California Innovation - New Ways to Sue
Product Liability
Duty to Innovate
This summer, the California Supreme Court agreed to review an intermediate appellate court decision that created a new theory of liability that, even by California standards, is outlandish.
In Gilead Tenofovir Cases, Gilead Sciences v. Superior Court of the City and County of San Francisco, the California Court of Appeal imposed a new duty to innovate on manufacturers. It found that even if a product is not defective or unreasonably dangerous, a company can be held liable if it was researching and developing another product that it “knew” was “safer” and did not release that product fast enough.
The Wall Street Journal pointed out that this theory could be used against any manufacturer, not just those that make prescription drugs: “Software, phone, car and medical-device manufacturers—the universe of potential defendants is endless.” Prescription drugs are already subject to multiple FDA trials and approval processes which can be barriers to innovations and it’s unclear how this new duty to go to market would complicate or interact with the FDA process.
This is the latest example of California’s courts serving as a breeding ground for novel legal theories, reinforcing its reputation as a laboratory for plaintiff lawyers. The California Supreme Court has an opportunity to prevent further abuse by rejecting this liability-expanding theory.
Benzene/Valisure
It should come as no surprise that when plaintiffs’ lawyers went searching for a favorable jurisdiction to file a new wave of junk science litigation, they looked no further than California. In 2024, they filed a series of lawsuits in California federal court against Walgreens, Kenvue and Johnson & Johnson alleging that their acne products contain unhealthy amounts of benzene and that the companies failed to warn consumers of these dangers in the products’ labels.
The lawsuits come almost immediately following Valisure, a private lab, submitting a citizen’s petition to the FDA requesting an immediate recall of benzoyl peroxide (BPO) products following its detection of a “high level of benzene, a known human carcinogen, in many specific batches of BPO products…”
What follows should raise eyebrows for anyone considering the credibility of this litigation. The petition goes on to say, “the current evidence suggests that on-market BPO products could produce substantial amounts of benzene when stored at above-ambient temperatures, specifically 37°C (98.6°F), 50°C (122°F) and 70°C (158°F),” temperatures well above those found in a consumer’s home or storage space.
This isn’t the first time Valisure has created concerns over products when heated to unrealistic temperatures. Federal multidistrict litigation in Florida involving Zantac was dismissed in 2022 after flaws behind the science of plaintiff experts’ claims were exposed by U.S. District Court Judge Robin Rosenberg. That litigation too was sparked by testing conducted by Valisure.
Judge Rosenberg said “there is no scientist outside this litigation,” despite extensive study of the question after the product’s voluntary withdrawal, “who concluded ranitidine causes cancer.”
Judge Rosenberg wrote in her opinion that “the Plaintiffs’ scientists within this litigation systemically utilized unreliable methodologies with a lack of documentation on how experiments were conducted, a lack of substantiation for analytical leaps, a lack of statistically significant data, and a lack of internally consistent, objective, science-based standards for the evenhanded evaluation of data.”
Valisure’s testing methodology for Zantac involved heating the product to well over 200 degrees, which is clearly not a realistic scenario for how an individual would consume the drug, considering that is double the temperature of the average healthy person.
Given the unlikelihood of consumers storing their acne medication at temperatures above 90°F, let alone 100°F+, federal judges evaluating this new wave of litigation must rigorously scrutinize the testing relied upon by the plaintiffs and prevent junk science from entering their courts.
PAGA Or The “Sue Your Boss” Law
Enacted in 2004, California’s Private Attorneys General Act (PAGA) has become known as the “Sue Your Boss” law. While its initial purpose was to protect workers, it has done little to help them. The plaintiffs’ bar has been the true beneficiary.
PAGA authorizes “aggrieved” employees to file lawsuits seeking civil penalties on behalf of themselves, other employees, and the State of California for labor code violations. Many PAGA lawsuits revolve around technical nitpicks, such as an employer’s failure to print its address on employees’ pay stubs, even though the address was printed on the paychecks themselves.
