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Meaux: Lawsuit reform works in Texas, but there’s reason for concern

By June 30, 2014No Comments

Via the Austin American Statesman

By Hazel Meaux – Special to the American-Statesman

Texas’ economic prowess is common knowledge. We’re a beacon state for business investment and job creation, a credential recently burnished again by Chief Executive Magazine.

For 10 years, America’s CEOs have graded states on their business climate, considering a wide range of concerns from regulatory issues, tort reform, work force, public health and cost of living. Texas was recently named the best state for business for the 10th straight year.

It should come as no surprise that Texas’ efforts over the past 10 years to embrace lawsuit reform contributed mightily to our state’s ability to create jobs.

That same Chief Executive magazine ranking puts states like California, New York and Illinois in the bottom three. Why?

As Texas passed legal reforms to rein in abusive lawsuits and ensure our courts were used for justice, not greed, California took a different path. By catering to personal injury trial lawyers, the state became a “judicial hellhole,” allowing abusive lawsuits to clog court dockets and forcing its taxpayers and small businesses to pay the price.

So it came as no surprise that Toyota recently announced it is moving its North American headquarters from California to Texas. The move will create more than $300 million in capital investment and bring 4,000 jobs to the Lone Star State.

Toyota is following the lead of several other employers in leaving California for Texas, and no doubt others will soon follow suit. As businesses from “judicial hellholes” like California, Illinois and New York choose to relocate and expand here in Texas, it’s cause for celebration, isn’t it?

Yes, but there’s also cause for concern.

That’s because the lawsuit abuse that plagues states like California isn’t constrained by state borders. In fact, the effects of lawsuit abuse and wildly burdensome regulations can be far-reaching.

Austin, Texas-based Whole Foods knows this fact all too well. Last month, a California federal judge refused to throw out a proposed class action lawsuit accusing the popular grocery chain for mislabeling some of its food products as “natural” when they contain evaporated cane juice. California law forbids the use of such labeling if the product contains artificial ingredients, flavorings, colorings and/or chemical preservatives — even though cane juice is actually sugar.

The costs to Whole Foods to fight this absurd lawsuit, coupled with the unclear and unpredictable regulatory environment in states like California, end up costing all of us more at the checkout counter.

So, while the Texas Miracle continues to move our economy forward, California’s poor legal climate isn’t just running businesses out of that state — it’s hurting businesses and consumers in Texas and across the U.S.

Whether it’s Texas Gov. Rick Perry on his jobs and economic development tours of other states or other state leaders, business owners and consumers sounding the alarm, it’s time we all pushed back against lawsuit abuse. If we don’t, California — and states like it — will export their abusive lawsuits, chilling economic growth, stifling job creation and costing hard-working Texans and Americans more.

Meaux is a board member of Texans Against Lawsuit Abuse.

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