Sun Chem. Corp. v. Fike Corp.

243 N.J. 319

235 A.3d 145

SUN CHEMICAL CORPORATION, Plaintiff-Appellant,

v.FIKE CORPORATION and Suppression Systems Incorporated, Defendants-Respondents.

A-89 September Term 2018

082815

Supreme Court of New Jersey.

Argued March 17, 2020

Decided July 29, 2020

Lance J. Kalik argued the cause on behalf of appellant (Riker Danzig Scherer Hyland & Perretti, attorneys; Lance J. Kalik, Morristown, of counsel and on the briefs, and Jeffrey A. Beer, Jr., Morristown, on the briefs).

Gino P. Mecoli argued the cause on behalf of respondents (Reilly, McDevitt & Henrich, attorneys; Gino P. Mecoli and Suzanne I. Turpin, Merchantville, 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).

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, 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

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 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 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 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.

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.

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, 647 A.2d 454 (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, 279 A.2d 640 (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, 801 A.2d 281 (2002) (quoting ...