By Jeannie O’Sullivan
A New Jersey-based chemical company on Tuesday urged the Third Circuit to undo a finding that its consumer fraud claims against two fire suppression system makers actually fell under product liability law, arguing the $5 million in damages it incurred from an explosion stemmed from the companies’ false claims about the effectiveness of a fire alarm.
Sun Chemical Corp. filed New Jersey Consumer Fraud Act claims, and not claims under the state’s Product Liability Act, against Fike Corp. and Suppression Systems Inc. because they allegedly misrepresented the effectiveness of their alarm, a Sun Chemical attorney told a three-judge panel sitting in Philadelphia for oral arguments. The company wants to reverse a New Jersey federal judge’s dismissal of the suit.
Sun Chemical claims the alarm system wasn’t loud enough to be heard by the employees of its East Rutherford, New Jersey, U.S. Ink facility the day the facility exploded in October 2012. The PLA only applies to claims for bodily injury or property damage to a plaintiff caused by a defective product or warning, Sun Chemical contends.
However, the “vast majority” of its damages constituted economic losses merely consequential to the bodily injury to its employees, which led to costly lawsuits and regulatory inspections, according to Sun Chemical. The explosion left the facility permanently inoperable.
“We have suffered purely economical losses,” Lance J. Kalik of Riker Danzig Scherer Hyland & Perretti LLP, representing Sun Chemical, told the panel.
An attorney for the defendants, Gino P. Mecoli of Reilly Janiczek McDevitt Henrich & Cholden PC, called the argument “nonsensical.”
This was “not a case at all in which Sun [Chemical] has not had physical damage to property,” Mecoli told the panel.
Third Circuit Judges Thomas L. Ambro and Cheryl Ann Krause challenged Kalik’s assertions.
“It sounds very much like a design defect claim,” Judge Krause said at one point.
Judge Ambro asked Kalik several times why Sun Chemical hadn’t simply amended the complaint to assert product liability claims.
“You’ve suffered an economic loss just by being here if you didn’t have to,” the judge told Kalik.
Kalik, who explained that he joined the case at the appeal stage, said Sun Chemical wasn’t alleging the alarm didn’t work, but rather that the defendants overstated the audibility of it.
Sun Chemical’s July 2013 lawsuit claimed the companies oversold the suppression system’s capabilities, prompting Sun Chemical to buy what turned out to be an unsuitable product based on the misrepresentations, according to court records.
The claim was further bolstered by testimony from an expert witness who said many of the representations by Fike and Suppression Systems “were, in fact, false,” court records said.
In March 2015, now-retired U.S. District Judge Faith Hochberg rejected the defendants’ argument that the PLA subsumed the CFA claim and denied their motion to dismiss.
Fike and Suppression Systems moved for reconsideration, but in June of that year, Judge Esther Salas — to whom the case had been reassigned following Judge Hochberg’s retirement — backed Judge Hochberg’s reasoning and denied reconsideration. During oral argument on Tuesday, Kalik repeatedly emphasized the case’s survival of the dismissal motions.
However, in December 2017, U.S. District Judge John Michael Vasquez granted summary judgment to the defendants after finding that the PLA did subsume the CFA claims.
Judges Cheryl Ann Krause, Thomas L. Ambro and Julio M. Fuentes sat on the panel for the Third Circuit.
Fike and Suppression Systems are represented by Gino P. Mecoli, Michael J. Jubanyik, Suzanne I. Turpin, Thomas Eugene Grady and Susan M. Valinis of Reilly Janiczek McDevitt Henrich & Cholden PC.
Sun Chemical is represented by Lance J. Kalik and Jeffrey A. Beer Jr. of Riker Danzig Scherer Hyland & Perretti LLP and John McGahren, Stephanie R. Feingold and Drew Cleary Jordan of Morgan Lewis & Bockius LLP.
The case is Sun Chemical Corp. v. Fike Corp. et al., case number 18-1062, in the U.S. Court of Appeals for the Third Circuit.
–Editing by Janice Carter Brown.
Original article can be found here.