Lawsuit Reform

Drive-By Lawsuits and the Abuse of the Americans with Disabilities Act

A recent 60 Minutes episode examined the growing litany of lawsuits that use the Americans with Disabilities Act (ADA) to demand payment from small businesses. In some cases, these lawsuits are collected from the comfort of the attorney’s car or even couch, driving by handicapped parking spots to assess violations or using Google Earth to find motels without accessible pool lifts for the disabled. An important reform in advancing equal access for the disabled has unfortunately been used by some bad actors for monetary gain more than disability advocacy and threatens the small business economy in some states.

Lawsuits aiming to bring about compliance with an important equal rights law like the ADA are important in advancing the cause, but some of the serial litigators are doing more to rake in damages than increase accessibility. As many states have statutes that go beyond the federal bill and offer individual lawsuit filers cash payments as well as attorney expenses, the incentives to file a lawsuit shift from accessibility to cash recovery. In California, in addition to having both sides’ legal fees covered by the defendant, a plaintiff recovers a minimum of $4,000 per ADA violation and the plaintiff is not required to offer a grace period for the violation to be rectified.

The ADA has promulgated thousands of regulations, ranging from flooring material requirements to mirror and sign height specifications. A regulatory violation could be as simple as a sign hung an inch higher than regulation height or a sign missing a few required words. Each violation, even if committed unknowingly as is often the case, compounds the recovery demand. These numbers can add up to enough to seriously harm a small business’ bottom line. A business owner who receives a demand letter for tens of thousands of dollars in payment will almost always choose to pay rather than litigate and pay for the expensive legal fees they and the plaintiff would rack up. Some plaintiffs’ attorneys are capitalizing on the likelihood of that choice.

One particular California law firm has brought over 600 ADA lawsuits in just two years and is now being sued by their former plaintiffs. They recruited disabled individuals to assess, block by block, the regulation-by-regulation compliance of every storefront. The hired individuals who are now suing the firm had the expectation that the ADA lawsuits would be preceded by warnings for the business to comply with regulations. But that hasn’t been the case.  America’s main streets can and should be more accessible but this can be done without creating a cottage legal industry that capitalizes on the minutiae of regulation at the expense of our small businesses.

The Americans with Disabilities Act was originally passed in 1990 under President George HW Bush and its regulations have been updated a handful of times since then. The law, as written, only requires regulations be adhered to when it is “readily achievable” or can be done with little effort or expense. The law was crafted with the recognition that requiring every business to immediately change existing architecture to be fully compliant is unrealistic. While the federal law is pragmatically crafted, supplemental state legislation has opened the way for lawsuits that ignore the “readily achievable” standard. A lawsuit or demand letter based on state statutes can demand monetary reward, not just non-compliance rectification, and full compliance, whether readily achievable or not, unlike legal actions supported solely by the federal reform.  The end result is inefficient enforcement via costly lawsuit, and ADA litigation focused more on payment punishment than meaningful rectification.

ADA regulations are poorly socialized among the nearly 30 million small businesses in the US and small businesses often lack the expertise and capital to understand and adhere to the regulations. If a business owner’s first notice of non-compliance with the law is a lawsuit demanding funds without grace period, something isn’t calibrated right in our system. Furthermore, it seems there is little follow up to ensure compliance was achieved following a lawsuit. Once payment is received, these attorneys seem to move on to the next lawsuit. This is understandable, perhaps, but not ideal if the policy goal of lawsuit enforcement is genuine improvement in accessibility.

Policy makers should look for ways to encourage meaningful adherence to the law while disincentivizing inefficient, erratic and economically damaging litigation. Moderating the cost-drivers of litigation by increasing prerequisites for litigation or decreasing lawsuit payouts would be a good first step.

In Depth: Lawsuit Reform

State legal systems and the liability they exert on businesses and individuals are a disincentive to bad behavior and allow fair players to succeed in the marketplace. When lawsuits inappropriately punish good actors, resources are sucked out of the business economy, away from research & development and job creation. Lawsuit…

+ Lawsuit Reform In Depth