March 31, 2008
JANICE WENDLING AND HOLLY CANDIA, PLAINTIFFS-APPELLANTS/ CROSS-RESPONDENTS,
PFIZER, INC., DEFENDANT-RESPONDENT/ CROSS-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-348-04.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued March 4, 2008
Before Judges Parrillo, Gilroy and Baxter.
Plaintiffs Janice Wendling and Holly Candia appeal from the summary judgment dismissal of their complaint against defendant Pfizer, Inc. for common law negligent misrepresentation and violation of the New Jersey Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20. These claims essentially allege that the advertisement for defendant's veterinary product, Strongid C, was false and misleading because it stated that it would "prevent and control parasites every day," but it did not prevent or control tapeworms, a type of parasite, that infested and eventually killed their horse. Defendant cross-appeals, contending the court erred as a matter of law in ruling that plaintiffs' claims are not barred by the New Jersey Products Liability Act (PLA), N.J.S.A. 2A:58C-1 to -11. We affirm in all respects.
We consider the evidence of record in the light most favorable to plaintiffs. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Wendling began raising and racing horses in 1977. She and her husband bought the Charter Acres horse farm in 1981 and by 2002, there were approximately twelve to eighteen horses on the farm, including a race-horse named "Always Special." Wendling and Candia, who worked at the farm as an exercise rider, each owned a one-half interest in "Always Special."
On August 11, 2002, "Always Special" exhibited signs of colic. The horse, however, did not respond to the routine treatment for colic, and was immediately transferred to the New Bolton Center at the University of Pennsylvania School of Veterinary Medicine. It was euthanized the next day, August 12, 2002. A post-mortem examination revealed that it had an obstruction at the ileocecal orifice, which was infested with over 100 tapeworms.
Plaintiff Wendling had no formal education or training in the care and treatment of horses, and instead acquired any knowledge from "years and years and years of taking care of them." She made all decisions as to what deworming products to use in order to prevent and treat parasites. At the time of the horse's death in 2002, there was no drug approved by the federal Food and Drug Administration (FDA) for the control and treatment of tapeworms in horses*fn1, although there were such products in development. Consequently, plaintiffs were using a rotation of three different drugs to control parasites in their horses: Strongid C, a product of defendant Pfizer, Inc.; Panacur, a product of Hoechst Ag.*fn2; and Zimecterin, a product of Farnam Companies, Inc. According to Wendling, she used Strongid C because "that's what the breeding farm used where he came from," and her veterinarian also suggested the product as part of a drug rotation regimen for the horses at the farm.
The Pfizer print advertisement for Strongid C 2X*fn3 shows a "ghosted" or fading horse and rider, accompanied by the following text:
He's got strength, talent and heart. But without Strongid C 2X, parasites could erase it all.
Your horse may look great on the outside, but inside parasites could be erasing his good health and performance potential. That's why for the past 11 years, the trainers and owners of millions of horses have trusted Strongid C 2X to prevent and control parasites every day. [(emphasis added).]
The label for Strongid C listed in both English and Latin the four specific types of parasites the drug would treat:
For control of the following parasites in horses:
Large Strongyles (adults): S. vulgaris, S. edentatus
Small Strongyles (adults and 4th-stage larvae): Cyathostomum spp., Cylicocyclus spp., Cylicostephanus spp., Cylicodontophorus spp., Poteriostomum spp., Triodontophorus spp.
Pinworms (adults and 4th-stage larvae): Oxyuris equi
Ascarids (adults and 4th-stage larvae): Parascaris equorum.
Notably, tapeworms are not among the parasites listed.
Wendling read the label for Strongid C after seeing the advertisement, and acknowledged that there was no indication on the label that the product was intended for the treatment of tapeworms. She neither relied on the advertisement for information as to what parasites the product would treat nor believed that Strongid C would treat all types of parasites. Rather, it was her understanding that rotating different drugs was necessary because "certain worms were resistant to certain compounds," and that "different compounds kill different species." Basically, Wendling used the product because "[t]his is all you have." In fact, Wendling did not even know tapeworms posed a risk to horses until her veterinarian informed her in August 2002 of "Always Special's" diagnosis, and therefore, she did not purchase Strongid C to specifically target tapeworms in her horses. As noted, the horse died shortly after first displaying signs of colic due to a tapeworm infestation.
