iStock-915690744
Advocacy

Californians Against Predatory Lawsuits

Protect California Small Businesses

WHAT WE’RE TRYING TO ACCOMPLISH: End legally-sanctioned extortion by a small group of unethical law firms that shake down our California small businesses through bogus lawsuits.

A small group of unethical law firms have enriched themselves by targeting small, minority-owned businesses with frivolous Americans with Disabilities Act lawsuits designed to extort owners into settling.

The proposed Californians Against Predatory Lawsuits Act 2023 offers a targeted, legislative fix to close this loophole to end this predatory practice.

THE PROBLEM:

A small number of bad actors are abusing the ADA in a predatory scheme designed to enrich lawyers

  • Approximately 92 percent of all California accessibility claims are filed by only five law firms.  
  • Of the 3,850 complaints, only 5.1 percent resulted in a judgment.
  • Firms have targeted over 35,000 businesses statewide since 2010.
  • ADA cases take up an estimated 25-30% of the US District Court’s civil caseload.
  • Two prolific lawyers, Peter Strojnik and Ted Pinnock, have been disbarred for engaging in similar unethical practices, including for filing fraudulent lawsuits, but many more bad actors are still operating. 

Even though many claims are baseless, small businesses overwhelmingly choose to settle claims, because it is cheaper than fighting them in court

  • Often, plaintiffs live hundreds of miles away from the businesses from which they claim damages, rarely visiting the businesses again after the case is settled.
  • One lawsuit against a San Francisco Chinatown restaurant alleged that its outdoor seating was not ADA compliant, even though it was only providing takeout service and did have outdoor seating.
  • Firms file multiple claims for one single infraction, each infraction valued at a minimum of $4,000.
  • Small businesses will settle for approximately $10,000 or more. Fighting the claims and proving the absence of a violation in court costs $50,000-$100,000.
  • According to a lawsuit filed by Los Angeles and San Francisco counties, tens of millions of dollars in settlements have been extracted by Potter Handy alone from thousands of small businesses in California.
  • These settlements exacerbate tremendous financial losses due to the COVID-19 pandemic.

These firms attempt to force small, minority-owned businesses to settle due to lack of legal resources

  • Small business owners overwhelmingly choose to settle, because they lack resources to fight these claims, regardless of whether an actual violation occurred.
  • Law firms take advantage of the fact that immigrant business owners often speak English as a second language, lack the financial resources to fight the claims in court, and are unfamiliar with the complexities of the U.S. legal system.
  • Growing numbers of lawsuits against Chinese-owned businesses appeared to rise with the wave of anti-Asian and anti-Chinese hate that occurred during the pandemic.
  • 120 businesses in the Richmond and Chinatown neighborhoods, which are predominantly Asian, were sued.
THE SOLUTION:

The proposed legislative fix is narrow in scope, closing the loophole that allows for this type of extortion while preserving the legislative intent of the ADA

  • The law targets repeat offenders who clearly engage in predatory practices
  • It eliminates perverse incentives that reward bad actors
  • The legislation keeps fully in tact the right of those with legitimate claims to seek redress in court.

Los Angeles and San Francisco Suit
Predatory Law Firms Target Minority-Owned Small Businesses
Firms Target Small Businesses of all Kinds
Serial Filers Now Target Websites for Access Suits

Plaintiffs and Plaintiff’s Firms Engaging in Abuses of ADA Law Take Many Forms and Come from Many States:

BACKGROUND

The ADA and Your Website
Many individuals with disabilities are unable to use a typical website through a computer or smartphone. The most obvious category of such individuals is those who are blind or who have sight impairments. But it is important to understand that sight impairment is not the only type of disability that needs to be addressed by a hotel’s website. Making sure your hotel’s website is accessible to anyone living with any of these disabilities should be a key priority:

  • Visual disabilities: blindness, other sight impairments, color blindness;
  • Deafness and hearing impairments;
  • Physical disabilities (motor disabilities and repetitive stress injuries);
  • Cognitive and neurological disabilities, including dyslexia, memory impairments, mental health disabilities, seizure disorders

In addition to the website, hotels must ensure their social media, point-of-sale devices

Lawsuits & Legal Considerations

While many businesses have argued that the ADA only applies to physical structures and facilities and not to websites, the DOJ has continuously taken the position that the ADA does not merely cover physical structures – it includes such things as websites. Many courts have taken the same position.

In the absence of website regulations, the courts are filling the void with a patchwork of decisions that often conflict with one another. The uncertain legal landscape has fueled a surge of lawsuits and demand letters filed and sent on behalf of individuals with disabilities alleging that the websites of thousands of public accommodations are not accessible.

View Complete Fast Facts
FRIVOLOUS ADA LAWSUITS

California Commission on Disability Access (CCDA) CCDA is authorized to act as an information resource to increase coordination between stakeholders, make recommendations to promote compliance with federal and state laws and regulations, and provide uniform information about programmatic and architectural disability access requirements to the stakeholders.

CCDA releases an annual report to the California State Legislature, which provides detailed numbers and statistics for federal and state construction-related physical access ADA complaints and prelitigation letters reported to CCDA. The law requires attorneys to submit these complaints and prelitigation letters to CCDA within five business days of filing a new lawsuit; however, many complaints go unreported.

View Complete Fast Facts

Q1: Does this bill make it more difficult for those with legitimate claims to seek redress?

A1: No. The bill is written narrowly to affect only high-frequency litigants and is tailored to reduce their incentive to extort small businesses. The private right to action for legitimate claims remains completely unaffected.  

Q2: There is no state enforcement mechanism for the ADA, so how will accessibility be protected?

A2: Currently, the ADA/Unruh Act is enforced by private litigants. However, the Act, as written, is overly broad and sets up perverse incentives for law firms to engage in predatory practices. Assemblymember Stephanie Nguyen’s Assembly Bill 539 reduces the incentives to abuse the Unruh Act but maintains existing incentives for legitimate claimants to bring their issues forward for redress.

Q3: Shouldn’t businesses that violate the ADA/Unruh Act be subject to penalties?

A3: Yes. The bill does not dispute that businesses must be compliant with existing accessibility law. However, because many law firms use high-pressure tactics to force small businesses to settle, many small businesses are being penalized regardless of whether any genuine violations existed.