California has again landed high on the annual list ranking America's worst "Judicial Hellholes."
ATRA compiles and publishes the list each year to draw attention to some of the country's courts that are the most welcoming to lawsuits and most hostile to businesses and employers in the way judges apply and interpret the law and court rules.
The report points to research indicating those aspects of these legal systems produce big real world costs for Americans.
The report cited research from The Perryman Group, which indicated "lawsuit abuse and excessive tort costs" in California alone cost the state economy more than $83 billion annually.
The report estimates these costs result in a loss of nearly 787,500 jobs annually in the Golden State, while saddling residents with about $2,100 per year in a so-called invisible "tort tax."
For the second consecutive year, the state of Georgia again claimed the No. 1 ranking in ATRA's report. This time, the Peach State shared that designation with two courts in Pennsylvania, that state's Supreme Court and the Philadelphia Court of Common Pleas.
Cook County, Illinois, which includes the city of Chicago, occupied the No. 2 spot. They were followed by California; New York City; South Carolina's asbestos courts; Lansing, Michigan; the state of Louisiana; and the city of St. Louis.
The report says California received its designation thanks to its continuing home as a "laboratory" for trial lawyers to explore "innovative new ways to expand liability through both the courts and legislature."
"These novel theories of liability are burdening small businesses and bogging down the state's economy," ATRA wrote in its report. "Even in areas where the U.S. Supreme Court has stepped in to rein in lawsuit abuse, the California Supreme Court has disregarded precedent and expanded liability."
The report takes particular aim at two kinds of lawsuits unique to California: litigation under the state's Proposition 65 and through the Private Attorneys General Act (PAGA.)
Enacted in 1986, Prop 65 was sold as a law to protect California consumers against cancer-causing and other toxic substances that may be present in all manner of products.
However, in the ensuing decades, Prop 65 has become one of trial lawyers' preferred ways to win big fees from lawsuits in California courts, the report said.
Under the law, plaintiffs can sue if tests detect "even the slightest, non-threatening trace of more than 1,000 chemicals that state environmental regulators deem carcinogenic or otherwise toxic," ATRA said.
According to the report, Prop 65 lawsuits have resulted in 797 settlements generating more than $18.9 million in payouts. However, of that total, $16.68 million, or 88% of the total, was paid to the attorneys who filed the lawsuits, ATRA said.
Under the law, not only individual California residents, but advocacy groups and lawyers themselves can bring Prop 65 lawsuits in the name of the state, and collect a chunk of any penalties or settlements paid by the companies targeted by the lawsuits, even if no one suffered any harm.
The Prop 65 law most notably led to the litigation spearhead against agrochemical company Monsanto over glyphosate, the active ingredient in its Roundup brand weed killer, which was added to California's list of toxic chemicals in 2017.
That designation came from allegedly questionable studies from one particular organization, in spite of hundreds of studies submitted to federal regulators that glyphosate does not produce an increased risk of cancer, ATRA said.
A court fight ensued over attempts by the state of California to force herbicide manufacturers and sellers to include language on their product labels stating their product is known to the state of California to cause cancer.
Judges, however, said there is no scientific basis for such a certain statement. This fall, a federal appeals court agreed the state's attempt to control the labeling amounted to unconstitutional compelled speech.
At the same time, ATRA said California businesses have also been routinely and increasingly targeted by attorney-enriching lawsuits under the state's PAGA law, which ATRA said has come to also be known as the "Sue Your Boss" law.
"While its initial purpose was to protect workers, it has done little to help them," ATRA said. "The plaintiffs’ bar has been the true beneficiary."
Under the law, workers who believe their employer has violated a provision in California's labor laws can invoke the PAGA law and step into place of the state of California to sue on behalf of all of their coworkers.
This has continued in California, despite a 2022 ruling from the U.S. Supreme Court, which declared that the PAGA law doesn't allow employees to simply ignore employer arbitration agreements, which would otherwise preclude them from suing their employer for allegedly shorting their overtime pay or other claims under California labor law.
However, this summer, the California Supreme Court allowed plaintiffs to sidestep that decision, ruling that while the arbitration agreement may defeat an individual employee's claims, the PAGA law still allows that same worker to bring "representational" claims on behalf of the other workers.
This has allowed the growth in PAGA claims against California employers - and the resulting fees paid to lawyers - to continue to rise unabated, with little benefit to California workers.
According to the report, PAGA notices increased 273% from 2011-2022.
According to the report, 75% of all penalties paid by employers under such PAGA actions go to the state of California, while lawyers claim about one-third or more of the remaining 25%, which is supposed to go to "aggrieved employees."
Meanwhile, California businesses also remain one of the top targets for so-called "serial plaintiffs," bringing lawsuits under the Americans with Disabilities Act and the state's Unruh Civil Rights Act, the report said.
"Often these so-called 'violations' are as minor as a mirror that is an inch too high or a sidewalk or parking lot that is angled one degree too much," the report states.
The report notes that the number of ADA-related suits have ebbed in 2023, down about 35% in the first half of this year compared to the first six months of 2022.
However, the report says that is likely the result of actions taken by California prosecutors against the Potter Handy law firm and its Center for Disability Access. The report noted prosecutors accused the firm and the CDA of improperly "filing thousands of boilerplate, cut-and-paste federal court lawsuits that falsely assert its clients have standing under the [ADA]."
"The DAs’ action alleged that the sheer number of claims made it 'literally impossible for the Serial Filers to have personally encountered each listed barrier, let alone intend to return to hundreds of businesses located hundreds of miles away from their homes,'" the report states.
Those filings resulted in "shakedowns" worth tens of millions of dollars, the report stated.
After a judge ruled in favor of Potter Handy and the CDA, the DAs appealed, and the enforcement actions remain pending.
Meanwhile, the report notes that the U.S. Ninth Circuit Court of Appeals earlier this year sided with one of the CDA's serial litigators, ruling that courts presiding over such disability access lawsuits cannot consider how many other duplicate lawsuits the plaintiff may have filed against other companies, bringing virtually the same claims.
The serial plaintiff, Chris Langer, had placed his name on almost 2,000 ADA lawsuits in the past 30 years.
The ATRA report further notes California courts rank among the most popular destinations in the country for:
-- Lawsuits over food and beverage labeling;
-- Lawsuits over asbestos exposure, notably including potentially massive jury verdicts against Johnson & Johnson, over talc in its baby powder products; and
-- Court fights over whether Uber drivers and other independent contractors must always be considered employees, and if those contractors can sue their "employers" under California's stringent labor laws.
“California has always been a hub for innovation and entrepreneurship, but excessive litigation threatens to stifle business growth, preventing job creation and economic prosperity,” said Tiger Joyce, president of the American Tort Reform Association.