The U.S. Court of Appeals for the Third Circuit and New Jersey's Supreme Court issued a series of decisions in 2020 that undercut the preemptive effect of New Jersey's Products Liability Act (PLA) with respect to implied warranties. On its face, the PLA suggests that only claims pursuant to the act and claims for breach of express warranties can be brought. As a result of the Sun Chemical v. Fike decisions, a carveout now exists for implied warranty claims that are based on a defendant's alleged express or affirmative misrepresentations, i.e. misrepresentations that a product would have a certain feature, rather than as to the defective nature of the product itself. See Sun Chemical v. Fike, 981 F.3d 231, 235 (3d Cir. 2020); Sun Chemical v. Fike, 243 N.J. 319, 324 (2020). There has been minimal treatment of the issue since 2020, but that limited body of case law provides some guidance regarding this potential avenue of exposure.
Background
New Jersey's PLA, N.J.S.A. 2A:58C-1 et seq., was enacted in 1987, and has traditionally held exclusive provenance over harms caused by a product regardless of the underlying theory, except for express warranty claims. N.J.S.A. 2A:58C-1(b)(3). Separately, the implied warranty of merchantability requires a good to be fit for the ordinary purposes for which such goods are used. N.J.S.A. 12A:2-314(1); 12A:2-314(2)(c). Similarly, the implied warranty of fitness for a particular purpose is implicated in the event a seller has reason to know at the time of purchase both that the purchaser has a particular purpose for which the goods are being obtained and that the buyer is relying on the seller's skill or judgment to select or furnish goods suitable for that purpose. N.J.S.A. 12A:2-315. Reviewing courts have long held that there is minimal practical distinction between the two implied warranties. See, e.g., Volin v. GE, 189 F. Supp. 3d 411, 419 (D.N.J. 2016) (citing Henningsen v. Bloomfield Motors, 32 N.J. 358, 161 A.2d 69, 76 (1960)). As a general rule, there was little dispute prior to 2020 that breach of implied warranty claims were subsumed by the PLA. See, e.g., Ford Motor Credit v. Mendola, 427 N.J. Super. 226 (App. Div. 2012).
The 'Sun Chemical v. Fike' Decisions
Plaintiff Sun Chemical Corp. purchased a new dust collection system from defendants, Fike Corp. and Suppression Systems Inc. (collectively, Fike), to be installed in Sun's ink production facility. Sun alleged that Fike made various representations during the course of the sale of that system, including that there would be an audible alarm connected to the system, that the system would comply with particular industry standards by including two pressure detectors, that Fike would provide training to Sun personnel, that the system had never failed in the field, and that the system was capable of preventing an explosion from entering the facility due to its various interrelated components. The system exploded on the first day it was operational.
The Sun Chemical decisions overtly dealt with Sun's pursuit of claims pursuant to New Jersey's Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 et seq., and, more specifically, whether such claims were subsumed by the PLA. In permitting those claims to proceed, the court determined that non-PLA claims can coexist in the different counts of the same pleading alongside PLA claims, so long as the claims were premised on different underlying theories of liability. Stated differently, claims premised on express or affirmative misrepresentations are not subsumed into PLA claims. If the essential nature of the claim is that the product did not work, i.e., the claim fits within a manufacture, design, or warning defect claim, it is preempted by the PLA. If the claim is that the seller broke its promise and the buyer did not get what was bargained for, the claim can proceed.
Applying that framework, summary judgment as to four of the five at-issue misrepresentations was reversed. Sun Chemical, supra, 981 F.3d, at 240. Alleged misrepresentations as to the compliance with industry standards, the scope of provision of training, a lack of prior failures in the field, and the inclusion of an audible alarm, did not go to the inherent nature of the product—the product could still work but for the lack of a promised alarm being audible or a particular standard complied with, or the receipt by employees of additional training. However, because a reasonable jury could conclude that those misrepresentations were material to the transaction, and causally related to the damages, those claims can proceed under non-PLA theories of relief. In contrast, the alleged misrepresentation as to the ability of the system to prevent the explosion was dismissed, as that went to the heart of the operation of the product, resulting in subsumption into the PLA.
Effect on Subsequent Claims
The primary avenue through which implied warranty claims have expanded in the aftermath of Sun Chemical is with respect to labeling. In March 2021, the district court issued its decision in Copeland v. Poliquin Performance Center 2 LLC, 2021 U.S. Dist. LEXIS 62515 (D.N.J. Mar. 30, 2021). Plaintiff Brandon Copeland, at that time a linebacker for the New York Jets, was subject to discipline under the NFL's performance-enhancing substance policies after failing a drug test. As a result of the Sun Chemical decision, a prior dismissal of his implied warranty claims was reversed, based on the misrepresentation on the label of a dietary supplement, which inaccurately stated it did not contain a prohibited substance. That misrepresentation as to the contents of the supplement was permitted to proceed separate and apart from any other PLA claims advanced. Similarly, a pet owner was permitted to proceed with implied warranty claims in Palmieri v. Intervet, secondary to alleged neurological injuries to a pet arising from a veterinary medication, the labeling of which indicated it was safe. 2021 U.S. Dist. LEXIS 103581, *25 (D.N.J. May 28, 2021).
Another clear example is provided by In re Valsartan, Losartan, & Irbesartan Products Liability Litigation, 2021 U.S. Dist. LEXIS 20886 (D.N.J. February 3,2021). Plaintiffs advancing economic loss claims, relating to either consumer purchases or third-party payer purchases or co-payments, were permitted to proceed with implied warranty claims premised on the misrepresentation that the contamination of the drugs rendered them substantially different than the FDA-approved generic medications for which they were marketed and sold. In contrast, plaintiffs advancing personal injury claims allegedly as a result of ingesting that contaminated medication were prohibited from advancing implied warranty claims because those claims related to the functioning of the product, rather than separate misrepresentations.
As a practical matter, as in Sun Chemical and the above examples, it should be anticipated that CFA claims would be advanced with such implied warranty claims. While the CFA claims, with their attendant treble damages and fee shifting, garner an appropriately large share of attention, the fact that the implied warranty claims rise or fall under an equivalent analysis with respect to PLA preemption demands they receive their due. Regardless of the specific theory, the essential question that must be examined will remain the same—if a misrepresentation is alleged, whether that misrepresentation more accurately fits in the bucket of "I did not get what I paid for," as opposed to "the product did not work." Given the nature of the PLA presumption analysis, whether implied warranty claims can proceed in a product liability setting should be expected to be the subject of extensive dispositive motion practice and resulting decisions in the years to come.
Originally Published by New Jersey Law Journal
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