A Spotlight on New Hampshire. A Spotlight on Tort Reform
A beer manufacturer is sued for $10,000 because beautiful women didn’t appear in a tropical setting when a man drank their beer. A TV station is sued for $1,000 when it predicted fair weather on a day that it rained. Frivolous civil litigation has become an American addiction – one that strain’s business’s bottom lines and hinders our country’s economic growth.
America faces a rising unemployment rate, crippling debt, and crawling private-sector growth. Today, 45 percent of jobless workers (6.2 million Americans) have been unemployed for more than six months – a higher portion than during the Great Depression. Shackled by government regulations and vulnerable to lawsuits that can cost them their business, job creators are discouraged from expanding, significantly stunting economic recovery.
At $255 billion or nearly 2 percent of the U.S. GDP (more than twice as much as any other industrialized nation as a percent of the GDP), America has the most expensive civil justice system in the world. Unfortunately, small businesses – the engines of our economy and the creators of 64 percent of American jobs – are often the target of frivolous lawsuits. In fact, small businesses paid 81 percent of business tort liability costs in 2008 – a portion of money these growing companies could have otherwise spent on product development or new job creation.
Lawsuit abuse is a serious issue in this country, costing the average American family $3,352 annually, as well as threatening the survival of job creators, hampering economic recovery, and undermining our legal system. Recently, Texas took a dramatic step towards eliminating the threat of frivolous lawsuits on Lone Star State businesses fighting against trial lawyers and enacting a landmark “loser-pay” tort reform bill. Prior to the legislation, litigants faced a no-lose situation, while defendants stood to lose everything – even for the most outrageous, bizarre, and wrongful accusations.
Under the state’s new law, however, litigants will be forced to pay for the defendant’s attorney fees, if the case is deemed frivolous, compelling litigants to consider the practicality of their complaint before taking legal action, as well as protecting defendants from the dire financial impacts of groundless lawsuits.
Softening the threat of frivolous lawsuits drives business and sparks economic activity. In 2003, for instance, Texas applied limits to non-economic damages in medical malpractice cases – another example of the state’s leadership on tort reform. As a result, the number of doctors applying to practice in the Lone Star State has improved by 60 percent. The same can be expected of businesses that no longer have to fear the financial impacts of civil lawsuit abuse.
Texas, led by Gov. Rick Perry, is blazing an important trail for other states (including South Carolina, Pennsylvania, Florida, Oklahoma and Alabama which all have governors who campaigned and won with pro-legal-reform agendas) as well as for presidential candidates who are running on pro-economic-growth platforms.
Tonight, presidential hopefuls will join in New Hampshire to debate the direction they would like to take our nation and tort reform should be included in that discussion. The country will be looking toward New Hampshire over the coming months, and we, in turn, must point to the issues that threaten our damaged economy. Groundless lawsuits cost billions of dollars, and cost American jobs.
We can’t afford to allow trial lawyers to dictate the speed or success of economic recovery efforts. Tort reform must be pulled into the national spotlight, and New Hampshire’s presidential debate is the place to do that.
Mr. DeMaura is the former Executive Director of the New Hampshire Republican Party and the president of Americans for Job Security.