BILL ANALYSIS Ó
SB 1186
Page 1
( Without Reference to File )
SENATE THIRD READING
SB 1186 (Steinberg and Dutton)
As Amended August 30, 2012
2/3 vote. Urgency
SENATE VOTE :36-0
JUDICIARY JUDICIARY 9-0
(vote not relevant)
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| | |Ayes:|Wieckowski, Wagner, |
| | | |Alejo, Dickinson, Feuer, |
| | | |Gorell, Huber, Jones, |
| | | |Monning |
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| | | | |
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SUMMARY : Seeks to promote compliance with the state's
disability access laws without unwarranted litigation.
Specifically, this bill :
1)Requires an attorney to provide a written advisory with each
demand letter or complaint, as defined, sent to or served upon
a defendant or potential defendant for any
construction-related accessibility claim, as specified.
2)Requires an allegation of a construction-related accessibility
claim in a demand letter, or any allegation of noncompliance
with construction-related accessibility standards in a
complaint, to state facts sufficient to allow identification
of the basis for the claim.
3)Prohibits a demand letter from including a request or demand
for money or an offer or agreement to accept money, as
specified.
4)Requires an attorney to include his or her State Bar license
number in a demand letter, and to submit copies of the demand
letter to the California Commission on Disability Access
(CCDA) and, until January 1, 2016, to the State Bar.
5)Requires, until January 1, 2016, an attorney to submit a copy
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of a complaint to the commission. Provides that a violation
of these requirements may subject the attorney to disciplinary
action.
6)Requires the commission to review and report on the demand
letters and complaints it receives until January 1, 2016.
7)Also requires the State Bar, commencing July 31, 2013, and
annually each July 31 thereafter, to report specified
information to the Legislature regarding the demand letters
that it receives.
8)Permits other defendants to file a request for a court stay
and early evaluation conference pursuant to this provision,
including a) a defendant, until January 1, 2018, whose site's
new construction or improvement on or after January 1, 2008,
and before January 1, 2016, was approved pursuant to the local
building permit and inspection process, b) a defendant whose
site's new construction or improvement was approved by a local
public building department inspector who is a certified access
specialist, and, c) a defendant who is a small business, as
described.
9)Authorizes a defendant who does not qualify for an early
evaluation conference pursuant to these provisions, or who
forgoes those provisions, to request a mandatory evaluation
conference, as specified. Authorizes a plaintiff to make that
request if the defendant does not make that request.
10)Requires the court, in assessing liability in any action
alleging multiple claims for the same construction-related
accessibility violation on different particular occasions, to
consider the reasonableness of the plaintiff's conduct in
light of the plaintiff's obligation, if any, to mitigate
damages.
11)Reduces a defendant's minimum liability for statutory damages
in a construction-related accessibility claim against a place
of public accommodation to $1,000 for each unintentional
offense if the defendant has corrected all
construction-related violations that are the basis of the
claim within 60 days of being served with the complaint and
other specified conditions apply, and reduces that minimum
liability to $2,000 for each unintentional offense if the
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defendant has corrected all construction-related violations
that are the basis of the claim within 30 days of being served
with the complaint and the defendant is a small business, as
specified.
12)Requires the Department of General Services to make a
biannual adjustment to financial criteria defining a small
business for these purposes, and to post those adjusted
amounts on its Internet Web site.
13)Requires a commercial property owner to state on a lease form
or rental agreement executed on or after July 1, 2013, if the
property being leased or rented has undergone inspection by a
certified access specialist.
14)Requires, in administering the certified access specialist
program, the State Architect to periodically review its
schedule of fees for certification under the program to ensure
that the fees are not excessive. Prohibits the State
Architect from charging a California licensed architect,
landscape architect, civil engineer, or structural engineer,
an application fee for certification that exceeds $250.
15)Adds a state fee of $1 on any applicant for a local business
license or similar instrument or permit, or renewal thereof,
for purposes of increasing disability access and compliance
with construction-related accessibility requirements and
developing educational resources for businesses to facilitate
compliance with federal and state disability laws, as
specified. Divides those moneys for the state between the
local entity that collected the moneys and the Division of the
State Architect, pursuant to specified percentages. Creates a
continuously appropriated fund, the Disability Access and
Education Revolving Fund, for the deposit of funds to be
transferred to the Division of the State Architect, thereby
making an appropriation. Makes an appropriation by
authorizing local government entities to retain 70% of the
fees imposed.
