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Consumer Fraud Act Claim or a Product Liability Claim? NJ Supreme Court Says Why Not Both? (NJ)

August 7, 2020

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<p style="text-align: justify;">In <em><a href="https://www.wcmlaw.com/wp-content/uploads/2020/08/Sun-Chemical-Corporation-v.-Fike-Corporation.pdf">Sun Chemical Corporation v. Fike Corporation</a>,</em> the Supreme Court grappled with the issue of whether a New Jersey Consumer Fraud Act claim can be based on a claim that is also actionable under the New Jersey Product Liability Act.</p>
<p style="text-align: justify;">Sun Chemical Corporation purchased an explosion isolation and suppression system from Fike Corporation to prevent and contain explosions in its new dust collection system. The system failed on the first day it was operational, causing property damage to Sun’s facility and personal injuries to several Sun employees.</p>
<p style="text-align: justify;">Sun filed a complaint in Federal District Court alleging violations of the Consumer Fraud Act based upon misrepresentations made by Fike. The District Court, however, dismissed the Consumer Fraud Act claim, holding that the claims were governed by the Product Liability Act. The Third Circuit Court of Appeals found no direct authority on the issue and therefore certified its question to the New Jersey Supreme Court.</p>
<p style="text-align: justify;">The New Jersey Supreme Court held that a Consumer Fraud Act claim alleging misrepresentations may be brought in the same action as a Product Liability Act claim. While there was no authority directly addressing the interplay between the Consumer Fraud Act and the Product Liability Act, the Court was nonetheless guided by the legislative intent behind both statutes. The Court found that there was no conflict between the statutes since they were intended to govern different conduct and to provide different remedies for such conduct. The Product Liability Act provided remedies for property damage and physical injuries, while the Consumer Fraud Act provided treble damages and an award of attorneys’ fees for misrepresentations made by a seller. The Product Liability Act did not allow a remedy for economic loss caused by the defective product while the Consumer Fraud Act did.</p>
<p style="text-align: justify;">Given this recent ruling, plaintiffs’ attorneys will undoubtedly try to establish that any misrepresentation made by a seller triggers treble damages for any economic loss caused by the defective product. Sellers of products should review their advertisements in brochures, radio advertisements and television commercials in order to prevent, as much as possible, the tethering of a Consumer Fraud Act claim onto a Product Liability Act claim.</p>
<p style="text-align: justify;">Thanks to Mike Noblett for his contribution to this post. If you have any questions or comments, please contact <a href="mailto:chayes@wcmlaw.com">Colleen Hayes</a>.</p>

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