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Atlantic County, New Jersey

New Jersey is home to two major industries: the one that manufactures life-saving prescription drugs, and the one that relentlessly sues those manufacturers. At the heart of the litigation industry’s business plan is Atlantic County’s Pleasantville, a town of 19,000 people near Atlantic City, where more lawsuits have been filed against pharmaceutical companies than anywhere else in the country. According to one economist, “Personal injury lawyers have learned that judges and juries in Pleasantville are more likely to rule in their favor. They flock there from across the country as litigation tourists, even though often neither plaintiff nor defendant is from the town.” And the state’s expansive, abuse-prone Consumer Fraud Act also helps drive this pernicious, economy-eroding form of litigation tourism. In fact, the New Jersey Law Journal reported in November 2010 that an estimated 93% of pending mass-tort cases in New Jersey are filed by plaintiffs who live elsewhere and have no connection to New Jersey.

For example, an Atlantic County court this past year awarded an Alabama man more than $25 million in damages against New Jersey based Roche – roughly 10 times the $2.6 million verdict the man received in 2007 before an appellate court overturned it. This recent verdict is the largest involving Accutane to date. The man claimed that the manufacturer did not adequately warn that inflammatory bowel disease is a potential side effect. More recently, an appellate court reversed a $10.5 million Atlantic County verdict in an Accutane case, finding that the judge did not provide Roche with a “full and fair opportunity” to present evidence that “could have potentially and reasonably led a jury to reach a different verdict.”

Excessive liability leads manufacturers to remove beneficial products from the market. While generic versions remain available, the high cost of defending against lawsuits contributed to Roche’s decision to discontinue Accutane in June 2009. Emboldened by large verdicts, favorable New Jersey law, and a welcoming court, plaintiffs’ lawyers from all over the country filed 400 Accutane suits in New Jersey in just two months, bringing the total pending in the state to 1,600. That’s about one quarter of the total cases nationwide.

It’s not just the pharmaceutical industry that risks being crowded out by weed-like litigation in the Garden State. A report by the Monmouth University Polling Institute, commissioned by the New Jersey Lawsuit Reform Alliance, found that 7 in 10 of the state’s small business owners believe state liability laws make New Jersey less attractive for businesses than other states. Meanwhile, 1 in 5 small business owners reported being sued by a client or customer in the past five years. Those who faced lawsuits were forced to limit expansion plans, discontinue products or services, layoff employees, cut employee hours, or raise prices. Sixty-five percent of these small businessmen and women also reported increases in liability insurance during the past five years.

Similarly, physicians also view themselves at risk due to their liability exposure in New Jersey, and some have left the state. A New Jersey Supreme Court decision gutting a law that weeded out meritless lawsuits by requiring plaintiffs’ lawyers to file affidavits of merit from three different doctors certified in the same field supporting a claim, adds to this anxiety. Unless the state takes action, many more doctors are expected to leave, limiting the availability of medical care for residents.

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