In a decision issued on April 20, Judge Arthur Schwab of the Western District of Pennsylvania makes it clear that every potential defendant who was sent one of the Carlson Lynch firm’s ADA Internet demand letters will end up in his court, and will have little choice but to settle. Since Carlson Lynch apparently sent hundreds of letters, Judge Schwab has effectively seized control of hundreds of cases that have not yet been filed. Sipe v. Am. Casino & Entm’t Properties, LLC, 2016 WL 1580349 (W.D. Pa. Apr. 20, 2016).
The most recent decision has its roots in a number of lawsuits filed last summer on behalf of a single plaintiff (the Jahoda cases). At around the same time these lawsuits were filed Carlson Lynch apparently sent hundreds of demand letters to businesses with web sites. Each letter notified the business owner that its web site did not meet accessibility standards, and offered to assist the owner to make the web site compliant if the owner would enter into a settlement agreement that required a payment of fees to Carlson Lynch. The letters did not mention a client that had actually been harmed by the lack of access, and in this recent case it is alleged Carlson Lynch refused to identify its client when asked by the defendant.
The Jahoda cases were consolidated by Judge Schwab and ordered to mediation. All were settled and dismissed in a relatively short time. The settlements required that the businesses make their web sites accessible over time and pay Carlson Lynch some amount (the amounts are confidential) in legal fees. Judge Schwab, who clearly believes that the ADA requires web accessibility, found that this procedure was “just, speedy, and inexpensive” and in his latest opinion applauds the professionalism of the defendants’ who realized, according to Judge Schwab, that “it was in the Defendant companies’ interest to provide greater access to their products and services to the blind and visually impaired.”
Given the success of this procedure Judge Schwab has also consolidated a second group of Carlson Lynch cases files on behalf of a different plaintiff (the Sipes cases). Among the defendants in these consolidated cases was Harbor Freight Tools. There was, however, a fly in the ointment. On March 1, 2016, before it was sued in Pennsylvania, Harbor Freight Tools filed a declaratory judgment action against Carlson Lynch in the Central District of California (Harbor Freight Tools USA, Inc. v. Carlson Lynch Sweet and Kilpela LLP, Case No. 2:16-cv-01438-AB-SS). The lawsuit seeks, among other relief, a declaration as to Harbor Freight’s actual legal obligations under the ADA.
Carlson Lynch responded in California with a Motion to Dismiss that is, as of the date of this blog, still pending. It also immediately filed suit against Harbor Freight on behalf of Sipe in the Western District of Pennsylvania. That suit was promptly consolidated by Judge Schwab into the other Sipe lawsuits. Harbor Freight moved to dismiss based on its prior filing in California, but the Court was having none of it, and on April 20 it denied the motion. On April 22 Judge Schwab ordered Harbor Freight and the remaining consolidated cases to mediation.
The order makes it clear that Judge Schwab was unhappy with Harbor Freight’s effort to take its dispute to another court. He writes, for example, that:
Despite Attorney Hurley’s past experience with the process this Court established through its case management of the Jahoda series of cases, Attorney Hurley in the Sipe case now takes what amounts to a preemptive strike against Plaintiffs and Plaintiffs’ law firm in their Brief in Support of Harbor Freight’s Motion to Dismiss . . . By filing the California Lawsuit, this Court notes that Defendants have only succeeded in: (1) harassing Plaintiffs’ counsel, and (2) possibly making the rights of the blind and visually impaired Plaintiffs more difficult to enforce.
Judge Schwab follows this scolding by accusing Harbor Freight’s counsel of bad faith:
Simply put, Attorney Hurley’s decision to file the California Lawsuit . . . is disingenuous at best, and in bad faith at worst. The pre-litigation letter placed Harbor Freight on notice that its website was allegedly non-ADA complaint for blind and visually impaired individuals, and Attorney Hurley upon receipt of this letter, instead of assisting his client, Harbor Freight, by speedily and inexpensively achieving the same result he obtained through court-ordered mediation for his Toys ‘R Us client, opted to initiate another federal lawsuit in a different District, inflicting substantial litigation costs upon his client, Harbor Freight. By filing the instant Motion to Dismiss, Attorney Hurley’s actions have placed additional litigation costs on Harbor Freight. These practices certainly violate the spirit and the letter of the law.
One might think that a defendant has a right to seek a declaration of its legal obligations when threatened with a lawsuit and to defend a lawsuit if it believes it has not violated the law. However, from the tone and content of this opinion it seems Judge Schwab has already decided against Harbor Freight on the merits of the lawsuit and now believes the only good faith course of action is to capitulate.
This decision sets a disturbing precedent for other ADA cases. This ruling implicitly approves the practice of making demands and seeking settlements on behalf of unnamed clients, a practice that makes it impossible for the defendant to know whom it has harmed or how. Judge Schwab has cut the ADA litigation industry loose from any requirement of a real case or controversy, leaving private law firms free to threaten or bully defendants into settlement without going to the trouble of having a client. Most important though, this decision assumes that ADA defendants are guilty until proven innocent, and that it is “bad faith” for a defendant to insist on the right to prove its innocence.