Survey: N.J. liability laws are a problem

John O'Brien Oct. 12, 2010, 2:00pm


TRENTON, N.J. (Legal Newsline) - New Jersey's small business owners say the state's liability laws are giving it a bad name.

Seventy percent of small business owners surveyed by Monmouth University said state laws make New Jersey a less attractive area to do business than other states, the New Jersey Lawsuit Reform Alliance announced Thursday.

"Seven-in-ten small business owners now fear New Jersey's culture of litigation, and with good reason," said Marcus Rayner, executive director of NJLRA.

"Our Consumer Fraud Act is abused to the point where a customer can sue before asking for a refund. This shows that things have gone far beyond 'the customer is always right.' Small businesses are falling victim to a legal loopholes and sacrificing jobs, innovation and economic growth in the process."

New Jersey's reputation took a hit this year when a Pacific Research Institute study ranked the state's as the most worrisome tort system. The study was based on plaintiff awards and settlements, the amount of lawsuits, tort rules and reforms, venue reforms and judicial-selection reforms.

New Jersey also popped up on the American Tort Reform Foundation's Judicial Hellholes report late last year. The report singled out Atlantic County.

The Monmouth survey showed that 1 in 5 small businesses have faced a lawsuit brought by a client or customer in the past five years, and one-third think it is more likely than not that they will be sued in the next five.

Ninety-two percent said misunderstandings are taken to court too quickly, and liability insurance increased for at least 55 percent of small businesses in the past five years.

The survey also determined 45 pecent of the small business owners who were sued limited plans for expansion, and one-third decided to discontinue products or services, layoff employees or cut employee hours.

Assemblywoman Amy Handlin (R-Monmouth) said, "New Jersey consumers are the ultimate victims of this overly litigious culture. When any businessperson can be dragged into court on any day, for virtually any reason, it chokes off innovation, expansion and competition."

The study was conducted by the Monmouth University Polling Institute and interviewed owners and senior operators of small businesses (2 - 50 employees) in New Jersey in July.

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