The American Tort Reform Foundation's latest Judicial Hellholes report has ranked California as the fifth most challenging state for businesses in terms of legal climate. The report highlights ongoing concerns about the state's legal system, which is described as a testing ground for new liability theories that could negatively impact businesses and consumers.

John Kabateck, state director for the National Federation of Independent Business (NFIB) in California, commented on recent reforms to the Private Attorneys General Act (PAGA). "A deal forged this year reformed the state’s horrendously bad anti-employer law, the 20-year-old Private Attorneys General Act (PAGA), but it took the threat of a ballot initiative, the Fair Pay and Employers Accountability Act, to bring some of the reluctant parties to the table," he stated. He also noted that despite these changes, challenges remain within California's legal environment.

Tiger Joyce, president of the American Tort Reform Association, expressed concern over what he perceives as excessive litigation practices in California. "California’s legal system continues to be the trial bar’s laboratory for innovative liability theories, burdening businesses and ultimately hurting consumers," Joyce said. He emphasized that such practices increase costs for Californians on everyday essentials like groceries and gas.

The report cites specific cases such as the Gilead Tenofovir decision as examples of problematic judicial decisions. This ruling imposed a new duty on manufacturers to innovate rapidly or face liability even if their existing products are not defective. Joyce criticized this decision: "The Gilead decision is a prime example of judicial overreach... We urge the California Supreme Court to reject this dangerous theory."

According to NFIB's release, lawsuit abuse in California costs each resident $2,300 annually and results in significant job losses.