16)Revises and recasts the duties and powers of the California
Commission on Disability Access, as specified, and eliminates
the biennial reporting requirement. The bill instead provides
that a priority of the commission shall be the development and
dissemination of educational materials and information to
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promote and facilitate disability access compliance, including
a requirement that the commission work with the Division of
the State Architect and the Department of Rehabilitation to
develop educational materials for use by businesses. Requires
the commission to post specified information on its Internet
Web site, including, but not limited to, educational materials
and information that will assist business owners. Requires
the commission to report to the Legislature on its
implementation by a specified date. Requires the commission
to compile data with respect to any demand letter or complaint
sent to the commission, and post that information on its
Internet Web site.
FISCAL EFFECT : Unknown
COMMENTS : In support of the bill the author's state: "SB 1186
is a compromise that applies a common sense approach to resolve
difficult issues. It maintains the hard-fought civil rights of
the disabled community while helping to protect California
businesses from predatory demand for money letters and lawsuits.
Support for important laws like the Unruh Act and the Americans
with Disabilities Act are weakened when those laws are abused
for personal gain. This measure bans the unscrupulous practice
of 'demand for money' letters, stops the stacking of claims
based on alleged repeat violations to force a business into a
quick settlement, while encouraging businesses to fix their
violations to comply with the law. Thus, SB 1186 provides some
relief to businesses who show good faith in trying to follow the
law and are willing to correct the violation, which ultimately
promotes compliance and brings greater access to the disabled
community."
Under current law, a violation of the Disabled Persons Act
subjects the violator to liability for actual damages plus a
maximum of three times the actual damages (but not less than
$1,000), plus attorney's fees and costs. In a private right of
action under the Americans with Disabilities Act (ADA), a
plaintiff may obtain injunctive relief and attorney's fees,
while an action by the U.S. Attorney may bring equitable relief,
monetary damages on behalf of the aggrieved party, and a civil
penalty of up to $100,000.
Likewise, persons with disabilities have long been among the
groups covered by the Unruh Civil Rights Act entitling all
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persons, regardless of sex, race, color, religion, ancestry,
national origin, disability or medical condition, to the full
and equal accommodations, advantages, facilities, privileges, or
services in all business establishments of every kind
whatsoever. (Civil Code Section 51.) A violation of the ADA
also constitutes a violation of Section 51. A violation of this
section subjects a person to actual damages incurred by an
injured party, plus treble actual damages but not less than
$4,000, and any attorney's fees as the court may determine to be
proper. (Civil Code Section 52.)
SB 262 (Kuehl), Chapter 872, Statutes of 2003, established in
the Division of the State Architect a voluntary "access
specialist certification program" in order to assist business
and property owners to comply with ADA and state access laws.
The bill also authorized an enforcement action with civil
penalties for noncompliance with ADA and state access laws,
after notification of the business owner or operator by a
government agency. The authority to institute a civil action
was extended to county counsels (in addition to the Attorney
General, district attorney, and city attorney).
This bill bans oral and written pre-litigation "demands for
money," and creates rules for demand letters and complaints in
claims involving a construction-related accessibility violation.
According to the authors, these provisions are needed to
respond to evidence showing that a very small number of
plaintiff's attorneys have been abusing the right of petition
under Section 52 and Civil Code Section 54.3, by issuing a
demand letter to a business that the business pay a quick
settlement of the attorney's often inflated claim of damages or
else incur greater liability and legal costs if a lawsuit is
filed. The bill seeks to prevent these so-called "extortion"
techniques by a few unscrupulous lawyers in order to protect the
integrity of the state's disability access law.
In an effort to do this, the bill bans pre-litigation demands
for money, where the plaintiff alleges a construction-related
accessibility violation and makes a request or demand for money
or an offer or agreement to accept money. The bill also
provides that a demand letter alleging a construction-related
violation or asserting a claim may offer pre-litigation
settlement negotiations but may not include a specific request
or demand for money. It also may not state any specific
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potential monetary liability for any asserted claim or claims,
and may only state "The property owner or tenant, or both, may
be civilly liable for actual and statutory damages for a
violation of a construction-related accessibility requirement."
Uncodified legislative intent language further expresses the
Legislature's policy that the abusive use of the right to
petition under Section 52 and Section 54.3, does not promote
compliance with the accessibility requirements and erodes public
support for and confidence in our laws.
The bill requires any demand letter or complaint asserting a
construction-related accessibility claim to state facts
sufficient to allow identification of the basis for the claim.
The requirement is that the alleged violations supporting the
claim be described with some specificity but without the need to
make averments with special language or precision, such as a
lawyer might employ, in light of the fact that this standard is
designed to be satisfied by non-lawyers. It is expected that
these rules will be liberally construed for non-lawyers, and the
bill specifically provides that there is no penalty for
violation of these instructions by a non-lawyer. The
specificity requirement prescribes the content of pleadings; it
does not change the permissible circumstances or standards by
which pleadings may be amended.
