By Leslie Kwoh | The Star Ledger
Three in 10 business owners have either been sued or threatened with a lawsuit in the last five years, and another one in three predict they will be taken to court in the next five years, according to a study by the Monmouth University Polling Institute.
“A lawsuit can literally destroy a small business overnight,” said Marcus Rayner, executive director of the New Jersey Lawsuit Reform Alliance, which commissioned the report.
The survey, which polled 405 business owners in July, also found that seven in 10 respondents consider the state’s liability laws problematic, and slightly more than half feel the laws favor consumers over businesses. Eight in 10 said it was too easy to sue in New Jersey.
The alliance, which represents the state Chamber of Commerce and about 50 other professional associations and employers, used the survey yesterday to advocate for tort reform to improve the state’s competitiveness.
In the half-century since the state passed the Consumer Fraud Act, the legislation has been broadened to target not just scam artists, but also well-meaning businesses, Rayner said. Meanwhile, other states such as Texas, California, Mississippi and Oklahoma, have made significant reforms to their civil justice laws, he said.
“It’s a powerful law and should be used to protect consumers from businesses who are truly trying to defraud people,” he said. “But now, it can be used to punish all sorts of businesses.”
Just last year, the Supreme Court ruled in favor of a Morris County woman who sued a car dealership – without first approaching the company for a refund – for overcharging her by $40. That ruling effectively gives consumers the power to sue businesses without giving them a chance to first make amends, Rayner said.
While the state does not provide a breakdown of consumer lawsuits, the total number of civil lawsuits – which include personal injury, negligence, malpractice and product liability – was 103,728 for the year ending in July, a 5 percent increase over the previous year, according to the state Judiciary.
Consumers also filed 18,000 complaints with the Attorney General’s Office last year, officials said.
Consumer abuse of liability laws can take a huge financial toll on businesses, the survey found. Of those businesses that had been sued, 85 percent said they had to retain an attorney, one-third had to lay off workers and another one-third had to discontinue products or services. One in six considered closing down entirely.