Non-Injury Lawsuits Continue to Make California a “Judicial Hellhole”

In what should not come as a surprise to most, California was named the third-worst “Judicial Hellhole” by the American Tort Reform Foundation (ATRF) in 2022. In addition to “nuclear” verdicts, frivolous “no injury” lawsuits has allowed California to consistently be labeled as a “Judicial Hellhole” by ATRF. Such “no injury” lawsuits include California’s Private Attorneys General Act (PAGA), California’s Proposition 65, and accessibility lawsuits.

PAGA allows an aggrieved employee to file lawsuits to recover civil penalties on behalf of themselves, other employees, and the State of California for Labor Code violations. The purpose of PAGA is not to recover damages or receive restitution but allow citizens to act as private attorneys general and enforce the Labor Code. However, citizens can only act as private attorneys generals if the state agency that enforces California labor laws – Labor and Workforce Development Agency (LWDA) – declines to pursue its own action against the employer upon notice by the aggrieved employee. If successful, then the aggrieved claimant can recover two types of civil penalties: (1) the penalties specified in the Labor Code section or (2) if no penalties are specified, then $100 per aggrieved employee per pay period, and each subsequent violation incurs a civil penalty of $200 per employee per pay period. Since its enactment in 2004, PAGA lawsuits have increased more than 1,000%. In 2021, 6,502 notices were filed.

PAGA lawsuits are enticing because successful PAGA claimants are entitled to recover “reasonable” attorneys fees while the claimants themselves are able to recover 25% of the civil penalties (75% of the civil penalties go to the LWDA). In other words, the attorneys representing the aggrieved employees most often collect a much higher disproportionate amount compared to their clients.

Another example of “no injury” lawsuits also include Proposition 65 claims. The purpose of Proposition 65 is to protect drinking water sources from toxic substances that cause cancer and birth defects and to reduce or eliminate exposures to those chemicals generally, such as consumer products, by requiring warnings in advance of those exposures. Similar in concept to PAGA, Proposition 65 allows an aggrieved citizen to act as a private attorneys general if the attorney general (or district attorney or certain city attorneys) declines to go after alleged Proposition 65 violators after receiving notice by the aggrieved citizen. A business found to be in violation of Proposition 65 is subject to civil penalties of up to $2,500 per day for each violation. For the aggrieved citizen, they can not only recover their attorney’s fees 25% of the penalties imposed. In the most recent information posted on California’s Attorney General website, in 2022, there were 735 out of court settlements wherein California businesses paid out $16,121,842. While the aggrieved citizens received $1,777,843 in penalties, their attorneys received $14,343,999. In other words, their attorneys received 89% of the pie.

Accessibility lawsuits is another yet another example of “no injury” lawsuits plaguing California. The Golden State is home to more than half of the nation’s accessibility lawsuits according to the American Tort Reform Association (ATRA).

Although California may have dropped from last year’s #1 ranking as a “judicial hellhole,” ATRA was clear in its reporting that it had nothing to do with any progress made in the state, but instead, “because of how poorly things are in other states’ civil justice systems.” In part due to California’s policies in protecting its citizens from unfair employment practices and health issues, ATRA calculated that California citizens are paying a “tort tax” of more than $1,900 per person each year while nearly 750,000 jobs are lost annually due to excessive tort costs.