New Jersey’s Lawsuit Climate Ranked Among Nation’s Worst

The Garden State Fell to Its Lowest Rank Ever

September 18, 2019

WASHINGTON, D.C.—New Jersey’s lawsuit climate ranks 43rd out of 50 in a new national survey released today by the U.S. Chamber Institute for Legal Reform (ILR). This ranking is the lowest ever for the Garden State since the survey’s inception in 2002.

The 2019 Lawsuit Climate Survey: Ranking the States, conducted by renowned polling firm The Harris Poll on behalf of the U.S. Chamber Institute for Legal Reform, questioned senior business executives about the fairness and reasonableness of state court systems.

Reasons for New Jersey’s ranking likely include the new lawsuit-expanding laws passed by the state’s legislature, including expanding liability for employers on an array of issues.
The state’s low ranking comes at a time when a record-high 89 percent of survey participants said a state’s lawsuit environment is likely to impact their company’s decision about where to locate or do business.

“For years, New Jersey’s lawsuit climate has been in a downward spiral,” said Harold Kim, chief operating officer of the U.S. Chamber Institute for Legal Reform. “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 legislature has enacted various bills that will result in more lawsuits and more money going to plaintiffs’ lawyers.

It passed the most sweeping and expansive equal pay law in the U.S., shifting the burden to employers to justify pay differentials across entirely different jobs, and opening up every company to liability for years of backpay, triple damages, and punitive damages.

It also passed so-called workers’ comp reforms that will take money out of   injured workers’ pockets, giving trial lawyers a share of all compensation offered, regardless of whether any legal work was even done.

Additionally, the legislature passed a bill that bans employers and employees from using arbitration to resolve their disputes.

The state’s pro-lawsuit reputation means Garden State residents have some of the highest tort costs in the country—a whopping $5,551 per household or 3.1 percent of its GDP, according to another ILR study. That is almost double the national average of $3,239 per household and 2.3 percent of U.S. GDP.

Fortunately, New Jersey’s Supreme Court has acted as a safeguard against the trial bar by adopting the sound, and widely used, Daubert standard to keep junk science out of the courtroom. It also now requires out-of-state plaintiffs to show they actually suffered harm before they can bring a lawsuit.

“The New Jersey Supreme Court’s reasonable jurisprudence could be the only thing standing between the state and #50,” explained Kim. “But it’s not enough. New Jersey must take its low lawsuit climate ranking seriously in order to avoid a business exodus.”

The 2019 Lawsuit Climate Survey: Ranking the States is the 12th time The Harris Poll has conducted the survey since 2002 for the U.S. Chamber Institute for Legal Reform. The final results are based on interviews with a national sample of 1,307 in-house general counsel, senior litigators or attorneys, and other senior executives who are knowledgeable about litigation matters at public and private companies with annual revenue of at least $100 million.

About the U.S. Chamber Institute for Legal Reform

ILR seeks to promote legal reform through legislative, political, judicial and educational activities at the national, state and local levels.

About the U.S. Chamber of Commerce

The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.

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