BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 1521 (Committee on Judiciary) - Disability access: construction-related accessibility claims ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: August 17, 2015 |Policy Vote: JUD. 5 - 1 | | | | |--------------------------------+--------------------------------| | | | |Urgency: Yes |Mandate: Yes | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 27, 2015 |Consultant: Jolie Onodera | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: AB 1521, an urgency measure, would make various changes to the law as it pertains to construction-related accessibility claims, as specified. This bill would create a new fee of $1,000 to be assessed on high-frequency litigants, as defined, in addition to the first filing fee, to be distributed between the General Fund and Trial Court Trust Fund, as specified. Fiscal Impact: Minor one-time absorbable costs (General Fund*) for the Judicial Council to update and develop the specified forms. Potential increase in revenues to the Trial Court Trust Fund and General Fund from the additional $1,000 filing fee on high-frequency litigants, as defined. To the extent the assessment of the additional fee serves to discourage the filing of construction-related accessibility claims that otherwise would have been filed, could result in some degree AB 1521 (Committee on Judiciary) Page 1 of ? of workload relief to the trial courts. Potential increase in the Proposition 98 minimum funding guarantee, potentially in excess of $50,000 (General Fund) annually should a specified portion of revenues from the high-frequency litigant fee be considered General Fund proceeds of taxes for purposes of calculating the minimum school funding obligation. Unknown, potential future litigation costs (General Fund) to the extent imposing new requirements on one class of plaintiff (disabled litigants), due to the volume of cases filed, without regard to the legitimacy of the allegations or merits of each case, should be challenged in court. *Trial Court Trust Fund Background: According to the Senate Committee on Judiciary analysis of this measure (August 25, 2015), data collected by the California Commission on Disability Access indicates that of the nearly 5,400 access-related complaints filed between September 2012 and October 2014, 54 percent of the cases were filed by two law firms, and 14 plaintiffs were involved in 46 percent of the cases. This bill seeks to limit the practice of high-volume lawsuits motivated by the goal of obtaining quick settlements with business owners, rather than correcting violations of construction-related accessibility standards. Proposed Law: This bill would make various changes to the law as it pertains to construction-related accessibility claims, in summary, as follows: Specifies that a "high-frequency litigant" means one of the following: o A plaintiff who has filed 10 or more complaints alleging a construction-related accessibility violation within the 12-month period immediately preceding the filing of the current complaint alleging a construction-related accessibility violation. o An attorney who has represented 10 or more AB 1521 (Committee on Judiciary) Page 2 of ? plaintiffs who were high-frequency litigants at the time when complaints alleging construction-related accessibility violations were filed on their behalf within the 12-month period immediately preceding the filing of the current complaint alleging a construction-related accessibility violation. Requires a high frequency litigant, as defined, to include additional information in a complaint and pay a $1,000 fee in addition to the first paper filing fee, as specified. Specifies for each additional $1,000 fee, the Administrative Office of the Courts is to distribute the amounts as follows: o $500 to the General Fund for use, upon appropriation by the Legislature, by the California Commission on Disability Access. o The remainder of the fee to the Trial Court Trust Fund. Requires the Judicial Council to, on or before July 1, 2016, develop an answer form for defendant businesses to respond to a complaint alleging a construction-related accessibility violation which includes specified information. Requires the existing advisory, which must be provided to a defendant with each demand letter or complaint, to include additional information regarding the rights and obligations of business owners and commercial tenants, as specified. Requires an attorney to provide a defendant or potential defendant with an answer form developed by the Judicial Council, which would allow a defendant to respond in the event a complaint is filed, as specified. Requires, if requested by the defendant, the court to order the parties and their counsel to meet at the subject premises to jointly inspect the premises, as specified. Requires property owners to indemnify a microbusiness tenant, as defined, from liability arising from any construction-related accessibility claims, as specified. Specifies that attorneys and/or plaintiffs must certify that specified conditions have been met, including, but not limited to, that the action is not being presented primarily for an improper purpose, such as to harass or to cause unnecessary delay, as specified. Related Legislation: AB 52 (Gray) 2015 would provide that a defendant's AB 1521 (Committee on Judiciary) Page 3 of ? maximum liability for statutory damages in a construction-related accessibility claim against a place of public accommodation is $1,000 for each offense if the defendant has corrected all construction-related violations within 180 days of being served with the complaint. This bill is currently in the Assembly Judiciary Committee. AB 54 (Olsen) 2015 would include any amount paid or incurred by a taxpayer to receive an inspection by a CASp as an eligible access expenditure for the Personal Income Tax Law and