- - Friday, September 14, 2012


Politically, California and Texas are worlds apart. Despite their blue state, red state ideological differences, the residents within those states share the common goals of robust job creation and a vibrant economy. The stories of these two states, however, are remarkably different.

While lawsuit reforms have played a key role in Texas’ economic boom, California, which has failed to pass such reforms, remains mired in the economic doldrums with consistently high unemployment and tepid job creation. The economic dichotomy that exists between these states can be bridged by eliminating partisan politics from the equation. For too long, legal reform has been viewed through a Democrat vs. Republican prism. In fact, it’s an economic issue.

The good news is that in the midst of the political knuckle-dragging, when it comes to lawsuit reforms, Americans get it. The American Tort Reform Association and Sick of Lawsuits recently conducted a national survey that found 9 in 10 Americans think lawsuit abuse is a problem. Moreover, 73 percent of Americans — across the political spectrum — are more likely to vote for a candidate for public office who supports lawsuit reform.

As small-business owners from very different parts of the country, we have seen firsthand how legal reform can provide a boost to the economy and how the lack of legal reform can hinder economic growth. Texas once had the biggest lawsuit-abuse problem in the country. Aggressive personal-injury trial lawyers played the courts like a litigation lottery. Businesses, including medical practices, were crushed by the costs of excessive litigation, and many simply stayed away, costing the state jobs and economic growth.

In response, Texas passed several significant legal reforms to introduce common sense into the civil justice system. Those reforms have helped the state create and retain jobs, enabled small-business employers to prosper and improved access to health care. According to a report by the Perryman Group examining Texas’ economy between 1995 and 2008, approximately 8.5 percent of Texas’ economic growth and the creation of 499,000 permanent jobs are the result of lawsuit reform.

Conversely, California’s story paints a vastly different picture. For decades, its leaders consistently have pursued policies that promote excessive litigation, making California one of the most litigious states in the nation. Those policies create obstacles for the new and small businesses that drive California’s economy, and they have allowed abusive lawsuits to delay or end several development projects that would create jobs. Consequently, California’s unemployment rate is more than two full points higher than the national average.

The effect of the two states’ legal climates was laid bare last year when CKE Restaurants, which owns the Carl’s Jr. franchise, declared the company was planning to move its headquarters from California to Texas. What’s more, the company halted construction of new restaurants in California but is expanding aggressively in Texas. When asked why, the CEO specifically cited California’s laws encouraging lawsuits against private businesses.

You would be hard-pressed to find two more politically opposite states. Yet voters on both sides of the aisle, including in blue California, recognize that legal reform will help to improve the economy and stand ready to support candidates who agree. With growing discontent over our nation’s economic woes, we need to create jobs, not lawsuits. Candidates for local, state and national office would be wise to listen to the voters and make legal reform a central part of their economic message.

Chip Hough is vice chairman of Citizens Against Lawsuit Abuse of Central Texas and managing partner of Basic Industries of South Texas. David Houston is owner of Barney’s Beanery in Los Angeles and co-chairman of California Citizens Against Lawsuit Abuse.



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