The American Tort Reform Association’s 2026 Legislative HeatCheck report says California lawmakers are in “Legislative Limbo” as they juggle a crowded and contradictory civil justice agenda. One reform was signed into law, one died despite broad support and one sits stalled, while three liability-expanding bills advance toward the governor’s desk.
“Lawmakers signed one meaningful reform this year, but that’s where the good news stops,” said Lauren Sheets Jarrell, ATRA’s vice president and counsel for civil justice policy. “The Assembly killed a bipartisan bill to curb often frivolous accessibility lawsuits against small businesses in favor of a problematic ‘fix’ likely to create more headaches.”
Gov. Gavin Newsom signed SB 623 into law June 25, targeting a tactic that inflates the cost of car-accident lawsuits: billing for medical care at prices far above what anyone actually pays. Under the new law, when a rideshare company or driver is sued, recoverable medical costs for care provided on a lien can’t exceed the 70th percentile of billed charges. The law also bars a contingency-fee attorney from referring a client to a medical provider the attorney or a family member owns.
“This is a real fix for a real problem, and it’s a model other states should look at,” Sheets Jarrell said. “But it only reaches rideshare cases. The same inflated-billing and lien practices run throughout California’s injury system, so this is a first step, not the finish line.”
A bipartisan effort to address predatory lawsuits that abuse the Americans with Disabilities Act was killed in favor of moving along a problematic bill that ATRA says purports to address the issue but could ultimately make the problem worse. SB 84 would have required someone suing a small business over a technical accessibility violation to give the business a detailed notice and 120 days to fix the problem before facing statutory damages, attorney’s fees and court costs. It passed the Senate June 4, 2025, but sat in the Assembly for more than one year before dying earlier this month when the bill failed to meet a procedural deadline.
The bill that the Assembly unanimously moved instead, AB 649, markets itself as small-business protection but works against it, with a coalition of California small business groups even formally opposing the bill. The bill would strip a business’s ability to recover attorney’s fees after beating a meritless accessibility lawsuit unless a court calls the claim “frivolous” — a nearly impossible bar — while requiring the business to pay for a new inspection and fix every violation within 120 days, even ones that can’t reasonably be fixed at all, to earn any protection. The Senate Judiciary Committee passed AB 649 on June 30.
“California lawmakers had a real opportunity to protect small businesses, lower costs and stand up to predatory billboard lawyers,” said Jaime Huff, president and CEO for the Civil Justice Association of California. “Instead, they’re advancing a bill that invites more abusive ADA lawsuits — driving up costs and driving out small businesses.”
“It is incredibly disheartening that the Assembly killed SB 84, which would have properly addressed the abusive litigation that California small businesses face due to trial lawyers who take advantage of loopholes in the law to pad their own pockets,” Sheets Jarrell said.
One other bipartisan reform remains stuck. SB 690 would clarify that standard website analytics tools aren’t illegal “wiretapping” under California’s decades-old privacy law, a legal theory attorneys have used to pursue settlements from businesses over routine web features. It passed the Senate in June 2025 and has cleared two Assembly committees this year but remains stuck in Assembly Appropriations.
“This is a common-sense fix with support from both parties, and the Assembly has been sitting on it for over a year,” Sheets Jarrell said. “Every month they stall is another month small businesses spend fighting off shakedown lawsuits lawmakers already agree are a problem.”
Two more liability-expanding bills are still moving through the process. AB 1776 would let a single company be sued for “monopolizing” a market on its own, significantly expanding who can be dragged into costly antitrust litigation. SB 947 is billed as artificial intelligence regulation but reaches far beyond it, sweeping in common, low-risk technology across every industry, piling on compliance burdens, and turning minor paperwork slips into lawsuits. Both bills have passed their originating chambers.
“Each of these bills would hand trial lawyers a new hook to sue California employers over ordinary business decisions,” Sheets Jarrell said. “Lawmakers should be building on the momentum from the rideshare reform, not undercutting it.”
Recent data shows that excessive litigation costs California families nearly $10,270 a year in a “tort tax” for a family of four, or $2,567 per person statewide. The burden runs even higher in some metro areas: San Francisco-Oakland-Berkeley families pay a tort tax of $4,927 per person and Los Angeles-Long Beach-Anaheim families pay $3,972 per person. Statewide, excessive tort costs contribute to the loss of 850,915 jobs and $101.2 billion in economic output each year, along with $5.3 billion in lost state government revenue and $4.4 billion in lost local government revenue.
California’s mixed record this year comes against the backdrop of a legal system already under strain. Los Angeles ranks No. 1 on the American Tort Reform Foundation’s 2025-2026 “Judicial Hellholes®” list. Lawmakers were in “Legislative Limbo” (previously called the “Heat Watch” list) in both 2024 and 2025.
California’s legislature joins Michigan, New York and Ohio lawmakers in “Legislative Limbo” in the 2026 Legislative HeatCheck. The full report is available at heatcheck.atra.org.
