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Delgozzo v. Kenny

Decided: July 20, 1993.

TITO DELGOZZO,*FN1CLAUDIA CAPRITTI, ROBERT SLIMM, CHARLES HECK AND WENDY HECK, PLAINTIFFS-APPELLANTS,
v.
WILLIAM KENNY, JR., STANLEY R. ORCZYK, PAUL A. VERMYLEN, JR., MEENAN OIL CO., INC., BLUERAY SYSTEMS, INC., AND KOV CORP., DEFENDANTS-RESPONDENTS



On appeal from the Superior Court of New Jersey, Law Division, Camden County.

Antell, Dreier and Skillman. The opinion of the court was delivered by Dreier, J.A.D.

Dreier

[266 NJSuper Page 172] Plaintiffs appeal by leave granted from an order denying class certification. Following the Disposition of a parallel federal action on jurisdictional grounds,*fn2 plaintiffs reactivated the present action,

filed in 1988, seeking "a substantive determination of their remaining strict liability, negligence, breach of warranty, intentional tort, and fraud counts." On June 1, 1992, plaintiffs filed a Notice of Motion for Class Certification. We granted leave to appeal from the denial of this motion. Following oral argument, we requested supplemental briefs from counsel on the effect of D'Angelo v. Miller Yacht Sales, 261 N.J. Super. 683, 619 A.2d 689 (App.Div.1993), on this case.

The named plaintiffs in this case were all residents of New Jersey who purchased "blue flame" oil furnaces or boilers from defendant Blueray Systems, Inc. ("Blueray") for residential use in New Jersey. They seek class certification for a class "comprised of thousands of persons and entities throughout New Jersey, New York, Connecticut and the United States." In all, "during the Class Period, defendants shipped approximately 21,000 Blueray (blue flame) furnaces and 14,000 Blueray "blue flame" boilers throughout the United States and Canada."*fn3

Defendant Meenan Oil Co., Inc. is a Delaware Corporation with its principal place of business in the State of New York. Meenan allegedly does "a significant amount of its business in Camden County and throughout New Jersey." Defendant KOV Corporation is allegedly the successor corporation to Meenan.*fn4 Defendant Blueray is a wholly owned subsidiary of Meenan, with its principal place of business in Pennsylvania. Blueray allegedly manufactured

Blueray "blue flame" furnaces and boilers throughout the class period of 1974 to 1983. Defendant William F. Kenny, Jr., was Meenan's chairman of the Board and CEO throughout the class period. He is allegedly a principal of KOV. Defendants Stanley R. Orczyk and Paul A. Vermylen, Jr. were both vice presidents of Meenan during all or part of the class period, and both were principals of KOV at the time the second amended complaint was filed on August 1, 1988.

Plaintiffs allege that defendants, anxious to capitalize on consumers' growing concern with fuel conservation and environmental issues, marketed the "blue flame" systems "as the state of the art residential heating system," representing technological advances over the traditional "yellow flame" units.*fn5 Blueray advertised the units as being cleaner, more efficient, and more economical than either traditional oil furnaces and boilers or gas units. Such advertising allegedly induced consumers to purchase the "blue flame" units. "Blue flame" units cost approximately $2,000. Notwithstanding the fact that Blueray manufactured various models and made several design changes throughout the class period, plaintiffs allege that the manufacturing defects causing the problems of which they complain were common to all models throughout the class period and were not corrected by any of the alleged "enhancements."

Plaintiffs contend that all the Blueray products contained a common design defect that caused the production and emission of excessive levels of carbon monoxide, and caused the units to malfunction, pulsate, and emit soot. Moreover, the units also allegedly required more servicing than conventional units. Plaintiffs assert that defendants were aware of the problems and hazards associated with the Blueray units, yet continued to advertise and market the units without disclosing to potential purchasers their "inherent defect, or hazardous and unreasonably dangerous

condition." As further proof of the hazards associated with Blueray "blue flame" units, plaintiffs cited a December 1987 Consumer Product Safety Alert, issued by the U.S. Consumer Product Safety Commission, warning of their "potential" for carbon monoxide poisoning, and advising that, since 1979, seven deaths from carbon monoxide poisonings had been linked to "improper maintenance or servicing" of the "blue flame" units. Defendants ceased manufacturing and marketing the "blue flame" units in 1983.

