Press Release: Tort Tax is a Burden We All Share, New Report Measures the Impact of Lawsuit Abuse in California
SACRAMENTO - Today, Citizens Against Lawsuit Abuse (CALA) released its latest Economic Impact of Lawsuit Abuse report, revealing that every Californian pays a $2,567 hidden “tort tax” due to excessive litigation. This number represents the hidden tax and the extra burden every Californian pays per year to compensate for California’s overly litigious climate.
“The 'tort tax' also leads to 850,915 jobs lost throughout the state, which is especially alarming given that California already has the highest unemployment rate in the nation,” said Victor Gomez, executive director, California Citizens Against Lawsuit Abuse. “The cost of excessive litigation in California continues to rise, placing a growing burden on California families, workers, and the broader economy.”
While America’s civil justice system plays a vital role in resolving disputes, compensating those who have been legitimately harmed, and deterring irresponsible behavior, the system can become imbalanced. When that happens, excessive tort costs, unpredictable outcomes, and massive awards begin to distort economic decision-making and divert resources away from productive uses.
The latest analysis, conducted by The Perryman Group, finds that excessive tort costs continue to impose a staggering economic burden on American families.
The Economic Impact of Excessive Tort Costs on California (2025)
$64.5 billion in annual direct costs
$101.2 billion in lost economic output (gross product)
850,915 jobs lost
$5.3 billion in annual state revenues
$4.4 billion in annual local government revenues
These costs translate into a hidden “tort tax” of $2,567 per person, every year, raising prices on everyday goods and services while suppressing wages.
California’s civil justice system has always been structured to provide fair remedies and promote responsible behavior, not to be punitive, excessive, or unpredictable. When baseless litigation drives exorbitant damages or an explosion in awards, the result is a misallocation of scarce economic and human resources that weakens economic growth and job creation.
All major industry sectors are affected, with particularly severe impacts felt in retail trade, business services, health services, and other service industries, which experience some of the greatest losses under excessive tort burdens.
Importantly, the report also outlines a clear path forward to help address the national lawsuit abuse crisis.
States that have enacted tort reforms to restore balance to their civil justice systems have seen improved judicial efficiency and increased economic performance over the years. These reforms preserve access to justice for those who are legitimately harmed while reducing excess costs that weigh down families and employers.
A fair and balanced legal system should promote accountability, impartial justice, and economic prosperity, not enrich the trial bar at the expense of working Americans.
The full report is available through Citizens Against Lawsuit Abuse and provides a comprehensive analysis of the economic and consumer impacts of lawsuit abuse in the United States.
The Economic Impact of Excessive Tort Costs on San Francisco-Oakland-Berkeley (2025):
$14.3 billion in annual direct costs
$22.5 billion in lost economic output (gross product)
189,192 jobs lost
$4,297 “tort tax” per person
The Economic Impact of Excessive Tort Costs on Los Angeles-Long Beach-Anaheim (2025):
$32.4 billion in annual direct costs
$50.8 billion in lost economic output (gross product)
427,377 jobs lost
$3,972 “tort tax” per person
The Economic Impact of Excessive Tort Costs on Riverside-San Bernardino-Ontario (2025):
$1.2 billion in annual direct costs
$2.0 billion in lost economic output (gross product)
16,414 jobs lost
$416 “tort tax” per person
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About Citizens Against Lawsuit Abuse (CALA)
Citizens Against Lawsuit Abuse (CALA) is a nonpartisan, grassroots movement working to end rampant lawsuit abuse across the United States. CALA advocates for commonsense legal reform measures by educating the public about the devastating, real-world costs of lawsuit abuse on working families and small businesses.
About The Perryman Group (TPG)
An economic and financial analysis firm, The Perryman Group (TPG), provides clients with well-documented, carefully considered answers to even the most complex questions. For more than 30 years, The Perryman Group has met the challenges of thousands of clients through a systematic approach and a level of performance that assures a consistent standard of excellence. The firm has been involved in scores of major events shaping the economic landscape, from crucial corporate locations to landmark legislation to important regulatory policies to notable judicial decisions.