California ranks among the states with the highest tort costs per household in the United States. According to the U.S. Chamber Institute for Legal Reform’s (ILR) research, Tort Costs in America: An Empirical Analysis of Costs and Compensation of the U.S. Tort System—Third Edition, California’s total tort costs amounted to a staggering $72 billion, translating to $5,429 per household.
As ILR President Stephen Waguespack noted, “The U.S. tort system is in desperate need of strategic reforms that promote economic growth and lower costs for American households. Plaintiffs’ lawyers and litigation funders are getting bigger paydays at the expense of consumers and businesses. The higher the price tag, the more consumers pay for products and services, and businesses see an increase in their liability burden.”
California Leads the Nation in Jury Verdicts Worth $10 Million or More
Several factors contribute to this high cost. For example, the state’s legal environment, the volume of litigation, and the most reported nuclear verdicts–jury verdicts worth $10 million or more–of all 50 states, according to ILR’s research, Nuclear Verdicts: An Update on Trends, Causes, and Solutions.
As an example, in one stand-out case in 2023, a court awarded $161 million against a motorcycle manufacturer. The plaintiff, who struck an SUV that abruptly stopped while crossing three lanes to turn left, blamed the accident on the motorcycle’s faulty front brake.
The high cost of litigation in California affects businesses and places a significant financial burden on California residents and consumers. These costs are often passed down to consumers in the form of higher prices for goods and services.
ILR, along with along with in-state partners, will continue to research and advocate for legal reforms to address these issues. Our recent report, Tort Costs in America, comprehensively analyzes the costs associated with the tort system across different states, including California. The report highlights the need for these continued legal reforms to manage and potentially reduce these costs.
Bottom Line
By addressing the root causes of high tort costs and implementing effective legal reforms, California can work towards creating a more balanced and equitable legal environment for all.
To view an interactive map of tort costs per household on the U.S. Chamber website, click here.