Los Angeles Business Journal

Texas-Size Problem

Ease of filing nuisance lawsuits in California could spur businesses to head for Lone Star State. By Maryann Marino Monday, February 18, 2013

When reporters asked Gov. Jerry Brown about the radio ads a Texas public-private partnership purchased in an attempt to lure California companies to Texas, he dismissed it reflexively, using words that would earn small children a time-out. Calling the ad campaign “a big nothing,” the governor said it was “barely a fart.”

While Brown’s language frustrated mothers around the state who tell their children that those words are not meant for the dinner table – or the 6 o’clock news – the real people Brown’s words disappointed were California’s small-business owners. Texas Gov. Rick Perry’s ad campaign underscored the struggles small-business owners deal with every day in this state: California’s high taxes, nonsensical regulations and especially its unfair legal climate.

The evidence has been stacking up for years that California’s legal climate is hurting its economy and costing the state jobs. Last December, the American Tort Reform Association released its annual “Judicial Hellholes” report, identifying the areas of the nation where abusive lawsuits thrive and courts produce uneven rulings that often favor plaintiffs. Which state earned the humiliating title of the nation’s worst “judicial hellhole”? You guessed it: California and, in particular, Los Angeles, where our unbalanced legal system is so famous for producing easy verdicts for plaintiffs it is nicknamed “the bank” by personal injury attorneys.

All these abusive lawsuits have an outsized impact on the economy. When a business is facing an abusive lawsuit, it is often far less expensive simply to settle the lawsuit rather than incur steep legal fees fighting it in court. While this saves companies money in the short term, it only encourages unscrupulous attorneys to continue shaking down businesses with abusive lawsuits.

This happens far too often in California, especially in Los Angeles, and it hurts both the L.A. and state economies. Through my involvement in California Citizens Against Lawsuit Abuse, a nonpartisan grassroots organization fighting against lawsuit abuse, I have heard stories from business owners all over the L.A. area about how abusive lawsuits have hurt their businesses.

Their stories are nothing short of staggering. Sil Gonzalez, who owned a car dealership in South Gate, was sued for a car ad because the font on the ad was too small. After settling the lawsuit, Sil closed his dealership and opened a new one – in Oregon, where the lawsuit climate doesn’t encourage abusive lawsuits against businesses.

Tina Freeman, the owner of Tina’s Tavern and T’s Lounge in West Covina, was sued four times for alleged violations under the Americans With Disabilities Act in the past two years. In one case, the lawsuit was so blatantly abusive that Tina threatened to approach the media about the lawsuit, and the attorneys arrived within 30 minutes with dismissal papers.

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