Three quarters of the penalties paid by non- compliant employers go to the state’s Labor and Workforce Development Agency while only 25 percent go to the “aggrieved employees” and their lawyers who take a third or so of that. In some cases, the plaintiffs’ lawyers receive even more. The number of these lucrative lawsuits doubled between 2017 to 2023.
Manageability of PAGA Claims
The California Supreme Court had an opportunity to rein in predatory “unmanageable” PAGA cases in 2024 but chose not to do so. In January 2024, the Court upheld a decision by the Fifth District Court of Appeal finding that manageability is only a requirement for class actions, not PAGA claims.
Allowing “unmanageable” PAGA cases to proceed will unfairly burden defendants and lead to inefficiencies and significant pressure to settle cases because of the overwhelming discovery that plaintiffs will seek.
Legislature Takes Action
In July, Governor Gavin Newsom signed two pieces of legislation aimed at addressing some of the problems around PAGA – A.B. 2288, authored by Assembly Member Ash Kalra, and S.B. 92, authored by Senator Tom Umberg.
Among the provisions included in the legislation:
- Increases penalty allocation from claims to employees from 25% to 35%, reducing the financial incentive for plaintiffs’
- Requires employee to “personally experience” the alleged violations in a Formerly, employees could bring claims on behalf of others.
- Lowers PAGA penalties for employers, setting specific amounts (e.g. $25 for a minor wage infraction) for smaller violations that were remedied to avoid litigation
- If employers take ‘reasonable steps’ to address a PAGA notice within 60 days, they cannot be penalized for more than 30% of the applicable penalty
- Establishes “new, higher” penalties for employers acting “maliciously, fraudulently or oppressively” in violation of labor laws
While the legislature should be applauded for taking steps to address PAGA abuses, there is cautious optimism as to whether these changes will sufficiently address the problem.
Lemon Law
While automobiles have become more reliable and the frequency of problems with them have generally decreased over the past decade, lawsuits under California’s Song-Beverly Consumer Warranty Act, known as the California lemon law, have been on the rise. Lawsuits under the lemon law reached record levels in 2023 and 2024. In 2023, there were 22,265 cases filed under the lemon law statewide, which was a 52% increase from 2022, and plaintiffs’ lawyers are on pace for filing over 30,000 claims in 2024.
A handful of law firms have established a niche market using the lemon law to target manufacturers. In 2023, just seven law firms filed 54% of all state lemon-law claims. These firms increased their filings by up to 75% between 2022 and 2023. This is particularly a problem in Los Angeles County, where judges report 700 to 800 lemon law-related cases on their docket.
The Song-Beverly Consumer Warranty Act clearly defines the obligations of the manufacturers of consumer goods. Under the law, a manufacturer guarantees that a product is in working order when sold. Should a product fail in utility or performance, the manufacturer must repair or replace the product or make restitution to the buyer in the form of a purchase refund. The Act also limits punitive damages to no more than twice the amount of actual damages.
The intent of the law was to ensure manufacturers would repair, replace, or repurchase a consumer’s defective vehicle as quickly as possible. However, plaintiffs’ lawyers have learned to exploit loopholes in the law and create windfalls for themselves at the expense of a fair resolution for consumers. The law provides an incentive for attorneys to pursue litigation even when companies make a reasonable offer that consumers may be inclined to accept because of the ability to recover unlimited attorneys’ fees for minor legal problems. This draws out the process for consumers and delays the time it takes to reach a fair resolution. The costly litigation also drives up the price of vehicles in the state. The true winners of the prolonged litigation are the plaintiffs’ lawyers. By dragging out a case, they run up hefty legal fees on top of the statutory lemon law fee entitlement.
