The American Tort Reform Association is calling on Colorado Gov. Jared Polis (D) to veto a bill it says will discourage arbitration, generate costly litigation, and expose employers to potentially unconstitutional penalties.
In a letter sent Monday to the governor, ATRA outlined several provisions in the bill it says will harm Colorado businesses, consumers, and workers — and ultimately push more cases into an already overburdened court system.
House Bill 1236 would repeal Colorado’s longstanding prohibition on punitive damages in arbitration — a change ATRA argues will raise the stakes of the process, adding time, expense, and contentiousness to what is designed to be a faster, lower-cost alternative to litigation.
“This bill doesn’t reform arbitration — it sabotages it,” said Tiger Joyce, president of ATRA. “Coloradans deserve a civil justice system that resolves disputes efficiently and fairly, and this bill moves in exactly the wrong direction.”
Recent data shows that Colorado families already pay one of the most expensive “tort taxes” in the country due to excessive litigation — nearly $2,135 per person, or $8,540 per year for a family of four.
The bill also imposes automatic double damages on employers and businesses that fail to satisfy an arbitration award within 120 days, with no requirement that a court first find bad faith or misconduct. ATRA warns that this provision, combined with the new authorization of punitive damages, could produce unconstitutionally excessive awards.
“Stacking punitive damages on top of mandatory double damages and no bad-faith standard is a recipe for unconstitutional awards and endless courtroom fights,” Joyce said.
ATRA also flagged provisions that would cloud the enforceability of arbitration agreements, as well as the disqualification of arbitrators and arbitration organizations whose rules or procedures have “the effect” of limiting how certain claims are brought. The group further warned the bill invites federal preemption challenges under the Federal Arbitration Act.
“The bill’s vague standards will spawn exactly the kind of costly, time-consuming litigation it supposedly aims to prevent,” Joyce said. “That’s bad for Colorado businesses and bad for Colorado courts.”
The Colorado legislature has earned the title of “Lawsuit Inferno” for two consecutive years in ATRA’s “Legislative HeatCheck” report due to legislators’ insistence on expanding liability in the state.
The full text of ATRA’s veto letter is available at ATRA.org.
