It’s that time of year again the American Tort Reform Foundation’s annual Judicial Hellholes report is out and once again California is a national standout for its unjust civil justice system.
“California is the trial bar’s laboratory,” the report notes. “It’s where they go to pursue innovative new theories of liability and push the envelope with regard to expanding liability for business. The courts welcome these theories with open arms and businesses are overwhelmed with claims.”
While many readers may wonder what could be so bad about this for the ordinary person, the reality is that California’s judicial landscape stifles and chills economic activity. Entrepreneurs are forced to allocate more money not toward improving their goods and services or hiring ordinary workers, but toward legal costs and lawyers just in case they get hit by frivolous legal action.
One study cited by the report quantifies the cost of the “tort tax” at as high as $2,297 per resident and hundreds of thousands of jobs.
The report goes through some of the classic sort of cases that have long plagued California. This includes the Private Attorneys General Act (PAGA) cases by which the California Legislature has empowered workers to sue their employers over even the most petty of violations. “Many PAGA lawsuits revolve around technical nitpicks, such as an employer’s failure to print its address on employees’ pay stubs, even though the address was printed on the paychecks themselves,” notes the report.
These have surged over the years, from 1,743 in 2011 to nearly 8,000 in 2023. State legislation signed this summer by the governor (AB 2288 and SB 92) seek to curtail some of the abuses of PAGA, but only time will tell whether the fixes actually work.
Then there’s the classic Proposition 65, the 1986 ballot measure behind the ubiquitous signage warning some potentially harmful chemicals are around. Failure to disclose the presence of even trace and trivial quantities of certain chemicals can mean big civil penalties, which are often sought by serial litigants.
“The money companies spend on compliance and litigation unnecessarily drives up the cost of goods for California consumers,” the report notes. “It also harms small businesses that do not have the in-house expertise or means to evaluate the need for mandated warnings or handle litigation.”
And then there are the infamous abuses of the Americans with Disabilities Act. The report cites the case of serial plaintiff Chris Langer, who has filed thousands of ADA complaints. California has long incentivized such people with additional civil penalties for the most minor of infractions.
We encourage readers interested in reading more to visit the Judicial Hellholes website (judicialhellholes.org).
The fact is that California’s civil justice system is unjust and in need of reform. We need to be a state that incentivizes business and investment, not more litigation. Alas, as the report also points out, the trial lawyers spend a lot of money in California politics, including millions in support of Gov. Gavin Newsom.
Here’s to hoping things change someday.
