Study Shows Tort Reform Benefits

A recent study conducted by Citizens Against Lawsuit Abuse (“CALA”) found that tort reform legislation could save California residents and businesses nearly $23 billion. The study also concluded that savings from tort reform could then be utilized to support more than 206,000 new jobs and generate over $46 billion in increased economic activity. This would, in turn, increase tax revenues as well, by an estimate of more than $2.5 billion. Ultimately, all industries would certainly benefit from a system that reduces litigation abuse and excessive verdicts.

The California Legistlature had a golden opportunity to take steps in the right direction at the outset of the pandemic with proposed bill AB 1035, which would have offered litigation relief to businesses that remained open to provide essential services. Alas, the bill did not pass and these business were, and remain, vulnerable to potentially abusive and costly pandemic lawsuits.

As articulated by California CALA Executive Director Victor Gomez, California can take an immediate step in the right direction to sensible reform by enacting a cap on punitive and non-economic damages. In California, there is no precise formula, or even a guideline, by which these damages are calculated. Establishment of a cap, or even a more specific guideline by which sough damages can be calculated, would undoubtedly go a long way to provide greater certainty of damages, which, in turn, would also likely lead to more prelitigation and pretrial resolutions of matters since the parties would have greater confidence in the calculation of damages.