By Marcus Rayner | The Daily Record
If you are a New Jersey resident, there is a good chance that you know someone who is employed by one of the 24 pharmaceutical and medical technology companies which have crowned us the nation’s medicine chest. Some 51,000 residents earn their livelihood at one of these entities, which produce everything from life-saving drugs to baby shampoo. Another 70,000 New Jersey residents collect paychecks from the industry through service contracts.
Our status as the nation’s medicine chest has roots in this area stemming as far back as the Industrial Revolution. Since then, New Jersey’s highly-skilled workforce, transportation hubs, and infrastructure have captured the industry in a natural embrace: the medicine chest companies and their offspring had an economic impact of $24.2 billion in 2010 alone.
But as impressive and critical as the industry’s economic reach is in New Jersey and beyond, the medicine chest’s success has made it a target for excessive litigation in its own backyard. And large amounts of capital which could be invested in New Jersey’s economy and product innovation end up being diverted to legal expenses as a result.
Unlike many states, New Jersey’s civil justice system readily permits lawyers to sue in our courts on behalf of individuals, irrespective of their state of residency. And when it’s your state’s economic engine under assault, all of us in the Garden State have a problem. Only seven out of every 100 plaintiffs in class action lawsuits against the industry is a New Jersey resident. To put this in perspective, allowing consumers from across the nation to use New Jersey’s antiquated laws to undermine its signature industry would be akin to California permitting residents of the other 49 states to cripple Silicon Valley through the courts. This practice is a disincentive for all employers to remain in New Jersey, which is why many competing states do not permit their civil courts to be used in this manner.
But as savvy attorneys have discovered, New Jersey is an infamous outlier. And as such, the phenomenon known as “litigation tourism” has begun to erode the Garden State’s life science dominance as companies restructure and retreat to greener pastures.
In addition, New Jersey’s courts take a liberal approach to what may be considered expertise. Enterprising lawyers across the country are discovering this and filing complex cases in New Jersey at a worrisome pace. And unsurprisingly, a domino effect of high-priced litigation has ensued, and most of the medicine chest companies find themselves embroiled in litigation at a time when our economy needs their investment.
The litigation tourism phenomenon came to a critical point in 2007, when the industry joined forces with nonprofits and others who experience the worst of New Jersey’s civil justice statutes. The New Jersey Lawsuit Reform Alliance, as they are now called, found that nearly 9 out of 10 of New Jersey’s small employers want the state Legislature to make reforming our civil justice laws a priority. What affects the life sciences industry has a ripple effect in New Jersey’s economy: the $161 in charitable gifts the industry bestows on the Garden State each year become endangered with every exploitation of the law. These gifts have already declined by nearly 50 percent in just one year. And most critically, a jeopardized three-quarters of a billion dollars in taxes the industry pays to New Jersey is a revenue source that can’t easily be filled.
Our life sciences industry is the Garden State’s economic contribution to the United States and our scientific gift to the world. New Jersey may still have the highly skilled workforce, transportation hubs, and infrastructure needed to house this key economic engine. But if we fail to amend laws which attract litigants from across the nation into our courtrooms to sue our largest employers, we will be inviting them to expand elsewhere.
It’s time to close the legal loopholes which have tested this relationship, reaffirm our commitment to New Jersey’s economic well-being, and give the industry the incentive to create jobs once again instead of shed them. More than 120,000 New Jersey residents and their families are depending on it.
New Jersey Lawsuit Reform Alliance