As the state of California grapples with a multibillion-dollar revenue shortfall and unsustainable budgetary demands in the coming years, it’s a good time to remind policymakers and voters that businesses are a critical partner to the fiscal health of this state. Paradoxically, we Californians agree that businesses need to stay put, create jobs, and innovate, but we continue to elect leaders who enact policies year after year that drive them away.
The business community has been beating this drum for so long it sounds cliché, but it’s a well-documented fact that businesses are fleeing to other states where they feel welcome and where economic growth is encouraged, not hindered. A top concern cited by both businesses that have left and those that remain is California’s excessive civil liability and litigation burden.
Our state’s overly litigious environment is due in part to policies that invite frivolous lawsuits against businesses, prolong litigation, or are so imbalanced they set up good actor businesses to lose. With the beginning of a two-year legislative session underway, and many new legislators who have joined the ranks, there’s a fresh opportunity to bring fairness and balance to our civil justice system.
A good example of legislation with the right intent is AB 950 (Maienschein-D) introduced earlier this year. It creates a presumption for businesses that a website is accessible under disability laws including the Americans with Disabilities Act (ADA) if it complies with certain website accessibility guidelines established by the World Wide Web Consortium. The absence of clear standards in the digital space has spawned new waves of exploitive litigation up and down the state, often aimed at small and ethnic minority-owned businesses. We look forward to working with Assemblymember Maienschein to help provide businesses some relief in this area.
Legislation that will make matters worse is SB 365 (Wiener-D) which would allow a civil lawsuit to proceed to court even if there is still a pending dispute between the parties over whether the case should go to arbitration. Arbitration provides a faster and less costly means to resolve disputes than court where parties agree to instead have their case decided by a neutral and unbiased party, such as a retired judge. Over the years, arbitration has been under attack by plaintiffs’ lawyers who stand to gain fewer fees with these shorter proceedings. This year is no exception. SB 365 will clog the courts and drive up costs for all by allowing duplicative and wasteful litigation to go forward. This proposal is nonsensical especially at a time when Californians and the state are under intense economic pressure.
A top concern cited by both businesses that have left and those that remain is California’s excessive civil liability and litigation burden.
Another concerning policy is AB 473 (Aguiar-Curry-D). This bill imposes unreasonable regulatory burdens on auto manufacturers that arbitrarily favor auto dealers. This includes placing an unfair burden of proof on manufacturers in disputes before the New Motor Vehicle Board, and imposing one-sided attorneys’ fees – allowing only dealers to recover attorneys’ fees if they win a case, but not auto manufacturers if they win. This legislation, yet again, proposes to favor one group over another in our civil justice system, when it should be impartial and balanced.
CJAC stands ready to work with California leaders who agree that our civil justice system needs reforms – to reduce frivolous lawsuits, to provide transparency and accountability, and to promote access to justice for both consumers and businesses. A fair and balanced civil justice system will encourage our businesses to stay, including the small business owner who runs a family restaurant to the global company that employs thousands. This means a better, fiscally-stronger California for all.
Kyla Christoffersen Powell is president and CEO of the Civil Justice Association of California
Editor's Note: This opinion article was originally published at Capitol Weekly.