BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 1521 (Committee on Judiciary) - Disability access:   
          construction-related accessibility claims
          
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          |Version: August 17, 2015        |Policy Vote: JUD. 5 - 1         |
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          |Urgency: Yes                    |Mandate: Yes                    |
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          |Hearing Date: August 27, 2015   |Consultant: Jolie Onodera       |
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          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  







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            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  








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                    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  








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          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,  








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          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  








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          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.


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