New reformers needed to curb the lawsuit abuse killing jobs in California
Joblessness and poverty in California are more severe than just about anywhere in America.
In an election year, this is a reality incumbents tend to gloss over. California’s improving, they say, so keep us in charge.
For the millions of Californians suffering in poverty, can’t find a job, or are underemployed, these assurances don’t go very far. Real hope requires job growth, and that means growing small businesses.
What’s holding back our small businesses? Why are they doing so much better in Texas?
While my fellow Republicans tend to cite taxes as the most damaging wet blanket being thrown onto California’s economic fire, there’s another big problem holding back job creation: an epidemic of lawsuit abuse.
As I travel throughout California, I’ve been surprised by just how many heads begin to nod when I mention to crowds the damage being done by a legal system that is truly out of control. Abusive lawsuits exploiting legal loopholes have impacted far more people than I expected to meet around the state.
One of the sources of this abuse is something called Proposition 65, passed in 1986 ostensibly as a public health measure. It’s the law that requires all those signs we see outside of buildings that read, “This building contains chemicals known to the state of California to cause cancer…” etc. (They’re real hits with the tourists).
Prop 65 requires the state to catalog over 800 carcinogenic chemicals, and mandates businesses provide warning labels on products and even buildings when even trace amounts of any chemical on the list is present. Law enforcement officials have the good sense to not waste precious resources running down every business that has missed out on any one of Prop 65’s many requirements. Yet, due to the law’s “private attorney general” provision, anyone can file a lawsuit, and win a settlement, without even proving damages.
This is the kind of law that trial lawyers just love because it’s an easy way to make a quick buck. Yet it’s a killer for small businesses that get caught up in this legal trap: more than $142 million was been paid to the trial lawyers and their plaintiffs between 2000 and 2010. Has there been an improvement in public health because of all these lawsuits? No – the cancer rate today is the same as it was before Prop 65 made it onto the books.
Another example of lawsuit abuse that is killing California jobs is the practice of “Greenmail.” It’s an insidious tactic where labor unions publicly or privately back environmental challenges to projects that are not built “union-only.” If the developer agrees to shut non-union contractors out of the job, the lawsuits go away. Most minority-owned businesses are non-union, by the way.
This shakedown tactic works especially well when the employer needs the permission of the Coastal Commission or the State Lands Commission for a job-creating project to go forward.
Thousands of jobs were destroyed in my own county of San Diego when Gaylord Entertainment pulled out of a massive hotel and convention center project in the heavily Latino city of Chula Vista. The reason: they refused to give into union extortion demands conveyed through their proxy “environmental” group.
As some Democrats make the rounds of fundraising solicitations to business leaders around the state, many of them like to spin that they are really “pro-business” and support economic growth. Yet, it’s not possible to be on the side of small business, job creation, and ultimately prosperity for our state while remaining in lock step with the trial lawyers, labor unions and environmental groups that have mastered the art of legalized extortion and shakedowns that every day destroy jobs, and opportunity, in California.
It’s time to bring one party rule to an end in our state. Every statewide office is up, along with the entire Assembly and half of the State Senate. No election is set in stone. Now is the time for leaders to step up and ensure that the forces of reform are given a new, stronger voice in state government next year.