Defending NJ Class Actions

Companies defending consumer product class actions in New Jersey have received additional support for fighting these proliferating claims. On June 30, the District of New Jersey added to the growing list of cases in which federal and state courts in New Jersey have dismissed product defect claims for economic loss under the New Jersey Consumer Fraud Act (CFA) based on the finding that such claims are subsumed by the New Jersey Products Liability Act (PLA).

The Case

In Nafar v. Hollywood Tanning Systems, Inc., the plaintiff brought suit on behalf of a purported class, claiming, in part, that the defendant had failed to warn her about the potential dangers of UV ray exposure from its tanning machines. Significantly, the plaintiff affirmatively disclaimed any damages for physical injury, claiming only economic loss and seeking reimbursement of the price paid. However, as is often necessary in such cases, the plaintiff contended that if she had been properly warned of the health risks, she would not have purchased the services.

Other Decisions

While Nafar was pending, three New Jersey state courts issued opinions holding that when the essential claim in a matter relates to harm or the potential for harm from a product, the claim must be brought under the PLA (In re Lead Paint Litigation, McDarby v. Merck & Co., and Sinclair v. Merck & Co.). While considering the plaintiff's class certification motion, the Nafar district court applied these decisions and found that the plaintiff's consumer fraud claims, premised on a “failure to warn” about a risk of harm from the tanning machines, were subsumed by the PLA and must be dismissed. The court left open the possibility that the plaintiff's consumer fraud claims premised on misrepresented benefits of the product could proceed, but required that she modify her class certification motion in light of this opinion.

What This Means

The import of these decisions is that even when a plaintiff purposefully limits a claim to economic loss ' a typical approach in consumer fraud class actions ' the PLA trumps the CFA if the core evidence to be presented involves the risk of personal harm related to a product. To be more specific, defendants may argue, based on these helpful cases, that a plaintiff cannot maintain a consumer fraud action when ' in order to support the materiality or causation elements of a consumer fraud claim ' the allegedly omitted information relates to health risks from the product. In the wake of a subsumption ruling, a plaintiff's claims may be dismissed outright and will at least be unlikely to sustain class treatment.

Conclusion

Nafar is one of a number of recent dismissals in New Jersey state and federal courts based on the increasingly well-developed theory of PLA subsumption.

Neal Walters is the Partner in Charge of Ballard Spahr's Product Liability Group, and Mike Carroll is an associate in the group. The firm regularly defends consumer product class actions in New Jersey and other states.

Companies defending consumer product class actions in New Jersey have received additional support for fighting these proliferating claims. On June 30, the District of New Jersey added to the growing list of cases in which federal and state courts in New Jersey have dismissed product defect claims for economic loss under the New Jersey Consumer Fraud Act (CFA) based on the finding that such claims are subsumed by the New Jersey Products Liability Act (PLA).

The Case

In Nafar v. Hollywood Tanning Systems, Inc., the plaintiff brought suit on behalf of a purported class, claiming, in part, that the defendant had failed to warn her about the potential dangers of UV ray exposure from its tanning machines. Significantly, the plaintiff affirmatively disclaimed any damages for physical injury, claiming only economic loss and seeking reimbursement of the price paid. However, as is often necessary in such cases, the plaintiff contended that if she had been properly warned of the health risks, she would not have purchased the services.

Other Decisions

While Nafar was pending, three New Jersey state courts issued opinions holding that when the essential claim in a matter relates to harm or the potential for harm from a product, the claim must be brought under the PLA (In re Lead Paint Litigation, McDarby v. Merck & Co., and Sinclair v. Merck & Co.). While considering the plaintiff's class certification motion, the Nafar district court applied these decisions and found that the plaintiff's consumer fraud claims, premised on a “failure to warn” about a risk of harm from the tanning machines, were subsumed by the PLA and must be dismissed. The court left open the possibility that the plaintiff's consumer fraud claims premised on misrepresented benefits of the product could proceed, but required that she modify her class certification motion in light of this opinion.

What This Means

The import of these decisions is that even when a plaintiff purposefully limits a claim to economic loss ' a typical approach in consumer fraud class actions ' the PLA trumps the CFA if the core evidence to be presented involves the risk of personal harm related to a product. To be more specific, defendants may argue, based on these helpful cases, that a plaintiff cannot maintain a consumer fraud action when ' in order to support the materiality or causation elements of a consumer fraud claim ' the allegedly omitted information relates to health risks from the product. In the wake of a subsumption ruling, a plaintiff's claims may be dismissed outright and will at least be unlikely to sustain class treatment.

Conclusion

Nafar is one of a number of recent dismissals in New Jersey state and federal courts based on the increasingly well-developed theory of PLA subsumption.

Neal Walters is the Partner in Charge of Ballard Spahr's Product Liability Group, and Mike Carroll is an associate in the group. The firm regularly defends consumer product class actions in New Jersey and other states.