NJ Business Matters: The Blog of the CIANJ

We Promise Not To Use The Words "Lock Box"

The State Treasurer has just given the legislature somewhat-surprising news - the state now expects to take in about $533 million more in revenue that was originally anticipated. However, the news came with a signal from the Corzine Administration that we here at CIANJ applaud,

"As the governor has said since February, we are at a turning point," state Treasurer David Rousseau told the Senate Budget and Appropriations Committee. "The time has come for us, together, to say: no more."

The short term increase to the State Treasury does not eliminate New Jersey's long-term budgetary issues, such as debt, pension and benefit obligations and an expected decrease in tax receipts next year. The Governor's original budget message was one that began New Jersey on the road to fiscal sanity. Today's news does not change that, and does not lessen the imperative that the legislature deliver a budget that does not increase spending over last year.

Open to Trade, Open for Business

US Commerce Secretary Carlos Gutierrez and California Governor Arnold Schwarzenegger use the op-ed page of today's Wall Street Journal to make the case for free trade, and to chide Congress for their inability and downright unwillingness to further open foreign markets to American products.

Free trade has been under assault from political leadership, and the assault has become even more hostile in a federal election year. Unfortunately, if political posturing were to become public policy,

In every state of the union, such a retreat would be disastrous for jobs, economic growth and consumer choice. Nowhere is this more clear than here in Torrance, Calif., where today we are visiting a Hitachi plant that remanufactures auto parts. This "foreign" company employs 16,000 Americans -- 8,000 in California alone -- and is just one of hundreds of overseas firms that invest directly in the U.S. From where we're standing, what America needs is more openness here and abroad -- not less.

"But what about American manufacturing?" one might ask. "What about American exports?" Even at a time when our economy has slowed, U.S. exports are booming. In 2007, we saw a record $1.6 trillion in exports, up 12.6% from the prior year. And exports are growing even faster in 2008. In the first quarter of this year, export growth is up nearly 18% from the same period last year. Nearly a third of all U.S. agricultural products and more than 20% of the goods we manufacture were exported last year. Indeed, exports have been a kind of silent stimulus over the past year, helping even a slowing economy stay in the black.

In economic downturns, the global economy can help keep American companies profitable. This in turn, keeps American workers employed. That logic does not disintegrate because this is an even-numbered year.

What's next...

Thank you to NJ Business Matters for welcoming us as a guest blogger this week.  For more information about the New Jersey Lawsuit Reform Alliance (NJLRA) and civil justice issues in New Jersey, please visit www.njlra.org often.  To join our mailing list, please visit http://www.njlra.org/join.html.

What's next for NJLRA?  We are going to continue to look at the growing problem of out-of-state plaintiffs coming into New Jersey to sue our companies and we will seek to educate our elected officials about how our laws can be reformed to be more in-line with those of other states.  We will soon be working to have several pieces of legislation introduced to accomplish this and will let you know more about them when they are pending in the legislature.

We will also continue to monitor the courts for opportunities to weigh in with amicus briefs that share the business community's perspective with our judges.  If you are involved in a case or know of one where NJLRA can be helpful, please contact us.

We hope you will consider NJLRA a resource for your business about litigation matters and we will continue to work closely with CIANJ to represent the business community in our courts and in the New Jersey Legislature.

Economic Growth Committee Passes School Choice Legislation

Earlier today, the Senate Economic Growth Committee voted to pass S-1607, the Urban Enterprise Zone Jobs Scholarship Act. The bill, long-supported by CIANJ, would allow corporations to make tax-deductible contributions to scholarship organizations. The dollars would be used by children in Newark, Camden, Trenton, Elizabeth, Lakewood, Paterson, Orange and (as of this morning) Jersey City to attend participating public or non-public schools of a student's choice.

Regular blog readers already know our reasons for support by heart. For the rest of you, here's a link to our press release and here's a link to the testimony of your friendly blogger.

Now for some mythbusting...here are the top three myths we heard perpetuated at this morning's hearing.

• Myth one: S-1706 will divert money from public schools

No it won't. Here is a link to the bill. Read it from cover to cover and you will find nothing that says the tax credit money will be taken from public school funding. In fact, many urban schools are held harmless under the new school funding formula for three years, even as they lose population.

