California Cities Sue Law Firm Accused of Abusing the ADA To Target Small Minority Businesses
San Francisco and Los Angeles insist in suit that likely tens of millions have been illegitimately squeezed from small businesses by ADA plaintiffs without proper legal standing.
The cities of San Francisco and Los Angeles this week filed a civil suit against the San Diego-based law firm Potter Handy, claiming it is illegally filing thousands of Americans with Disabilities Act (ADA) claims around the state without the legal standing required.
The law firm is sneakily getting around California's Unruh Act, the cities insist, whose procedural requirements would in many cases forbid these cases from getting to state court. The Unruh Act also allows plaintiffs to hit ADA violators with a minimum $4,000 damages demand per violation above and beyond any settlement, unlike the federal ADA.
Potter Handy tries to have it both ways, the lawsuit insists. "By using false standing allegations to get an ADA injunctive-relief claim into federal court—where the [California] Legislature's procedural reforms on abusive Unruh Act litigation do not apply—and coupling the federal claim with a state-law Unruh Act claim, Potter Handy is able to avoid those reforms while demanding small businesses pay it the heavy damages available under the Unruh Act."
To have proper legal standing, the cities insist, Potter Handy's client must have "personally encountered an ADA violation at the business" and prove he "was deterred or prevented from accessing the business because of it, and genuinely intends to return to the business after the barrier is removed."
The lawsuit insists it is "literally impossible for Potter Handy's Serial Filer clients, at least some of whom are wheelchair-bound, to repeatedly travel to all of the thousands of businesses they sue, especially those that are located hundreds of miles from where they live."
Since the firm's allegedly harmed clients "frequently do not personally encounter barriers themselves (often conducting cursory 'drive-bys' or having helpers or investigators go to businesses in their place) and they almost never return to the businesses they sue after the cases resolve," Potter Handy is thus also violating state laws that prohibit "deceit or collusion, or consent[ing] to any deceit or collusion, with intent to deceive the court or any party."
The complaint from the cities insists evidentiary records already back up their claims, including that "Federal courts have [previously] awarded attorney's fees to businesses and sanctioned Potter Handy attorneys…for the firm's bringing of frivolous or false standing allegations. Other federal courts…have thrown out Serial Filer cases for lack of standing, holding that their allegations simply are not credible. Moreover, the astonishing number of cases Potter Handy files on behalf of the Serial Filers—over 800 federal cases on behalf of Serial Filer Orlando Garcia, approximately 1,700 federal cases on behalf of Serial Filer Brian Whitaker, and thousands more on behalf of…various other Serial Filers—make it literally impossible for the Serial Filers to have personally encountered each listed barrier, let alone to intend to return to hundreds of businesses located hundreds of miles away from their homes."
Two of the plaintiffs in thousands of such Potter Handy cases live in Los Angeles, but according to the lawsuit, L.A.-area courts began to get wise to them and started dismissing their suits. So one such serial filer "tapered off his activities in Los Angeles in early 2021" and the firm switched to filing "an enormous number of federal cases on his behalf in federal courts in San Francisco, Oakland, and San Jose, eventually reaching over 500 new cases filed between January 2021 and February 2022."
Similarly, another such serial filer "on whose behalf Potter Handy filed nearly 500 physical-barrier ADA/Unruh cases in Los Angeles's federal courts beginning in 2019, suddenly stopped initiating cases there in early 2021….Defendants began filing…over 320 physical-barrier ADA/Unruh cases in the… Northern District of California in a ten-month period from May 2021 to March 2022" on that other man's behalf.
The cities find this very suspicious, especially given that both men who suddenly got so ADA-litigious in the Bay Area live in Los Angeles County. This shift in the places they suddenly allegedly faced personal ADA-reparable barriers to access "could only have been coordinated by and at the direction of" Potter Handy. "Moreover, it underscores the fact that the Serial Filers' lawsuits are not intended to remedy ADA violations personally encountered by the Serial Filers in their day-to-day lives in their own communities, but to maximize financial returns for Defendants and the Serial Filers themselves by targeting vulnerable small businesses in plaintiff-friendly judicial venues."
The cities argues they are standing up for a beleaguered minority being targeted by Potter Handy: "Small businesses, particularly those owned by immigrants and individuals for whom English is a second language, who are often less familiar with the complexities of the American legal system, are rarely able to afford the risk and expense of defending themselves in court. As a result, each year Potter Handy uses ADA/Unruh lawsuits to shake down hundreds or even thousands of small businesses to pay it cash settlements, regardless of whether the businesses actually violate the ADA." The cities believe that tens of millions have been extracted from small businesses in California via this one firm's suits.
Dennis Price of Potter Handy told Courthouse News that "the allegation that we targeted any particular community is a heinous lie and not supported by any evidence…our cases are filed throughout the state. They don't target any particular neighborhood or business."