BILL ANALYSIS Ó
AB 1521
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB
1521 (Committee on Judiciary)
As Amended September 4, 2015
2/3 vote. Urgency
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|ASSEMBLY: |76-0 |(May 28, 2015 |SENATE: |38-0 |(September 10, |
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Original Committee Reference: JUD.
SUMMARY: Provides additional information and legal resources to
small business owners who may not realize how to minimize their
liability for Americans with Disabilities Act (ADA) violations
or respond to a lawsuit filed against them. Also limits the
practice of high-volume lawsuits motivated by quick settlement
with business owners, rather than correction of ADA violations.
Specifically, this bill:
1)Revises the notice of rights and responsibilities that is
required by current law to be provided to a defendant
contemporaneously with service of a complaint or demand
letter.
2)Requires the Judicial Council, by July 1, 2016, to develop a
form to answer the complaint and requires a plaintiff's
attorney to provide a defendant with a copy of the answer form
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created by the Judicial Council when serving the defendant
with a complaint or demand letter (and the notice of rights
and responsibilities, as required by existing law).
3)Defines a "high-frequency litigant" (HFL) as either a
plaintiff who has filed 10 or more complaints alleging
violations of construction-related accessibility standards in
the past 12 months; or an attorney who has represented 10 or
more such plaintiffs in the past year. For attorneys, claims
that result in correction of violations do not count.
4)Imposes new procedural requirements on HFLs who file new
claims: a) A higher filing fee; b) Special pleading
requirements; and c) Certification by the attorney that, among
other things, the complaint is not being presented primarily
for an improper purpose, such as to harass or to cause
unnecessary delay or needless increase in the cost of
litigation.
5)Requires attorneys who file construction-related accessibility
claims to notify the California Commission on Disability
Access (CCDA or Commission) about how their claims are
resolved.
The Senate amendments add the HFL provisions and CCDA reporting
requirements.
FISCAL EFFECT: According to the Senate Appropriations
committee:
1)Minor one-time absorbable costs (General Fund*) for the
Judicial Council to update and develop the specified forms.
2)Potential increase in revenues to the Trial Court Trust Fund
and General Fund from the additional $1,000 filing fee on
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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
of workload relief to the trial courts.
3)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.
4)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
COMMENTS: Under the federal ADA, a business that constitutes a
place of public accommodation (e.g., many places of lodging,
entertainment, recreation, restaurants, bars, theaters, stores,
health clubs, etc.) is prohibited from discriminating on the
basis of disability if its operations affect interstate
commerce. Prohibited discrimination can take a number of forms
- e.g., denial of participation in the facility, or a service,
benefit, or good of the business; denial of equal participation
in a good, service, or facility; or provision of a different or
separate facility, service or good (unless necessary to provide
services and the like that are as effective as that provided to
others). Public accommodations in California are required to
comply with not only the ADA, but also with the state's Unruh
Act, which incorporates the ADA into its provisions and makes a
violation of the ADA punishable as a violation of Unruh. All
violations of Unruh are subject to statutory damages of at least
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four thousand dollars per violation, except some cases where the
violation is based on a construction-related accessibility
claim, in which case lower damages (a minimum of one thousand or
two thousand dollars, depending on the circumstances of the
case) apply.
Recent and objective evidence about the magnitude of ADA/Unruh
litigation. California has approximately 3.3 million small
businesses. According to data compiled by the Commission, from
January 2014 until January 2015, 3,468 demand letters and
complaints were filed in the state. This means that less than
one percent of small businesses (and a far smaller percentage of
all businesses) was sued in 2014 for violations of
construction-related accessibility standards.
Nevertheless, some of the information reported to the Commission
is alarming in terms of the number and frequency of
construction-related accessibility lawsuits being filed by a
small number of law firms in California. According to the
Commission, between September 2012 and October 2014, 5,392
complaints (including demand letters) were filed (in both state
and federal courts). More than half (54%) of the complaints
were filed by just two law firms. Forty-six percent of all
complaints were filed by just 14 parties.
What can be done or should be done about (the small number of)
attorneys who file large numbers of Unruh Act-ADA lawsuits? The
Ninth Circuit Court of Appeals addressed this issue in Molski v.
Evergreen Dynasty Corp. (9th Cir. 2008) 521 F.3d 1215. Molski
was paralyzed from the chest down, needed a wheelchair to get
around, and filed about 400 lawsuits in the federal courts
within the districts in California. Upon motion of the
defendant businesses (including the named defendant, a
restaurant) the district court declared Molski a vexatious
litigant and granted the defendants' request for a pre-filing
order (requiring court approval before Molski could file
additional lawsuits). The Ninth Circuit acknowledged that
"pre-filing orders are an extreme remedy that should rarely be
used" and that courts "should not enter pre-filing orders with
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undue haste because such sanctions can tread on a litigant's due
process right of access to the courts." Nevertheless, the Ninth
Circuit upheld the order, finding that it was within the
district court's power, "In light of the district court's
finding that Molski did not suffer the injuries he claimed . . .
to conclude that the large number of complaints filed by Molski
containing false or exaggerated allegations of injury were
vexatious" and the pre-filing requirement could be issued.
This bill will help combat the problem of serial Unruh-ADA
litigation in a number of ways. First of all, early and easy
settlement by business owners is a problem because it fuels the
unethical attorneys whose business model is easy settlement.
Business owners, especially small businesses that are tenants in
larger shopping centers, may not be liable for the damages they
think they are exposed to. Landlords are responsible for
maintaining parking lots in these complexes and are more likely
to have the resources and wherewithal to litigate or settle
claims and to bring the property into compliance. Second, the
availability of a new answer form will allow the business owner
to respond to the lawsuit and, in cases where it's necessary or
appropriate, to do so without hiring an attorney.
This bill seeks to slow the rate and number of lawsuits filed by
the small number of attorneys who file large numbers of Unruh
Act-ADA lawsuits. It is clear that a very small number of law
firms files a very large and disproportionate share of Unruh-ADA
lawsuits in California. This bill will limit the practice of
high-volume lawsuits motivated by quick settlement with business
owners, rather than correction of ADA violations in a number of
ways:
1)Creates a new answer form, allowing business owners to respond
to lawsuits and, where necessary or appropriate, to do so
without hiring an attorney.
2)Defines a HFL as either a plaintiff who has filed 10 or more
complaints alleging violations of construction-related
accessibility standards in the past 12 months; or an attorney
who has represented 10 or more such plaintiffs in the past
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year. For attorneys, claims that result in correction of
violations do not count.
3)Imposes new procedural requirements on HFLs who file new
claims: a) A higher filing fee; b) Special pleading
requirements; c) Certification by the attorney that, among
other things, the complaint is not being presented primarily
for an improper purpose, such as to harass or to cause
unnecessary delay or needless increase in the cost of
litigation.
4)Requires attorneys who file construction-related accessibility
claims to notify CCDA about how their claims are resolved.
This focus on HFLs is an important component of a comprehensive
solution to the problem of serial ADA litigation.
Analysis Prepared by:
Alison Merrilees / JUD. / (916) 319-2334 FN:
0002291