In support of their motion for class certification, plaintiffs submitted portions of depositions of themselves and others. For example, Jay L. Dugan, former Meenan General Manager, tended to confirm Meenan's market strategy for the "blue flame" products, and also acknowledged that the "blue flame" units required more servicing than the conventional "yellow flame" heaters. He also acknowledged other difficulties associated with the units that seemed not to comport with the advertising. Bradley Davis, another former Meenan General Manager, noted that the initial "blue flame" units were not "life-cycle tested, because that was something that was not part of the capabilities of the firm at that time," and that Blueray was "anxious to get the product out there and get it sold." He noted that the initial units pulsated and were difficult to maintain. He attributed the problem to the marriage of two incompatible technologies, essentially the "blue flame" combustion system encased in standard "yellow flame" casings. In Davis's opinion, Blueray's advertising did not accurately reflect the actual "blue flame" unit functioning. He also represented that Blueray, through defendant Kenny, was aware of this. In addition, Davis noted that Blueray was getting complaints from builders who were utilizing the products and that "this was affecting our sales effort."

Plaintiffs also presented the affidavit of Morton H. Lerner, a private engineering consultant who "reviewed various documents pertaining to the Blueray Systems, Inc. 'blue flame' heating units . . . and . . . inspected a Blueray heater" in formulating his

opinion. According to Lerner, the "blue flame" units installed in residences consist of standard yellow flame casings housing "blue flame" burner systems, which are "technologically more delicate" than yellow flame burners. According to Lerner, the necessary settings needed for proper functioning of "blue flame" burners "cannot be consistently maintained" as designed, and appropriate redesign was never accomplished. These defects result in "small explosions (puff-backs), incomplete combustion and complete heater shutdown in the winter." Incomplete combustion may result in carbon monoxide production and emission, as well as "the production of excessive amounts of soot, odor, smoke, noise, and pulsation," which a properly designed system can keep within acceptable limits. Finally, Lerner observed that Blueray units failed to provide adequate instructions and warnings.

In their depositions, the prospective class representatives related various problems with their "blue flame" units, including shutdown, pulsation, noise, soot, and smoke. According to Charles Heck, the unit in his and his wife's home required 20 to 30 service calls (covered under their warranty) in October and November 1982. The Hecks subsequently had their unit converted at no charge, and have experienced no further problems of the sort associated with their "blue flame" unit. However, they have not replaced the Blueray unit with a more efficient one due, apparently, to a "lack of money to do it right at the time."

Plaintiffs Slimm and Capritti apparently had difficulties locating a qualified service person when their unit experienced shutdown, and they subsequently used a wood and coal burning stove for the remainder of the 1988 heating season. Slimm and Capritti eventually had their "blue flame" unit removed, after being told that it "could not be converted to a yellow flame." Capritti also became concerned about the safety of their unit after learning that a family in a nearby New Jersey community "had died because of a heater malfunction, [and] the heater involved was a Blueray."

In their complaint, plaintiffs seek relief on theories of negligence, strict liability, breach of warranties, and intentional tort.

In addition, they allege that they are entitled to punitive damages as a result of defendants' intentional or reckless malicious conduct. Although plaintiffs' complaint alleges physical harm suffered by some class members, they assert that their claims seek only economic damages and "never included a claim for personal injuries."

In essence, plaintiffs allege that defendants knew or should have known that they were placing a hazardous product into the stream of commerce, that purchasers relied on defendants' "false and misleading" advertising in purchasing the product, that defendants failed adequately to warn purchasers of the product's inherent hazards, and that defendants "fraudulently conceal[ed]" their conduct to the ultimate harm of the plaintiff class. The unifying themes underlying all theories of liability asserted by plaintiffs are claims of consumer fraud and products liability.

