Ulterior Motives, Bad Lawsuits Cripple Economic Growth

On June 10th, CALA released a report titled, “Ulterior Motives, How Abuse Lawsuits in California's Central Valley Suppresses Job Growth in an Already Depressed Economy.” You can read the report here. The report illustrates how abusive lawsuits are robbing the Central Valley of economic opportunities. These lawsuits are being used to shut down, delay and otherwise obstruct business growth in the economically depressed Central Valley.

California is one of the most litigious states in the country with more than one million lawsuits filed every year. For a region that has already been hit pretty hard, these lawsuits are only costing more jobs and slowing the economy even further.

As economic development projects are proposed, California environmental law is being evoked, often with specious environmental claims, with the goal of delaying or stopping economic growth to further the goals of specific special interests. Lawyers from the Bay Area and Sacramento are filing questionable lawsuits alleging violations of the California Environmental Quality Act (CEQA) as a legal facade to harass private companies because of the way they operate. This abusive environmental litigation by these attorneys and their special interest clients has been referred in the media as a form of "greenmail."

The report lays out specific cases of these abuse lawsuits in Visalia, San Benito, Merced and Galt. In case after case, special interests use these abusive greenmail lawsuits to undermine genuine environmental protection efforts. CEQA was passed in 1970, reflecting a growing acknowledgement among the public that the environmental impacts of increased development should be mitigated as much as reasonably possible. Abuse of this landmark law raises questions about the motives of bona fide environmental protection efforts.

We have also seen this kind of abuse when it comes to Proposition 65, which was passed by the voters in 1986. A small group of lawyers, under the guise of the environment, file claims for technical violations and take upwards of 70% of the settlements. These lawsuits provide little or no environmental benefit, just big legal fees for a small group of lawyers. This was not what the voters in California wanted from measures like CEQA and Proposition 65.

When the legal system is used for greed and not justice, everyone pays. In the Central Valley in particular, halting job creation stifles economic development and creates entrenched unemployment in an area that is already suffering from sky high unemployment rates. What's more, the loss of potential local tax revenues can cause reductions in public safety, education and other community services. And I think we all have had enough of that lately without sacrificing more due to lawsuit abuse.

It is time to stop lawsuit abuse and focus on jobs and economic growth. The only way California is going to get back on track is when we start thinking about job creation and the stopping the impediments to that job growth. One of those issues is legal reform. Because remember, one lawsuit can put you out of business faster than any tax increase or regulation.

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