Chip Hough and David Houston: The truth behind the Perry-Brown face-off
Politically, California and Texas are worlds apart, yet they share the common goals of robust job creation, a vibrant economy and high quality of life. The realities of these two states, however, are remarkably different.
Those differences are at the core of the recent face-off between the two states’ governors in the media. Gov. Rick Perry and his California counterpart, Gov. Jerry Brown, have chided, chuckled and sparred over Perry’s recent efforts to lure more California businesses to Texas. But the real issues cannot be glossed over with cutting humor.
Texas’ legal climate consistently outshines California’s. Common-sense legal reforms have been a key contributor to the Texas economic boom. California, which has failed to pass meaningful pro-job reforms, continues to see abusive lawsuits wreak havoc on businesses, and the state remains mired in economic doldrums with consistently high unemployment and tepid job creation.
As any small business owner can attest, the state of your civil justice system can boost or dampen your ability to create jobs and spur 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. These reforms have helped the state create and retain jobs, allowed small employers to prosper and improved access to health care. According to a report by the Perryman Group, approximately 8.5 percent of Texas’ economic growth and the creation of 499,000 permanent jobs between 1995 and 2008 are the result of lawsuit reform.
California’s story paints a vastly different picture. For decades, its leaders have consistently pursued policies that promote excessive litigation, making it among the most litigious states. These policies create obstacles for the new and small businesses that drive California’s economy and have allowed abusive lawsuits to delay or halt projects.
The effect of the legal climates is laid bare each time a California business packs up and heads to Texas. Some may recall that the CEO of CKE Restaurants, which owns the Carl’s Jr. franchise, declared two years ago that the company was planning to move its headquarters from California to Texas and halting construction of new restaurants in California while expanding aggressively in Texas. When asked why, the CEO specifically cited California’s laws that encourage lawsuits against private businesses.
What many leaders in California fail to realize is that we need to create jobs, not lawsuits. In the meantime, Texas will continue to lure businesses and jobs away from the Golden State, and we welcome these transplants with open arms.
Chip Hough is 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.