A California Supreme Court ruling in March 2024 illustrates the excessive and unreasonable liability automakers face under California’s lemon law. In that instance, a consumer sued Fiat Chrysler after the manufacturer did not buyback a Jeep after making repairs. A jury found a violation of the lemon law and awarded the $40,000 purchase price of the vehicle, $5,000 in incidental damages, and $60,000 in civil penalties for the automaker’s failure to provide the plaintiff a timely buyback. The trial court even refused to deduct from the verdict the $19,000 trade-in credit the plaintiff had received toward a new vehicle. While an intermediate appellate court found that such an award provided the plaintiff with a windfall, the state’s high court reinstated the trial court’s ruling.
Legislative Activity
A.B. 1755 was enacted and provides that lemon law claims must be filed within one year after expiration of a relevant warranty and cannot be brought more than six years after original delivery of a vehicle. Beginning in April 2025, consumers must provide written notice to a manufacturer prior to seeking civil penalties.
PROP-65
Proposition 65, a well-intentioned law enacted in 1986, has become one of the plaintiffs’ bar’s favorite tools to exploit. Baseless Prop-65 litigation unjustly burdens companies that do business in California.
Under Prop-65, businesses are required to place ominous warning signs on products when tests reveal the presence of even the slightest, non-threatening trace of more than 1,000 chemicals that state environ- mental regulators deem carcinogenic or otherwise toxic. Failure to comply can cost up to $2,500 per day in fines, and settlements can cost $60,000 to $80,000.
A troublesome part of the law allows private citizens, advocacy groups and attorneys to sue on behalf of the state and collect a portion of the monetary penalties and settlements, creating an incentive for the plaintiffs’ bar to pursue these types of lawsuits. Law firms identify serial plaintiffs who are willing to file multiple lawsuits despite not suffering any injuries or harm.
Through October 1, there were 763 Prop-65 settlements for a total of more than $19.5 million with $16.8 million going towards attorneys’ fees and costs. This is 85% of the total settlement amount.
Prop-65 Serial Plaintiffs
Each year, plaintiffs’ lawyers send thousands of notices to companies threatening Prop-65 lawsuits and demanding a settlement. Food and beverage companies are among the prime targets. This includes allegations that products contain traces of heavy metals, such as lead, cadmium, and arsenic. The key product categories for notices relating to heavy metals include seafood products, spices, and protein supplements.
In August, Kroger and Ralphs’ Grocery were hit with a Prop-65 lawsuit due to alleged presence of heavy metals in their snacks and cinnamon products without having “clear and reasonable warnings.” The complaint alleges that the defendants are liable for up to $2,500 per day in civil penalties per individual exposure to Cadmium or Lead. The Consumer Advocacy Group, one of the top-10 Prop-65 serial plaintiffs, filed the lawsuit.
Prop-65 “60-day notice” filings have skyrocketed in recent years. These notices are often sent by organizations or individuals to companies asserting a Prop-65 violation, threatening suit, and demanding labeling changes and monetary settlement. As of October 1, 4,118 notices had been filed in 2024, far exceeding the prior year’s total at the same point in the year.
The money companies spend on compliance and litigation unnecessarily drives up the cost of goods for California consumers. It also harms small businesses that do not have the in-house expertise or means to evaluate the need for mandated warnings or handle litigation.
