By Mike Patel, Citizens Against Lawsuit Abuse Supporter, Located in Riverside

First, it was the coronavirus that crushed small businesses. Then, it was the supply chain disruption and inflation. Add to that the challenge of finding workers in a state with a very high unemployment rate. But now, hidden under all the challenges we face, is yet another burden we all share that only drives up the cost of goods and services.   It’s known as the impact of lawsuit abuse which saddles the Riverside, San Bernardino, and Ontario region with a loss of 12,326 jobs, $787.5 million in personal income and a “tort tax” of $267.00 per person.

Business owners can survive temporary economic challenges; they are resilient. But these challenges are nothing compared to just one potential shakedown lawsuit that could wipe them out entirely, leaving business owners and their employees without a job and a future. We need a break from lawsuit abuse.

California Citizens Against Lawsuit Abuse (CALA) has just released an alarming new report titled, “The Economic Benefits of Tort Reform in California.”  The report, authored by the Perryman Group, an economic analysis firm, explains how an overly aggressive litigious environment further drains California’s fragile economy. 

Every day thousands of California businesses face abusive unwarranted lawsuits based on technical violations related to the Private Attorney General Act, PAGA, wage and hour lawsuits, and Americans with Disability Act lawsuits. These abusive suits become a cost we all pay for through lost jobs, weakened productivity and higher prices.

The Private Attorney General Act was intended to protect workers from employers who failed to pay them their full wages. Instead, employers are now targets for attorneys who can file suits based on technical violations in the more than 900-page labor code, leaving them feeling like a dartboard, even when an employee has felt no harm or lost no money. Does failing to put a beginning date and an ending date on a check stub when the check clears the bank on time the reason to sue an employer for tens of thousands of dollars?

California is seeing lawsuit abuse inflation with the rise in Americans with Disability Act lawsuits increasing by 22% in California, while national filings decreased. The Americans with Disabilities Act was enacted to give complete access to public places to those with a disability. Instead, plaintiffs can sue up to $4,000 per technical violation because of loopholes in the law. During the pandemic, plaintiffs took no time off looking for ADA violations, allowing them to file suit for a mirror that is a quarter of an inch too high, a toilet a half an inch too low, or the blue striping on a parking lot that is starting to fade.

The report shows how an unbalanced justice system increases costs, disincentives innovation, and decreases economic productivity and output. It highlights the benefits of tort reform and how it can lead to substantial financial gain. 

The report also measures the impact of lawsuit abuse showing a loss of $1.243 billion in gross product annually. It also shows $791.9 million in direct costs a year that negatively affects all major industry groups, including retail trade, business services and health services experiencing the most significant losses.

Unfortunately for all Californians, Governor Gavin Newsom and the legislature expanded liability across the board for all businesses. As a result, California has been in the Top 3 worst Judicial Hellholes for a decade and was named the “Everlasting Judicial Hellhole” for being named a top Judicial Hellhole for the last 16 out of 20 years.

There is still time for the Governor and legislature this legislative session to step up and block any legislation that will only add to the burden of lawsuit abuse.

We must all send a message to the Governor and our lawmakers in Sacramento, so they realize that unchecked expansion of abusive lawsuits costs all of us dearly.