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DeBenedetto v. Denny’s, Inc.

A-4135-09T1 (N.J. Super. App. Div. 2011) (Unpublished)

CONSUMER FRAUD; PRODUCTS LIABILITY ACT; DAMAGES — Where a consumer’s complaint is actually a product liability claim disguised as a consumer fraud violation, the consumer’s exclusive remedy is under the New Jersey Products Liability Act and, under that Act, where the economic loss rule applies, the consumer is precluded from recovering damages for harm to the product itself.

A consumer alleged that a restaurant’s ham, bacon, sausage, and hash brown containing meals had excessive levels of sodium and that the restaurant failed to disclose this fact. According to the consumer, this violated the New Jersey Consumer Fraud Act because, were consumers aware of the high sodium content, they would not purchase those meals. Specifically, the consumer alleged that the meal’s sodium levels were two to three times greater than the maximum daily sodium intake recommended by the Centers for Disease Control. The consumer did not allege any physical injury or harm as a result of the restaurant’s failure to disclose.

The lower court found that the claim was actually a product liability claim disguised as a consumer fraud violation, and thus the New Jersey Products Liability Act was the exclusive remedy if the claim were otherwise viable. The lower court then dismissed the complaint as failing to state a claim upon which relief could be granted because the Products Liability Act requires plaintiffs to allege a physical injury.

On appeal, the consumer argued, as controlling, a recently-decided Supreme Court case which allowed a consumer fraud claim where a drug company had promised benefits based on untruths and had disseminated those untruths through false advertising. Here, the Appellate Division disagreed because the consumer could point to no affirmative acts of misrepresentation by the restaurant.

The consumer next argued that another recently-decided Supreme Court case was controlling. In the cited case, the Supreme Court held that when the economic loss rule applies, a plaintiff is precluded from recovering damages for harm to the product itself, noting that the Products Liability Act was not designed to transform a contract-like claim into a tort claim. However, the Court noted that the issue in the consumer’s claim was not addressed in that Supreme Court case; namely, whether a claim asserted under the Consumer Fraud Act is actually a product liability claim and thus subject to the exclusive remedy provisions of the Products Liability Act. Thus, the referenced case was not instructive to the Court, and the lower court’s decision was affirmed.


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