For 89 percent of senior business executives, a state’s legal environment impacts decisions about where to locate and where to do business. New Jersey’s not high on the list, according to a national survey released Wednesday by the U.S. Chamber Institute for Legal Reform.
Its lawsuit climate ranks 43rd out of 50, the state’s lowest rank ever since the survey began in 2002.
The 2019 Lawsuit Climate Survey: Ranking the States questioned senior business executives about their perception of the fairness and reasonableness of state court systems. Lawsuit expanding laws, such as the Diane B. Allen Equal Pay Act, are likely a reason for the ranking, according to ILR.
“For years, New Jersey’s lawsuit climate has been in a downward spiral,” said ILR COO Harold Kim in a statement. “Today, this climate is a tale of two institutions: a state Supreme Court that has shown a commitment to stabilizing the rule of law, and a legislature that is committed to undermining it.”
The Diane B. Allen Equal Pay Act shifts the burden to justify pay differentials to employers, which opens companies up to liability for years of backpay, triple damages, and punitive damages. According to the ILR, New Jersey’s “pro-lawsuit reputation” sticks New Jersey residents with $5,551 per household in tort costs or 3.1 percent of its GDP. The national average is $3,239 per household and 2.3 percent of U.S. GDP.
The New Jersey Supreme Court uses the Daubert standard, regarding the admissibility of expert witness testimony “to keep junk science out f the courtroom.” It also requires out-of-state plaintiffs to show they’ve suffered actual harm before bringing a lawsuit to court.
“The New Jersey Supreme Court’s reasonable jurisprudence could be the only thing standing between the state and number 50,” said Kim in a statement. “But it’s not enough. New Jersey must take its low lawsuit climate ranking seriously in order to avoid a business exodus.”
Survey results are based on interviews with a national sample of 1,307 in-house general counsel, senior litigators or attorneys, and other senior executives at companies with annual revenue of at least $100 million.
