National Studies Rank NJ Civil Justice System One of the Most Expensive in the U.S.

“Perfect Storm” of Plaintiffs’ Bar-Controlled Legislature, Murphy Administration Agenda, and Changing Supreme Court Could Lead to Even Higher Costs for Employers and Families

TRENTON – New Jersey’s civil justice system has been ranked one of the most costly in the nation and it may get even worse, according to three recently released independent reports from the U.S. Chamber of Commerce Institute for Legal Reform and the American Tort Reform Foundation (ATRF).

1. In ATRF’s annual Judicial Hellholes® report released today, New Jersey reappears on the Judicial Hellhole Watch List due to a variety of conditions appearing across all three branches of government that could lead to a “perfect storm” of litigation abuse across the state.
2. Last month, the U.S. Chamber of Commerce Institute for Legal Reform (ILR) released an economic study that found the costs and compensation paid in the U.S. tort system totaled $443 billion—or 2.1% of national gross domestic product and $3,621 per household—in 2020.  New Jersey was ranked the fourth most expensive state tort system in the nation, with an average cost of $5,059 per household.
3. Finally, the size and frequency of massive jury verdicts—known as “nuclear verdicts” and described generally as being worth $10 million or more—are increasing, according to a new landmark study by the U.S. Chamber Institute for Legal Reform. New Jersey ranks 8^th on the list of highest nuclear verdicts in the nation, which comes at the expense of every business, consumer, and family in the form of higher prices and insurance costs.

“Employers and families should be deeply concerned by New Jersey’s terrible rankings because we are all footing the bill for a civil justice system that invites questionable and abusive litigation,” said Anthony Anastasio, President of New Jersey Civil Justice Institute. “At a time when inflation is at record high levels, the costs of the state’s lawsuit-friendly policies are piling on for New Jersey citizens and making everything more expensive, from everyday household products to insurance costs.”

“New Jersey policymakers need to wake up and accept reality: An unfair and imbalanced civil justice system that is tilted against the business community invites runaway litigation and increases the cost of living and doing business for everyone in the Garden State,” Anastasio continued. 

Summaries of the three reports follow:

1. ATRF Judicial Hellholes 2022

New Jersey reappears on the Judicial Hellhole Watch List for 2022.

According to the report: “The state’s civil justice system faces a triple threat – the plaintiffs’ bar now wields unprecedented power and influence in New Jersey’s Legislature because the new Senate President is a practicing plaintiffs’ attorney. New Jersey’s recently reelected governor is a progressive stalwart who has shown no interest in civil justice reform priorities and the new makeup of the New Jersey Supreme Court may result in a shift toward activism and expansion of liability.”

ATRF lists a number of legislative initiatives by Senate President Nick Scutari that have the potential for lawsuit abuse, particularly a law that was signed by Governor Murphy to expand “bad faith” liability for auto insurance carriers. There is concern that this new law will lead to a significant increase in meritless claims against insurance carriers, which could force many of these companies to stop writing policies in New Jersey, eliminating competition and raising rates for state drivers.

The ATRF report also cites the Murphy Administration’s active pursuit of legislation and litigation seeking to transform public nuisance law as a big concern for the state’s business community. The report rebukes the Administration for filing a climate change lawsuit against several oil and gas companies, “in yet another attempt to inappropriately expand New Jersey’s public nuisance law.”

“ATRF will keep a watchful eye on New Jersey to see if the state’s leadership can resist the influence of the powerful plaintiffs’ bar or if it will embrace a liability-expanding agenda and become a full-blown Judicial Hellhole®.”

2. U.S. Chamber Institute for Legal Reform: Tort Costs in America: An Empirical Analysis of Costs and Compensation of the U.S. Tort Systemestimates every state’s tort cost as a percentage of state gross domestic product and per household cost. Tort system costs in the most expensive states are up to 2.7 times larger than in the least expensive states.

Among the states with the highest tort costs per household:

1. New York ($5,408)
2. Florida ($5,065)
3. New Jersey ($5,059)
4. California ($4,599)
5. Georgia ($4,157)

Tort Costs in America was conducted by the Brattle Group on behalf of ILR and can be downloaded and viewed here.

3. U.S. Chamber Institute for Legal Reform:  Nuclear Verdicts: Trends, Causes, and Solutionsanalyzes nearly 1,400 verdicts in personal injury and wrongful death cases. The report, which looks at the trends, drivers, and types of cases leading to nuclear verdicts, found:

• Almost half of the nuclear verdicts in the report’s sample came from product liability (23.6%) and auto accident (22.8%) claims.
• Juries in state courts, rather than federal courts, produced most nuclear verdicts.
• Third party litigation funding, lawsuit advertising, and plaintiffs’ lawyers’ courtroom tactics fuel the size and frequency of nuclear verdicts.

“Nuclear verdicts have spun out of control and should concern every policymaker, business, and consumer because of the real-world impact on the price of everyday household products, services, and insurance. Moreover, nuclear verdicts can threaten the viability of a business,” said Harold Kim, president of the U.S. Chamber of Commerce Institute for Legal Reform and chief legal officer for the U.S. Chamber of Commerce, in ILR’s press release of the study. “While some might feel that a huge verdict is ‘sticking it’ to a business, the reality is that nuclear verdicts add uncertainty and layers of cost throughout our economy that we all pay and undermine the rule of law in the process.”

ABOUT NJCJI:  The New Jersey Civil Justice Institute is the State’s leading organization advocating for the business community on matters of law and legal policy.  The Institute promotes a fair and predictable civil justice system and defends the value of the rule of law in protecting innovation and fostering economic growth.

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