Industrial ADA litigation – “roll me baby, just like a tumbling dice.”

By in ADA, ADA - drive-by litigation, ADA - serial litigation, ADA - Standing, ADA Litigation Procedure, ADA Mootness, Uncategorized Tags: , , , , ,

Tumbling dice - album cover for Rolling StonesThe Rolling Stones famously asked that they be rolled like a pair of tumbling dice, and looking at recent Title III ADA headlines reminded me of just what a crapshoot ADA litigation can be. The good news for businesses is that the district attorneys of San Francisco and Los Angeles have filed suit against the Potter Handy firm and its partners alleging that the firm filed false lawsuits under the ADA.¹ Hard on the heels of the action by the local authorities a federal judge in San Francisco, Vince Chhabria, entered a series of show cause orders requiring the Potter Handy firm and its clients to file sworn declarations providing factual support for their allegations concerning having visited and intending to visit ADA defendants in the future.² I don’t know how Potter Handy and its clients will respond to these orders, or what Judge Chhabria will do with those responses, but within days of these actions a federal judge in San Jose entered an all too typical order allowing a case to proceed despite being more or less identical to those being handled by Judge Chhabria. Sevens or snake eyes, in ADA Title III matters defendants and plaintiffs are at the mercy of the random assignment of judges done with each federal lawsuit filed.

First, a little background to Judge Chhabria’s orders. Because Title III of the ADA only provides for injunctive relief a plaintiff cannot maintain a lawsuit under Title III unless they allege and ultimately prove they plan to go back to the same store or restaurant they are suing. This is because in a private lawsuit federal courts cannot make orders that are only for the public good. Whatever the court does must be of benefit to the plaintiff. If the plaintiff is never going back to the property then ordering the owner to comply with the ADA won’t do the plaintiff any good. Thus, for the federal court to act the plaintiff must show they will return in the future; otherwise the court will dismiss the case for lack of jurisdiction.

It has been obvious for years that a serial lawsuit filer claiming they will return may not be telling the truth. After all, how likely is it that someone who has sued dozens of restaurants that they never ate at before really intends to go back to all of them?  However, in the earliest part of a lawsuit, before there has been any evidence, the court has to assume that what the plaintiff says in their complaint is true as long as it is minimally plausible. That means it is hard to get these cases dismissed early on, which in turn means that it they are expensive to fight. Since the owner doesn’t get back their attorneys fees  even if they win it always makes business sense to just settle and save money. That logic has lead to tens of thousands of settlements and made it highly profitable for law firms to file Title III ADA suits. For very little effort they can make thousands or tens of thousands of dollars on each case they file. This is the origin of industrial litigation under Title III; there is an incentive to file lawsuits on an industrial scale based on the structure of the ADA and the nature of the Federal Rules of Civil Procedure.

This incentive is especially strong in California because a plaintiff can always add a claim under the state’s Unruh Act. Under the Unruh Act the plaintiff gets a minimum of $4,000 in damages, meaning that the risk of litigation is higher and the plaintiffs’ lawyers can demand and get higher settlement amounts. The Unruh Act is why some 40% of all ADA cases nationwide are filed in California state or federal court.

The California legislature tried to put a stop to this use of the Unruh Act by making filing claims under the Unruh more expensive and difficult in state court. Unfortunately, state laws don’t affect how the federal courts do business, so many plaintiffs have kept filing in federal court while tacking on an Unruh Act claim, thus getting the benefit of the $4,000 damage amount without the hassle of the state court requirements. Seeing that they were being used by these plaintiffs many federal courts in California began refusing to consider Unruh Act claims – something technically called refusing to exercise supplemental jurisdiction.³ I say many federal courts because this isn’t universal. The rules about supplemental jurisdiction leave a lot of discretion to the federal judge, and some just think it is o.k. to allow Unruh Act claims to tag along with an ADA claim.