In denying class certification, the trial Judge made "preliminary determinations," and then heard argument of plaintiffs' counsel, upon which he concluded that his "original decision stands." We reproduce here the material part of the trial Judge's decision:

The Plaintiffs -- oh, they deny they seek a recovery [for] any class member who suffered personal injury. On Page 3 of the original memorandum they say, and I quote, "The problems were severe and wide spread and in some instances personal injury and death resulted." Also personal injury is claimed in the amended complaint.

Now, the Plaintiffs, apparently in an effort to avoid dealing with any issue relating to personal injury, are willing to abandon such claim, even though according to their own allegations members of the class have suffered severe injury . . . .

The Plaintiffs seek to simplify their matters when in fact it is far from simple. The Plaintiffs argue, all that has to be done is prove that the Blue Ray Heaters were defective and inherently dangerous. Whether Defendants knew or should have known the Blue Ray Heaters were defective and dangerous and whether Defendants breached implied warranties and whether Defendants misrepresented material facts. The Plaintiffs can't really mean that this is all that is in the case. It may be that these are some common issues stated in a very general broad brush fashion.

Throughout the memo the Plaintiffs speak of Blue Ray Heaters as if all heaters were the same. Yet it is alleged by competent legal evidence that they are not in the affidavit of Paul A. Vermilelin (phonetic spelling), Jr. Plaintiffs do not attempt to indicate which members of the class had problems, who did not.

The class, according to Plaintiffs, is 35,000 people in 25 states. If the Plaintiffs knew of the 35,000 people they should make some effort to set forth with some degree of spec -- of particularity who in the class was affected by the alleged conduct and who was not, who purchased the products and who were consumers -- or who purchased which products . . . .

The Plaintiffs distinguish Lee (sic) versus American Motors on the basis that . . . in Lee (sic) there was evidence that the manufacturing during the class period substantially changed the features that made the CJ5P unsafe. They argue no such evidence in this present case. This is not so. Even Glessner acknowledges "the Blue Flame" models manufactured by Defendants were the subject of design enhancements during the class period . . . .

It appears to the Court that the present Plaintiffs are not in a position to adequately represent the interest of the class, even assuming the class were proper for certification. The Plaintiffs owned units for many years, which negates the fact that they had any problems of a serious nature. Only Plaintiff Heck had problems starting early on. Defendants corrected the problem by converting the unit to yellow flame. Capriatti experienced shutdown on several occasions. This is a far cry from the allegations of the Plaintiff's counsel. [Delgozzo] experienced complete shutdown on the coldest night of the year.

It seems the Plaintiffs' claims are nowhere near as serious as the claims counsel allege exist. So they certainly would not be appropriate to represent the members of the thousands of defective Blue Ray Heaters in the hands of class members, "In many cases continuing to cause dangerous conditions of excessive carbon monoxide" . . . .

Generally speaking, Plaintiffs' counsel describes the alleged class as 35,000 people . . . . The class is apparently composed of persons in 25 states and Canada. There are some common questions of . . . law, no doubt about it and some common questions of fact. But, many, if not all of the questions of fact, must be addressed to each member of the class with particularity and specificity.

Such as, when was the unit purchased? Type of the unit. Most important, manner of installation, manner of service, who had problems, who did not, extent of problems, nature of damage, extent of same. As to questions of law, trying to deal with the law of perhaps only 5 different states is totally unacceptable. It may be that all 25 states do not have different laws but that is not the question. There will be many states who have substantial differences in their respective laws both statutorily and casewise.

The Court acknowledges some courts have not felt this is a valid consideration. This Court does not agree with that. Also whether the law, as it is determined to be raises substantial questions as to each member of the class and as to the facts supporting their legal Conclusions to be reached. These problems make the issues as to each member or group most fact sensitive.

Finally, in the opinion of the Court, the class action is not a superior means to address the problems . . . . In fact, in the opinion of the Court, it is not an acceptable means at all. The magnitude of the class would make it unruly, and more importantly, each member would most likely receive far less than would be received if each member who was actually injured brought an individual action. A

class action in this shotgun setting would not be fair to the Defendants as well and we cannot overlook ...


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