January 28, 2021
It’s time that California lawmakers take tort reform more seriously. Just this year, the Golden State ranked No. 3 on the American Tort Reform Foundation’s Judicial Hellholes Report, which, according to the report, “focus[es] primarily on jurisdictions where courts have been radically out of balance.” It’s appalling to me that we’ve allowed our courts to get so out of hand that we’ve earned one of the top three spots on this list. It should appall every single one of us, particularly those of us who are employers or small business owners.
You see, when a state is plagued by the level of lawsuit abuse that California is, the business community suffers immensely. And, given the damage that the ongoing COVID-19 pandemic has done to California’s businesses in the past year, many local businesses do not have the capacity for the additional suffering that comes with operating a business in such a litigious state.
In evaluating the laws that are contributing to California’s lawsuit abuse problem, several stick out to me. One of which is the Americans with Disabilities Act (ADA), a law intended to do good, only to be abused by greedy trial lawyers for years. To put it into context, by mid-2020, California was host to more federal ADA accessibility lawsuits than any other state, with a whopping 2,702 federal claims filed by July. New York came in at a distant second, with nearly 2,000 fewer claims. While the law by its nature is very good, abusing this law hurts the very people it was intended to help.
Part of the problem stems from California’s Unruh Civil Rights Act, which enforces a fine of $4,000 per ADA violation, on top of the attorneys’ fees. This fine does not exist in any other state, making California an outlier. What’s worse, it doesn’t matter how frivolous the lawsuit is, the fine remains in place. With that incentive in mind, trial attorneys continue to abuse the system by seeking out any minor, technical ADA violation they can find in order to make easy money at the expense of whatever unlucky small business they decide to target. These lawsuits range in ridiculousness, but common examples include lawsuits over a mirror being slightly too high on the wall or a recycling bin being an inch too close to the door.
Another problematic law is California’s “Sue Your Boss” law, otherwise known as the Private Attorneys General Act (PAGA). To put it simply, PAGA allows any “aggrieved” employee to sue their employers on behalf of themselves, other employees, as well as the state of California. Just as some ADA claims, PAGA lawsuits can be as trivial as they come. Common PAGA claims include typos in employees’ pay stubs or suing an employer because they failed to print their address on the paystub even though it was printed on the paychecks themselves. As you can see, PAGA is another example of a law intended for good – as it was originally meant to protect California workers – only to be taken advantage of by trial lawyers looking to turn a quick buck.
These are just two examples of the many laws that must be addressed by our lawmakers in order to begin improving California’s litigious reputation and make it the business-friendly state it once was. It’s also worth noting that it is not just employers and small business owners that are impacted by lawsuit abuse. It’s everyone. In fact, The Perryman Group found that excessive tort costs have led to an estimated $15.1 billion lost in direct costs to Californians each year, as well as 242,761 jobs and a $594.74 “tort tax” per Californian.
Given the state of our economy, the ongoing COVID-19 pandemic and the destruction it brought with it, our lawmakers must take the issue of tort reform seriously, as it’s draining precious resources, dollars and jobs that we simply can’t afford to lose right now. By meaningfully addressing tort reform, California can once again welcome new businesses, which will in turn create more jobs, allowing our great state to pick up the pieces that COVID-19 left behind a little faster.
Mario A Guerra is the former Mayor of Downey and business owner. He can be reached at Mario@Guerrains.com