Seyfarth Synopsis: In yet another effort to limit predatory ADA lawsuits, California Governor Jerry Brown recently signed into law – effective immediately – legislation that will provide small business owners with some potential relief.
Another year, another attempt in California to reform disability access laws – which presently offer plaintiffs a $4,000 per violation bounty for suing businesses. But this one might actually make a difference – for small businesses at least. The bill is significant as a demonstration of yet another effort at reform that will still likely have little effect on the big picture. As the bill’s author has noted, it is a “watered down solution to this lawsuit abuse dilemma.”
On Tuesday, May 10th, Governor Jerry Brown signed into law Senate Bill 269. The bill became effective immediately.
Most significantly, the legislation creates a third category of businesses exempt from full minimum statutory damages — businesses that have employed 50 or fewer employees on average over the past three years, with a facility that has been inspected by a CASp inspector before the filing of a lawsuit or receipt of a demand letter (and the business was not otherwise on notice of the alleged violations), and the business corrected, within 120 days of the CASp inspection, all construction-related violations noted by the CASp inspector that are the basis for the lawsuit or demand letter. This third category is added to two other categories of businesses which are eligible for reduced statutory damages by virtue of 2012 reform legislation — the last earnest effort of reform that made it into law, which we wrote about here.
There are quite a few hoops for a small business to jump through to qualify for this new exemption, which is why we doubt it will make much of a difference.
SB 269 also allows an exemption from statutory damages for small businesses (25 or fewer employees and less than $3.5 million in gross receipts annually over the past three years), and only provides protection from enumerated technical violations (things like parking lot paint fading or signage) if the small business can manage to fix them within 15 days of notice of the alleged violations — a really short time. Often it can take more than 15 days to get a contractor out to re-paint parking lot striping, and much longer than that to order and install proper, compliant signage.
A plaintiff can still recover damages if he shows that he did in fact experience difficulty, discomfort, or embarrassment on the particular occasion as a result of one or more of the technical violations. This means that the plaintiff could just try to open the door and find a violation inside the facility, or find a violation that doesn’t fall into one of the “technical violations” specified in Civil Code section 55.56(e).
Last year’s reform effort, AB 1521, added Section 425.55 to the Code of Civil Procedure. That section imposes procedural and substantive conditions (disclosure of number of previous lawsuits filed, the reason the plaintiff was in the geographic location of the alleged violation, and why he/she visited the site) before a “high-frequency litigant” can file a lawsuit in California state courts. A “high frequency litigant” is a “plaintiff who has filed 10 or more complaints alleging a construction-related accessibility violation within the 12-month period immediately preceding the filing of the current complaint alleging a construction-related accessibility violation or an attorney who has represented as attorney of record 10 or more high-frequency litigant plaintiffs in actions that were resolved within the 12-month period immediately preceding the filing of the current complaint alleging a construction-related accessibility violation.”
AB 1521 also requires, in Government Code section 70616.5, a high-frequency litigant to pay at the time of filing a construction-related accessibility lawsuit in California state court, a $1,000 filing fee in addition to the court’s initial filing fee. Finally, AB 1521 established state court procedures to evaluate cases that involve a high-frequency litigant as well as procedures for requesting a joint inspection of the premises as part of participating in an early evaluation conference.
We’re often asked what practical effect these California reform bills have on the big picture of ADA lawsuit abuse. The response, unfortunately, is usually: very little because the statutory damages exceptions apply mostly to small businesses, and the procedural protections only apply to lawsuits filed in state courts, while many ADA cases are filed in federal courts. On May 4, 2016, the United States District Court for the Eastern District of California issued an Order confirming that defendants sued in federal court are not entitled to a stay of proceedings and an early evaluation conference under California’s disability accessibility laws.
Despite efforts to reign in overzealous plaintiff’s attorneys and bring back the spirit of the ADA and California accessibility laws, the wheels of justice turn slowly. These bills show the legislature’s attempts to chip away at this issue bit by bit.
Edited by Kristina M. Launey, Minh N. Vu.