Plaintiffs then sued Pfizer for common law negligent misrepresentation and statutory violation of the CFA, alleging that the advertisement for Strongid C was false and misleading because it stated that it would "prevent and control parasites every day," but it did not prevent or control tapeworms, a type of parasite. Following discovery, defendant moved for summary judgment.*fn4 In granting the motion on the statutory claim, the judge found plaintiffs' interpretation of the language of the advertisement "unconventional and unreasonable," and their reliance thereon too attenuated to establish any causal connection between defendant's advertisement and plaintiffs' ascertainable loss, especially given the lack of any expert proof establishing the standard of care for treating tapeworms. As to the common law claim, the judge found the challenged statement "prevent and control parasites every day" to be true.
On appeal, plaintiffs contend, as to their statutory cause of action, that defendant's advertising was misleading, omitted a material fact, and that such an affirmative misrepresentation and/or material omission was causally connected to the horse's demise. As to their common law cause of action, plaintiffs repeat their contention that defendant concealed a material fact in its advertising and thereby breached its duty to disclose its product may not be used for the prevention of tapeworms. On cross-appeal, defendant argues plaintiffs' common law and statutory claims are barred by the PLA, which provides the exclusive remedy in all such cases. We reject all of these contentions.
The CFA was enacted "to protect consumers 'by eliminating sharp practices and dealings in the marketing of merchandise and real estate.'" Lemelledo v. Beneficial Mgmt. Corp. of Am., 150 N.J. 255, 263 (1997) (quoting Channel Cos. v. Britton, 167 N.J. Super. 417, 418 (App. Div. 1979)). It vests private citizens with a cause of action under defined circumstances, providing that "[a]ny person who suffers any ascertainable loss of moneys or property, real or personal, as a result of the use or employment by another person of any method, act, or practice declared unlawful under this act . . . may bring an action . . . in any court of competent jurisdiction." N.J.S.A. 56:8-19. An unlawful practice under the CFA is defined as:
The act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise or real estate, or with the subsequent performance of such person as aforesaid, whether or not any person has in fact been misled, deceived or damaged thereby. . . .
To state a claim under the CFA, a plaintiff must allege:
(1) unlawful conduct by the defendant; (2) an ascertainable loss on the part of the plaintiff; and (3) a causal relationship between the defendant's unlawful conduct and the plaintiff's ascertainable loss. See Cox v. Sears Roebuck & Co., 138 N.J. 2, 24 (1994). In order to state a cause of action for consumer fraud, a plaintiff does not need to show reliance, and need only show proof of a causal nexus between the loss and the unlawful conduct, i.e., misrepresentation. Varacallo v. Massachusetts Mut. Life Ins. Co., 332 N.J. Super. 31, 43 (App. Div. 2000).
In support of their statutory claim, plaintiffs point to the phrase in the advertisement to "prevent and control parasites every day" as an affirmative misrepresentation because Strongid C did not prevent and control tapeworms, a parasite. We disagree.
As noted, an unlawful practice under the CFA includes "[t]he act, use or employment by any person of any . . . misrepresentation, . . . in connection with the sale or advertisement of any merchandise." N.J.S.A. 56:8-2. An affirmative misrepresentation is "'one which is material to the transaction and which is a statement of fact, found to be false, made to induce the buyer to make the purchase.'" Ji v. Palmer, 333 N.J. Super. 451, 462 (App. Div. 2000) (quoting Gennari v. Weichert Co. Realtors, 288 N.J. Super. 504, 535 (App. Div. 1996), aff'd, 148 N.J. 582 (1997)). An affirmative misrepresentation does not require a showing of knowledge of the falsity of the misrepresentation. Gennari v. Weichert Co. Realtors, 148 N.J. 582, 605 (1997).