• Myth two: This five-year pilot program would drain $360 million from the State Treasury at a time when public schools are already struggling for adequate resources. The Legislature would almost certainly cut funding for public schools by $360 million to pay for this program.

Again, that is not in the bill language. To believe that adding $24 million in education investments in year one would somehow result in draining public schools of money is to speculate about what the legislature will do down the road and act as though it is fact. Also, not all students in the program will attend private schools. The intent of this legislation is to give children in failing schools a choice as to where they get their education.

• Myth Three: New Jersey cannot afford this program

This bill is an example of New Jersey spending money to save it. Private schools in New Jersey's urban centers are closing, and as each one closes its students move into public schools. The pilot districts have some of the highest per-pupil spending in the nation! That does not include the potential need for new school construction. In a state that spends about $24 billion in education, this $24 million investment in year one would represent 0.012% of overall spending. Keeping private schools open saves taxpayer dollars and helps boost student achievement.

Those voting YES were the bill sponsor, Senator Raymond Lesniak (D-20), Senator Joseph Kyrillos (R-13), and Senator Stephen Oroho (R-24). CIANJ thanks them for their support, despite enormous pressure from the teachers' lobby. Senator Teresa Ruiz (D-29) voted NO.

Same leopard, different spots.

NJ Lawyer magazine published a story last week ("Perhaps a new name for ATLA?" May 2,2008 by Dana Sullivan) informing us that ATLA-NJ, the American Trial Lawyers Association, New Jersey chapter, plans to change its name to the New Jersey Association for Justice.  This follows a name change at the national level to the "American Justice Association" and changes at the state level in several states, including Michigan, Ohio, Pennsylvania and Florida.

NJ Lawyer reports:

Members are expected to vote on the name change in October.

"This has nothing to do with our not being proud of our being trial lawyers," said Amos Gern, ATLA-NJ president, during the organization's annual Boardwalk Seminar on Thursday in Atlantic City.

Two years ago, the national organization changed its name to American Association for Justice (AAJ), and Gern acknowledged the change was made for public-relations reasons. So now the local unit is preparing to follow suit and eliminate "trial attorneys" from its name.

Despite Mr. Gern's protests, it seems clear that this change is a nationally coordinated effort to hide the fact that these groups work to promote the interests of plaintiffs attorneys, not justice.  This Orwellian strategy will not change the public's mind about abusive litigation, however. 

Tell us your story...

Have you or your company been the victim of lawsuit abuse?  If so, the New Jersey Lawsuit Reform Alliance (NJLRA) wants to hear your story.

NJLRA is collecting stories of lawsuit abuse from around New Jersey and from all industries so that we can share them with legislators, jurists and decision makers.  Data and state rankings are powerful, important facts that help us inform our leaders about the problems in New Jersey's civil justice system.  But sometimes they need to hear an anecdote about how a lawsuit destroyed a business or racked up millions in attorneys fees without helping a consumer.

So please tell us your lawsuit abuse story today.  Simply go to http://www.njlra.org/html/index.html now and click "Share your story." 

Thank you.

The Plaintiffs are coming...

The New Jersey Lawsuit Reform Alliance (NJLRA) has joined with the NJ Business and Industry Association and the Healthcare Institute of NJ to submit a friend of the court briefing to the NJ Superior Court's Appellate Division in Briest v. Wyeth.

The plaintiffs, Laura and Robert Briest, have lived in Virginia their whole lives. In 1998 and 1999 Mrs. Briest was prescribed and took (in Virginia) Premphase, a hormone replacement drug manufactured by Wyeth. In 1999 she was diagnosed with breast cancer. In 2004, nearly five years after she stopped taking the drug and after her diagnosis with breast cancer, Mrs. Briest sued Wyeth under New Jersey's Product Liability Act, arguing that the premphase caused her breast cancer.

Why did this Virginia resident and her husband sue in New Jersey?

Virginia's statute of limitations does not allow her to bring suit more than two years after the date of her injury and would not allow the suit. Because Wyeth is headquartered in New Jersey, the Briests and their lawyers decided to take advantage of NJ's more permissive statute of limitations and bring suit here, arguing that since Wyeth is headquartered in NJ the State has a vested interest in the case. The trial court allowed the suit, and Wyeth has appealed.

