California used to be the land of opportunity. Today, its courts are driving up costs on families and small businesses alike — not because consumers are being harmed, but because plaintiffs’ lawyers have learned how to turn everyday laws into litigation revenue engines.
The American Tort Reform Foundation’s newest Judicial Hellholes® report once again names California as the worst of the worst in the nation — this time going so far to specifically name Los Angeles — and the consequences are rippling through our wallets, workplaces, and communities.
At the heart of the problem are massive “nuclear verdicts” and a host of so-called no-injury lawsuits that do little to improve safety or protect the public but do a great deal to inflate the cost of living in the state. In 2025 alone, a Los Angeles jury awarded nearly $1 billion in a single talc lawsuit, and another awarded $50 million in a spilled tea case, with punitive damages dwarfing compensatory awards. These outsized verdicts are made possible by courts that allow aggressive trial tactics like emotional “anchoring,” repeated use of the same experts despite questionable credentials, and litigation financing that encourages gambling on high payouts rather than fair settlements.
These headline‑grabbing figures aren’t isolated curiosities — they translate into higher costs for everyday Californians. When businesses face the threat of nine‑figure judgments, they have only a few options: raise prices, cut services, or relocate operations out of state. Even if a company wins on appeal, the legal expenses alone can topple budgets and force layoffs. That’s a lawsuit abuse tax that hard‑working families end up paying, quietly baked into the prices of goods, services, insurance premiums, and even grocery store shelves.
Excessive tort litigation imposes enormous economic costs on the state. Each year, direct costs total $64.5 billion, while losses to gross state product reach $101.2 billion. The impact extends to public finances as well, reducing state government revenue by $5.3 billion and local government revenue by $4.4 billion annually. These pressures contribute to the loss of 850,915 jobs statewide and amount to a so-called “tort tax” of $2,567 per person.
The impact on consumers and the broader economy should not be understated. California already ranks among the highest in the nation for lawsuit‑related costs, which accumulate as a hidden tax on residents. Every business hit with a frivolous suit is a business that may raise prices, cut jobs, or close altogether. Every small retailer that settles rather than fights is one less local business in the community.
Reform isn’t about protecting corporations from accountability, it’s about restoring balance and predictability to a system that increasingly rewards strategy over substance, defense over diligence, and settlement over justice. Common‑sense changes — like curbing abusive serial claims, tightening standards for expert testimony, and bolstering early dismissal for meritless suits — would reduce needless litigation costs and, in turn, help families keep more of their hard‑earned money.
Other states that have adopted similar reforms have seen measurable benefits, including lower insurance costs, more stable business climates, and stronger job growth. Florida offers a clear example of enacting meaningful tort reforms, including limits on abusive lawsuits, stronger standards for expert testimony, and protections against inflated damage claims. These changes were designed to reduce speculative lawsuits and bring greater predictability to the legal system, particularly for businesses facing outsized liability exposure. As a result, insurers and employers gained clearer rules of the road, allowing businesses to plan, invest, and hire with greater confidence rather than diverting resources to prolonged courtroom battles.California’s failure to act leaves it increasingly isolated. While Florida took concrete steps to rein in lawsuit abuse and restore balance to its tort system, California has largely doubled down on permissive litigation practices that encourage inflated claims and excessive verdicts.
For too long, California’s laws have allowed excessive litigation to thrive and nowhere is the problem more pronounced than in Los Angeles. The county’s aggressive verdicts, high-profile lawsuits, and permissive legal climate amplify the burden on businesses and consumers alike. Until lawmakers and judges rein in these practices, residents across the state will continue to pay the price for a system that rewards legal excess over fairness and common sense.
Amanda Morales serves as the Special Projects and Workforce Development Coordinator for the Fontana Chamber of Commerce. Amanda is passionate about preserving the small business throughout her community and California.
