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New Jersey

New Jersey again appears on the Judicial Hellholes® report’s Watch List in 2023 due to ongoing concern about conditions that could increase lawsuit abuse in the state. This year, the plaintiffs’ bar continued to exercise outsized power and bipartisan influence over New Jersey’s Legislature. Also, the political balance of the New Jersey Supreme Court has shifted to the left and recent decisions by the state’s lower courts indicate a corresponding shift toward increased liability for businesses. Accordingly, ATRA will keep a watchful eye on New Jersey to see if the plaintiffs’ bar will succeed in pushing its liability-expanding agenda in the state’s legislature and courts, turning New Jersey into a full-blown Judicial Hellhole®.

The Plaintiffs’ Bar Still Wields Outsized Power And Bipartisan Influence Over New Jersey’s Legislature

New Jersey’s Senate President, Senator Nicholas Scutari, is a practicing plaintiffs’ personal injury attorney whose legislative agenda is pro-plaintiff. As the second most powerful politician in the state, Senator Scutari has leveraged his position to push pro-plaintiff policies. He works closely with influential Senator Jon Bramnick, who is also a plaintiffs’ personal injury attorney, to pursue his agenda.

Upon his ascension to Senate leadership in 2022, Senator Scutari successfully enacted legislation entitled the “New Jersey Insurance Fair Conduct Act,” which allows policyholders to bring private civil actions against their auto insurers for any “unreasonable delay or unreasonable denial of a claim for payment of [UM/UIM] benefits under an insurance policy.” This legislation did not define an “unreasonable” delay or denial, which will generate high-stakes litigation because of this legal uncertainty combined with the bill’s punitive remedies. Senator Scutari then sought to move a large package of legislation seeking to upend the state’s automobile insurance market for the benefit of the plaintiffs’ bar. Out of this package, Senator Scutari was successful in enacting a bill that will increase mandatory auto insurance coverage amounts to the highest in the nation, thereby increasing the pot of money available to plaintiffs’ attorneys in auto accident litigation and incentivizing more lawsuits.

In 2023, during the Legislature’s annual budget negotiations, the plaintiffs’ bar has sought to move legislation (A5353/S3818) seeking to impose a mandatory award of attorneys’ fees to prevailing plaintiffs in workers’ compensation cases. This mandatory award would be equal to 25 percent of any award, order for payment, or approved settlement, without any regard for the circumstances of the case or actual work performed by the plaintiff’s attorney. In short, the bill would eliminate judicial discretion to determine reasonable attorneys’ fees to be awarded to plaintiffs in these cases. The only group that stands to benefit from such legislation are plaintiffs’ attorneys.

Also in 2023, the plaintiffs’ bar has sought to move legislation (A3715/S1410) designed to protect a new litigation tactic employed by the plaintiffs’ class action bar called “mass arbitration.” Confronted with court decisions protecting individualized arbitration of consumer and employment disputes, plaintiffs’ lawyers instead file thousands of identical individual arbitrations against a defendant-business, triggering massive up-front costs for the business, which routinely agree to pay most, or all, arbitral fees. Even if the plaintiffs’ claims are meritless, the business is either pressured to settle, abandon arbitration altogether, or pay the huge, upfront fees simply to have the chance to defend itself.

To counter this tactic and preserve their contractual right to individualized arbitration, many businesses have redesigned their arbitration clauses to include a version of the “bellwether” process, which is commonly used in multidistrict litigation. Essentially, this process requires the plaintiffs and defendant to select a handful of bellwether cases to arbitrate first. Depending on the outcomes of the bellwether cases, the parties can then negotiate early settlement of all cases before the business is forced to shoulder the massive cost of arbitration fees. A3715/S1410 seeks to outright prohibit inclusion of this bellwether process in arbitration clauses, so that plaintiffs’ lawyers can continue to exploit businesses’ agreements to pay arbitration fees to force massive settlements.

Unfortunately, Governor Phil Murphy, does not serve as a reliable check on the plaintiffs’ bar’s power and influence over New Jersey’s legislature. Governor Murphy is a strong progressive, who has shown no interest in civil justice reform. Indeed, Governor Murphy has signed numerous liability-expanding bills during both his first and second terms, and his Attorney General has supported the plaintiffs’ bar’s positions in important court cases by appearing as amicus curiae.

New Jersey’s Courts Take Aim at Businesses

Recent decisions from New Jersey’s trial and intermediate courts reflect a growing trend towards the expansion of business liability. In what has proven to be a continuing pattern, these courts have pushed the boundaries of statutory and case law in favor of consumers. Among other things, New Jersey’s lower courts have invalidated standalone class action waivers as a matter of public policy, rejected the business community’s attempts to effectively manage mass arbitration, and expanded available remedies under New Jersey’s Consumer Fraud Act.

Notably, in September 2023, the judge presiding over the mass-tort talc litigation involving Johnson & Johnson issued case management orders consolidating dozens of plaintiffs’ cases for discovery and trial. As a result, rather than address individual plaintiffs’ claims in separate actions, Johnson & Johnson will have to face the allegations of batches of unrelated plaintiffs in consolidated trials. This “batch-and-blend” approach to trials permits plaintiffs’ attorneys to hide the deficiencies in individual litigant’s claims. Plaintiffs’ attorneys can highlight certain helpful aspects from each plaintiff’s case—ignoring their individual deficiencies—to build a case around a composite “perfect plaintiff.” Studies have shown that the “batch-and-blend” approach typically yields higher recoveries against defendants by blurring the line between individual claims and incensing juries. Contrary to the time-honored principle that each individual litigant’s claim should rise and fall on its own merit, the consolidation approach adopted by the trial court in the talc litigation threatens to distort justice by stacking the deck against defendants.

Anti-business sentiment in the lower courts is concerning against the backdrop of a changing New Jersey Supreme Court. New Jersey recently added several young justices to its Supreme Court. Indeed, by the end of Governor Murphy’s second term, he will have appointed five of the seven justices who sit on the Court and titled the political balance of the court to the left. If these new justices are reappointed after their initial seven-year terms, they will serve until the mandatory retirement age of seventy (70) years old, and thereby have a longstanding impact on New Jersey law and public policy.

Governor Murphy’s most recent appointee to the Supreme Court, Justice Michael Noriega, has ties to the plaintiffs’ bar. Justice Noriega joined the Court on July 6, 2023, filling the seat previously occupied by Justice Barry T. Albin. Prior to his appointment to the Court, Justice Noriega was a law partner of Senator Jon Bramnick, a prominent New Jersey plaintiffs’ personal injury lawyer.