SACRAMENTO (Legal Newsline) - When Kimberly Stone, president of the Civil Justice Association of California, describes her state's deplorable legal climate, she points to private rights of action as a primary problem.
Stone explains that California allows residents, whether or not they have been harmed, to sue for a number of technical violations. In many other states, lawsuits only arise after a governmental agency enforces the law or an individual sues over an injury.
"In California, it has been taken to the extreme," she said. "We have dozens and dozens of laws where anyone can sue to enforce them. That's what leads to lawyers behaving badly ... And this is why those private rights of actions thrive. The lawyers make money."
Stone and other legal reform advocates say these abusive and excessive lawsuits, particularly those involving the Americans with Disabilities Act (ADA), Proposition 65 and class actions, continue to wreak havoc on California. They say they not only harm the state's already stagnant economy, but also threaten future job creation and business development.
The American Tort Reform Foundation ranked California as the No. 1 "judicial hellhole" in the nation in 2012. In its 11th annual report, the foundation points out that "the sheer number of atrociously abusive lawsuits filed all over the state would collectively make for the basis of a blockbuster Hollywood comedy were it not for their negative impact on the state's economy and the mendacity that too often drives them."
The foundation also predicts that "this nearly insolvent state, with businesses fleeing in droves and without a tax-dollar for court resources to waste on meritless litigation, will almost surely see well more than one million new lawsuits filed there again this year."
From Stone's perspective, politics in California play a leading role in excessive litigation. She argues that over the years, the plaintiffs' bar contributed to and helped elect legislators who make it possible for lawyers to sue for many different reasons.
Tom Scott, the executive director of Citizens Against Lawsuit Abuse, agrees that decades of increasing regulations and laws provided more avenues for litigation. He points out that nearly 1.2 million civil lawsuits were filed in California last year - a statistic that shocks most people.
However, Scott also believes many political leaders fail to realize that certain laws will ultimately lead to excessive lawsuits. He offers the Unruh Civil Rights Act, which prohibits discrimination based on sex, race, color, religion, ancestry, national origin, disability, medical condition, marital status or sexual orientation, as one example.
Scott explains that the California law expands on the federal ADA, creating a private right of action that allows any individual to sue a business that may not be in compliance.
"In 1990, when President Bush signed the ADA into law, I don't think he thought, this is going to be a vehicle for thousands upon thousands of lawsuits," Scott said. "But in our state with the Unruh Act ... it really takes the federal ADA to a whole different level."
Scott offers abusive Proposition 65 lawsuits as another example. California created the law to protect residents from chemicals known to cause cancer, birth defects and reproductive harm. It requires businesses to warn consumers if their products or environments could expose them to these chemicals. It also allows consumers to sue businesses for up to $2,500 for each day they fail to post warning signs.
"The intent of that initiative was great," Scott said. "When it was passed, there were only 40 chemicals on the list of chemicals people should be aware of. Now there are around 850. Every time a new chemical is listed, it creates litigation."
According to CALA, Proposition 65 has resulted in more than 16,000 lawsuits and more than $500 million in settlements.
In addition to ADA and Proposition 65 lawsuits, Stone pinpoints class action lawsuits as part of the problem. She sees lawyers sue dozens of companies each month on behalf of consumers who never voiced concerns over their products. In recent years, consumers were pulled into class action lawsuits after buying Dannon yogurt that failed to improve their digestion or frozen pizza that failed to improve their overall health.
"The expense for the defendant company to fight the lawsuit is so great that they just settle," Stone said. "They pay the attorney millions of dollars in attorneys' fees, they give the class members some coupon so they buy more of their product, and that's it. The only people who benefit are the lawyers."
Despite outcry from legal reform advocates, Brian Kabateck, president of the Consumer Attorneys of California, suggests that data doesn't support claims of lawsuit abuse. He cites the National Center for State Courts' Court Statistics Project report, which shows personal-injury lawsuits in California decreased by 38 percent between 2001 and 2011.
"There is no litigation explosion in California," Kabateck said. "Are there always lawsuits that are being filed that don't have merit? Of course. It happens. There are always bad lawyers out there, and there are bad lawsuits. But I believe our justice system in California works, and I believe bad lawsuits get weeded out."
He adds that the report also ranks California 28th in the number of civil lawsuits per capita, demonstrating that it fares better than states with the most filings of these lawsuits. He calls that a significant statistic, especially since 38 million people reside in the state.
"That's more than the population of the entire country of Canada and more than the population of Australia, and almost more than the two of them combined," he said. "It's a big, giant state, and big, giant places sometimes have big problems. But this concept that somehow lawsuits and litigation are at the root of all evil in California is ridiculous."
Scott remains unconvinced, contending that if California spends millions or even billions of dollars on litigation each year, it affects both current and future economic development.
"If businesses do not find California an appealing place to start, grow or relocate a business, they will go elsewhere, taking vital jobs, services and tax revenue with them," he said.