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Herman v. Sunshine Chemical Specialties Inc.7/28/1993
This case raises the issue whether plaintiffs in a products-liability action presented sufficient evidence of the financial condition of defendant Sunshine Chemical Specialties, Inc. (Sunshine) to sustain an award of punitive damages. Finding the evidence insufficient, the Appellate Division reversed the judgment and remanded the matter to the Law Division. 257 N.J. Super. 533, 608 A.2d 978 (1992). We granted the petition for certification of plaintiff Sandra Herman (plaintiff or Mrs. Herman), 130 N.J. 398, 614 A.2d 620 (1992), reverse the judgment of the Appellate Division, and reinstate the $400,000 award of punitive damages.
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In February 1985, Sunshine engaged Sandra Herman as an independent contractor to demonstrate and sell its products. During a two-day training period, Sunshine instructed Mrs. Herman about the company's products and personnel. No part of the training concerned the potential hazards or safe use of the products.
Sunshine's best-selling product was Sun-Clean Concentrate (Sun-Clean), an all-purpose cleaner that generated gross sales of $1 million in 1985 and $1.2 million in 1986. The Sun-Clean label stated: "SUN CLEAN is safe to use." In larger print, the label provided that Sun-Clean "CONTAINS NO ACIDS, CAUSTICS[,] AMMONIA, ALIPHATIC OR AROMATIC SOLVENTS." The label represented that Sun-Clean met the "operating standards" of the Occupational Safety and Health Administration (OSHA). It did not warn of the dangers of inhaling Sun-Clean vapors.
Sunshine did not manufacture Sun-Clean. Instead, it purchased in bulk from Harley Chemical Corp. (Harley) a product called "3-D," which Harley colored orange and transferred to one-and five-gallon containers bearing the Sun-Clean label.
Robert Feldman, the president and sole owner of Sunshine, designed the Sun-Clean label by cutting and pasting together the labels from products of other manufacturers. Although Harley had provided to Sunshine a "safety data sheet" that outlined the hazardous ingredients of its products, Feldman either did not know of the sheet or ignored it. The sheet indicated that 3-D contained sodium hydroxide, a caustic soda. In contrast, the Sun-Clean label specifically stated that the product contained no caustics. Harley placed on 3-D a label warning, "Danger . . . . Avoid breathing vapor. Keep container closed. Use with adequate ventilation." The Sun-Clean label, however, did not warn against breathing Sun-Clean vapors. Furthermore, Sunshine did not submit either the label or the product to OSHA for approval, nor did the company consult "OSHA operating standards" to determine whether the product met those standards. Feldman simply had removed the OSHA seal from another label.
Feldman submitted the cut-and-paste label to Robert Solly, the president of Harley. Solly reviewed the label for accuracy. A chemist employed by Sunshine also had the responsibility to review labels. Neither Solly nor the chemist recommended any changes.
While demonstrating Sun-Clean in July 1985, Mrs. Herman suffered a coughing fit. Shortly thereafter she developed a fever and breathing problems. After two weeks she consulted a doctor, who treated her for a suspected respiratory infection. Her respiratory problems continued, and she consulted a second physician and then an allergist, who were likewise unsuccessful in treating her. The doctors then placed her on steroid- and cortisone-based drugs that improved her breathing, but caused her to gain over sixty pounds.
Mrs. Her
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