This specificity provision is designed to deter the use of form
demand letters and complaints by the so-called "mill" attorneys
described above who assert hundreds of the same or nearly
identical claims, often for the same client against different
businesses. The requirement is also intended to address the
inappropriate "stacking" of multiple claims by requiring a
description of each alleged violation instead of the use of a
generalized form letter or complaint alleging any number of
multiple violations without more specificity. In the Magic Real
Estate case, the attorney simply stated that the plaintiff
"would have patronized said facility on at least 30 occasions
during Ýthe preceding year]" without any greater specificity.
A further provision adds a requirement that any complaint
alleging a construction-related accessibility violation must be
verified by the plaintiff. This provision is in response to the
practice of at least one attorney asserting and filing claims
without the claimant's knowledge or authorization.
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The bill will, for a three-year period, require any demand
letter alleging a construction-related accessibility violation
to be sent to the State Bar. For easier identification, the
bill also requires the demand letter to include the attorney's
State Bar license number. The measure also provides that a
violation of the ban on making a demand for money in a
construction-related accessibility claim, or for sending a
demand letter which makes a request or demand for money or an
offer or agreement to accept money would be cause for attorney
discipline. Attorney discipline, however, would not be
mandatory.
The bill also requires a copy of any attorney demand letter or
complaint in state or federal court which alleges a
construction-related accessibility violation to be sent to the
CCDA. These documents would evidently be public records absent
some exception. The CCDA would be directed to tabulate the
types and frequency of violations alleged and to compile a list
of the top ten frequently alleged violations which would be
posted on its Web site. The CCDA would also be directed to
report to the Legislature the tabulated data. This information
will provide empirical data to policymakers about disability
access and compliance issues. It would also provide information
to property owners about the most common accessibility
violations alleged in demand letters and complaints so that they
might take steps to protect themselves from those frequent
claims.
One of the most significant features of the bill with strong
support from business advocates is the new subdivision (f) to be
added to Civil Code Section 55.56, which provides the potential
for reduced statutory damages and certain procedural benefits to
certain defendants for non-intentional violations. In order to
avail themselves of these advantages, a defendant must establish
that it has corrected the alleged violation within either 30 or
60 days of being served with the complaint, depending on the
defendant. This period is deliberately short and is not subject
to enlargement because it is designed to be available for
relatively less-extensive violations.
A defendant who had hired a certified access specialist (CASp)
and had met applicable compliance standards, or a person who had
new construction or an improvement approved by the local
building department on or after January 1, 2008, would be liable
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for minimum statutory damages of $1,000 per offense, instead of
$4,000 per offense, when the defendant corrects the alleged
construction related accessibility violation within 60 days of
being sued. Also, a small business defendant (defined as having
25 or fewer employees and no more than $3.5 million in gross
receipts) could have its minimum statutory damages liability
reduced to $2,000 for each offense, instead of $4,000, when it
corrects an alleged physical accessibility violation within 30
days of being served the complaint. These provisions would not
allow for reduced statutory damages where the violation was
intentional. The bill does not change the general rule that
liability for disability access discrimination typically does
not require proof of intent. (Munson v. Del Taco, Inc., 46 Cal.
4th 661 (2009); Donald v. Cafe Royale, Inc., 218 Cal. App. 3d
168, 180 (1990).) The amendments revising the definition of
"intentional" are designed to reflect that the one
previously-identified example involving actual knowledge is just
one of the many means by which intent may be shown in light of
the principles and purposes by which the relevant statutes are
construed. (See Angelucci v. Century Supper Club, 41 Cal.4th
160, 167 (2007). See also Gunther v. Lin, 144 Cal. App. 4th 223,
228 (2006); Lentini v. Cal. Ctr. for the Arts, 370 F.3d 837, 850
(9th Cir. 2004). Cf. Modern Development Co. v. Navigators
Insurance Co, 111 Cal. App. 4th 932, 943 (2003).) Also, new
subdivision (f) would not affect the availability or amount of
actual damages, treble damages or attorney's fees.
