‘Drive-by’ lawsuits under disabilities statute costing economy
By: John McMickle
Congress has recently taken up the issue of frivolous litigation under the Americans with Disabilities Act (ADA). Under this landmark legislation, owners of public accommodations are required to ensure that hotels, restaurants shopping malls and other places of business are accessible to the disabled.
As a result of this law, disabled Americans are better able to use and enjoy public spaces to the betterment of America. While it seems like a win-win for everyone, there is a significant negative trend that has caught the attention of Congress.
Increasingly, private lawyers have begun to file “drive-by” lawsuits over minor infractions solely for the purpose of wringing settlements from property owners, often small businesses.
For instance, there has been a significant uptick in litigation under Title III of the Americans with Disabilities Act in recent years. In 2016, Title III litigation increased by 37 percent and prior years have seen similar increases. All total, there were 6,601 Title III cases filed nationwide in 2016.
Amazingly, Lee Ky, who owns and works in a small donut shop in California, and ironically is in a wheelchair, testified to the House Judiciary Committee that she has been sued on the grounds that she has not accommodated the disabled at her business.
In the House of Representatives, a bipartisan bill has passed the House Judiciary Committee and awaits action by the House. This legislation requires that attorneys give notice to business owners before a lawsuit is filed. If the ADA problems — inaccessible bathrooms, parking lots, ramps, etc. — are not fixed within 120 days, the lawsuit proceeds.
But, if the business fixes the problems, a lawsuit would be moot. This would be a true win-win for everyone — other than the trial attorneys. In fact, some plaintiffs from ADA drive-by lawsuits are actually suing their supposed attorneys because they were deceived about the nature of the lawsuits filed.
The Senate may consider this idea when the Judiciary Committee conducts a hearing on the need for lawsuit reforms. They certainly should.
As noted, Title III requires property owners to ensure that public accommodations are accessible to the disabled and permits private lawsuits. Under the ADA, plaintiffs often allege they have visited or attempted to use the public accommodation even though they may not have done so in order to be eligible to file a lawsuit.
Importantly, the ADA provides that lawyers filing suit may receive attorney’s fees. Plaintiffs are not eligible to receive compensation. Frequently, these lawsuits are filed by serial plaintiffs who can file over 100 lawsuits in one year.
While amounts paid to settle Title III lawsuits vary, based on a recent survey I performed of property owners and practicing attorneys, a conservative estimate of payouts for attorneys’ fees in Title III cases is $7,500. This means that in 2016, businesses across the country may have paid roughly $50 million merely to compensate attorneys. If that’s not a sham, I don’t know what is.
Assuming that Title III lawsuits and settlement amounts remain constant in the future (a conservative estimate since Title III lawsuits have increased every year since 2013), the amount businesses will pay to attorneys over a 10-year period would be close to a half-billion dollars.
It should be noted that this dollar figure understates the true cost of Title III litigation. This amount does not include legal fees paid to lawyers representing property owners or monies paid to a plaintiff attorney after a threat to sue rather than an actual lawsuit. Nor does it include money paid under state law versions of the ADA.
Such staggering amounts paid to attorneys to settle or resolve Title III cases represent a significant lost opportunity for the disabled, property owners and economic growth. $500 million spent to pay lawyers is $500 million not used to refurbish property to ensure accessibility for the disabled and not used to invest in new development projects that, in turn, create jobs in the construction sector.
Congress should give property owners a chance to fix accessibility problems before a lawsuit is filed. Property owners can and should identify and remediate problems quickly and in a cost-effective way, fulfilling the true intent of the ADA while removing the misaligned financial incentives that drive predatory lawsuits.
This is what H.R. 620 does, and the legislation is badly needed.