"To constitute consumer fraud . . . the business practice in question must be 'misleading' and stand outside the norm of reasonable business practice in that it will victimize the average consumer. . . ." New Jersey Citizen Action v. ScheringPlough Corp., 367 N.J. Super. 8, 13 (App. Div.) (quoting Turf Lawnmower Repair, Inc. v. Bergen Record Corp., 139 N.J. 392, 416 (1995), cert. denied, 516 U.S. 1066, 116 S.Ct. 752, 133 L.Ed. 2d 700 (1996)) (alterations in original), certif. denied, 178 N.J. 249 (2003). Courts in New Jersey have also recognized a distinction between misrepresentations of fact actionable under the CFA and mere puffery about a product that will not support relief. See Rodio v. Smith, 123 N.J. 345, 352 (1991) (holding that slogan "You're in good hands with Allstate," is nothing more than mere puffery); Schering-Plough Corp., supra, 367 N.J. Super. at 13 (statement in advertising for allergy medication Claritin that "you . . . can lead a normal nearly symptom-free life again" was not actionable statement of fact within the meaning of CFA). In Schering-Plough Corp., we upheld the trial court's dismissal of the plaintiff's CFA complaint for failure to state a cause of action, stating that:
These statements, merely by the use of the word "you" and by the failure to include a disclaimer along the lines of "results may vary" are not transformed into a guarantee of universal and complete effectiveness and thus are not statements of fact actionable under the CFA. [Id. at 14.]
Here, contrary to plaintiffs' argument, the mere pluralizing of "parasite" in the advertisement does not reasonably imply a universal and complete antidote that treats effectively all types and species of parasites. Nor does the challenged phrase remotely suggest a guarantee or warranty. Rather, it simply denotes a category or genre of conditions that the drug treats, and that the drug treats more than one type of parasite. Nothing in the phraseology admits of an exhaustive list and indeed plaintiff Wendling herself admits she did not so construe the advertisement at the relevant time. Consequently, we consider the advertisement neither false nor misleading because it has not been shown to be incorrect. Plaintiffs offer no proof that Strongid C does not in fact "treat and prevent parasites every day" -- more specifically, the four types of parasites explicitly listed on its label.*fn5
Of course, the CFA also makes unlawful the "knowing concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission." N.J.S.A. 56:8-2. The CFA "distinguishes between wrongs committed by affirmative acts and wrongs committed by a failure to act." Leon v. Rite Aide Corp., 340 N.J. Super. 462, 469 (App. Div. 2001). While a consumer fraud violation consisting of an affirmative act does not require the element of intent and a plaintiff does not need to prove that the defendant intended to commit an unlawful act, when the alleged violation consists of an omission, a plaintiff must show that the defendant acted with knowledge. Cox, supra, 138 N.J. at 17-18. Thus, "intent is an essential element of the fraud" in the case of an omission. Id. at 18.
Just as plaintiffs here have failed to prove a false or misleading representation, they have similarly failed to establish any intent to deceive. In this regard, plaintiffs point only to the omission in the advertisement of any mention that the drug would not control tapeworms. But even assuming such an omission is material -- a finding we decline to make -- plaintiffs have presented no proof of any intent that others rely upon that omission to the end they be deceived. Indeed, allowing plaintiffs to prove that an omission of fact was intended to deceive consumers simply by citing to the omitted fact would effectively eliminate the statutory requirement of proving intent. For all these reasons then, we conclude that the statement in Pfizer's advertising is not actionable and was properly rejected as a basis for plaintiffs' CFA claim.
We further conclude that plaintiffs also cannot demonstrate that any loss suffered was caused by defendant's allegedly misleading advertisement. To be sure, "the element of traditional reliance required to be pleaded and proven in a common law fraud or misrepresentation case, see Jewish C[tr.] of Sussex County v. Whale, 86 N.J. 619, 624 (1981), need not be proven in order to recover . . . damages pursuant to the CFA, see Varacallo, [supra,] 332 N.J. Super. [at] 43." ScheringPlough Corp., supra, 367 N.J. Super. at 15. Nonetheless, plaintiffs must "plead and prove a causal nexus between the alleged act of consumer fraud and the damages sustained." Ibid.