For the defendants who establish that they satisfy the
requirements of section 55.56(f), the bill also grants the
option to request an early evaluation conference (EEC) and an
immediate mandatory stay of the proceedings, similar to the
litigation protections now given to a qualified defendant who
had hired a CASp to inspect the property and issue a report on
its compliance status. Evidence regarding the defendant's
eligibility for the EEC as a small business would be
confidential at this stage of the proceedings so as to not deter
potentially eligible defendants from applying for an EEC. A
mandatory stay freezes the litigation at the point of the court
order, which serves to freeze the plaintiff's attorney's fees at
that point. An EEC could be useful to end the case at an early
stage, particularly when the defendant has corrected the
asserted violation. The authors state that the policy goal of
new subdivision (f) is to incentivize property owners to correct
their violations, as opposed to settling the case and doing
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nothing to eliminate the violation. The provision for reduced
minimum statutory damages in section 55.56(f) flows from the
understanding that the condition causing the violation will be
fixed by the time the EEC is held, and thus does not represent a
departure from the traditional rule that a defendant may not
reduce a penalty by post-litigation conduct, as reflected in the
fact that the availability of treble damages is not affected.
The bill also expands and strengthens the existing advisory
notice that recipients of civil complaints and demand letters to
provide information regarding the new rights and restrictions
under the bill. As with notification to the State Bar and CCDA,
these notices are to be sent once at the outset and do not need
to be re-sent in the same dispute unless new claims are
asserted.
New subdivision (h) is added to Civil Code Section 55.56 to
address the so-called "stacking" problem. This occurs when the
plaintiff is allegedly deterred by the same construction-related
accessibility violation on different occasions and thereby
asserts a claim of $4000 in statutory damages for each of the
multiple claims. According to the authors, the most egregious
example is the Mundy v. Magic Real Estate case, where the person
asserted 30 violations over a short period of time (less than 30
days reportedly) and sought $120,000 in statutory damages.
While the obligation to mitigate damages under current law would
likely result in a much lower award in a court trial, the mere
threat of multiple stacked claims and the purported minimum
statutory damages based on multiple claims is intimidating to
many property owners who are pressured to quickly settle for
lesser damages. New subdivision (h) states that in assessing
statutory damages in a deterrence claim, the reasonableness of
the plaintiff's conduct in light of the plaintiff's obligation
(if any) to mitigate damages must be considered by the court in
any action alleging multiple claims for the same
construction-related accessibility violation on different
particular occasions.
This bill allows either party to request a mandatory evaluation
conference (MEC) conducted by the court within 90 days to 120
days of the request. Similar to the EEC under existing law, the
MEC would evaluate the status of the case and consider the
current condition of the property and whether the defendant has
made repairs or plans to make repairs, what are the asserted
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damages and attorney's fees of the plaintiff, and whether the
case can be settled in whole or in part. While these defendants
would not be eligible for the court stay of the proceedings, the
mandatory court evaluation conference could assist in resolving
the case at an early stage and promoting compliance, whether
because the defendant has corrected the violation or because the
plaintiff is able to obtain injunctive relief.
This bill will require property owner and lessor to notify the
tenant in the lease form or rental agreement executed on or
after July 1, 2013, whether the property being leased or rented
has undergone inspection by a CASp, and if so, whether the
property has been or has not been determined to meet all
applicable construction-related accessibility standards.
As part of the effort to educate businesses of their obligations
under the law with respect to disability access, this bill
requires a city, county, or city or county, to inform the
licensee that under federal and state law, compliance with
disability access laws is a serious and significant
responsibility that all applies to all California building
owners and tenants with buildings open to the public. The bill
further requires the local entity to inform the licensee that
information about the compliance requirements and how to comply
is available at various state agencies, and to list the Web site
addresses of those agencies.
This bill requires cities and counties to collect a $1 fee upon
issuance or renewal of a business license or similar instrument
to pay for more CASp in local building departments, to reduce
costs of CASp testing and certification to encourage more
private CASp, to strengthen the CASp program by enabling the
Division of State Architect (DSA) develop audit procedures for
the CASp program to maintain quality control, develop "best
practices" guidelines, and pay for development of more
educational and training resources at state and local level to
promote compliance. Monies collected will be split 70% to
locals and 30% to DSA. Local public entities could use 5% of
monies for administrative costs and the rest would go to pay for
hiring and training of more CASp for local building departments.
The other 30% would go to the newly created Disability Access
and Education revolving fund in DSA for the purposes noted
above.
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Getting more public and private CASp is essential to promoting
compliance and helping businesses, particularly those in older
buildings, comply and avoid lawsuits. Currently, only about 450
CASp, split evenly between private and public employment, serve
the needs of all of California. The high costs of certification
and examination, $1,650 for a three year certificate, has been a
significant hurdle. This $1 fee proposal is intended to help
fund more public and private CASp and make the program stronger.
Some funds will also be spent on state and local educational
programs to assist building owners understand and meet their
compliance obligations.
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334
FN: 0005841