California's excessive tort costs, referred to as the "tort tax," result in a $5 billion annual revenue loss, according to a report from The Perryman Group. Released on November 25, 2024, the findings highlight the broader impact on federal, state, and local government funds.
The report states that California's "tort tax" leads to $17.7 billion in federal revenue losses, equating to $2,458 per resident annually, and $4.1 billion in local government losses. In the transportation and warehousing sector, this includes $29.7 billion in total expenditures, $19.3 billion in lost gross product, $12.7 billion in reduced personal income, and 137,300 job losses each year.
According to Law Street, between 2019 and November 2022, California courts processed more than 2,250 federal lawsuits against Ford Motor Company (Ford), General Motors (GM), and Stellantis N.V., primarily involving product liability and breach of contract. Ford accounted for over half of these cases. Stellantis faced nearly 1,700 cases while GM had 981 nationwide cases driven by the state's pro-consumer Song-Beverly Act.
The U.S. Chamber of Commerce raises concerns about third-party litigation funding (TPLF). It cites reduced financial recoveries for plaintiffs who often receive less than half of settlements due to funder and attorney fees. Additionally, TPLF poses national security risks with foreign entities—including sanctioned individuals and governments—using it to influence U.S. litigation and access sensitive information.
The Perryman Group is based in Waco, Texas with over four decades of experience serving more than 3,000 clients including Fortune 100 companies and U.S. Cabinet Departments. According to its website, the firm has conducted over 1,000 public policy studies aimed at driving economic growth and social progress.