Opinion ID: 3059146
Heading Depth: 3
Heading Rank: 3

Heading: Dismissal of the Implied Warranty Claim

Text: Finally, Southeast challenges the district court’s dismissal of its implied warranty claim under New Jersey law, disputing the district court’s conclusion that Southeast had “not adequately pled that Trasylol’s defect proximately caused its economic damages,” and had “not alleged that Trasylol was not fit for its intended use in preventing perioperative bleeding.” Under New Jersey law, “a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind.” N.J. Stat. Ann. § 12A:2-314(1). In order for “[g]oods to be merchantable,” they must be “fit for the ordinary purposes for which such goods are used.” Id. § 12A:2-314(2). This “implied warranty of merchantability means that the product is reasonably fit for the purpose intended; it does not imply absolute perfection.” Jakubowski v. Minn. Mining & Mfg., 199 A.2d 826, 831 (N.J. 1964). In order to establish an implied warranty claim, a plaintiff must prove “that the product was not reasonably fit for the ordinary purposes for which it was sold and 5 The parties submitted supplemental briefs addressing this court’s recent decision in Ironworkers Local Union 68 v. AstraZeneca Pharmaceuticals, LP, 634 F.3d 1352 (11th Cir. 2011). The holding in the present case is not inconsistent with the Ironworkers decision. 21 such defect proximately caused injury to the ultimate consumer.” Hollinger v. Shoppers Paradise of N.J., Inc., 340 A.2d 687, 692 (N.J. Super. Ct. Law Div. 1975) (citations omitted). Southeast does not assert that Trasylol’s alleged defect physically harmed any of its plan members. Instead, Southeast contends that the complaint states a claim for breach of implied warranty under New Jersey law because a harmful medication is per se unmerchantable. In support of this theory, Southeast relies primarily on Mones v. Imperial Bottling Works, Inc., 185 A. 483 (N.J. 1936). In Mones, the court held that a magnesia solution that failed to comply with the United States Pharmacopoeia requirements was unmerchantable because it was sold to a business for purposes of resale and the business could not legally resell it. 185 A. at 483. On these facts, the New Jersey Supreme Court concluded that “[c]ertainly a dealer who purchases for resale cannot be said to be without warranty if the goods which he purchases cannot be resold without violating the law of this state.” Id. Thus, Mones does not stand for the proposition that a drug is per se unmerchantable because it is harmful, even where it does not cause harm to the plaintiff. Instead, Mones stands for the familiar proposition that a breach of implied warranty claim is properly asserted where a good is not reasonably fit for the ordinary purposes for which it was sold. The remaining cases cited by Southeast similarly fail to support 22 Southeast’s theory that a harmful medication is per se unmerchantable. In the present case, the complaint alleges that Trasylol was “not fit for the ordinary purpose for which anti-fibrinolytic drugs are used.” Nonetheless, Southeast does not allege that Trasylol failed to act as an anti-fibrinolytic or that it or any of its members were physically harmed by Trasylol. Moreover, Southeast has failed to identify any case law to support its theory that the potential of a drug to cause harmful side effects, in the abstract, renders a drug per se unmerchantable, even as to plaintiffs that did not suffer the side effects. Thus, the complaint does not allege that Trasylol is unfit for the ordinary purpose for which it was sold, a requirement to state a claim for breach of implied warranty under New Jersey law. In addition, Southeast has not alleged that Trasylol’s defect proximately caused Southeast’s economic damages. To succeed on a breach of warranty claim, the plaintiff’s injury must arise as a proximate result of the alleged defect of the product. See Santor v. A & M Karagheusian, Inc., 207 A.2d 305, 313 (N.J. 1965) (requiring product defect to “cause[] injury or damage” to support a breach of implied warranty claim); Hollinger, 340 A.2d at 692 (to be liable for breach of warranty, the “defect [must] proximately cause[] injury to the ultimate consumer”). Here, the alleged product defect is that Trasylol created an undue risk of kidney failure and other bodily harms. However, Southeast does not assert that Trasylol’s alleged defect physically 23 harmed Southeast, nor does Southeast assert a derivative claim on behalf of any its members that might have suffered physical injuries from ingesting Trasylol. Instead, the economic harm for which Southeast seeks recovery is the excess money that it paid for the high-priced Trasylol instead of the cheaper generic alternative drugs. But this harm was not caused by the condition which rendered Trasylol unmerchantable, namely, its unsafe condition. Instead, it was allegedly caused by Bayer’s misrepresentations and fraud. However, fraud is not relevant misconduct for purposes of a breach of warranty claim. See Santor, 207 A.2d at 313 (“The liability [for a product defect under tort or contract law] does not depend on . . . proof of legal or equitable fraud.”). Thus, the alleged product defect underlying Southeast’s breach of warranty claim did not cause Southeast’s asserted injury. Accordingly, Southeast’s implied warranty claim was properly dismissed.