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April 22, 2008

California Stuck Near Bottom in New Ranking of Legal Climate

WASHINGTON, DC – California’s legal environment remains mired in the bottom ten states, according to Lawsuit Climate 2008: Ranking the States, an annual assessment of state liability systems conducted by Harris Interactive, a leading nonpartisan market research firm, and released today by the U.S. Chamber Institute for Legal Reform (ILR).  In addition, Los Angeles was again named the least fair and reasonable litigation environment in the country.

“California’s low ranking is not surprising, given the fact that California courts have a reputation for certifying class action lawsuits that 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.

Donohue also noted that California has become a target for “litigation tourism,” as plaintiffs’ lawyers file hundreds of asbestos- and silica-related lawsuits on behalf of non-residents, after similar lawsuits have been shut down by changing laws and courts in Illinois, Mississippi and Texas. 

California ranked 44 out of 50 in Lawsuit Climate 2008 – up one spot from the previous year.  The Harris survey is the preeminent standard by which companies, policymakers and the media measure the legal environment of states.

A separate survey of California business owners found 88 percent believe frivolous lawsuits are a serious problem, 59 percent think the number of unfair lawsuits against businesses in California will increase over the next five years, and 73 percent want the California Legislature to enact new laws to help protect business from unfair and frivolous suits.

“An unfair legal system sucks the life out of a state’s economy,” Donohue said.  “It affects business expansion, it affects jobs and it takes money out of consumers’ pockets.  The legislature must pass meaningful legal reforms before California’s lawsuit climate will show significant improvement.”

The California business owners reported raising prices, limiting the types of products sold, reducing employee benefits, or laying workers off in response to their concerns about frivolous lawsuits.

ILR is launching a national advertising campaign highlighting the results of the study and the need for comprehensive legal reform, including television, radio and online ads in Sacramento.

Harris asked 957 senior attorneys to evaluate up to five states in which they were “very” or “somewhat familiar” with that state’s litigation environment.  Survey respondents assigned each state a letter grade for each of 12 different factors affecting the states’ tort liability system, ranging from the overall treatment of tort and contract litigation to judges’ competence and impartiality, and Harris computed an overall score for each state based on these evaluations.

The survey of 250 California business owners, 85 percent of them small businesses with fewer than 20 employees, was conducted by Public Opinion Strategies earlier this month.  It has a margin of error of +/- 7 percent.

ILR’s mission is to make America’s legal system simpler, fairer, and faster for everyone. It seeks to promote civil justice reform through legislative, political, judicial, and educational activities at the national, state, and local levels. The U.S. Chamber of Commerce is the world’s largest business federation, representing more than 3 million businesses and organizations of every size, sector, and region.

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