March 23, 2024
Opinion: California Business Community Plagued by Trial Lawyers’ Exploitation of Regulatory Laws
By: Christian Garcia
Last year, California was ranked as the third worst “Judicial Hellhole” in the United States, according to the American Tort Reform Association’s 2023-2024 Report.
California’s business community is plagued by many regulatory issues, from rampant Proposition 65 litigation to the exploitation of the Private Attorneys General Act (PAGA) and the Americans with Disabilities Act (ADA).
These legal frameworks, originally designed to protect consumers and employees, have unfortunately become tools for excessive litigation — often targeting small businesses that are the backbone of our local economies that don’t have the resources to fight these claims effectively.
Californians bear the brunt of this in the form of a “tort tax,” costing each person nearly $2,120 per year. If reforms were implemented to curb lawsuit abuse, California’s gross product could see an increase of a substantial $83.16 billion.
To see a symptom of this problem, you can just turn on the TV or look around at billboards. In 2022 alone, trial lawyers spent a whopping $183.15 million on legal services advertisements across various media in the state. This is a whole industry that has emerged from the lucrative nature of lawsuit abuse in California.
The root of the problem lies in the exploitation of well-intentioned laws. For instance, PAGA was established to protect workers’ rights but has since been hijacked by opportunistic lawsuits over minor infractions, often not benefiting the employees it protects. A number of these lawsuits come from simple oversight. For instance, businesses have been sued across the state for an employer’s failure to print its address on employees’ pay stubs, even though the address was printed on the paychecks themselves.
Similarly, ADA regulations, crucial for ensuring accessibility for all, are being used by some as a pretext for frivolous lawsuits against small businesses for minor, easily correctable violations. To ensure that these laws are utilized for the common good as they were intended, legal reform is needed from our lawmakers as soon as possible.
This climate of litigation abuse doesn’t just hurt business owners; it affects our entire community. Every dollar spent fighting an unnecessary lawsuit is a dollar not spent on employee benefits, business improvements, or community investments. It leads to increased prices for consumers and a less vibrant local economy.
It’s time for our lawmakers to take a hard look at these issues and enact meaningful reforms. We need legislation that balances the original intentions of laws like PAGA and the ADA with safeguards against their misuse.
California’s businesses deserve a fair and reasonable legal environment, one that encourages growth and innovation, not one that stifles it with the fear of litigation.
Our state has always been known for its spirit of innovation and opportunity. Yet, the current legal climate is tarnishing this reputation. We must work together — lawmakers, business owners, and the community — to reform our judicial system. This is not just about protecting businesses; it’s about preserving the economic vitality and diversity of our communities.
The “Judicial Hellhole” designation must be taken as a wake-up call for all Californians. This is an opportunity to reform our legal system to make it more just and balanced — a system with the goal of protecting the rights of both consumers and businesses. Let’s use this moment to create positive change, ensuring California remains a place where small businesses can thrive and contribute to the rich tapestry of our state’s economy and culture.
Christian Garcia is the Deputy Mayor of Escondido. He has a master’s degree in public policy from USC, works as a high school teacher, and previously worked in international logistics and supply chain.