“As simple as the concept of the Economic Loss Rule appears to be, New Jersey’s interpretation of this well-settled doctrine and its corollary, the ‘integrated product’ doctrine, is not at all predictable. Even though the N.J. Supreme Court and Appellate Division have issued significant decisions addressing the doctrine, its status remains unclear. The confusing and sometimes seemingly contradictory results of the cases on this topic present an area of law which begs for further clarification,” write Anita Hotchkiss and Leah A. Brndjar, attorneys in Goldberg Segalla’s Product Liability Practice Group.
“The Economic Loss Rule, which bars tort remedies in strict liability or negligence when the only claim is for damage to the product itself, evolved as part of the common law, largely as an effort to establish a boundary line between contract and tort remedies. According to the U.S. Supreme Court, ‘product liability grew out of a public policy judgment that people need more protection from dangerous products than may be afforded by the law of contracts and warranties.’”
In this article, Anita and Leah address the origins of the Economic Loss Rule, its purpose, the policies underlying the rule, the integrated product doctrine, and the varying interpretations accorded these doctrines by the New Jersey courts, including the New Jersey Supreme Court’s failure to apply the rule under certain facts.
“The NJPLA [N.J. Products Liability Act] does not define what qualifies as a product. This leaves open the opportunity for defense attorneys to argue under different factual scenarios that New Jersey should formally adopt the integrated product doctrine and apply it to bar future recoveries for apartment complexes, houses, condominiums, or any other ‘larger’ product into which a component has been integrated. It will be interesting to see what future courts choose to do in complex product situations.”