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California is the worst “Judicial Hellhole®” in the country, according to a new report.
The American Tort Reform Foundation (ATRF), in its 20th anniversary edition of the annual report, says 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.
ATRF reports that 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,” American Tort Reform Association President Tiger 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.”
California’s Proposition 65, which requires warning labels on products containing any of the 1,000-plus chemicals the state deems possible carcinogens, costs businesses millions of dollars each year. In 2020 and through mid-2021, more than 85% of settlement costs paid by businesses went to trial lawyers. Through July of this year, trial lawyers have made $6.5 million from California Prop-65 settlements.
In 2017, the state added glyphosate, the main ingredient in the weedkiller Roundup, to the Prop-65 list of possible carcinogens, despite regulators worldwide deeming it safe. A myriad of high-profile lawsuits followed, relying heavily on a single study which contradicts the hundreds of others which say glyphosate is safe. The reliability of evidence in one glyphosate-related personal injury case which resulted in a $25 million verdict may be reviewed soon – a cert petition in Monsanto v. Hardeman will be considered by the U.S. Supreme Court on Friday.
“Junk science in California’s courts robs juries of the full story and makes a mockery of our civil justice system,” Joyce said.
ATRF reports that businesses of all sizes are under attack in California, though.
“Although still referred to as the “Golden State,” California is just about the worst place in the country to be a small business owner,” Joyce said. “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 (PAGA) authorizes “aggrieved employees” to file lawsuits regarding labor code violations and to seek civil penalties. However, 75% of the penalties paid by non-compliant employers go to the state’s Labor and Workforce Development Agency. Less than 25% goes to the “aggrieved employees” after their lawyers take one-third or more of the remaining 25%.
“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 says frivolous lawsuits filed under the federal Americans with Disabilities Act (ADA) are another issue plaguing California’s civil justice system. 2020 brought a 22% 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.”
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 more than 200,000 jobs lost each year.
California is one of eight states named a Judicial Hellhole® in the 2021-2022 report:
Judicial Hellholes® are deemed the most unjust local courts and state civil justice systems in the country. Read the full report at JudicialHellholes.org.
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