Marcus Rayner • Executive Director, NJLRA
NJLRA supports A-2473
Good afternoon. My name is Marcus Rayner and I am the executive director of the New Jersey Lawsuit Reform Alliance (NJLRA). I would like to thank you Chairwoman Pou and the committee for holding this hearing today on Assembly bill 2473 and for the opportunity to appear before you.
In this economy I know that both the legislative and executive branches are all looking for ways to create jobs and encourage economic growth, but that daunting budget deficits and diminishing tax revenues limits policy options.
When the state’s leading employers formed NJLRA in 2007, our economy was still relatively strong. New Jersey was then, and is now, a target for abusive lawsuits. Our economy is much more challenging today, and the rise in abusive lawsuits experienced by our business community has only made matters worse.
Civil justice reform is a cost-free way for the Legislature to help businesses create economic growth. A2473 helps to protect businesses in NJ from abusive litigation while ensuring justice for plaintiffs.
In today’s increasingly litigious society, the reality is that a business or individual can be sued for almost anything. On average, the size of judgments has increased significantly. The current appeal bond statute did not anticipate the difficulty that businesses, both large and small, would have in obtaining the financing needed to exercise their right to appeal in a challenging economy.
Appeal bond statutes were originally developed in the 19th Century. They were designed to prevent defendants from dissolving their assets so plaintiffs wouldn’t be able to collect their judgments. At the time of their creation, multi-million dollar verdicts were rare. Today, they are routine.
For a business which can’t obtain the financing it needs to post a bond, it is denied the right to appeal by default. Its only other option is to file for bankruptcy. The cost of proceeding with litigation is unattainable for many defendants, even if they have a strong case warranting appellate review, and it increases the pressure on businesses to settle frivolous claims and risk damage to their own reputation, rather than to seek justice in court.
New Jersey is a particularly bad place in which to get sued. We are among a minority of states which do not cap appeal bonds for all industries. Twenty seven states (and Puerto Rico) have either no bonding requirement or have enacted appeal bond caps that cover all defendants. Of the remaining 23 states, 11 (including New Jersey) have passed legislation capping appeal bond amounts for signatories to the Master Settlement (tobacco companies).
The fear of being sued is one of the biggest barriers to entrepreneurship in New Jersey. High tech, bio-tech, and research-based companies, as well as small businesses and professional firms are all major drivers of economic growth in New Jersey, and they are the most vulnerable under the existing statute. Justice should not be denied to businesses and service providers which do not own large facilities or possess hard assets against which a bond can be leveraged.
The resources a business must use to finance a bond throughout the appellate process for the duration of an appeal are lost and never recovered, even if the business is ultimately successful. These are funds which could have been used for additional innovation, expansion, and job creation.
A $50 million bond cap has been in New Jersey for some time, but it is only available to tobacco companies. Extending this cap to all industries would shield companies from having to prepay court fees before seeking an appeal. It sends the message that New Jersey is open for business, and it allows the courts the opportunity to review legitimate appeals for a broader scope of industries.
Thank you again for the opportunity to appear before you today. I look forward to your support of A2473.
