SB 1186 was a widely publicized effort by the California Legislature to rein in Americans with Disability Act (“ADA”) lawsuit abuse in 2012.

ADA lawsuit abuse has been the scourge of small business owners throughout California for many years. Businesses in the Sacramento area have been especially hard-hit.

Professional litigants such as Scott Johnson file hundreds of lawsuits each year demanding that small business owners make expensive repairs to their property. They do so under the cover of advocating for disabled persons. But they are really filing these lawsuits to put money in their own pockets — and the pockets of their lawyers.

SB 1186 was supposed to reform parts of California law to make ADA lawsuit abuse go away.

It isn’t working.

ADA Abuse is a California Problem

As an initial matter, I must clarify an important distinction: ADA abuse is so prevalent in California because of unique provisions of California law. The federal Americans with Disabilities Act contains reasonable measures that allow plaintiffs to bring lawsuits against non-complaint property owners.

However, federal law does not allow for the award of money damages in ADA denial-of-access cases. This is a critical distinction that is often lost in the debate. Federal ADA law only allows for injunctions against non-compliant business owners (and an award of attorney’s fees). No money damages whatsoever.

These lawsuits are so attractive to plaintiff’s attorneys here in California because of unique provisions of California law that impose a minimum statutory penalty of $4,000 for every violation of the ADA’s California equivalent, the Unruh Act.

It is this unique feature of California law that has created a cottage industry of professional ADA litigants and law firms.

With that important clarification, below are two real-world examples of how SB 1186 is not working as intended.

Ban on Monetary Demand Letters

One highly-touted provision of the new law is a prohibition on demand letters that seek any amount of money in exchange for not filing a lawsuit.

These letters were thinly veiled shakedowns, but they at least provided property owners notice that they had access issues. SB 1186 prohibits a demand letter from containing a demand for a monetary settlement to prevent a lawsuit. SB 1186 also requires the sender of such letters to file them with the State Bar of California.

Professional ADA plaintiffs such as Scott Johnson have responded in the simplest way possible: they stopped sending pre-litigation demand letters altogether. Now, businesses are being served with ADA lawsuits without the slightest warning.

By removing the incentive to send demand letters, SB 1186 has eliminated the opportunity for a business owner and an argieved disabled person to come to an out-of-court settlement prior to the filing of a lawsuit. Merely having to defend a lawsuit is a large part of the cost associated with an ADA lawsuit.

And get this — the plaintiff’s attorneys are citing the fact that they had “no choice” to file a lawsuit as justification for their sky-high monetary demands during litigation settlement negotiations.

As you can see, banning pre-litigation demand letters is going to lead to more litigation, not less.

And because litigation is going to become more prevalent, these cases will actually become more expensive to property owners because of the attorneys fees involved on both sides.

Early Evaluation & Stay Provisions Don’t Apply in Federal Court

Another important facet of SB 1186, and of earlier reform legislation by Assembly Member Roger Niello, are provisions in the Civil Code of Procedure that allow for an early evaluation conference and stay of court proceedings in certain ADA lawsuits.

The stay and early evaluation conference procedure is intended to provide the parties to an ADA lawsuit with an informal opportunity to settle the case quickly and cheaply with a Court’s supervision.

Professional ADA plaintiffs response? Instead of filing their lawsuits in California courts, they are now filing their lawsuits in US District Courts.

Because US District Courts only apply California substantive law, and not California procedural law, the stay and early evaluation provisions of the Code of Civil Procedure do not apply.

As such, these time and money saving provisions of SB 1186 are essentially null and void. They have no effect in Federal Court, and thus they are not capable of being utilized by ADA defendants.

ADA plaintiffs found a very simple workaround by filing their lawsuits in Federal Court, and business owners throughout the state will continue to suffer paying exorbitant settlments in order to quickly end litigation.

Conclusion

These are just two examples of how recent ADA lawsuit reform is not working. It would be disingenuous for anyone to point to SB 1186 as proof that ADA lawsuits are being reined in. Nothing could be further from the truth.

As discussed above, these cases are still prevalent and are costing small businesses in Sacramento large amounts of time and money.

Real ADA lawsuit reform is needed. I will be blogging in the near future about a real solution that the California Legislature could implement to end the abuse of the Americans with Disabilities Act and the Unruh Act.

Please contact my office if you have been served with a ADA lawsuit or demand. I can help you fight back. I can be reached at (916) 333-2222.