That brings us to two lawsuits that are kind of hard to tell apart. One, Whitaker v. Peet’s Coffee, Inc. is pending before Judge Chhabria in the San Francisco Division of the United States District Court for the Northern District of California as Case No. 21-cv-07698. The other, also called Whitaker v. Peet’s Coffee, Inc. is  pending before Judge Beth Labson Freeman in the United States District Court for the Northern District of California, San Jose Division as Case No. 21-cv-05163. Both were filed by the Potter Handy firm. I have not read the complaints, but it would be surprising if there was any significant difference except the address of the Peet’s Coffee that Mr. Whitaker supposedly visited. It is safe to say that given the number of lawsuits filed in Mr. Whitaker’s name these complaints are more like Fords rolling off the assembly line than Maseratis being hand crafted in Italy.

Despite their obvious similarities, within the last few days the two federal judges involved reached completely different conclusions about how to handle these cases. On April 19 and 20, 2022 Judge Chhabria entered  orders requiring an evidentiary hearing on whether Mr. Whitaker has standing to sue and ordering Mr. Whitaker and his attorneys to show cause why his Unruh Act claims should not be dismissed. This case is a little further along than the cases in which Judge Chhabria entered his show cause orders, but his approach is clear. He is skeptical of the plaintiff’s claim that he has ever been to the defendant Peet’s Coffee store and equally skeptical that he ever plans to return. Instead of waiting for a trial to hear the evidence on these issues he is going to take evidence early and, if it turns out the plaintiff cannot prove an intent to return, dismiss the case before he and the lawyers spend too much time on it.(4) He has also fairly clearly aligned himself with those federal judges who are declining to exercise supplemental jurisdiction over Unruh Act claims, thus making it a little less profitable to file ADA cases if they end up in his court.

Judge Freemen has taken a very different approach. In a decision entered on April 21, 2022 she refused a request that she do what Judge Chhabria is doing. I will let her speak for herself on this:

Overall, however, the Court agrees with Judge Orrick and several other courts in this Circuit that “if an ADA plaintiff is going to be disbelieved on the issue of standing, it should be in the context of factfinding, not in the context of a Rule 12(b)(1) motion.” Garcia, 2021 WL 7285264, at *4 (brackets omitted).
Here, given Plaintiff’s unequivocally asserted intent to return to the Coffeeshop and the absence of direct evidence rebutting that intent, the Court does not find that an evidentiary hearing is warranted. That said, the Court notes that discovery has yet to commence, and it is under a continuing obligation to ensure subject matter jurisdiction exists over Plaintiff’s claims at all times. Should subsequent facts arise in the course of discovery that would provide a direct basis to doubt Plaintiff’s sworn statements of his intentions to return to the Peet’s Coffee, Defendant is welcome to renew its standing challenge at that point.
Whitaker v. Peet’s Coffee, Inc., 2022 WL 1189888, at *5 (N.D. Cal. Apr. 21, 2022). She then concludes by refusing to dismiss the Unruh Act claim, leaving the plaintiff with a larger threat and making the case more valuable to the plaintiff’s lawyers. She does suggest she might consider a challenge to standing at some point before trial, but by then it will be too late because as a practical matter the defense costs will have far exceeded the cost of settlement.

I’m sure Judge Freeman does not think of herself as a proponent of industrial ADA litigation, but her unwillingness and that of many other federal judges to address standing to sue and the credibility of allegations of intent to return at the very beginning of the case has the effect of perpetuating a system that causes millions of dollars to be spent on lawyers and does almost no good for those with disabilities. In many cases the effect of an ADA lawsuit is simply to drive a small business out of business, thus making sure no disabled person will ever benefit from its goods and services. In most cases, I believe, the plaintiff’s lawyers get their money and walk away so that the owner never has to make the property accessible(5). The fees paid to settle these cases are just a tax businesses pay to avoid complying with the ADA.(6)

