ADA – drive-by litigation

Painting of Queen Mary I of England “Short sharp shock” is too good a phrase not to re-use, as proved by the fact that after its first use by Mary I of England to describe her hope that burning a few protestants would bring others back into the fold and its popularization by Gilbert and Sullivan it turned up in a song by Pink Floyd and as the title of Michelle Shocked’s first album. My use probably won’t get added to the Wikipedia page on the phrase (7) but it suits a discussion of braille gift card litigation and the effect of TransUnion v. Ramirez in ADA litigation.

A few days after the Supreme Court issued its opinion in TransUnion v. Ramirez I predicted that it would have an effect on ADA industrial litigation.¹ I’m happy to report that this particular prediction seems to be coming true.² The latest example is Calcano v. Swarovski N.A. Ltd., 2022 WL 1788305, at *1 (2d Cir. June 2, 2022) a case dealing with the sudden rise and fall of ADA lawsuits demanding braille gift cards.(6) The Second Circuit took its own 2013 holding on ADA standing, boosted it with the holding in TransUnion, and threw out five lawsuits with typical industrial boilerplate allegations. The Court’s reasoning deserves some attention because it will be useful for defense counsel in any typical ADA lawsuit.

The standing related allegations were identical in all five lawsuits:

Plaintiff “telephoned Defendant’s customer service office in an attempt to purchase a store gift card from the Defendant and inquired if Defendant sold store gift cards containing Braille.”
Plaintiffs state that they live near their respective Defendants’ stores and have been customers “on prior occasions.”
Plaintiffs also claim that they “intend[ ] to immediately purchase at least one store gift card from the Defendant[s] as soon as the Defendant[s] sell[ ] store gift cards that are accessible to the blind.”

Beyond this they alleged in conclusory fashion that they were unable to equally use and enjoy the goods and services of the defendant businesses because they were blind and needed braille gift cards.

The Second Circuit began its analysis with its own 2013 decision in Kreisler v. Second Ave. Diner Corp., 731 F.3d 184 (2d Cir. 2013). In Kreisler the Court held that a plaintiff alleged the injury in fact and necessary likelihood of future injury if:

“(1) the plaintiff alleged past injury under the ADA; (2) it was reasonable to infer that the discriminatory treatment would continue; and (3) it was reasonable to infer, based on the past frequency of plaintiff’s visits and the proximity of defendants’ [businesses] to plaintiff’s home, that plaintiff intended to return to the subject location.”

Kreisler, 731 F.3d at 187–88. Projecting its own test onto the later TransUnion decision the Court held that third requirement, a reasonable inference of intent to return, was intended to make sure the “’the risk of harm is sufficiently imminent and substantial’ to establish standing,” quoting TransUnion, 141 S. Ct. at 2210. It went on to adopt the 11th Circuit’s standing analysis, which it describes this way:

Thus, the central inquiry is not whether a complaint pleads the magic words that a plaintiff “intends to return,” but if, “examined under the ‘totality of all relevant facts,’ ” the plaintiff plausibly alleges “a real and immediate threat of future injury.” . . . (including “definiteness of the plaintiff’s plan to return” and “frequency of the plaintiff’s travel near the defendant’s business” as factors to consider in assessing whether a plaintiff “faces a real and immediate threat of future injury” (cleaned up)).

quoting Kennedy v. Floridian Hotel, Inc., 998 F.3d 1221, 1233 (11th Cir. 2021). It did not adopt the 11th Circuit’s explicit four factor analysis concerning intent to return³ instead sticking to its own earlier and more general description of the needed analysis: “we must refer to a complaint’s “factual context” to discern whether to accept “a complaint’s conclusory statements.”” quoting Amidax Trading Grp. v. S.W.I.F.T. SCRL, 671 F.3d 140, 148 (2d Cir. 2011), which in turned quoted Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

With its framework for analysis in place the Court’s next step was a crucial one, for it rejected the idea that quoting or paraphrasing language from its own cases was sufficient. The reasoning is crucial and worth quoting:

Here, each Plaintiff pleads the identical assertion that he resides “in close proximity to” Defendants’ businesses, has been a “customer at Defendant’s [location] on prior occasions,” and “intends to immediately purchase at least one store gift card from the Defendant as soon as the Defendant sells store gift cards that are accessible to the blind.” . . . . These allegations parrot the court’s language in Kreisler, see 731 F.3d at 188, and Plaintiffs characterize them as factual assertions that we must presume as true. But these assertions are nothing more than “legal conclusion[s] couched as … factual allegation[s].

It would have been helpful if the Court had told us a little more about the difference between the allegations in Calcano and the allegations in Kreisler. Where the plaintiffs in Calcano pled “close proximity,” Mr. Kreisler pled “within several blocks,” and where the plaintiffs in Calcano pled “prior occasions” Mr. Kreisler pled that he passed by “three or four times a week.” The reason the allegations in Calcano were conclusory is that the words came not from Mr. Kreisler’s allegations, but rather from what the Court calls the Camarillo test after its decision in Camarillo v. Carrols Corp., 518 F.3d 153, 158 (2d Cir.2008). A description of a legal test is a conclusion that could apply to many different allegations. Facts, the court seems to be saying, won’t usually be alleged in words that quote a legal test.

