Third Circuit Makes Precedential Ruling for Riker Client Regarding CFA Claims

Third Circuit Makes Precedential Ruling for Riker Client Regarding CFA Claims
Dec 03, 2020

Riker Danzig secured a precedential ruling on November 30, 2020 for client Sun Chemical Corporation when the Third Circuit Court of Appeals ruled that Sun Chemical’s Consumer Fraud Act (CFA) claims are not precluded by the Products Liability Act and require a trial. The ruling reversed the District Court’s summary judgment against Sun Chemical, and reinstated the bulk of Sun Chemical’s CFA claims. 

Sun Chemical seeks to recover the losses it suffered from an explosion at its East Rutherford, New Jersey facility in 2012 that tragically injured several of its employees.  The explosion occurred on the first day that Sun Chemical put into operation a new explosion suppression and isolation system it purchased from defendant Fike Corp. Sun Chemical contends that it purchased the system based on certain representations made by Fike that turned out to be untrue and which caused its losses. The Third Circuit found that Sun Chemical’s misrepresentation claims "fall squarely" within CFA territory, and that a genuine dispute of material fact required a trial to resolve the claims.

Our appellate team, led by Riker Danzig co-managing partner Lance J. Kalik, was retained to file an appeal to the Third Circuit from the District Court’s ruling that Sun Chemical’s Consumer Fraud Act claim was subsumed by the Products Liability Act.  Lance argued that Sun Chemical’s damages were predominantly for economic loss that were not cognizable under the Products Liability Act, and further that Sun Chemical’s claims for express misrepresentations could be brought under the Consumer Fraud Act irrespective of the Products Liability Act.  The Third Circuit certified this novel legal question to the New Jersey Supreme Court.  Lance argued before the Supreme Court on March 17, 2020, in one of the last live arguments before the Court went to remote arguments due to the COVID-19 pandemic. 

On July 29, 2020 in a case of first impression, the New Jersey Supreme Court decided in a 5-0 opinion that Sun Chemical’s Consumer Fraud Act claims are not subsumed by the Products Liability Act.  The Court held that the Consumer Fraud Act is designed to address misrepresentations and unconscionable commercial practices, and that a plaintiff that alleges such conduct may pursue its remedies under the Act even if the misrepresentations involve a product and even if its losses, in whole or in part, also might be brought under the Products Liability Act. 

Riker Danzig Associates Jeffrey A. Beer, Jr.  and Alfonse Muglia provided assistance throughout the appeal, and ret. Justice Stewart Pollock, ret. Judge Victor Ashrafi, and ret. Judge James S. Rothshild, Jr., provided guidance to the team.  A Law 360 article covered the Third Circuit’s decision.