Whether you agree with Judge Freeman or Judge CChabria about how to approach ADA cases, it is disturbing that the fate of defendants and plaintiffs alike depends on the random assignment of cases to federal judges. No matter which side you are on, the determining factor in the outcome of the lawsuit will be the initials put after the case number that indicate which judge the case was assigned to. If you are a plaintiff or plaintiff’s lawyer and you see BLF after the case number you’ve hit the jackpot and it is almost certain you’ll get a quick and easy payday by settlement. If you are defendant and you see VC after the case number there’s a good chance you can either make a better deal or even get out of the case entirely at a reasonable cost of defense. I haven’t surveyed all 19 judges in the Northern District of California, but I’m sure that others can be found on both sides of this divide, or even taking their own independent approach to these issues.

The lawsuit against Potter Handy by the San Francisco and Los Angeles district attorneys might have some effect on these cases, but the outcome is probably years away and won’t affect the many other firms who file serial ADA lawsuits. The solution lies, unfortunately, with Congress, which has been notoriously dysfunctional for some years. For now defendants in Title III ADA lawsuits can only hope for the best and make sure their defense or settlement strategy is based on what can be known about the individual judge to whom their case is assigned. It is that assignment, not any principle of law, that will likely determine the outcome. We are all like Mick Jagger, except that it is a computer down at the District Clerk’s office that’s going to “roll me, just like a tumbling dice.”

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¹ Thanks to Jim Vitale and William Goren for calling my attention to the filing. One of several stories about the filing can be found at https://www.courthousenews.com/law-firm-accused-of-ada-shakedown-of-small-businesses/ I cannot say, of course, whether the claims have any merit.

² See, Federal Judge in San Francisco Challenges Lawsuits Filed by Aggressive ADA Law Firm

³ See my blog Supplemental Jurisdiction for my earliest note about this kind of dismissal. Search “supplemental” in accessdefense.com and you’ll find the many updates I’ve posted on where various courts stand on the issue.

(4) It is a depressing truth that by the time a case gets as far as this one the defense costs have already exceeded the cost of settlement, but Judge Chhabria’s orders in newly filed cases have the potential to save defense costs by getting rid of meritless cases early on.

(5) Assuming, of course, that there was ever a real accessibility problem.

(6) I’ll note here, as I have many times before, that this kind of industrial litigation has been going on for at least 15 years and the number of cases continues to increase. If this kind of lawsuit were working as a way to persuade businesses to become accessible we would see the number of filings going down, not up. Industrial litigation is a failure in terms of ADA compliance; only the lawyers benefit.


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Stigmatic injury and how the 11th Circuit got in wrong in Laufer v Arpan

By in Accessibility Litigation Trends, ADA - Hotels, ADA - serial litigation, ADA - Standing, ADA Internet Web Tags: , , , , ,

King Cnut rebukes his courtiers for believing he can control the tideCan the 11th Circuit hold back the tide as King  Cnut famously failed to do?² In Laufer v. Arpan LLC, 2022 WL 906511 (11th Cir. Mar. 29, 2022) the 11th Circuit disagreed with the Fifth, Tenth and Second Circuits concerning the injury sufficient to satisfy the standing requirements in Article III of the Constitution. If the case goes to the Supreme Court the 11th Circuit is likely to get its feet wet on Article III standing, but of more interest is the Court’s failure to consider whether the plaintiff had even suffered a statutory injury; that is, did she suffer the kind of injury Title III of the ADA was intended to prevent? If there was no statutory injury then the question of constitutional injury never arises.

The lawsuit was typical of the thousands filed by Laufer. She admitted that she visited a hotel website with no intention of visiting the hotel but instead to see if it met DOJ regulations concerning information about accessibility features. When she found something missing she sued, claiming that this violation of the ADA caused her humiliation and embarrassment. That humiliation and embarrassment was her only injury. She never intended to visit the hotel so the absence of information did not deprive her of any opportunity to stay at the hotel or enjoy any of its goods and services.