Far more important than this distinction is, however, the Court’s willingness to compare the allegations in the various Complaints to facts that could only have come from outside the Complaint. The Court notes that one plaintiff claims he lived near a store that doesn’t exist, and that another used “close proximity” to refer to a location in Manhattan when he lived in the Bronx. Phrases like “close proximity” are used by serial litigants to avoid facts because facts are their enemy. A willingness to test such allegations against facts that cannot be disputed is the first step to early dismissal of these claims.

A second important fact is the Court’s willingness to insist on details. It describes the failings in the complaints like this:

Calcano, Dominguez, and Thorne fail to provide any details about their past visits or the frequency of such visits. They do not specify which stores they visited or what items they purchased. And they do not say why they want to purchase braille gift cards—for their own use or as gifts—so urgently that they intend to do so “immediately … as soon as the Defendant[s] sell[ ] store gift cards that are accessible to the blind.” . . . Without such basic information, Plaintiffs cannot possibly show that they have suffered an injury that is “concrete and particularized.”

This is a standard that is almost never imposed on plaintiffs in ADA cases, especially in the Ninth Circuit, which only reluctantly acknowledges the possibility that plaintiffs might routinely file lawsuits that have no merit and is the reason why eliminating ADA litigation abuse has been left in the hands of the prosecutors.(4) Applying the Second Circuit’s insistence on details to ADA suits generally would make the suits almost impossible to plead.

Finally, and most important of all, the Second Circuit was willing to consider these lawsuits in the larger context of hundreds of lawsuits filed by the same law firms and plaintiffs. “Third, we cannot ignore the broader context of Plaintiffs’ transparent cut-and-paste and fill-in-the-blank pleadings.” Too many district judges bury their head in the sand and refuse to consider that the plaintiff’s actions in other lawsuits reflect on the credibility of allegations in the suit before them. Some recognize that multiple filings of almost identical filings are relevant (5) but this is not universal at the motion to dismiss stage.

Except for the decision in TransUnion nothing really changed between the earlier Second Circuit decisions and Calcano. I’m sure the Court would say it would have reached the same result regardless, but I think TransUnion has reminded this and other Courts that standing is an important concept that, among other things, takes the federal courts out of the business of aiding and abetting get rich quick schemes based on finding a pet plaintiff to file multiple lawsuits. To quote Winston Churchill, “This is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

+++++++++++++++++++++++++++++++++

¹ See Transunion v Ramirez – has the Supreme Court put an end to cheap standing in ADA litigation?

² Circuit Court decisions in ADA serial filer cases that cite TransUnion include Laufer v. Arpan LLC, 29 F.4th 1268 (11th Cir. 2022) (which got it wrong for reasons I explain in Stigmatic injury and how the 11th Circuit got in wrong in Laufer v Arpan), Harty v. W. Point Realty, Inc., 28 F.4th 435, 438 (2d Cir. 2022) and Laufer v. Looper, 22 F.4th 871, 877 (10th Cir. 2022) (both of which got it right).

³ We have previously considered four factors relevant to this analysis: “(1) the proximity of the defendant’s business to the plaintiff’s residence; (2) the plaintiff’s past patronage of the defendant’s business; (3) the definiteness of the plaintiff’s plan to return; and (4) the frequency of the plaintiff’s travel near the defendant’s business.” Kennedy v. Floridian Hotel, Inc., 998 F.3d 1221, 1233 (11th Cir. 2021).

(4) On April 11, 2022 the District Attorneys for San Francisco and Los Angeles County filed a civil action against the Potter Handy law firm and its partners claiming that it had filed numerous fraudulent ADA lawsuits. On May 19 a grand jury in San Francisco indicted Kousha Berokim, a Beverly Hills attorney, for grand theft by false pretense for ADA filings targeting small businesses. I think most ADA defense attorneys would agree these represent only the tip of the iceberg in terms of filings that are based on misrepresentations about the plaintiff’s standing to sue.

(5) See, Hunter v. Branch Banking and Tr. Co., 2013 WL 4052411, at *5 (N.D. Tex. Aug. 12, 2013), citing Norkunas v. Wynn Resorts Holdings, LLC, 2007 WL 2949569, at *4 (D.Nev. Oct.10, 2007) (stating that “a plaintiff’s litigation history can undercut the sincerity of his or her expressed intent to return”); Brother v. Tiger Partner, LLC, 331 F.Supp.2d 1368, 1374–75 (M.D.Fla.2004) (similar).

(6) See my blogs Blogathon – ADA and FHA cases with a little help from my friends. and Quick Hits – Vernal Equinox edition for a very brief history that will, we can only hope, end with Calcano.

(7) Wikipedia will confirm these facts. I only knew of its use in Gilbert and Sullivan’s Mikado and as Michelle Shocked’s album title. Mary I and burning protestants was a surprise, as was its use as the name of a “crossover thrash band” from Liverpool. Now I have to go look up “crossover thrash” music.

Tumbling dice - album cover for Rolling Stones The 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. More

ADA – drive-by litigation

A short sharp shock – the end of the beginning for serial ADA lawsuits?

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

ADA and FHA Quick Hits – it could be worse edition

HUD and DOJ pushing hard on ESA cases.

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

Laufer v Looper – the death of tester standing, and not just in ADA cases.