Such a causal nexus is lacking here. In the first place, there is no proof -- expert or otherwise -- concerning the standard of care for treating tapeworms in horses, the prevalence of the condition, the effectiveness of different medications on the market in treating the condition, or whether the use of another drug would have prevented the death of plaintiffs' horse in this case. Equally lacking is any proof that had plaintiffs not relied on the advertisement in choosing to use Strongid C to prevent tapeworms in their horse, the horse would not have been infested and died from the tapeworm infestation. And, just as important, it is undisputed that Wendling did not purchase Strongid C to treat and prevent tapeworms in her horses, that she did not see any indication on the product label that it would treat tapeworms, and that she did not believe that the drug would treat all types of parasites without exception. Given these facts and circumstances, no causal nexus between Pfizer's advertising and plaintiffs' loss has been demonstrated.
Plaintiffs next attribute error in the dismissal of their common law negligent misrepresentation claim, arguing that defendant had a duty to disclose in its advertising for Strongid C that the product may not be used for the prevention of tapeworms. We find no such duty exists as a matter of law.
Negligent misrepresentation is "[a]n incorrect statement, negligently made and justifiably relied upon, [and] may be the basis for recovery of damages for economic loss . . . sustained as a consequence of that reliance." H. Rosenblum, Inc. v. Adler, 93 N.J. 324, 334 (1983), superceded on other grounds, N.J.S.A. 2A:53A-5. Thus, in order to sustain a cause of action based on negligent misrepresentation, the plaintiff must establish that the defendant negligently made an incorrect statement of a past or existing fact, that the plaintiff justifiably relied on it and that his or her reliance caused a loss or injury. Kaufman v. i-Stat Corp., 165 N.J. 94, 109 (2000). See also Kuhnel v. CNA Ins. Cos., 322 N.J. Super. 568, 581 (App. Div. 1999) (affirming trial court's dismissal of negligent misrepresentation claim for plaintiffs' failure to show detrimental reliance), certif. denied, 163 N.J. 12, cert. denied, 531 U.S. 819, 121 S.Ct. 61, 148 L.Ed. 2d 27 (2000).
We have already determined that the Pfizer advertisement is neither incorrect, misleading, nor intentionally omits a material fact. But even assuming otherwise, as plaintiffs suggest, they have simply not demonstrated the other two elements of the cause of action, namely that they justifiably relied on the statement or that their reliance caused a loss or injury.
As noted, Wendling, as caregiver to their horses, conceded that she did not rely on the advertisement in treating plaintiffs' horses for tapeworms and, in fact, did not even know that horses could be infested with tapeworms. Moreover, she read the label for the product specifically identifying the parasites it purported to treat; that tapeworms were not listed as a parasite that the product treated; and that she did not believe that Strongid C would treat all types of parasites. Furthermore, even if there were the requisite reliance, there has been no showing of any causal connection between Pfizer's product advertising and plaintiffs' loss. In other words, no proof has been offered that had plaintiffs not relied on the advertisement in their treatment of the horse's condition, "Always Special" would not have been infested with tapeworms and died from the infestation. Accordingly, as with plaintiffs' statutory CFA claim, the Law Division properly rejected plaintiffs' common law cause of action as wanting in supportive proof.
Given the propriety of the summary judgment, defendant's assertion on its cross-appeal of yet another ground for the dismissal of plaintiffs' lawsuit is moot. Nevertheless, because it strikes a recurrent note, we proceed to address the issue of whether the PLA bars plaintiffs' CFA and negligent misrepresentation claims.
The PLA defines a "product liability action" as "any claim or action brought by a claimant for harm caused by a product, irrespective of the theory underlying the claim, except actions for harm caused by breach of an express warranty." N.J.S.A. 2A:58C-1(b)(3). N.J.S.A. 2A:58C-2 establishes the sole method to prosecute a product liability action:
A manufacturer or seller of a product shall be liable in a product liability action only if the claimant proves by a preponderance of the evidence that the product causing the harm was not reasonably fit, suitable or safe for its intended purpose because it: a. deviated from the design specifications, formulae, or performance standards of the manufacturer or from otherwise identical units manufactured to the same manufacturing specifications or formulae, or b. failed to contain adequate warnings or instructions, or c. was designed in a defective manner.
