BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 1521


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          CONCURRENCE IN SENATE AMENDMENTS


          AB  
          1521 (Committee on Judiciary)


          As Amended  September 4, 2015


          2/3 vote.  Urgency


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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