The Detroiting of California: Lawsuit Abuse May Help Bring State to Ruin

By Debra Tash

Back in the 1960’s Detroit was considered the premier municipality, the seat of economic prosperity driven by capitalism.  This cradle of America’s automotive industry, birthplace of Motown, now lies in ruins, evidenced by a high crime rate, abandoned housing and lack of jobs. The New York Times in a 2013 piece, Anatomy of Detroit’s Decline, examined the once great city’s slide.  A key factor they site was the shortcomings of leadership.

On April 4th, the Civil Justice Association of California (CJAC) and California Citizens Against Lawsuit Abuse, held a Day At the Capitol event to persuade the current leadership in Sacramento to stop a practice which could turn this state into a financial wasteland. Over 150 entrepreneurs were attendance.  Small business owners, under 200 employees, most with only a handful of workers, represent a cross-section of the 99% of the state’s employers who generate half of the jobs here.  An explosion of frivolous lawsuits against these entrepreneurs only adds to the economic hurdles in a state which ranks as one of the most expensive in the union to start and grow a company.

Ken Barnes, Executive Director for California Citizens Against Lawsuit Abuse and John Doherty President of CJAC along with 100 or so event attendees held a press conference by the Capital’s east entrance.  The issues cross political lines.  Issues like Prop 65, passed by voters to warn pregnant women/vulnerable citizens of hazardous substances contained in products or the manufacture of products, to Wages and Hours laws and the ADA, Americans with Disabilities Act, all enacted with good intentions and later hijacked by litigating sharks.

Many business owners who are served lawsuits by  bounty hunting firms/attorneys are not given time to cure, correct a sited “problem”, whether it be an inch off the height of a bathroom mirror or not posting a warning label on products supposedly containing hazardous substances with minuscule amounts of lead in a brass hose coupling, etc.  Lawsuits are filed every day, ending with settlements where attorneys get nearly 70% of the proceeds and the underlying “problem” is never rectified. 

Some of those preyed upon business owners gave their story at the press conference. Jerry Brown, quick to point out not that Jerry Brown, a retired policeman who now owns a towing company in South Gate, was sued by a former employee.  That employee did not clock out for breaks while he was in the field driving a truck.  Anne Hackney, CFO of Dytran Instruments Inc. in Chatsworth, a company that employees over 170 people, was sued in a wage and hour class action regarding meal periods, among other claims.  Specifically, the class action alleged that hourly employees were not provided an opportunity to begin their meal periods within five hours of starting work as required by California law.  All it took was one former employee to bring the class action.  Interestingly, that employee’s husband had been in a similar class action before and was represented by the exact same attorney who filed the class action against Dytran.  The disposition of the case is confidential.  Most heartbreaking of all was Martha Perez, owner of Jose’s Mexican Restaurant in Jackson California.  One day before opening, Ms. Perez let in a gentleman who asked to use the restroom. Holding back tears, she told that two weeks later she was served with a lawsuit for not being ADA compliant.  Stressed by the litigation, incurring high legal expenses, she suffered a brain aneurysm.

Success puts a target on your back. Everyone there had a story.  Current law has been twisted into a for profit industry.  Taking that profit motive out of the equation, and addressing real problems with real solutions is needed. 

There are bills wending their way through the legislature. Some deal with procedure, others in giving the business owner time to cure (fix) it. AB105 by Assemblyman Devon Matthis (R) deals with ADA violations and time to cure.  AB913  Assemblyman Adam Gray (D), affords a judge the right to review a litigant’s history and to prohibit a suit brought by a high frequency litigator. Assemblyman Travis Allen (R) spoke to the group at a luncheon held at the Citizens Hotel.  He’s introduced AB 1621.  Currently the Certificate of Merit, the underlying support for an action against a business for violation of Prop 65, is not discoverable, in other words, ts hidden from the defendant and the court. From the bill’s text:

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Debra Tash is Editor-in-Chief of Citizensjournal.us, past president for Citizens Alliance for Property Rights, business executive and award-winning author, residing in Somis.