims brought pursuant to the Products Liability Act (PLA), provided each claim is based on distinct conduct. In Sun Chemical Corporation v. Fike Corporation and Suppression Systems, Inc., the Court explained that it is the nature of the actions—not the resulting damages—that determines when claims may be brought under either the CFA or the PLA. The Court clarified that CFA claims may be brought in instances where a party alleges “express misrepresentations — deceptive, fraudulent, misleading, and other unconscionable commercial practices,” while PLA claims are reserved for claims based upon “product manufacturing, warning, or design defects.”
The claims in Sun Chemical arose out of the plaintiff’s purchase of an explosion isolation and suppression system from the defendant to be used to “prevent and contain potential explosions” in the plaintiff’s new dust collection system. Plaintiff’s federal court complaint alleged that on the first day it used the suppression system, a fire broke out in the dust collection system and while the alarm in the suppression system was activated, it was inaudible. Plaintiff alleged that, as a result, several employees were injured and Sun’s facility sustained extensive damage. Plaintiff alleged that the defendant violated the CFA by having “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 the defendant’s motion for summary judgment noting that “a plaintiff may not avoid the requirements of the PLA by artfully crafting its claims under the CFA.” The plaintiff appealed and the Third Circuit looked to the New Jersey Supreme Court on certification under Rule 2:12A-3 to clarify 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.”
The New Jersey Supreme Court held that a party may plead both claims in the same action so long as the same conduct does not form the bases for the PLA claim and the CFA claim. The Court distinguished claims that allege that a party engaged in deceptive or fraudulent activities in the sale of a product that resulted in injury or damage from claims that allege the party failed to warn about a product that results in injury or damage. The Court explained that PLA claims are based upon “a product’s manufacturing, warning, or design defect.” Conversely, claims for “deceptive, fraudulent, misleading, and other unconscionable commercial practices” may be brought under the CFA. The Court’s justification was that the theory of liability is determinative of whether a claim is governed by the CFA or PLA, rather than the nature of the damages. Thus, if the theories of liability form distinct bases, then a court may permit a party to plead under both statutes.
This case clarifies New Jersey Supreme Court jurisprudence addressing the interaction between the CFA and the PLA. Previously, the Court held that the PLA is “paramount when the underlying claim is one for harm caused by a product.” Now, it appears that whether there is harm caused by a product is not determinative; rather, it is the theory of liability underlying the claim that determines the recoverable damages. In other words, the PLA will not bar a CFA claim alleging express or affirmative misrepresentations. Therefore, manufacturers should anticipate that a plaintiff may bring both CFA and PLA claims in a single action, and that both claims may survive a motion to dismiss if the facts pled in support are sufficiently distinct.