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Touting tort reform before business

During time of opportunity, advocates lobbying for caps, new appeals

New Jersey Lawsuit Reform Alliance executive director Marcus Rayner.

Advocates of lawsuit reform are touting the possibility of significant bills to reform the state’s laws governing class action and consumer fraud cases, signaling what may become the biggest opening for changes since the 1990s.

Advocates of lawsuit reform are touting the possibility of significant bills to reform the state’s laws governing class action and consumer fraud cases, signaling what may become the biggest opening for changes since the 1990s.

A pair of bills introduced this session would limit the cost to post bonds for corporations that are appealing judgments, and would allow the subjects of class-action lawsuits to directly appeal the determination that a “class” exists.

The state’s most prominent lawsuit reform advocate may be Marcus Rayner, executive director of the New Jersey Lawsuit Reform Alliance, which launched in 2007 to bolster lobbying on tort reform and related issues.

Rayner said the political climate is shaping up to be good for the bills.

“I think the business community has been impressed with this legislative leadership’s interest with helping,” along with that of Gov. Chris Christie, Rayner said.

Rayner said tort reforms in other states — including North Carolina, Wisconsin, Tennessee and Texas — increased pressure on New Jersey.

“A climate of excess litigation drives up the costs for everybody, from the business owner to the consumer,” he said.

The effort is meeting resistance from the New Jersey Association for Justice, an organization that represents plaintiff’s attorneys and has successfully fended off tort-reform efforts in recent years.

Its president, Joseph C. Grassi — a member of Wildwood-based Barry, Corrado, Grassi & Gibson P.C. — said the agenda is designed to help global corporations, not New Jersey-based small businesses.

The proposals have “been a longstanding part of a tort reform agenda of groups in New Jersey and nationally, in order to limit the rights of consumers,” Grassi said. “They favor big business, even over small business.”

The appeal bond cap measure, A-241, would limit to $50 million the bond that corporations must post, instead of posting the full amount of the judgment, which can range into the hundreds of millions of dollars.

BDO Seidman, an accounting firm with a Woodbridge office, said a Florida bond appeal cap allowed the company to pursue an appeal of a judgment in that state. It won the appeal, but wouldn’t have been able to afford pursuing it if required to post the full amount of the $511 million judgment as a bond.

“We would have lost our constitutional right to that appeal and been forced to accept a judgment that we firmly believe should not be allowed to stand,” BDO Seidman counsel Barbara Taylor told an Assembly panel last year.

Rayner said the bill can save businesses from bankruptcy, but Grassi said the measure would allow giant corporations to put off paying after losing cases.

“You will find some cases where the law might cause a hardship for an individual (company), but the fact is that the law is going to hurt so many people you shouldn’t leap to do it,” he said.

Another bill, A-894, would allow companies facing class-action suits to appeal a ruling whether a class truly exists to the Appellate Division, rather than having to argue whether an appeal in warranted.

“We’re saying it should be a fundamental right of the legal process,” Rayner said, adding that it would make the process more efficient for both sides.

Grassi, though, said the appeals will lengthen cases, carving out a special exception for companies that can afford delay tactics.

“This is anti-efficiency, but the longer it takes to get a case resolved, the longer the money stays in the defendant’s pocket,” he said. “It’s not fair — it’s a denial of justice, because justice delayed is justice denied.”

The third bill Rayner is working toward hasn’t been introduced this term, but was introduced last term as A-3333. It would make several changes to the state’s consumer fraud law — plaintiffs would have to be individuals, not businesses, and plaintiffs would have to be the victims of fraud, not error. It also gives courts discretion in setting awarding damages, rather than tripling the damages under the current law.

“We’re just trying to give the court more discretion and make it clear that we’re going after businesses that are defrauding people, not businesses that just happened to make a mistake,” Rayner said.

Rayner described the state’s consumer fraud law as the strongest in the country, drawing lawsuits from other states.

Grassi said the bill will protect large pharmaceutical companies from out-of-state residents and would only prove to be an incentive to companies that harm consumers.

“If that’s what we’re going for, maybe we’ll attract unscrupulous people to New Jersey,” Grassi said.

Rayner said the bills have been crafted with a goal of making the state’s civil justice system more efficient and “more cost-effective to businesses, without barring the courthouse door to people who have legitimate claims,” and said the proposals are gaining traction.

“One of the things that we talk to legislators about all the time is that this is a cost-free way to improve the business climate in the state at a time when budgets are tight,” Rayner said.

E-mail to: akitchenman@njbiz.com
On Twitter: @Kitchenman

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