The PLA subsumes common law claims of liability. Tirrell v. Navistar Int'l, Inc., 248 N.J. Super. 390, 398 (App. Div.), certif. denied, 126 N.J. 390 (1991). The Tirrell court held that:
Since a product liability action encompasses "any claim or action brought by a claimant for harm caused by a product," N.J.S.A. 2A:58C-1, (emphasis added), and section 2 describes the sole method of proof, namely that recognized for strict liability claims, it is clear that common-law actions for negligence or breach of warranties (except express warranties) are subsumed within the new statutory cause of action, if the claimant and harm also fall within the definitional limitations of section 1. [Ibid.]
N.J.S.A. 2A:58C-1(b)(1) defines "claimant" as "any person who brings a product liability action. . . ." "Harm" is defined as "physical damage to property, other than to the product itself. . . ." N.J.S.A. 2A:58C-1(b)(2).
With this as background, defendant argues that plaintiffs' CFA claim is barred by the PLA because it is essentially a failure to warn claim, citing N.J.S.A. 2A:58C-1(b)(3) and N.J.S.A. 2A:58C-2. We disagree. Plaintiffs never alleged that Strongid C was not reasonably fit for its intended use because it failed to contain adequate warnings or instructions. See Freund v. Cellofilm Props., Inc., 87 N.J. 229, 243 (1981) (holding that an adequate warning on a product "is one that includes the directions, communications, and information essential to make the use of a product safe"). Rather, they alleged that they were misled by defendant's advertisement. Allegations of a misleading advertisement clearly fall within a covered practice of the CFA. As noted by the motion judge, there is a difference between "a PLA failure to warn claim and a CFA violation where a misrepresentation was relied upon resulting in actual damages."
Furthermore, the CFA itself instructs that it should be applied in conjunction with other statutes or common law:
The rights, remedies and prohibitions accorded by the provisions of this act are hereby declared to be in addition to and cumulative of any other right, remedy or prohibition accorded by the common law or statutes of this State, and nothing contained herein shall be construed to deny, abrogate or impair any such common law or statutory right, remedy or prohibition. [N.J.S.A. 56:8-2.13.]
The Court has noted that the language of the CFA "'evinces a clear legislative intent that its provisions be applied broadly in order to accomplish its remedial purpose, namely, to root out consumer fraud.'" Perez v. Rent-A-Ctr., Inc., 186 N.J. 188, 219 (2006) (quoting Lemelledo, supra, 150 N.J. at 264), cert. denied, 127 S.Ct. 984, 166 L.Ed. 2d 710 (2007). The Lemelledo Court further held:
We are loathe to undermine the CFA's enforcement structure, which specifically contemplates cumulative remedies and private attorneys general, by carving out exemptions for each allegedly fraudulent practice that may concomitantly be regulated by another source of law. The presumption that the CFA applies to covered practices, even in the face of other existing sources of regulation, preserves the Legislature's determination to effect a broad delegation of enforcement authority to combat consumer fraud.
In order to overcome the presumption that the CFA applies to a covered activity, a court must be satisfied . . . that a direct and unavoidable conflict exists between application of the CFA and application of the other regulatory scheme or schemes. It must be convinced that the other source or sources of regulation deal specifically, concretely, and pervasively with the particular activity, implying a legislative intent not to subject parties to multiple regulations that, as applied, will work at cross-purposes. We stress that the conflict must be patent and sharp, and must not simply constitute a mere possibility of incompatibility. [Id. at 270.]
The Lemelledo Court made clear that there is a "presumption that the CFA applies to covered practices, even in the face of other existing sources of regulation," and that in order to overcome this presumption, there must be a "direct and unavoidable conflict" between the application of the CFA and, in this case, application of the PLA. Ibid. For reasons already stated, we perceive no such conflict here.
The same reasoning applies, of course, to plaintiffs' negligent misrepresentation claim. As noted, a product liability action encompasses "any claim or action brought by a claimant for harm caused by a product." N.J.S.A. 2A:58C-1. Plaintiffs have not alleged product defect or even that Strongid C was not reasonably fit for its intended use because of inadequate warnings. N.J.S.A. 2A:58C-2(b). Instead, they alleged that there was a misleading, false or materially deficient product advertisement. In other words, it was not the product itself that caused the harm, but allegedly its misleading promotion. Under the circumstances, we conclude that plaintiffs' negligent misrepresentation claim is not subsumed by the PLA.