Litigation explosion destroying opportunity in state of California
California has historically been a state of opportunity — where anyone could start a business, work hard and reap the rewards of their labor. In recent years, thanks to misguided policies coming from Sacramento, the opportunity of California has been destroyed by a “litigation explosion.”
More lawsuits are being filed in California than any other state and many of these cases are solely to extract settlements from businesses. This “lawsuit abuse” is costing California businesses billions of dollars every year.
Predatory lawsuits are largely spurred by three pieces of policy: PAGA, ADA and Proposition 65. Each one puts businesses in the same position: pay up or lawyer up.
PAGA lawsuits are those filed under the Private Attorneys General Act of 2004. This law allows private citizens to act on behalf of the state in cases where they believe there has been a violation of the state’s Labor Code. While this law intended to give employees a way to enforce their rights, it has become a favorite of trial lawyers looking to shake down businesses for quick settlements. In fact, a significant amount of PAGA settlements in California are for $10,000 or less.
And because these settlements tend to be confidential, there is no way to know how many billions of dollars are being funneled into the pockets of trial lawyers each year.
ADA lawsuits are another area where lawsuit abuse is rampant. The Americans with Disabilities Act requires businesses to make reasonable accommodations for employees and customers with disabilities. However, many so-called disability access consultants will file shakedown lawsuits against businesses they claim are not compliant with the ADA. There have been recent examples of trial lawyers in California who file hundreds of groundless disability rights lawsuits with the goal of shaking down small businesses for cash payments. As a result, businesses pay tens of thousands of dollars to avoid going to court.
Proposition 65 lawsuits are another avenue for massive paydays that lawyers frequently abuse. The proposition requires detailed product warning labels. While this sounds like a good idea in theory, the reality is that Proposition 65 has become nothing more than a moneymaking scheme for trial lawyers and plaintiffs’ attorneys. They file suits against businesses large and small, claiming that they have failed to provide adequate warnings about the presence of chemicals in their products.
The science backing these claims is more than suspect; it can be flat-out nonsense.
Still, in many cases, these suits are settled out of court for confidential sums that can be as high as millions of dollars. Proposition 65 has become a lucrative cash cow for those who know how to exploit it.
All three of these laws were intended to protect employees and consumers, but they have instead been hijacked by trial lawyers who use them to line their own pockets at the expense of businesses and Californians alike.
Lawmakers can enact meaningful reforms to end lawsuit abuse and its time they do so, or this litigation explosion is only going to get worse.