the Corporation Tax Law which allows a credit to eligible small businesses for 50 percent of eligible access expenditures. This bill is currently in the Assembly Revenue and Taxation Committee. AB 1230 (Gomez) 2015 would establish the California Americans with Disabilities Act Small Business Compliance Finance Act to provide loans to assist small businesses finance the costs of projects that alter or retrofit existing small business facilities to comply with the federal American with Disabilities Act. This bill is pending on the Suspense File of this Committee. AB 1342 (Steinorth) 2015 would provide additional revenue to the California Commission on Disability Access. This bill is pending on the Suspense File of this Committee. AB 1468 (Baker) 2015 would provide that a public entity's possession of a close out letter from the State Architect certifying that the buildings, facilities, and other places meet the applicable construction-related accessibility standards of the federal Americans with Disabilities Act, serves as presumptive evidence of compliance with the federal Americans with Disabilities Act. This bill is currently in the Assembly Judiciary Committee. SB 67 (Galgiani) 2015 would limit recovery against a small business for construction-related accessibility claims to injunctive relief and reasonable attorney's fees, and would allow businesses who have undergone a CASp inspection 120 days to correct violations in order to qualify for reduced statutory minimum damages. SB 251 (Roth 2015 would provide that a defendant is not liable for certain violations if fixed within 15 days, as specified, AB 1521 (Committee on Judiciary) Page 4 of ? and would exempt a defendant from liability for minimum statutory damages with respect to a structure or area inspected by a certified access specialist for a period of 120 days if specified conditions are met. This bill is pending on the Suspense File of the Assembly Appropriations Committee. Prior Legislation: SB 1186 (Steinberg/Dutton) Chapter 383/2012 reduced statutory damages and provided litigation protections for specified defendants who timely correct construction-related accessibility violations of the Unruh Civil Rights Act. This bill also banned pre-litigation "demands for money" and created rules for demand letters and complaints in claims involving construction-related accessibility violations. AB 2282 (Berryhill) 2012 would have authorized an aggrieved person to bring a disability access suit only under specified circumstances. This bill was held on the Suspense File of this Committee. SB 1163 (Walters) 2012 would have established notice requirements for an aggrieved party to follow before he or she could bring a disability access suit and give the business owner a 120-day time period to remedy the violation. This bill failed passage in the Senate Committee on Judiciary. Staff Comments: The Judicial Council has indicated one-time minor and absorbable costs to revise and develop the forms required under this bill. Additionally, to the extent the provisions of the bill reduce the frequency of litigation for construction-related accessibility claims, the courts could potentially experience some degree of reduced trial court workload. Staff notes this measure currently includes an urgency clause that requires a two-thirds vote of the Legislature for passage. In the absence of the urgency clause, the new high-frequency litigant fee created under the provisions of this bill could potentially constitute a tax under Proposition 26 of the November 2010 General Election, which amended Section 3 of Article XIIIA of the California Constitution and broadened the definition of a state or local tax to include various payments previously considered to be fees or charges. Specifically, $500 of the $1,000 fee assessed on high-frequency AB 1521 (Committee on Judiciary) Page 5 of ? litigants is to be distributed to the General Fund for use, upon appropriation by the Legislature, by the California Commission on Disability Access. To the extent these revenues are not considered a charge imposed for a specific benefit or government service provided directly to the payor that is not provided to those not charged, this portion of the high-frequency litigant fee could potentially be considered a tax. If these fees are deemed a tax, at least 40 percent of the new revenue would be allocated to K-14 education pursuant to Proposition 98. In some years, however, a notably higher share of the associated revenue might need to be allocated to K-14 education. The exact share going to K-14 education would depend upon various factors, including the size of the Proposition 98 maintenance factor, how the maintenance factor is repaid, and the overall growth in state revenues. Because the level of revenue collected for the new fee is unknown at this time, it is difficult to assess the potential impact on the Proposition 98 guarantee. The Senate Judiciary Committee analysis of this measure noted that the California Commission on Disability Access indicates that of the 5,392 access-related complaints filed between September 2012 and October 2014, 54 percent of the cases were filed by two law firms, and 14 plaintiffs were involved in 46 percent of the cases. For illustrative purposes, assuming 250 filings (less than five percent of total filings) were impacted, $125,000 of the $250,000 in revenues collected would be distributed to the General Fund. Based on the 40 percent allocation pursuant to Proposition 98 would result in a $50,000 General Fund increase in the Proposition 98 guarantee. Should a share of the new revenues be required to be set aside for the Proposition 98 minimum funding guarantee, the revenues available to the General Fund for the use by the California Commission on Disability Access, would likewise be reduced. -- END -- AB 1521 (Committee on Judiciary) Page 6 of ?