By Amy Yi | Bloomberg
Small businesses in the U.S. have struggled with rising inflation, manpower shortages and supply chain tightness during the epidemic. Many are now hit by another unexpected challenge: disability claims.
Trade unions and business owners say serial prosecutors filing dozens or hundreds of cases are increasingly using U.S. disability law since 1990 to spend tens of thousands of dollars in settlements – rather than to promote access as the clear civil rights law intended.
The authorities began to act. This week, California district attorneys filed a civil lawsuit against a law firm they say filed “thousands of small business fraud lawsuits.”
The number of ADA lawsuits filed in federal court alone has soared to an all-time high last year, according to data collected by law firm Seyfarth Shaw, which represents defendants in these cases.
The ADA Act was a milestone for civil rights, giving people with disabilities the right to equal opportunities, including access to buildings and transportation. It gives disabled citizens the right to seek restraint, said Carl Tobias, a professor of law at the University of Richmond who teaches tort law in the United States. These are entitled to their day in court, “Tobias said.
But it’s the growing number of plaintiffs seeking financial arrangements from local stores or restaurants that has frightened policymakers and even disability advocates like Hin Kelly, a former Democratic Party chairman of the California Democratic Party.
Companies need to be compliant with the ADA, but small businesses are often unaware of violations, and repairs can be physically difficult in old buildings or on mountain streets, like those in the San Francisco Bay Area, said Kelly, who is now regional director of the CDP. And payment to settle claims leaves less money for repairing access barriers, she said.
“It’s a delicate situation,” said Kelly, a cripple. “We need something that helps businesses and helps people with disabilities.”
In New York, the number of ADA claims jumped to 2,744 from 125 in 2013, according to Seyfarth Shaw. California is responsible for more than half of the 11,452 federal lawsuits filed last year on disability issues.
Among them are hundreds of cases brought by a prosecutor represented by Potter Hendy, the law firm that is currently the focus of a lawsuit by district prosecutors in San Francisco and Los Angeles. District Attorneys claimed in a press release that Potter Hendy “apparently defrauded tens of millions of dollars” from small businesses in California.
“We will take responsibility for anyone who exploits vulnerable business owners, harms immigrant communities and undermines the intent of laws designed to promote accessibility,” said San Francisco District Attorney Chesa Bodin, who opened last July in an investigation into ADA-targeted lawsuits in Chinatown. Including many run by immigrants with limited English.
“It is unfortunate that these attorneys choose disabled access advocates for political reasons. Attorney Dennis Price of the Pottery Office wrote that both DAs face serious recall threats and file these lawsuits in order to generate support.”
One of his clients, Orlando Garcia, has filed more than 1,000 ADA lawsuits in California federal court since 2020, according to data collected by the Lawsuit Reform Alliance of New York, or LRANY. Garcia suffers from cerebral palsy and uses a wheelchair, according to court records. Price said he was not available for comment.
Last June, Garcia sued Lola’s Chicken Shack, a restaurant in Alameda, near San Francisco, for a lack of accessible outdoor tables and a high front doorstep. The owner, Mark Rogers, said he hired ADA consultants, corrected the violations – but refused to pay to settle the lawsuit.
“I have nothing against the ADA requirements. They are a good thing,” he added. Rogers, who suffers from Parkinson’s disease, said he postponed brain surgery to focus on the lawsuit.
On March 24, after nine months of litigation, a California judge dismissed the case, noting that the restaurant immediately repaired alleged access barriers and that additional requests, including nominal damages, were “unconvincing.”
The suit was “just one more mountain after another to climb,” said Rogers, who, like many business owners, struggled with supply chain problems and inflation. “I sit on pins and needles every day to see if I’ll have enough chicken.”
Another defendant was Michael Lee, the owner of Sandwich Board, a takeaway restaurant also in Alameda. After Garcia sued last June, Lee said he hired an ADA consultant, added a table to the counter and removed some non-compliant tables.
The Sandwich Board, set up by Lee’s parents nearly 40 years ago, has never had an ADA complaint before, he said.
“Sometimes I can not sleep at night, or I lose my appetite. My bank account just empties,” he told me. A judge dismissed the case on March 30.
Now Lee can return to other everyday challenges. He objected to raising sandwich prices against a 50% price increase for hot dogs and disposable gloves – but finally did so recently.
Garcia’s attorney, Price, said in an email that “our clients find that their requests have been deleted, they return to the business several months later and he still does not meet the requirements despite promises from managers and owners to fix it.”
Small businesses also report receiving letters of demand for alleged breaches of the ADA. Such letters are routine in the U.S. legal system, designed to give defendants notice of possible lawsuits against them and to offer a settlement before filing a lawsuit.
But settlement amounts could range from $ 10,000 to $ 25,000, according to Tom Stebbins, CEO of LRANY. Fearing the possibility of costly and time-consuming legal action, business owners pay the money, he said.
“This is a complete shake-up,” Stabins said, referring in general to such settlements, which have no public records.
It is difficult to estimate the true cost of offensive ADA lawsuits, according to Nathan Morris, senior vice president of the U.S. Chamber of Commerce’s Institute for Legal Reform.
However, small businesses are disproportionately affected by legal proceedings in general. Those with annual revenues of less than $ 1 million, which accounted for about 7% of the total, bore 39% of the cost of commercial liability for damages, according to a 2020 report by the Institute for Legal Reform. Commercial torts are lawsuits brought against businesses for illegal acts Where they may be held liable.
In recent years, ADA cases have expanded into the virtual world. More than 4,000 lawsuits against websites, apps or video content were filed in 2021, a 15% increase from the previous year, according to UsableNet, an accessibility consulting firm.
In Florida, one plaintiff filed 26 lawsuits against gas stations for lack of closed captioning in videos on pumps. This case was dismissed by a judge who said in court that the lawsuit was intended to collect payments “in an unethical arrangement of division of fees” with the attorney. The judge fined the plaintiff and the attorney $ 59,900 each, according to the filing.
There is no easy way to fix the problem. In 2017, a bill by Republican Congressman Ted Fu proposed requiring a written notice to businesses about the violations and allowing time to correct them before filing a lawsuit. It passed the House of Representatives, but was opposed by Democrats in the Senate.
Michael Abundanza, former owner of Riverbend Restaurant near Denver, is a rare example of a business that fought back after his restaurant was sued in 2016 by a plaintiff who filed nearly 200 lawsuits in Colorado and Denver between 2015 and 2017, based on data collected by LRANY.
Abundanza said he had corrected the ADA violations and refused to pay a compromise.
“I’m not going to get addicted to this behavior. It’s just wrong,” Abundanza said.
The lawsuit was dropped, but in 2019 Abundanza sued the lawyers behind it for extortion. Joel Rotman, an attorney representing one of the attorneys in the counterclaim, said he thinks it will be dismissed and that there is no evidence of wrongdoing.
The case continues – and Abundanza was forced to close his difficult restaurant last year.