California is the worst “Judicial Hellhole®” in the country, according to a new report.
The American Tort Reform Foundation, in its 20th anniversary edition of the annual report, said the state’s atrocious litigation environment and government officials’ determination to expand liability across the board are to blame for its return to the top.
California has been in the Top 3 worst Judicial Hellholes® for a decade and was named an “Everlasting Judicial Hellhole” this summer.
“We have received this unfortunate honor, not once, but 16 times over the past 20 years,” said Victor Gomez, executive director, California Citizens Against Lawsuit Abuses. “The result? Californians pay for lawsuit abuse and excessive tort costs in the form of an annual “tort tax” of nearly $575 per person. The costs of this litigation also result in nearly 200,000 jobs lost each year.
“I was a franchise owner on the central coast for 17 years. My community was always supporting me, my business, and other locally owned businesses That’s what makes a community strong. Yet, we are often the targets of these type of shakedown lawsuits. I feared the threat of a lawsuit. There was nothing to protect me.”
According to Tiger Joyce, President, American Tort Reform Association, “Although still referred to as the “Golden State, California is just about the worst place in the country to be a small business owner. Between frivolous lawsuits abusing state and federal laws and onerous business regulations that create nearly endless opportunities for unscrupulous trial lawyers, it’s easy to see why business owners are making a mass exodus out of the state.”
California’s Private Attorneys General Act authorizes aggrieved employees to file lawsuits regarding labor code violations and to seek civil penalties. However, 75 percent of the penalties paid by non-compliant employers go to the state’s Labor and Workforce Development Agency. Less than 25 percent goes to the aggrieved employees after their lawyers take one-third or more of the remaining 25 percent.
“The intent behind PAGA was to protect workers, but it has done little to help them. Employees have actually lost flexibility in their work lives as a result,” Joyce said. “Most of these lawsuits revolve around technical nitpicks and don’t claim any real injury. Trial lawyers have turned PAGA into a loophole around arbitration clauses in employment contracts which typically limit expensive class actions that only benefit the lawyers.”
ATRF said frivolous lawsuits filed under the federal Americans with Disabilities Act are another issue plaguing California’s civil justice system. 2020 brought a 22 percent increase in ADA filings while nationally, such filings decreased. 2021 is on pace to be a record-breaking year in California for ADA filings. California has more expensive penalties for ADA violations due to the state’s Unruh Civil Rights Act. The Act includes a $4,000 fine per violation, which other states don’t have, plus attorneys’ fees.
“Often, these alleged violations are as minor as a mirror that is an inch too high or a sidewalk angled one degree off,” Joyce said. “Unfortunately, businesses are rarely given a warning or even a customer complaint about noncompliance until sue-happy trial lawyers take them straight to court. As small businesses struggle to stay afloat, litigation costs alone could very well put them out of business for good.”
ATRF reports that businesses of all sizes are under attack in California, though. This year, Amazon was held liable for injuries caused by a product sold by a third-party seller. The California Court of Appeals used a 2020 case, which the state Supreme Court refused to review, as precedent.
“The unfortunate reality is that where California goes, the country tends to follow,” Joyce said. “The unintended consequences of this precedent could very well have a chilling effect on ingenuity and entrepreneurship across the nation. This is especially dangerous given California courts’ willingness to allow questionable science as expert evidence in trials.”
Judicial Hellholes® are deemed the most unjust local courts and state civil justice systems in the country. Read the full report at JudicialHellholes.org.
About the American Tort Reform Association
Founded in 1986, ATRA is a nonpartisan, nonprofit organization and is the nation’s first organization dedicated exclusively to reforming the civil justice system through education and legislative enactment. ATRA acts as a nationwide network of state-based liability reform coalitions backed by 142,000 grassroots supporters. ATRA works to bring greater fairness, predictability and efficiency to America’s civil justice system. Those efforts have resulted in the enactment of state and federal laws that make the system fairer for everyone.
About the American Tort Reform Foundation
ATRF is a District of Columbia nonprofit corporation, founded in 1997. The primary purpose of the Foundation is to educate the general public about how the American civil justice system operates; the role of tort law in the civil justice system; and the impact of tort law on the private, public and business sectors of society. It is a sister organization of the American Tort Reform Association.
Citizens Against Lawsuit Abuse is a nonpartisan grassroots movement of concerned citizens and businesses who are fighting against lawsuit abuse in California. CALA serves as a watchdog to challenge the abuse of our civil justice system, and engages the public and the media to deliver the message that lawsuit abuse is alive and well in California — and that all Californians are paying the price.
To learn more about CALA, visit CaliforniaCALA.org.