This is where qustion of statutory injury comes in. There is very good evidence that Congress never intended Title III of the ADA to protect individuals with disabilities from humiliation and embarrassment. To see why it is useful to make the same comparison the 11th Circuit made when it considered that damages for emotional distress were available under Section 504 of the Rehabilitation Act, another disability discrimination statute. Section 504 explicitly permits the recovery of damages, which damages for emotional distress being only one kind of damages that may be awarded. Such damages are also available to victims of discrimination under the Fair Housing Act and under Titles I and II of the ADA. They are not, however, available under Title III of the ADA. Congress deliberately chose to exclude from Title III of the ADA any kind of damage remedy.

The absence of any damage remedy at all shows that emotional injuries like humiliation and embarassment are not injuries that Title III is intended to prevent. Title III only allows injunctive relief because its purpose is to prevent the denial of the “full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation.” It was never intended to prevent bad feelings that might result from being aware of an ADA violation. No matter how bad a discriminatory website or other condition makes a disabled person feel, unless it denies them the full and equal enjoyment of the public accommodation then it has not injured them in the way the statute is intended to prevent, and that is the only kind of injury that gives rise to standing. Because Laufer never suffered a Title III statutory injury she had no standing to sue under Title III regardless of any constitutional considerations.¹

However, even if Title III granted a remedy for emotional distress Laufer’s alleged distress would not satisfy the requirements of the Constitution. The 11th Circuit’s error is found in two sentences from the opinion:

Because she claims not only that she suffered illegal discrimination but also that the discrimination resulted in “frustration and humiliation” and a “sense of isolation and segregation,” she has adequately pleaded a concrete stigmatic injury. And because her emotional injury is her emotional injury, it affects her “in a personal and individual way” and is therefore sufficiently particularized

2022 WL 906511, at *4. The key word here is “stigmatic.” A stigmatic injury is an injury that one suffers  because one is a member of some group. The injury itself is by definition neither personal nor individual because every member of the group would suffer the same injury under the same circumstances.  All that is personal to Laufer or another member of the group who suffers a stigmatic injury is the degree of harm – how bad they feel – rather than the nature of the injury.

Allen v. Wright, a case the 11th Circuit refers to but does not seem to understand explains why a stigmatic injury, though real, does not satisfy the requirements for constitutional standing.

Our cases make clear, however, that such injury accords a basis for standing only to “those persons who are personally denied equal treatment” by the challenged discriminatory conduct.

