The U.S. Chamber of Commerce has announced that California ranks among the top five states with the highest tort costs per household, reaching $5,429. This figure is attributed to the economic burden of lawsuits and the need for legal reforms. The announcement was made on their social media platform on February 25.
According to the Institute for Legal Reform (ILR), California leads the nation in high-cost jury verdicts, including nuclear verdicts—awards of $10 million or more—more than any other state. In a notable 2023 case, a court awarded $161 million against a motorcycle manufacturer despite the plaintiff colliding with an SUV that abruptly stopped while crossing three lanes. ILR President Stephen Waguespack said, "The U.S. tort system is in desperate need of strategic reforms that promote economic growth and lower costs for American households." He added that high litigation costs in California burden businesses and are often passed down to consumers in the form of higher prices, highlighting an urgent need for legal reforms.
Judicial Hellholes reports that the American Tort Reform Association (ATRA) has consistently ranked California among the top "Judicial Hellholes" in its annual reports, noting the state's challenging legal environment for businesses. In its 2024-2025 report, California was placed at No. 5. The report also points out that California serves as a testing ground for plaintiffs' attorneys to pursue novel liability theories, contributing to its reputation as a difficult jurisdiction for defendants.
According to the Insurance Information Institute (Triple-I), excessive litigation is driving up auto insurance costs as insurers now pay out more than $1.10 for every $1 collected in premiums. Third-party litigation funding allows hedge funds and other investors to profit from lawsuits, increasing settlement payouts and inflating legal expenses. Triple-I CEO Sean Kevelighan notes, "The price of insurance is the effect, not the cause of risk, and there must be more work done to curb legal system abuse."
The U.S. Chamber of Commerce is described as the world's largest business organization representing companies across various industries. It advocates for policies promoting economic growth, connects business leaders with government officials, and provides resources to help businesses succeed in a complex market.