Defense Defense 12/08: Unmasking Products Liability Claims Disguised As Consumer Fraud Claims

By Arthur F. Wheeler, Esq.*

New Jersey - Product Liability

The New Jersey Products Liability Act ("PLA"), codified at N.J.S.A. 2A:58C-1, et seq., provides the exclusive remedy for all personal injury claims arising out of the use of a product. The PLA defines a product liability action as "any claim or action brought by a claimant for harm caused by a product, irrespective of the theory underlying the claim, except actions for harm caused by breaching express warranty." "Harm" is defined as personal physical illness, injuries, death, and physical damage to property, except for damage done to the product itself.

The New Jersey Supreme Court and the Superior Court of New Jersey, Appellate Division have recently addressed attempts to bring claims for injuries arising out of harm caused by products under the Consumer Fraud Act, which would allow a plaintiff to recover treble damages and attorney's fees, as opposed, or in addition, to asserting claims under the PLA.

The New Jersey Supreme Court addressed this issue in Sinclair v. Merck & Co., 195 N.J. 51 (2008). The Sinclair matter was a products liability action brought by the plaintiffs as a result of the direct consumption of the drug Vioxx. The plaintiffs alleged that they were at enhanced risk for serious undiagnosed and unrecognized myocardial infarction and other latent and unrecognized injuries. The plaintiffs sought to recover the cost of diagnostic testing pursuant to the Consumer Fraud Act. The trial court had granted the Motion to Dismiss Merck upon determining that medical monitoring had not been applied to a products liability action and because the Consumer Fraud Act only allowed recovery of economic damages. The Appellate Division remanded the case for further discovery. The Supreme Court reversed. The Supreme Court first held that the definition of harm under the Products Liability Act does not include the remedy of medical monitoring when no manifest injury is alleged. Further, the Supreme Court also held that the Products Liability Act was the sole source of remedy for the plaintiffs' defective product claim.

The Supreme Court was very specific in addressing the scope of the Products Liability Act, making clear that claims for personal injuries arise out of injury caused by a product, asserted under the Consumer Fraud Act are subsumed by the PLA:

Plaintiffs also seek to avoid the requirements of the PLA by asserting their claims as CFA claims. However, the Legislature expressly provided in the PLA that claims for 'harm caused by a product' are governed by the PLA 'irrespective of the theory underlying the claim.' N.J.S.A. 2A:58C-1(b)(3). We explained in Lead Paint, supra. that '[t]he language chosen by the Legislature in enacting the PLA is both expansive and inclusive, encompassing virtually all possible causes of action relating to harms caused by consumer and other products.' 191 N.J. at 436-37, 924 A. 2d 484. As a result, we declared that '[i]n light of the clear intention of our Legislature to include all [product liability] claims within the scope of the PLA, we find no ground on which to conclude that the claims being raised by plaintiffs, regarding an ordinary household product used by consumers, were excluded from the scope of' the PLA. Id. at 437, 924 A. 2d 484. We reach that same conclusion here.

The language of the PLA represents a clear legislative intent that, despite the broad reach we give to the CFA, the PLA is paramount when the underlying claim is one for harm caused by a product. The heart of plaintiffs' case is the potential for harm caused by Merck's drug. It is obviously a products liability claim. Plaintiffs' CFA claim does not fall within the exception to the PLA, but rather clearly falls within its scope. Consequently, plaintiffs may not maintain a CFA claim.

The Appellate Division recently addressed this issue in the matter of McDarby v. Merck, Co., Inc., 401 N.J. Super 10 (App. Div. 2008). The McDarby matter was a products liability claim based upon the pharmaceutical company's alleged fraudulent failure to warn of the safety risks of a drug. The plaintiffs in that matter also attempted to assert claims under the Consumer Fraud Act. The Appellate Division held that the plaintiffs' Consumer Fraud Act claims were subsumed within the PLA. Specifically, the Appellate Division stated as follows:

We find no basis, in legislative history, statutory language or Court decisions, to conclude that Plaintiffs can maintain separate causes of action under the PLA and the CFA in this case. As Merck notes, to permit such an expanded form of relief would be to destroy the balance established between the interest of manufacturers, the public and individuals established by the Legislature in enacting the PLA by introducing and otherwise unavailable tremble-damage remedy for harms resulting from a failure to warn.

The Appellate Division further opined that:

... the essential effect of recognition of a cause of action for the fraudulent withhold of safety information such as that espoused by Plaintiffs pursuant to the CFA - a cause of action that would likely would be available to most product liability plaintiffs claiming a failure to warn - would be to permit an award for attorneys fees in the majority of product liability actions without Legislative authorization for such relief. We find no warrant for such actions.

These two most recent decisions illustrate the willingness of the Supreme Court and Appellate Division to follow the legislative intent of the PLA in providing some degree of predictability when defending and evaluating a products liability claim. Defense counsel may raise this defense at different stages of the litigation, including a Motion to Dismiss the Complaint at the outset of the case, and/or raise the Products Liability Act as a separate defense with an eye toward filing an eventual Motion for Summary Judgment or Motion to Dismiss the Consumer Fraud Act claims as being subsumed by the PLA.

*Art is an associate in our Cherry Hill, New Jersey, office who can be reached at (856) 414- 6316 or afwheeler@mdwcg.com.