AUSTIN—California state legislators and lawsuit reform supporters marched in front of the State Capitol Building last week advocating for changes to the justice system’s rules regarding lawsuits. Now those who are pushing for reform have found support in an unlikely place: Texas.
Once home to the biggest lawsuit abuse problem in the country, Texas has passed several significant legal reforms in recent years, allowing the state to create and retain jobs, allow small employers to prosper and improve access to health care. “Common-sense legal reforms have been a key contributor to the Texas economic boom,” Jennifer Harris, Texans Against Lawsuit Abuse spokeswoman, told the Southeast Texas Record.
“Conversely, California’s story paints a vastly different picture. For decades, its leaders have consistently pursued policies that promote excessive litigation, making California one of the most litigious states in the nation.” Abusive lawsuits have wreaked havoc on California businesses, she said. “The state remains mired in economic doldrums with consistently high unemployment and tepid job creation.”
In 1978, California adopted one tort reform, which was a cap on pain and suffering damages in medical malpractice cases, Victor Schwartz, partner at Shook, Hardy and Bacon’s Washington, D.C. office, told the SE Texas Record. That tort reform measure was later adopted by Texas in 2003.
“Courts in California, especially trial courts, lean toward plaintiffs,” Schwartz said. As a result, apart from medical malpractice cases, people in California file tort suits because it’s a very open-ended system. Additionally, “Texas firms like to bring cases in California, especially on asbestos, because it’s easier.”
Given small business owners are often victims of predatory lawsuits, many are moving their offices out of California.
“Some may recall that the CEO of CKE Restaurants, which owns the Carl’s Jr. and Hardee’s franchises, declared just two years ago that the company was planning to move its headquarters from California to Texas and halting construction of new restaurants in California while expanding aggressively in Texas,” Harris said. “When asked why, the CEO specifically cited California’s laws that encourage lawsuits against private businesses.”
California Citizens Against Lawsuit Abuse and the Civil Justice Association of California have argued for years that common sense reforms must be made to ensure lawyers no longer exploit courts for their own personal financial gain, but instead benefit ordinary people. The groups have marched in front of the California Capitol since 2011, but the state government has yet to make any changes to its tort laws.
Schwartz said it’s very unlikely California will adopt more tort reforms any time soon because the state legislature is dominated by trial lawyer interests.
“California has very expansive consumer protection acts and those laws allow people to sue for damages if they believe there has been some misstatement in an advertisement,” he said. “But it gets pretty loose out there with respect to statements.”
For example, if an advertisement says a food product contains natural ingredients, there isn’t a clear definition for what constitutes as a natural ingredient. And the individual bringing the actions doesn’t even have to have seen the ad. “That’s pretty remarkable,” Schwartz said.