Association says tort reform would encourage business growth in N.J.

October 28. 2011 2:16PM

Association says tort reform would encourage business growth in N.J.

If New Jersey follows states like Texas and South Carolina in reforming its tort laws, the New Jersey Law Reform Association said, thousands of jobs can be created.

According to a study funded by the U.S. Chamber of Commerce’s Institute for Legal Reform, if New Jersey reduced tort activity in its courts, it could reduce litigation spending up to $1.7 billion, and between 35,000 and 94,000 jobs could be created.

The report used data on liability insurance and losses reported by Towers Watson in its annual U.S. torts cost report to look at activity and spending in litigation in each state.

Marcus Rayner, executive director of NJLRA, said reform to keep lawsuits without specific New Jersey jurisdiction out of the state’s legal system would be key to decreasing the amount of tort activity.

“Our members are concerned about a number of things, number one being the number of out-of-state plaintiffs,” Rayner said. “Currently in New Jersey, 93 percent of the plaintiffs suing our pharmaceutical companies, for example, in mass tort suits are from out of state.”

“New Jersey is a state that likes to be proud of the fact that we’re home to the life sciences and pharmaceutical industry, and the medical community,” Rayner said. “That is a business that is particularly prone to litigation because of the innovative nature of their products … if we want to be the home to these businesses and create these kind of very educated, high-end jobs that support these industries, tort reform needs to be part of the conversation.”

According to the report, New Jersey has the nearly 47 suits per 10,000 people. In contrast, New York had 30 suits per 10,000 residents, and Pennsylvania, 13 per 10,000 residents.

“Business goes where it’s welcome, and litigation is inherently uncertain, and uncertainty makes businesses cautious. When you create a litigation climate that is fair and reasonably predictable … business feels more comfortable investing in that state,” Rayner said.

But Seton Hall University School of Law professor Andrea McDowell said the survey does not adjust for more industrialized states, which are likely to have more accidents than agricultural states.

“My first reaction is that the money that the defendants don’t pay out is money that the victims don’t get — the amount of money, in the end, stays the same,” McDowell said of the report. “The most striking thing about the tort system is that in 95 percent of cases, victims of accidents don’t go to trial or don’t receive any compensation.”

“If there were 10 times as many tort suits, then it could be that it accurately reflects the number of people who were injured by other people’s negligence,” McDowell said.