California stuck near bottom in ranking of legal climate

By CMTA Staff

Capitol Update, April 27, 2007 Share this on FacebookTweet thisEmail this to a friend

The U.S. Chamber Institute for Legal Reform (ILR) this week announced that California moved down one spot to number 45 in Lawsuit Climate 2007: Ranking the States, an annual assessment of state liability systems conducted by Harris Interactive, a leading nonpartisan polling firm.  In addition, Los Angeles was again named the least fair and reasonable litigation environment in the country.

The ranking survey is available online at www.instituteforlegalreform.com .

"California’s low ranking is not surprising, given the fact that California courts are willing to certify class action lawsuits most other jurisdictions would toss out, and that California juries are increasingly likely to award disproportionately large judgments in civil cases," said Tom Donohue, president and CEO of the U.S. Chamber of Commerce.

California is becoming a target for "litigation tourism," as plaintiffs’ lawyers file hundreds of lawsuits on behalf of non-residents, after similar lawsuits were shut down by changing laws in Mississippi and Texas.  California has, however, made progress in improving its business and jobs climate, Donohue noted.  In particular, Governor Schwarzenegger has shown leadership in reforming the state’s workers compensation system, and the efforts of  the Civil Justice Association of California in passing Proposition 64, which restricted the ability of the plaintiffs’ bar to file "clientless lawsuits."

 "Without a fair and reasonable legal system, progress can easily be thrown off track," said Donohue.  "An unfair legal system sucks the life out of a state’s economy.  It affects business expansion, it affects jobs and it takes money out of consumers’ pockets.  The legislature must pass meaningful legal reform before California’s lawsuit climate will show significant improvement."

A recent actuarial study estimated the annual cost of the tort system in America to be $261 billion, or $880 per citizen.  Following those estimates, the price tag of the lawsuit system for the entire population of California is almost $32 billion.

In an effort to correct this unfortunate trend, AB 1505 (Parra) has been introduced in the legislature to provide for substantial class action reform by giving judges clear statutory rules for handling class action cases, much like what exists at the federal level. Additionally, the bill aims to greatly reduce the legal ambiguity that often makes such lawsuits incredibly costly and time-intensive. AB 1505 will face its first policy hearing in the Assembly Judiciary committee on May 8th.


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