The Colorado Legislature earned a “Lawsuit Inferno” designation for the third consecutive year from the American Tort Reform Association in the 2026 edition of its Legislative HeatCheck report.
Gov. Jared Polis vetoed two bills on June 2 that ATRA says were particularly problematic. The first dealt with arbitration and the other created new avenues to sue.
“Coloradans should be relieved Gov. Polis stepped in, but relief shouldn’t depend on a veto pen every year,” said Lauren Sheets Jarrell, the American Tort Reform Association’s vice president and counsel for civil justice policy. “Lawmakers keep introducing bills that would drive up costs for small businesses and consumers, and families should know the true impacts.”
The first bill, House Bill 1236, would have fundamentally altered arbitration in Colorado by allowing punitive damages for the first time and forcing businesses to pay double an award if they missed a 120-day deadline — even if a court never found they acted in bad faith. ATRA sent Polis a letter urging the veto.
“This bill would have sabotaged arbitration instead of reforming it,” Sheets Jarrell said. “Arbitration gives Coloradans a faster, cheaper way to resolve disputes than a lawsuit, and lawmakers tried to strip away that advantage.”
HB 1236 also would have exempted any company operating across state lines, meaning it would have left Colorado’s own small businesses facing new penalties while the large, out-of-state corporations, which lawmakers said they were targeting, escaped its reach.
The second bill that led to Colorado’s “Lawsuit Inferno” status this year is HB 1210, which would have expanded liability under the state’s consumer protection law. It would have created a new deceptive trade practice for businesses that use personal data to set prices or wages, opening the door to state enforcement actions and lawsuits over routine pricing and pay decisions.
“Vague terms like ‘surveillance data’ would have left businesses guessing what counts as a violation and trial lawyers ready to sue over the guesswork,” Sheets Jarrell said.
Lawmakers introduced roughly 20 bills this year that would have expanded liability for Colorado businesses and workers, according to the Colorado Civil Justice League.
Excessive litigation already costs Colorado families more than $8,500 annually in a “tort tax” for a family of four ($2,135 per person), up from $1,874 in 2024 — a 14% increase. Excessive tort costs also contribute to a loss of 105,746 jobs across the state annually.
“Gov. Polis has been a critical backstop against a Legislature bent on expanding liability, but with this governor’s term nearly up, Colorado needs leaders who will build a fair legal system rather than ones who require a veto to stop them,” Sheets Jarrell said.
Colorado, which was named a “Lawsuit Inferno” in both the 2024 and 2025 Legislative HeatChecks, joins Virginia as the 2026 “Lawsuit Inferno” legislatures. ATRA’s full 2026 Legislative HeatCheck report is available at heatcheck.atra.org.