| Plaintiff |
Number of Settlements (2024) |
Non-Contingent Civil Penalty |
Attorney’s Fees |
Counsel |
| Environmental Health Advocates, Inc. |
87 |
$2,007,500 |
$1,795,500 |
Entorno Law LLP |
| Ema Bell |
>79 |
>$1,159,750 |
> $1,094,750 |
Evan Smith |
| Gabriel Espinoza |
>77 |
> $1,299,000 |
> $1,211,000 |
Evan Smith |
| Keep America Safe and Beautiful |
58 |
$1,329,340 |
$1,177,875 |
Seven Hills LLP, Stephanie Sy, Manning Law, APC |
| Dennis Johnson |
46 |
$727,480 |
$657,380 |
Voorhees & Bailey LLP |
| Precila Balabbo |
44 |
$806,000 |
$757,000 |
Evan Smith |
| CA Citizen Protection Group, LLC |
32 |
$713,250 |
$692,000 |
Khansari Law Corporation |
| Sandra Assareh |
27 |
$366,500 |
$260,700 |
Gil Alvandi |
| Ramy Eden |
26 |
$1,311,500 |
$754,500 |
Jarrett Charo APC |
| CalSafe Research Center, Inc. |
25 |
$550,600 |
$495,540 |
Manning Law APC |
| Consumer Advocacy Group, Inc |
23 |
$1,962,000 |
$1,631,000 |
Reuben Yeroushalmi |
Americans with Disabilities Act Litigation
In 2023, California’s federal courts hosted nearly 30% of the nation’s ADA lawsuits alleging that businesses did not meet accessibility standards. That year, plaintiffs’ lawyers filed 2,380 accessibility lawsuits – second to only to New York, a fellow Judicial Hellhole®. Plaintiffs’ lawyers also file a substantial number of these lawsuits in California state courts, which they may view as a more favorable forum in which they can tack on additional claims.
These lawsuits claim that businesses violated standards under the ADA that are intended to ensure that public places are accessible to everyone but have been abused by serial plaintiffs and certain attorneys.
Most often, small businesses are the main target of this abusive litigation because they lack the resources to defend themselves and are more likely to settle.
One of the most prolific areas of ADA abuse in California involves website accessibility. California courts are currently split on whether there needs to be a nexus with brick-and-mortar presence for websites to qualify as a place of public accommodation.
In California, penalties for accessibility violations are much higher due to the state’s Unruh Civil Rights Act, which provides for a fine of $4,000 per violation, a fine other states do not have, plus attorneys’ fees. Often these so-called “violations” are as minor as a mirror that is an inch too high or a sidewalk or parking lot that is angled one degree too much.
Unfortunately for California small businesses, California had regained the top spot with 1,588 federal ADA lawsuits filed during the first half of 2024.
ADA Serial Plaintiffs
The U.S. Supreme Court had an opportunity to provide California small businesses some relief from lawsuit abuse by serial ADA plaintiffs, but unfortunately, the Court declined to weigh in.
In February 2024, the U.S. Supreme Court denied certiorari of a troublesome Ninth Circuit decision that prevents courts from considering the litigiousness of the plaintiff when deter- mining whether the plaintiff has standing to bring an ADA accessibility lawsuit. The plaintiff, Chris Langer, a serial litigant represented by the Center for Disability Access, filed a complaint against owners of a lobster shop and smoke shop claiming a lack of accessible parking. This was just one of nearly 2,000 ADA lawsuits that he has filed over the past 30 years.
The district court found Langer’s assertion that he planned on returning to the establishment not credible based, in part, on his record of bringing ADA claims. According to District Judge Robert Benitez, “On the day he filed this lawsuit, he also filed six other lawsuits. Yet, [Langer] was unfamiliar with those suits as well as the businesses involved.”
Unfortunately, the Ninth Circuit reversed the district court’s decision, holding that a plaintiff’s motive for visiting a place of public accommodation is irrelevant to standing. According to the Ninth Circuit, district courts cannot “question the ‘legitimacy’ of an ADA plaintiff’s intent to return to a place of public accommodation simply because the plaintiff is an ADA tester or serial litigant.”
The dissent found the majority should have respected the trial court’s finding that the plaintiff’s assertions were not credible and observed it was “implausible to think that Langer intended to actually patronize the nearly 2,000 businesses that he had sued.”
California is the trial bar’s laboratory. It’s where they go to pursue innovative new theories of liability and push the envelope with regard to expanding liability for business. The courts welcome these theories with open arms and businesses are overwhelmed with claims.
Since 2017, the Top 20 plaintiffs’ firms that donated the most to political campaigns in California made combined contributions totaling more than $15.5 million.
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