This ruling creates an uneven playing field for New Jersey companies that hurts New Jersey's economic competitiveness. The result of this ruling is that New Jersey companies will now face suit under the worst of either of two states' laws, whichever is more favorable to the plaintiff. Should everyone who wants to sue Ford be able to choose which law, Michigan's or their own state's, is better for them? Since companies like Ford and Wyeth do business in all 50 states (and many countries), it makes more sense that the laws of the state where the transaction occurred should be applied.

Is it any wonder that today an estimated 93% of pharmaceutical mass torts in New Jersey are brought by out-of-state plaintiffs? Unfortunately our laws are more favorable to plaintiffs than those of many other states and - even more unfortunately - many of our courts are allowing people from around the nation to sue under them.

Meanwhile, New Jersey consumers - and taxpayers - are forced to wait in line behind plaintiffs from other states who are eager to cash in on a suit against our compananies. New Jersey courts should serve New Jersey residents and our businesses, not plaintiffs from around the nation seeking to sue our companies.

Stay tuned for the results of this appeal.

Encouraging Economic Growth...Everywhere

Last year, CIANJ supported legislation designed to spur investment in New Jersey's cities. The Urban Hub Transit Act, which passed and was signed by Governor Corzine, offers a 10% tax credit on the Corporate Business Tax (CBT) per year for ten years if a company makes a substantial investment and brings jobs to within 1/2 mile of a rail station in nine cities. The bill's intent is to encourage the use of mass transit and be used as a tool for economic development.

While the bill was worthwhile, Sen. Tom Kean, Jr. has introduced legislation to make it more expansive. S-1466 would make companies eligible for the tax credit if they make a capital investment of $75 million and create new jobs within 1/2 mile of a rail station in any municipality. As the Senator notes in today's Record,

"If it's good for one community, it should be good for every community," he said. "If we are trying to encourage growth within New Jersey, we are trying to encourage the use of mass transit, let's create growth or opportunities for growth in areas that already have mass transit available."

Happy Tax Freedom Day

Congratulations New Jersey, today is Tax Freedom Day for the Garden State.

Each year the Tax Foundation estimates the number of days per year an individual must work to pay their federal, state and local tax burden. The average number of days for America was 113, based on an individual paying just over 30% of their overall income in taxes. On average, the country worked until April 23 to pay their tax liability. In New Jersey, we celebrate a bit later.

Now you can begin to move on to things like food, clothing, shelter...and profit.

The full Tax Freedom Day study is available here.

It's not always about the consumer

Last week in New Jersey Superior Court (in Atlantic County, no less) a NJ woman, Lauren Coyle, filed a class action lawsuit against AriZona Iced Tea and its parent companies alleging that they are illegally marketing their product as "100% natural" when in fact the product contains high fructose corn syrup.  She is seeking damages for herself and everyone in NJ who purchased an AriZona iced tea in the past six years.

What, specifically, is she seeking? Aside from attorney's fees (bingo) and a court order preventing AriZona from marketing its product as "100% natural," she is seeking to be reimbursed for the difference between a premium, i.e. "100% natural," beverage and an ordinary one. What is that, about 25 cents?

As with many class action suits brought under the New Jersey Consumer Fraud Act (CFA), the only people who will benefit from this suit are the lawyers, who will run up enormous fees in discovery and trial costs. The average consumer who is alleged to have been defrauded will see little, if any compensation.

The CFA was designed to allow individual consumers who have been defrauded by a business or sold a defective or harmful product to seek compensation. The fact that Ms. Coyle and her lawyers think that they can benefit from this suit exposes just how far our law and our courts have strayed from these ideas. Ms. Coyle could have simply turned the bottle around, read the ingredients and found high fructose corn syrup among them, and returned her iced tea to the store. Or she could have asked the company for her money back. Instead, consumers who have truly been harmed will now wait in line behind Ms. Coyle and the millions of people who purchased AriZona Iced Tea during the past six years while the court sorts this out.

Her lawyers now stand to make a lot of money. Ms. Coyle, barring punitive damages, might take home tens of dollars. The rest of us will get a coupon.