Industry Update
Opinion Article31 January 2013

Finally! Relief from abusive ADA litigation in California? Maybe not...

Hotel Lawyer talking about California's new law aimed at ADA litigation reform

By Jim Butler, Partner, Chairman, Global Hospitality Group®

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ADA litigation claims have skyrocketed. Since January 2005, 16,530 ADA lawsuits -- lawsuits alleging violations of the Americans with Disabilities Act ("ADA")  -- have been filed in federal courts across the country. Even more have been filed in state courts.


In the article below, two senior members of our Global Hospitality Group® talk about a new law passed in California with the goal of reducing abusive ADA litigation. Parts of this law became effective in September 2012, and the rest of it became effective January 1, 2013. Marty Orlick, Chair of JMBM's ADA Compliance & Defense Group, and David Sudeck, hotel and timeshare lawyer, look at some of the key provisions of this new law and provide their observations about their impact.

Marty and David frequently work together to advise hotel and timeshare owners and operators in connection with Federal and State accessibility law compliance. In this article, they bring California business owners some insight into the likely effectiveness a well-intentioned new law intended to curb abusive ADA litigation.

Will California law changes discourage abusive ADA litigation? The jury is still out...

by Marty Orlick | Chairman, ADA Compliance & Defense Group David Sudeck | Senior Member, Global Hospitality Group®

Since January 2005, 16,530 lawsuits alleging violations of the Americans with Disabilities Act ("ADA") have been filed in federal courts across the country. More of these lawsuits were filed in California than in any other state. Some believe that California is a hotbed of ADA litigation because California law awards damages and attorneys' fees to private plaintiffs for defendant's ADA violations – treble damages, with minimum statutory damages of $4,000 (prior to the passing of this Senate Bill), and punitive damages. An unknown number of accessibility cases have been filed in California state courts, and countless more claims have been threatened against mostly small business owners.

Past efforts to curtail ADA litigation abuse in California have been marginally successful. Unfortunately, the latest California legislation (SB 1186) may also provide limited relief from abusive ADA litigation. Key provisions of the new law became effective January 1, 2013. California SB 1186, through comprehensive amendments to a number of California laws, including provisions of the California Civil Code (Sections 55.3 et seq.), was intended to provide protection for the owners and operators of public accommodations who are making a good faith effort to comply with the ADA.

An overview of the main provisions of the new California law and our ADA Defense Lawyer observations "from the trenches" regarding the new law follows.

SB 1186 Provision JMBM ADA Defense Lawyer observation
1 Allows specified defendants to request a stay of court proceedings and an early evaluation conference. These defendants and their projects must meet certain requirements, such as (A) were approved pursuant to the local building permit and inspection process, (B) were approved by a local public building department inspector who is a CASp certified specialist, and (C) meet the definition of a "small business" provided in the Code. At this time, California State Courts do not have adequate resources or a plan in place to handle the numerous requests for stays and early evaluation conferences that may arise.

It is not clear whether Federal Courts will give any weight to the changes in California law.

With respect to clause (B), we, on the defense side, have been arguing for years that a building owner or tenant should be able to rely on the local building department's plan check, building permit, inspections and the issued Certificate of Occupancy. However, Courts have been reluctant to follow such a rule.

Until 2008, there were no requirements that building departments have a CASp certified building inspector on staff. The first building officials became CASp certified in mid-2009. Generally, however, building owners and tenants should not assume that building department sign-off on construction necessarily means that their property is ADA-compliant.

2 Reduces minimum statutory damages from $4,000 per offense to $1,000 per offense with respect to those defendants that satisfy clause (A) or (B) of the paragraph above, if all violations that have been identified in the complaint are brought into compliance with the ADA within 60 days after a business owner is served with a summons and complaint. A small business, as defined, that does not meet the foregoing requirements, may still have damages reduced to $2,000 if the violations are addressed within 30 days of service. The reduction in minimum statutory damages has not yet caused plaintiff's lawyers to reduce their damage claims, but the changes to the law are recent.

Some ADA violations cannot reasonably be addressed in 30 or 60 days, as applicable (particularly if architectural drawings, permits and construction contracts are necessary), and in such cases, the reduction of the minimum statutory damages may be illusory.

3 Requires commercial property owners to include a statement in any rental agreement executed after July 1, 2013 as to whether the subject property has undergone inspection by a certified access specialist. Requires commercial property owners to include a statement in any rental agreement executed after July 1, 2013 as to whether the subject property has undergone inspection by a certified access specialist.
4 Requires that the Court consider the reasonableness of the plaintiff's conduct in connection with "stacked claims" (where a plaintiff visits the same property repeatedly to file multiple claims for the same violation), particularly in light of the plaintiff's obligations to mitigate damages, if any. Furthermore, multiple claimed violations of the ADA may now be considered to be one violation depending on the circumstances. We are hopeful that this provision will result in a reduction of damages, but we have not yet realized any benefit from this new requirement.
5 Bans "pre-litigation demand letters" in which plaintiffs seek a specific amount of money without actually filing a lawsuit. Specifically, a demand letter may offer pre-litigation settlement negotiations, but shall not state any specific potential monetary liability for any asserted claim or claims, and may only state: "The property owner or tenant, or both, may be civilly liable for actual and statutory damages for a violation of a construction-related accessibility requirement."

