California’s court system is in a bad place, hurting our small businesses.
Recently, the American Tort Reform Association released a report of the worst judicial hellholes in America. Our home state finished in the top five, marking its 18th appearance on the list.
Being from Santa Clarita, I know all too well the threat of shakedown lawsuits threatening small businesses.
There are many ways to be targeted by a frivolous lawsuit here, but they all tend to follow the same formula. A few big law firms in the state target small businesses with excessive lawsuits due to minor code violations.
Sometimes, it’s an Americans with Disabilities Act lawsuit; other times, it’s the Private Attorneys General Act. Occasionally, you get lawsuits from expansive enforcement of one of our state’s many citizen-passed propositions.
The end result is always the take-it-or-leave-it option of settling or fighting an expensive court case. If you ask me, that doesn’t sound like justice.
And a quick word about settlements: As the ATRA report highlights, the state needs to do a better job of providing solid legal ground for businesses to enter into arbitration agreements.
If small businesses don’t even have the option to seek arbitration when a problem arises, the state leaves them to the mercy of wealthy law firms who can outmaneuver and outlast us.
And just so lawmakers know, there are a lot of “us.”
You can’t find a local chamber of commerce where someone hasn’t been targeted with a shakedown lawsuit. Things have gotten so bad that many people are starting to think it’s just the price of doing business in California.
Lawmakers need to put a stop to this madness before our economy sees significant contraction.
The ATRA report notes that lawsuit abuse costs residents of the state millions in tort tax and lost economic activity, in conjunction with thousands of lost jobs. At the individual level, the victims of abuse are small business owners getting lawsuits from serial filers who see common technical oversights — like a misplaced disclaimer at a checkout register — as a financial opportunity.
To safeguard the economic health of our state, lawmakers must take decisive action.
Reforms should encompass not only the establishment of a fair and accessible arbitration process but also stricter regulations on the initiation of lawsuits targeting small businesses for minor infractions. Such measures would discourage predatory legal practices and empower small businesses to thrive without the constant threat of frivolous legal action.
The time to act is now.
California’s small businesses are the lifeblood of our economy, and their success is intertwined with the well-being of our communities. By implementing comprehensive legal reforms, we can ensure that justice is served, businesses are protected, and our state remains a beacon of economic opportunity for all.
Joe Messina
Saugus
