California Lawmakers Face Renewed Scrutiny for Inaction on Legal Reform, Placed on “Heat Watch” by National Report

Today, the American Tort Reform Association placed California’s legislature on “Heat Watch” in its latest Legislative HeatCheck report for the second consecutive year. 

Lawmakers in the Golden State are considering various bills related to civil justice – some that could improve the state’s legal system, and some that could make it even worse.

“California’s courts long have been known as a ‘Judicial Hellhole®,’ and state lawmakers typically have done little to remedy the situation,” said Tiger Joyce, president of ATRA. “There are several commonsense reforms before the legislature that could help provide some relief for small businesses who face abusive lawsuits and we hope they’ll be taken up again in the future.”

Mixed Bag of Legislation 

The Legislative HeatCheck highlights five bills in California that merit its “Heat Watch” status, including:

Positive Reforms

• ADA Lawsuit Abuse Relief: S.B. 84 failed to advance but sought to address lawsuit abuse targeting small businesses under the Americans with Disabilities Act and ​California’s Unruh Civil Rights Act, specifically related to accessibility claims. This measure was intended to reduce frivolous ​lawsuits and give small businesses a fair chance ​to comply with accessibility standards without ​facing immediate litigation.
• CCPA Lawsuit Abuse Relief: S.B. 690 failed to advance but aimed to stop shakedown lawsuits under California’s Consumer Protection Privacy Act. Trial lawyers have sued more than 1,500 California businesses under the CCPA for usual business activities, including website analytics and online advertising, both of which are already regulated by the Act.
• Transparency in Lawsuit Funding: A.B. 743 failed to advance but would regulate third party litigation financing contracts and require funders to file a $250,000 surety bond. 

Liability Expansions

• Restricting Arbitration: S.B. 82 would unduly restrict the use of arbitration agreements in consumer contracts, forcing small businesses to endure unnecessary litigation. 
• Expansion of Recoverable Damages: S.B. 29 would allow for continued excessive damages recovery in survival actions, ultimately leading to inflated costs in the legal system overall. California law already allows generous damages for survivors. This bill would permit double-dipping of noneconomic damages that other states do not allow, making California an outlier.

“Instead of seeking to further expand liability and drive up costs in the legal system even more, California legislators would be wise to focus on the positive reforms brought by their colleagues that could help small businesses thrive rather than suffer through frivolous, needless lawsuits that can put them out of business altogether,” Joyce said.

Impact on Families and Small Businesses

The consequences of expanding opportunities to sue carry real economic costs. California residents already pay $2,458 per person annually in “tort tax” — that’s more than $9,833 for a family of four. California’s per person tort tax has increased more than 28% since 2021. 

Residents living in the San Francisco and Los Angeles metro areas can pay a tort tax up to 89% more than the statewide average – $4,651 and $3,658 per person respectively. Excessive tort costs additionally contribute to an estimated loss of 829,255 jobs and $5 billion in revenue for the state’s government annually.

Heat Watch In a Perennial Judicial Hellhole®

California’s courts have a storied reputation as “Judicial Hellholes®,” most recently ranked fifth-worst in the nation.

“California has an opportunity to chart a new course — one that makes the justice system work for everyone, not just those looking to exploit it,” Joyce said. “It’s time for lawmakers to choose progress over the status quo and deliver relief to families, job creators, and consumers across the Golden State.” 

ATRA’s Legislative HeatCheck report evaluates a select group of states’ progress — or lack thereof — in enacting meaningful tort reform measures during their most recent legislative sessions.

California’s legislature is named to the “Heat Watch” list alongside both the Michigan and Ohio state houses. The full Legislative HeatCheck report is available at heatcheck.atra.org.

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About the Legislative HeatCheck: The Legislative HeatCheck is an annual analysis, started in 2024 by the American Tort Reform Association, that assesses which states are making strides to improve their civil justice systems through tort reform and which states remain in dire need of legal reform. The report categorizes a select group of states into three groups:

• Tort Reform Trailblazers: States that have recently enacted key tort reform measures to rein in lawsuit abuse and improve their legal climates.
• Lawsuit Infernos: States whose legislatures are actively expanding liability and worsening their civil justice systems or failed to pass any meaningful legal reforms during their latest legislative sessions, leaving their civil justice systems mired in a litigious status quo.
• Heat Watch: States whose legislatures still are in session and are considering either positive or negative legislation. These states are placed on “Heat Watch” due to inaction on tort reform or the potential for liability-expanding legislation that could worsen their legal climates.

The Legislative HeatCheck provides an overview of tort reform battles waged in statehouses nationwide and serves as a guide for where reform efforts should be focused in the year ahead.