California Named a Top ‘Judicial Hellhole’

California Named a Top ‘Judicial Hellhole’

Press Releases | December 8, 2020

State policies harm workers, Lemon Law lawsuits increase

California’s love of lawsuits places it near the top of the “Judicial Hellholes” list yet again.

The American Tort Reform Foundation (ATRF) named the Golden State to the No. 3 spot this year. It is down one position from last year only because conditions deteriorated in No. 1 Judicial Hellhole Philadelphia Court of Common Pleas & the Supreme Court of Pennsylvania and No. 2 Judicial Hellhole New York City.

Judicial Hellholes are deemed the most unjust local courts and state civil justice systems in the country. The 2020 report ranks nine total and shines a light on lawsuit abuse and its effects.

Emerging concerns in California this year are the legislature’s attack on workers with its ill-fated implementation of Assembly Bill 5, trial lawyers exploiting the state’s unique “Lemon Law,” attempts at regulation through litigation, and Proposition 65 placing onerous burdens on businesses which trial lawyers exploit.

“Lawsuit abuse harms hard-working Californians by clogging the court system with meritless and frivolous cases,” American Tort Reform Association (ATRA) President Tiger Joyce said.

Excessive tort costs place a $2,378 burden on the average family of four in California and result in an estimated loss of nearly 250,000 jobs.

“While we’ve named California to the Judicial Hellholes list year after year, lawmakers don’t seem to get the hint,” Joyce said. “Both the legislature and the courts continue to implement poorly thought out policies that are riddled with unintended consequences, all in the name of helping the average worker.”

In November, California voters passed Proposition 22 which will classify app-based drivers as independent contractors and not employees. It creates an exemption within A.B. 5 (2019) which codified the state Supreme Court’s adoption of the “ABC Test” regarding whether a worker is classified as an employee or contractor. The law went into effect in January and targeted not only gig economy companies like Uber, Lyft and DoorDash, but also negatively affected freelance workers like journalists and other writers. The state of California was met with heavy blowback as the U.S. District Court for the Southern District of California granted a preliminary injunction prohibiting enforcement of A.B. 5 against motor carriers operating in California and the American Society of Journalists and Authors filed a lawsuit against the state over the new law.

“The ‘ABC Test’ places an immense burden on businesses to meet three conditions before a worker can be considered an independent contractor,” Joyce said.

Further impacting workers’ flexibility is California’s Private Attorneys General Act (PAGA), also called the “Sue Your Boss” law. The law was intended to protect workers, but instead it created a system so stringent that work environments are forced to operate in strict adherence to state labor laws, meaning employees actually lose flexibility in their work lives. A March 2020 decision from the California Supreme Court will further expand liability under PAGA.

“Nearly every time California passes a bill they think will help workers, it has the complete opposite effect,” Joyce said. “California workers are left with forced stringency in the workplace, if they are able to work at all. The overall climate of lawsuit abuse drives employers out-of-state or out of business and leads to lost jobs.”

Also contributing to California’s Judicial Hellholes status is a surge in lawsuits under California’s Lemon Law. Suits doubled between 2015 and 2019. In an August 2020 decision out of the San Diego County Superior Court, the plaintiff was awarded $1 in damages, but the plaintiff’s attorneys in the case received more than $680,000. The plaintiff’s lawyers claimed they worked more than 1,505 hours on what was a very straightforward Lemon Law case and initially requested more than $1 million.

“Trial lawyers have learned to exploit loopholes in California’s Lemon Law to create windfalls for themselves at the expense of a fair resolution for consumers,” Joyce said. “They draw out the litigation process for consumers and delay the time it takes to reach a fair resolution. But the true winners of the prolonged litigation are the trial lawyers.”

Halfway through 2020, California had the most federal Americans with Disabilities Act accessibility lawsuits – 2,702. Most lawsuits allege that a restaurant, store, or its parking lot fails to meet any of numerous accessibility standards. Combined, the other states in the Top 10 jurisdictions for ADA lawsuits had only 1,845 cases filed between January 1 and June 30, 2020.

“Businesses often aren’t given a warning or even a customer complaint about noncompliance until the lawsuit is filed,” Joyce said. “But sue-happy lawyers and their clients don’t bother giving them a chance to fix a problem before taking them straight to court. So many small businesses struggled to stay afloat during the pandemic and litigation costs alone could very well put them out of business for good.”

Nearly 60% of Californians do not believe lawmakers are doing enough to combat lawsuit abuse.

As of today, California has not enacted any liability protections for frontline health care workers, small businesses, or other employers.

Eighty-four percent of Californians believe health care workers should not have to consider the risk of being sued while fighting COVID-19.

“We urge California to follow the lead of other states around the country and protect those on the front lines from frivolous lawsuits,” Joyce said.

The full 2020-2021 Judicial Hellholes rankings are:

View the full report at JudicialHellholes.org.

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