New York Law Journal: Gov. Hochul Must Protect New York’s Courts from Forum Shopping and Nuclear Verdicts

By: Mark A. Behrens

Gov. Kathy Hochul will soon decide whether to veto or sign two bills that pit New York’s powerful trial lawyer lobby against just about every other sector and industry in the state. Hochul has vetoed these far-reaching proposals in the past, and should do so again.

The first bill would create a forum-shopping frenzy and invite out-of-state plaintiffs to file lawsuits in New York courts over matters that occur elsewhere in the world. Hochul has a looming deadline—December 23—to act on this bill. The other proposal, which has yet to be sent to her desk, would add new subjective categories of damages to wrongful death lawsuits. This measure is strongly opposed by organizations representing local governments, public school districts, healthcare professionals, including OB-GYNs and surgeons, and small business owners. Both bills would dramatically alter New York’s liability landscape.

A.7351/S.7476 would force an out-of-state corporation that applies for authority to do business in New York to broadly consent to the jurisdiction of New York courts. This would allow out-of-state plaintiffs to sue out-of-state businesses in New York for alleged activities that happened elsewhere in the country or even elsewhere in the world — picture a Virginia resident injured in Virginia suing a Virginia-based company in a state court in Buffalo or Manhattan.

Nonresidents may prefer to file suits in New York over local courts in their home states to take advantage of the Empire State’s reputation for extraordinary awards. A 2022 study of personal injury and wrongful death cases found that New York had the third most “nuclear verdicts” (verdicts of $10 million or more) of any state between 2010 and 2019, and the second most on a “per capita” basis. Commentators have cautioned that legislation such as A.7351/S.7476 may lead to “abusive forum-shopping on a grand scale.” An influx of claims will mean justice delayed as injured New York-based plaintiffs wait behind earlier cases filed by nonresidents. Being a “magnet jurisdiction” for “litigation tourists” will involve extra costs too. Why should hard-working New Yorkers’ tax dollars go to funding “the nation’s courtroom”? And New York residents are not going to like being called for jury duty and pulled away from work or families to receive just $40 per day to sit as jurors in cases that do not belong in New York.

Leading New York business advocates—representing manufacturers to construction contractors to campgrounds to family-owned trucking companies—have said that if A.7351/S.7476 is enacted, major employers will start “packing in search of less hostile legal environments.” Small- and medium-sized businesses, in particular, may choose to avoid doing business in New York at all due to the increased risk of remote litigation. A.7351/S.7476 would make New York an outlier. Only Pennsylvania has a statute like the proposal on Hochul’s desk. The legislation is also constitutionally suspect. In a narrow holding, the U.S. Supreme Court ruled this year in a case called Mallory v. Norfolk Southern Railroad that Pennsylvania’s law did not violate due process in that individual case, but a swing-vote justice said there “is a good prospect” the law could be found to violate the Commerce Clause. If signed into law, A.7351/S.7476 is certain to become the subject of litigation itself.

New Yorkers would see little benefit from A.7351/S.7476. New York residents can already sue in New York courts for injuries that occur in-state. New York’s long-arm statute also provides a viable basis for jurisdiction in some cases where a New Yorker is injured by a nonresident defendant.

Hochul vetoed identical legislation in 2021, emphasizing her commitment to “a stronger, more inclusive economy,” including attracting employers incorporated elsewhere who are looking for opportunities to grow in New York. She wisely appreciated that the bill would create “substantial uncertainties for businesses” and “deter out-of-state companies from doing business in New York entirely.” She added that “[f]oreign corporate flight, or a significant decline in investments in the State, reduces tax revenues, risks harm to the New Yorkers who depend on the presence of foreign companies for jobs, products, and services, and undermines the State’s competitiveness.” Nothing has changed. The bill should be vetoed again.

The second bill under discussion, the so-called Grieving Families Act (A.6698/S.6636), would greatly expand damages and increase the pool of people who can file wrongful death lawsuits. Today, if someone dies from another’s negligent or wrongful act, New York law allows a wrongful death claim to be filed by a child, parent, spouse, or the personal representative for the decedent’s estate. The proposed Act would permit such lawsuits to be filed by a “decedent’s spouse or domestic partner, issue, foster-children, step-children, and step-grandchildren, parents, grandparents, step-parents, step-grandparents, siblings or any other person standing in loco parentis to the decedent.”

More significantly, the Act would authorize much larger awards by expanding recoverable damages to include noneconomic damages. Today, surviving family members may recover economic or pecuniary losses resulting from a loved one’s wrongful death, such as medical and funeral costs related to the death, wages the decedent would have earned, and the value of lost services provided by the decedent such as childcare. In addition to these awards, the Act would permit uncapped recoveries for “grief or anguish,” “loss of love, society, protection, comfort, companionship, and consortium,” and “loss of nurture, guidance, counsel, advice, training and education resulting from the decedent’s death.”

An added problem is that layering “grief” on top of other amorphous categories of recovery such as “loss of love . . . comfort, [and] companionship,” and “loss of nurture” will lead to overlapping, duplicative recoveries. New York jurors, courts, and litigants would face the vexing task of distinguishing and separately valuing concepts that are essentially indistinguishable.

The Act would also extend the current two-year statute of limitations for wrongful death cases, giving claimants an extra year to file suit. This would have several ripple effects such as extending the time businesses must set aside reserves to pay potential claims or retain records. The search for the truth at trial would be hampered as memories fade and witnesses become unavailable over time.

Last year, Hochul vetoed substantially similar legislation, describing it as “an extraordinary departure from New York’s wrongful death jurisprudence.” She expressed concern the Act “would increase already-high insurance burdens on families and small businesses and further strain already-distressed healthcare workers and institutions.”

Hochul’s concerns were well-founded. New York is home to the most expensive medical liability climate in the nation in terms of lawsuit payouts and premiums for specialized physicians like neurosurgeons and women’s healthcare providers. It has been estimated that the Act would increase insurance premiums for doctors and healthcare facilities by several billion dollars annually.

Given the serious flaws in both A.6698/S.6636 and A.7351/S.7476, Hochul should veto these proposals once again. As she previously determined, the proposals are “not in the public interest” and could have “significant unintended consequences.”

Mark A. Behrens co-chairs Shook, Hardy & Bacon L.L.P.’s Washington, D.C.-based public policy group.