Protecting Small Businesses Is Critical to COVID-19 Recovery

Ann Kinner
NFIB California Leadership Council Member; Owner, Seabreeze Nautical Books and Charts in San Diego, CA.

Despite the CARES Act’s crown as the largest stimulus package in human history, the $350 billion it allocated for small businesses was exhausted in just two weeks. In 2016, small businesses employed 59.9 million people and made up 99.9 percent of all U.S. businesses. Now, with unemployment numbers nearing thirty million, the small business community is hemorrhaging money from all sides, burning through precious cash reserves and being forced to lay off employees or shutter their doors for good.

The backbone of our country, our 30 million small businesses employ nearly half of total private-sector workers, which makes the current health crisis particularly painful. Whereas large corporations have either the luxury of issuing corporate bonds or significant emergency funds in place, small businesses, by their nature, are not so lucky. Owners often risk everything to start the business, and then, if profits do come, they are needed to invest in workers or sustain operations.

As such, when crisis strikes, these businesses are the most vulnerable. Often dependent on unreliable or paltry government relief, these companies must focus entirely on survival and cannot afford any other outside expenses. 

Enter plaintiffs’ attorneys. Just last week, an ad circulated to these lawyers in California encouraging them to pursue individuals who are quarantined at home by visiting a website that would recruit them join class action lawsuits. The tagline? “Finding Plaintiff’s Today Has Never Been This Easy!”

If you are thinking that this does not sound like legitimately harmed consumers justly suing for damages, you are correct. Instead, plaintiffs’ attorneys are exploiting a crisis that has taken lives, put millions of Americans out of work, and has forced small businesses to file for bankruptcy left and right. Class action litigation was designed to efficiently deliver compensation to large groups of individuals who were all adversely impacted in the same way. Instead, lawyers are now shopping for clients auction-style in order to boost their possible winnings in court.

Other than the plaintiffs’ lawyers, no one is winning. The plaintiffs’ counsel walks away with the majority of any settlement or court award, while the plaintiffs themselves end up with literal pennies in some cases. Worst of all, this unethical practice does not discriminate when it comes to who gets sued. Unfortunately, small businesses and corner stores doing their best to serve local communities cannot afford court costs to fight cases on their merit. Many are forced to settle, putting them out of business for good. It only takes one lawsuit to destroy a small business and in these uncertain times, now is not the time for business owners to worry about fighting a frivolous lawsuit. 

These types of lawsuits are plaguing our courts and this misuse needs to stop, especially during the coronavirus pandemic. If businesses cannot fairly fight a case in court, then cases hardly need merit or justification. The mere threat of a lawsuit forces a settlement, and only one side sees the money – plaintiffs’ lawyers. California’s myriad of overreaching regulations, such as Prop 65 and Private Attorney General Act regulations, already make it tough for small businesses as it is. With the coronavirus now putting these companies on the brink, they cannot afford to become the next victims of lawyers chasing easy paydays.

It is imperative that our lawmakers immediately act to shield small businesses from COVID-19-related lawsuits. We should be looking to improve our economy, not hurt it. Already, plaintiffs’ attorneys are compiling coronavirus cases with scant evidence. How can there be any claims while we all have been quarantined for the past month? California’s road to recovery can only begin when consumers get back on their feet, jobs are restored, and small businesses resume operations.

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