Dome of the California Capitol in Sacramento
The dome of the California Capitol in Sacramento. Courtesy of the governor’s office

By Lawrence Chou

In 2021, something must be done to address California’s deteriorating business climate. Lawmakers have spent the last several years passing law after law that — while originally well-intended — have contributed to a massive uptick in lawsuits against businesses.

Because of our litigious reputation, the Golden State has become unattractive to potential new businesses, and toxic for the businesses that already exist here. This is true for businesses of all kinds, particularly for online businesses or ones that operate in the digital sphere, such as my own.

Take for example Proposition 24, otherwise known as Prop. 24, or the California Privacy Rights and Enforcement Act. Prop. 24 served as the replacement for the California Consumer Privacy Act (CCPA), which only went into effect on January 1, 2020 and began enforcement on July 1.

Opinion logo

The CCPA is a major privacy bill with a reputation of being “the toughest” data privacy law in the United States. The problem is that it’s chock-full of ambiguities that leave online businesses uncertain about how to abide by it, therefore leaving them to fend for themselves when it comes to trial lawyers using frivolous CCPA lawsuits to shake them down.

The idea behind CCPA, as well as Prop. 24, is to prevent businesses from collecting and sharing Californians’ personal data without their consent. Sounds reasonable enough, until you dig a little deeper and see that the regulation hurts Californians — consumers and businesses alike.

Lawrence Chou
Lawrence Chou

Under the CCPA, consumers can sue an online business if a “data breach” takes place, regardless of whether or not any harm was done as a result. This makes the bar for a lawsuit quite low, as you do not need to prove an actual injury occurred. Prop. 24 was passed in November in order to address some of the aforementioned ambiguities, as well as to expand on the already radical initiative. This resulted in a significant increase of the burden placed on online businesses.

To put it plainly, Prop. 24 is highly problematic. It’s an obscenely complicated law and does not provide clear directions for business owners. For starters, it eliminated a business’s 30-day window to fix the problem, and instead fines an immediate violation. Prop 24 also increased businesses’ contractual obligations.

Ultimately, it sets up online businesses to fail by leaving them vulnerable to lawsuits over virtually nothing. Unfortunately, this is not where California’s anti-business laws end.

The list of laws that make owning and operating an online business in California extremely difficult is long, but one that stands out — in addition to Prop. 24 — is the Americans with Disabilities Act. This is another example of a law that was passed with good intentions, only to be misused in the end.

In fact, California is home to such horrific abuses of ADA lawsuits that it was one of the main reasons listed for why we earned the No. 3 spot on the 2020 Judicial Hellholes Report from the American Tort Reform Foundation, which spotlights the jurisdictions that have earned the worst reputations.

According to the report, California was host to “by far” the most federal ADA accessibility lawsuits in the country, including an enormous number of lawsuits against online businesses. The reason behind the excess of ADA lawsuits in California is because of our unique state law known as the Unruh Civil Rights Act, which incentivizes trial attorneys to bring ADA lawsuits against businesses by providing a fine of $4,000 per violation. Unsurprisingly, certain trial lawyers find any minor “violation” to bring suit, destroying online businesses left and right over nothing.

It’s time we put a stop to this threateningly litigious environment so that online businesses can thrive, not get crushed over meaningless, harmless technicalities that serve no purpose other than to benefit trial lawyers. Given the state of the economy and the ongoing COVID-19 pandemic, California is in desperate need of new opportunities for businesses.

The online commerce industry can meet this demand, but California lawmakers are squashing the opportunity by creating endless and easily found ways to sue these businesses. In 2021, I urge lawmakers to address the issue of lawsuit abuse so that we can make the Golden State business-friendly once again.

Lawrence Chou is the owner and operator of Printivity, a San Diego-based company offering custom printing services online.