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ADA Lawsuit Reform – SB 1186

August 27, 2013

By Randolph Ortlieb and Jared Herling

Introduction

The Legislature enacted SB 1186 to address litigation abuse, such as “vexatious litigation” — lawsuits that are not pursued to rectify wrongs or to advance or create a public benefit.[1] As stated by the author of the bill:

Vexatious special access lawsuits unduly burden our courts and taxpayers and do not result in improved access for those with special access needs. Those lawsuits cost California jobs and economic prosperity, unfairly threaten small businesses, force businesses to respond with higher costs for goods and services, and have adverse impacts on levels of employment and employee compensation.[2]

Here is a summary of SB 1186 – the details of which are codified at California Civil Code Section 1938.

The Basics

  1. Businesses have 60 days to fix an ADA violation, after receiving notice of the violation, if their facility was completed after January 1, 2008.  Businesses that don’t qualify for this benefit can qualify if they have obtained an inspection report from a Certified Access Specialist (CASp).
  2. Qualified businesses can also be able to get damages reduced from $4,000 to $1,000 when the violation is corrected.
  3. A small business that does not have a CASp inspection, which has fewer than 25 employees, has up to 30 days to correct a violation.  The statutory fine for a violation can be reduced from $4,000 down to $2,000 if the corrections are completed within 30 days.
  4. Demands for money are now forbidden.  Attorneys who send “demand letters” must also send the letter to the California Commission on Disabilities and the California State Bar, for review of compliance with the law.  The letter may not make a demand or request for money, and may only state the potential for civil liability.

Notice and Demand Letters

Pre-litigation letters must now contain a factual statement which would allow a reasonable person to be able to identify the violation.  The specific access barrier (or reason the individual was deterred) must be set forth in plain language, with enough information about the location of the barrier for a reasonable person to be able to identify it.  Further, the letter must explain how the barrier interfered with the person’s full and equal access. It must include the date(s) on which the interference occurred.

Plaintiffs who chose to file their lawsuit without sending a notice must provide the property owner with an advisory of their rights.  This must include information pertaining to the limitation of damages and procedural protections, which owners can invoke in order to gain time to address the plaintiff’s claim.

Procedural Protection

Qualifying landlords or property owners can seek an immediate stay (of 90-days), which stops the lawsuit from proceeding.  Plaintiffs must then present their claim at an “Early Evaluation Conference” which allows the merits of the case to be assessed.  This conference is ordered within 50-70 days of filing the application for stay, and the parties must all personally appear. The courts is required to view the evidence on both sides and verify that the plaintiff’s claims are supported.

Qualifying categories:

  • CASp Inspection: A landlord or property owner may qualify if: 1) their property has been inspected or meets the applicable standards; 2) has a CASp determination pending; 3) if no alterations or modifications have been made which might affect compliance with the ADA; or 4) a CASp inspection report has been issued.

OR

  • New Construction: The property qualifies if it was 1) constructed or improved after January 1, 2008; 2) was approved through a local building permit and inspection process; 3) no alterations or modifications which would affect compliance with ADA have been made; and 4) any violations are corrected within 60 days.

OR

  • CASp Certified: The property was 1) constructed or improved after January 1, 2008; 2) was approved by a local CASp certified inspector; 3) no alterations or modifications made affect ADA compliance; and 4) any violations are corrected within 60 days.

OR

  • Small businesses: a business employing 25 or fewer employees, which has gross receipts of less than $3,500,000. Additionally, all violations must be corrected within 30 days.

New Damage Criteria

Establishing liability: Plaintiff must show through one of two methods that the violation denied them full and equal access to the place of public accommodation on a particular occasion.

  • Method 1: Plaintiff must show that they encountered the violation, which resulted in difficulty, discomfort or embarrassment.

OR

  • Method 2: Plaintiff must show that they were deterred from accessing the place of public accommodation.  This requires plaintiff to show that he had 1) actual knowledge of the violation, and 2) the violation would have actually prevented full and equal access.

The plaintiff may recover damages based on the specific instance that he was denied access.  Plaintiffs may not recover based on the number of existing violations, but only per instance where he was denied full and equal access.  It is also more difficult for a plaintiff to claim he was denied full and equal access on more than one occasion, because he must show that he acted reasonably, when visiting a location despite being aware of a barrier to access.

New damage limits: Damages are reduced under the law from $4,000 down to $1,000 per offense, where the defendant remedies the violation within 60 days and where either:

  • The property was inspected by a CASp and met the applicable standards.  Further, no modifications or alterations have been made which affect compliance with ADA standards.

OR

  • The property is currently in the process of being inspected by a CASp. The defendant has also implemented measures to correct the violation or was already doing so at the time of plaintiff’s denial of full and equal access.

OR

  • The property was a new construction or improvement.  The property was approved and inspected by permit and the related inspection process beginning January 1, 2008 or thereafter.  Lastly, the property had no modifications or alterations which affected compliance with ADA standards.

OR

  • The property was a new construction or improvement.  The property was inspected and approved by a local CASp. No alterations or modifications affecting ADA standards had been made.

Small businesses may have minimum damages reduced from $4,000 to $2,000 where the business: 1) has had less than 25 employees on average over three years;  2) has averaged gross receipts of less than $3,500,000; and 3) corrects construction-related violations within 30 days of receiving the complaint.

Commercial Leases

Leases of commercial property entered into on or after July 1, 2013 must indicate whether a CASp inspection was made, and whether any violations were found.  For more on this topic, see our article here. (note: insert a link to “New Commercial Lease Disclosure Requirements Concerning Disability Access” at http://www.whiteandbright.com/articles/new-commercial-lease-disclosure-requirements-concerning-disability-access/)

Miscellaneous

A $1.00 tax will be charged for applications for local business licenses or the equivalent.  The funds will be contributed to the expansion of the CASp program.

Conclusion

SB 1186 helps level the playing field for businesses and leads to faster resolution of ADA claims.

Randy Ortlieb is an partner at White and Bright specializing in real estate and business litigation.  For questions relating to this article or for assistance with a real property matter, please contact Mr. Ortlieb at White and Bright (760-747-3200).

 


[2] Id. at Section 1(c).



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