featured graphic for Citizens Against Lawsuit Abuse

New report shows “hidden tax” of $2,835.00 per person

Ravi Patel
Ravi Patel. Courtesy photo.

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 is yet another burden we all share that only drives up the cost of goods and services. It’s known as the “tort tax” which saddles every Los Angeles, Long Beach and Anaheim area resident with a just revealed $2,835 annual tax that we all pay in the cost of lost businesses, fewer jobs and weakened productivity.

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. Thus, leaving business owners and their employees without a job and without 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 is further draining California’s fragile economy.

Everyday thousands of California businesses face abusive unwarranted lawsuits based on technical violations related to the Private Attorney General Act, or 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. 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. Really, 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 nationally filings decreased. The Americans with Disabilities Act was enacted to give complete access in public places to those with a disability. Instead, because of loopholes in the law, plaintiffs can sue up to $4,000 per technical violation. Plaintiffs took no time off during the pandemic in 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 results in increased costs, disincentives for innovation and decreased economic productivity and output. It highlights the benefits of tort reform and how it can lead to substantial economic gain.

The Report shows that job losses of 371,522 due to excessive tort litigation in the Los Angeles, Long Beach and Anaheim region. It also shows loss of personal income as $23.736 billion, and direct costs, as a loss of $23.870 billion each year, that negatively affect all major industry groups.

Unfortunately for all Californians, Governor Gavin Newsom and the legislature expanded liability across the board for all businesses. 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 cost all of us dearly.

This article was written by Ravi Patel, Citizens Against Lawsuit Abuse Supporter located in Artesia.

1 Comment

  1. Well done Ravi, I totally agree with you and appreciate that you are making this awareness .

Comments are closed.