By Maryann Marino
There’s a sure-fire way to improve the San Diego area economy that would help boost businesses and save jobs for many years to come. It’s a fix that could also save the region and, for that matter, all of California a lot money. A lot … as in billions.
So, what is it? It’s called tort law reform and the goal would be to curb excessive civil tort lawsuits that are inflicting serious economic harm. A new study on the estimated costs of too many tort cases shows that California is suffering economic losses totaling $11.6 billion in annual direct costs.
The Citizens Against Lawsuit Abuse report, titled the Economic Benefits of Tort Reform, calculated that runaway tort litigation inflicts losses of $18.5 billion in economic output each year. That damage, in turn, results in the yearly loss of nearly 200,000 jobs when other effects are considered. The report was conducted by The Perryman Group, a highly respected economic and financial analysis firm based in Texas.
One example to reduce the costs of tort lawsuits would be to reform California’s Safe Drinking Water and Toxic Enforcement Act of 1986, commonly known as Proposition 65. New regulations that took effect Aug. 30 call for new warnings and signage that will only serve as a shakedown lawsuit target, harming small business owners — especially minority small business owners — across the state and here in San Diego.
The act was originally a good-faith attempt to inform consumers and help protect the environment by protecting sources of drinking water from chemicals that cause cancer or reproductive harm. But it has become, instead, an oppressive legal trap that harms consumers and communities.
The harsh new laws require store and business owners to list the full name of one or more of the 900+ chemicals published by the Office of Environmental Health Hazard Assessment, the state’s regulatory agency. If OEHHA decides that any product contains “a chemical known to the state to cause cancer or reproductive toxicity,” then manufacturers and distributors, along with retailers, all face potential legal exposure.
So, it’s clear these new laws are going to cause problems. Failure to comply can result in fines of up to a $2,500 a day, and legal settlements that often run $60,000 to $80,000 for beleaguered owners — simply for not properly displaying a $40 warning sign.
Unfortunately, Proposition 65 allows for something called “private rights of action,” which means that unscrupulous individuals can partner with profit-seeking attorneys to act, in effect, as bounty hunters and sue businesses on behalf of the state. These are quintessential shakedown tort lawsuits.
A cursory court search showed that at least 17 Proposition 65 lawsuits have been filed in San Diego Superior Court since January. Of these lawsuits, nine were filed by one plaintiff and five by another, proving that these lawsuits will continue to be a windfall for attorneys.
The problem is that all these negative actions can result in major economic impacts for local neighborhoods, especially those in minority or immigrant communities such as Logan Heights, Southcrest and Lincoln Park. That is because big payments can result in the closure of small businesses and loss of jobs.
The Economic Benefits of Tort Reform Report, which created comparative estimates based the successful tort reform efforts in Ohio, offers other startling findings that are worth noting: the yearly fiscal losses in California are calculated at $961 million in state revenues and $804.7 million for local governments.
Beyond Proposition 65, lawsuit abuse also targets government agencies because they are perceived as having deep pockets. But these deep pockets are your taxpayer dollars. A study commissioned by Citizens Against Lawsuit Abuse showed that in 2011 the City of San Diego spent $17 million fighting frivolous lawsuits while other major cities around the state spent a cumulative $92 million.
The new study goes on to declare that tort reform as used in other states, such as legislation to set limits on punitive and non-economic damages, can result in economic benefits and other positive outcomes.
So, what can we do to fix this? One solution would be to set limits on punitive and economic damages as is being done in other states. The other is to encourage common sense on the boards overseeing Proposition 65 so they regulate with fairness and take a second look at this onerous law that only seems to financially benefit unscrupulous attorneys.
Maryann Marino is regional director of Citizens Against Lawsuit Abuse, a nonpartisan group of concerned citizens and businesses who are fighting against lawsuit abuse in California.