New York State businesses consider the state's civil justice system a major impediment to competitiveness because it drives up costs and stifles innovation, a new survey of Business Council members shows.
"The need for tort reform has never been more important to businesses and their ability to compete in New York," said Brian McMahon, director of manufacturing and economic development for The Business Council.
"The threat of frivolous lawsuits and fear of unfair penalties drives up costs of products and services and makes companies less likely to assume liability risks associated with innovation," he added. "This is bad for all New Yorkers."
The survey of 107 Business Council members showed the following:
- 65 percent of respondents said that the civil liability system had a very or moderately negative impact on their ability to do business in New York State.
- 68 percent said that the threat of liability litigation stifles innovation and product development either significantly or somewhat.
- 53 percent said that the threat of liability lawsuits hurts their ability to hold down costs of products and services.
- 65 percent of respondents said that their costs of liability insurance have increased in the last five years, with an average increase among these respondents of 21 percent.
Respondents urged the state to make several essential tort reforms: repealing joint and several liability; capping non-economic damages; repealing strict liability for contractors/employers; and creating a statute of repose.
Under joint and several liability, any defendant in a multi-defendant lawsuit can be forced to pay full damages - even if that defendant's liability is only 1 percent of total liability.
Under strict liability, a contractor is fully liable for any employee's worksite injury regardless of contributory negligence on the employee's part.
A statute of repose would limit a manufacturer's liability for damages attributable to the manufacturer's product to a specified period of time after the product leaves the manufacturer's control unless there is an express warranty to the contrary.
Currently, manufacturers' liability never expires, regardless of how many times the product has been re-sold or modified.
"Some machining companies have proprietors who are still liable for products made by their grandfathers," McMahon said. "This is patently unfair."