Allen v. Wright, 468 U.S. 737, 755 (1984), abrogated on other grounds, Lexmark Intern., Inc. v. Static Control Components, Inc., 572 U.S. 118 (2014). The Court went on to explain that there is no “personal” denial of equal treatment when the injury  is based on nothing more than membership in a particular group:
If the abstract stigmatic injury were cognizable, standing  would extend nationwide to all members of the particular racial groups against which the Government was alleged to be discriminating . . . All such persons could claim the same sort of abstract stigmatic injury respondents assert in their first claim of injury. A black person in Hawaii could challenge the grant of a tax exemption to a racially discriminatory school in Maine.
Laufer is just like the hypothetical black person in Hawaii who is offended by the grant of a tax exemption to a private school in Maine that engages in race discrimination. She is offended by discriminatory conduct but she is not a victim of that conduct because she was not “personally denied equal treatment.” She was not personally denied equal treatment because, of course, she never sought equal treatment from the hotel whose website she visited, and she was given exactly equal treatment with respect to the information on the website itself.
What Laufer really alleges and what the 11th Circuit mistakenly relies on is what the Supreme Court calls the “offended observer” theory of standing;  See, Am. Legion v. Am. Humanist Assn., 139 S. Ct. 2067 (2019) [Gorsuch and Thomas concurring]. This notion of standing has been rejected by the Supreme Court because:
The federal courts have abjured appeals to their authority which would convert the judicial process into “no more than a vehicle for the vindication of the value interests of concerned bystanders.”
United States v. SCRAP, 412 U.S. 669, 687, 93 S.Ct. 2405, 2416, 37 L.Ed.2d 254 (1973). Laufer is a concerned bystander. She is disabled, just as the plaintiffs in Allen v Wright were black, but like them she has never been denied equal treatment; that is, equal access to goods and services. Without a desire to take advantage of the goods and services of a public accommodation a plaintiff like Laufer will never suffer the kind of individual injury required to satisfy Article III.
Laufer v. Arpan cannot be squared with the Fifth Circuit’s decision in Laufer v. Mann Hosp., L.L.C., 996 F.3d 269 (5th Cir. 2021), the Tenth Circuit’s decision in Laufer v. Looper, 22 F.4th 871, 877–78 (10th Cir. 2022) or the Second Circuit’s decision in Harty v. W. Point Realty, Inc., 28 F.4th 435 (2d Cir. 2022). Each of these makes slightly different arguments concerning tester standing as the courts look back to their own earlier precedents, but at the end of the day these cases all correctly reject the notion that a stigmatic injury without unequal treatment is sufficient for Article III standing.  There is a clear conflict among the circuits as my colleague Bill Goren has pointed out, and one of these cases should make it to the Supreme Court, which will have the opportunity to put a stake in the heart of industrial litigation under the ADA by doing no more than requiring that ADA Title III plaintiffs allege and prove more than a mere stigmatic injury.
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¹Many courts hold that a person with a disability suffers an injury if they merely confront or become aware of a discriminatory condition. These decisions ultimately rest on the notion that the person who confronted the condition was thereby deterred or prevented from taking advantage of the offered goods and services.
² King Cnut (or Canute or Knut) was supposedly annoyed by the flattery of his courtiers concerning his own power as King. To show them that their flattery was vain and did not impress him he had  his throne set by the sea and then commanded the tide, to no avail, to not get his feet wet.

 


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DOJ Guidance on Website Accessibility and the ADA – it still could be worse

By in Accessibility Litigation Trends, ADA Internet, ADA Internet Web, ADA Web Access Tags: , ,

On March 18 the Department of Justice published its Guidance on Web Accessibility and the ADA. Anything that helps businesses understand their ADA obligations is helpful, but the fact that this Guidance was posted on the beta site of ADA.gov tells you that even DOJ has low expectations. Those low expectations are justified because the Guidance doesn’t define website accessibility and therefore does nothing to help businesses have certainty about their compliance with the law. More


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ADA and FHA Quick Hits – it could be worse edition

By in Accessibility Litigation Trends, ADA - drive-by litigation, ADA - Hotels, ADA - Standing, FHA, FHA definition of handicap, FHA Emotional Support Animals, HOA, Uncategorized Tags: , , ,

Flag of UkrainePictures of bombed out buildings and civilian casualty counts are a reminder that aggravating and expensive as ADA and FHA lawsuits can be, taking these disputes to court is a luxury most people in the world do not enjoy.  For those of us who can engage in a civilized discussion of legal issues, here are the latest cases and other news. You’ll see where I think the courts and administration have gone wrong, but I’d rather be here than most of places in the news these days.

HUD and DOJ pushing hard on ESA cases.

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ADA and FHA Quick Hits – Not quite President’s Day edition part 1

By in Accessibility Litigation Trends, ADA - drive-by litigation, ADA - serial litigation, ADA - Standing, FHA, Uncategorized Tags: , , , , , , ,

Picture of Mount RushmoreThe last six weeks have seen some important or at least interesting decisions under the Fair Housing Act and Title III of the ADA. If there is any common thread, it is that courts in general seem increasingly reluctant to give serial plaintiffs the benefit of the doubt on dubious pleadings while some judges continue to treat private enforcement as a legitimate means to advance the policy goals of these statutes. This is part 1 of a 2 part blog, so stay tuned . . . More


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