Furthermore, under SB 1186, an attorney must provide a written advisory, which must also include statutory language and his or her State Bar license number, that includes sufficient detail to allow a reasonable business owner to identify the basis of the claim, and a copy must be sent to the California Commission on Disability Access and, until January 1, 2016, to the California State Bar. Any attorney violates these requirements may be subject to discipline by the California State Bar.

In the past, demand letters often have requested a payment to avoid costly litigation. Some do not even request that the property in question correct the alleged violation.

So far, we are finding that this requirement is only postponing the demands for money until after litigation has been filed. It has not seemed to have any effect on the number of claims.

6 Requires that any complaint based on a construction-related accessibility claim must be verified by the plaintiff under oath. Until January 1, 2016, an attorney must submit a copy of the verified complaint to the Commission. Requires that any complaint based on a construction-related accessibility claim must be verified by the plaintiff under oath. Until January 1, 2016, an attorney must submit a copy of the verified complaint to the Commission.
7 Increases business license fees to fund the enhancement of the State's certified access specialist program. A sign of the times.

Overall evaluation of California law changes

SB 1186 did not go as far as some wanted. Many businesses were advocating a restriction on litigation until after a potential defendant had been given a reasonable time to correct alleged violations (which would have provided similar protections to those provided under other legislation (SB 800), which helped to curb the abuse of construction defect litigation against condominium developers). However, SB 1186 did not provide this protection.

Experienced plaintiff's attorneys have already figured out how to work within the boundaries of or circumvent the new law. It does not appear to be slowing the onslaught of lawsuits.

From our perspective, if and when the Court system is equipped to handle the additional burden imposed by SB 1186, the most important benefit of the new law may be the ability of a defendant to petition the state Court to stay proceedings and order an early evaluation conference before meaningful attorney's fees have been incurred. It is harder to come to a reasonable settlement when significant legal fees have been run up by both sides.

Ultimately, the best protection is to secure a CASp certified survey under the supervision of an experienced ADA attorney and to correct any violations under the ADA that are identified in that survey (if and to the extent that such correction is required under applicable law).

Other ADA defense and compliance resources

You can access the full library of ADA materials on Hotel Law Blog by going to the home page, selecting the tab at the top that says "HOTEL LAW TOPICS", and then clicking on "ADA Defense & Compliance" in the drop down menu . . . or by clicking here.

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This is Jim Butler, author of and hotel lawyer, signing off. We've done more than $60 billion of hotel transactions and have developed innovative solutions to unlock value from hotels. Who's your hotel lawyer?

Martin Orlick is a partner in JMBM's Real Estate Department, the Chair of the Firm's ADA Compliance and Defense Group, and a senior member of JMBM's Global Hospitality Group®. Marty has significant experience in representing hospitality industry clients in enterprise wide ADA compliance and defense. He has represented more than 500 businesses in ADA issues, many of them hotels and restaurants, as well as hotel mixed-use properties. In addition to defending lawsuits and governmental investigations, Marty's team of ADA specialists focuses on enterprise-wide ADA compliance including facilities, website and operational compliance. He recently performed an ADA survey of a portfolio of Manhattan hotels. Marty is a member of the American College of Real Estate Lawyers (ACREL) and a frequent speaker on the ADA and other topics. For more information, please contact Marty Orlick at 415.984.9667 or [email protected]

David Sudeck, is a senior member of JMBM's Global Hospitality Group®. He helps clients create value for their hotels and other hospitality properties in the purchase and sale, development, construction, financing, leasing, sale-lease back, and operation of (including management and ADA compliance issues associated with) such properties. David's practice primarily involves the complex issues associated with hotels, resorts, vacation ownership properties (including clubs, timeshares, fractionals and private residence clubs), restaurants, golf courses and spas. He represents several financial institutions and private equity funds as special counsel relating to their hospitality interests. David has a pragmatic approach to practicing law, and he adds value through his business experience and legal expertise, his finance, entitlement and development knowledge, and his extensive relationships with investors, lenders, brokers, developers, and service providers. Contact David Sudeck at 310.201.3518 or [email protected].

Our Perspective. We represent hotel lenders, owners and investors. We have helped our clients find business and legal solutions for more than $60 billion of hotel transactions, involving more than 1,300 properties all over the world. For more information, please contact Jim Butler at [email protected] or +1 (310) 201-3526.

Jim Butler is a founding partner of JMBM, and Chairman of its Global Hospitality Group® and Chinese Investment Group™. Jim is one of the top hospitality attorneys in the world. GOOGLE "hotel lawyer" and you will see why.

Jim and his team are more than "just" great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them.

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