Just do a search for these terms strung together — small business, ADA, lawsuits — and you’ll learn about “vexatious lawsuits.” CBS’s 60 Minutes ran a piece on them in December 2016, calling them “drive-by lawsuits.”
Another label: predatory lawsuits. These are legal actions brought for minor infractions of the Americans with Disabilities Act (ADA), with the intention of getting the defendant — small business owners in particular — to settle because it’s too expensive to fight the action in court.
On January 26, 1992 — 25 years ago — the “public accommodations” rules under the Americans with Disabilities Act (ADA), which was enacted in 1990, became effective. “Public accommodations” means businesses providing goods and services to the public. There is no small business exception.
The “minimum guidelines” for being accessible have been developed over many years by the Access Board (13 public members appointed by the President, the majority of whom must be individuals with disabilities, and the heads of 12 federal departments and agencies), and they’ve been changed from time to time. For example, on August 11, 2016, a final rule was added to the list of requirements. There is an ADA Guide for Small Business that businesses can use to be sure they’re accessible.
Example of a drive-by lawsuit
Here’s what happened recently in my town:
One restaurant owner who has operated a well-known eatery for nearly a quarter of a century received a call from another business owner in a nearby town. Our restaurant owner was warned that an attorney was on the hunt for violators of the ADA. This federal law has very specific requirements for accommodating the disabled, including the height of bathroom mirrors, toilet paper dispensers, and handicapped parking signs (the requirements run hundreds of pages). This attorney sent in someone in a wheelchair to test compliance with the ADA. The finding here: the mirror was an inch too high, giving the attorney the grounds for a lawsuit.
This restaurant owner settled for $5,000 rather than incur $30,000 or more to fight the action. Had he had the resources to fight, he could have won on a variety of grounds. For example, according to Matthew T. Anderson, an attorney with the firm of Jaburg Wilk in Phoenix, businesses that had complied with the 1991 regulations do not have to retrofit for the 2010 regulations. Thus, a bathroom mirror hung at 36” as required under the 1991 regulations does not have to be rehung at 34” as required by the 2010 regulations. However, winning is still a loss because the plaintiff bringing the action—the disabled person who visited the restaurant, represented by the attorney in our story—does not necessarily have to compensate the owner for legal fees. Attorney’s fees are recoverable only if, in the eyes of the court, the plaintiff’s action was frivolous, unreasonable, or groundless. Winning can be nothing more than a pyric victory for a small business owner.
Are these lawsuits benefiting the disabled?
The ADA was enacted to ensure that disabled individuals had access to privately owned businesses and were not blocked by their disabilities. Unfortunately, the primary beneficiaries of the drive-by lawsuits are the attorneys who bring them.
The types of small businesses that are particularly vulnerable include convenience stores, restaurants, motels, laundromats, and nail salons. One source reported that more than 3,400 such lawsuits were filed in the first six months of 2016, which was a 60% increase over the number of suits filed in the same period in 2015. The plaintiffs, who are disabled (or in some cases merely posing as such), usually only receive a fee or a small fraction of the recovery.
Note: In some states, such as Arizona, a business can be fined for a violation, with the civil penalties payable to the state (not to the disabled individual). The fine: up to $5,000 for the first violation and up to $10,000 for a subsequent violation.
What can be done?
Here’s my New Year’s Resolution: I’m going to work with small business advocacy groups and groups representing the disabled to reach a consensus about how to best address this problem of access to small businesses. After all, given the fact that an estimated 18.7% of the population has some disability, and nearly 50% of those age 65 and older are disabled (according to the U.S. Census Bureau), it makes no business sense for small business owners to discourage the patronage of the disabled by having inaccessible premises. Quite the contrary: small business owners I know welcome all paying customers, regardless of any physical or other limitations they may have.
There should be a system for warning businesses about alleged violations and give them time to make changes needed to become compliant. In 2015, the ADA Education and Reform Act (H.R. 3765; S. 3446) would have required a plaintiff to give 60-days notice of an alleged violation of the ADA so that a business owner could take remedial action and prevent the filing of a lawsuit. It never gained any traction in Congress but is expected to be brought up again in Congress this year. In 2016, California enacted a similar measure.
It is also important to find ways to fund the cost (sometimes very high) for making repairs and renovations to bring the premises into compliance. Federal tax breaks, which include the disabled access credit and the ability to deduct the costs of removing architectural barriers up to $15,000, are helpful but may not be enough. California’s Capital Access Program (CalCAP) has a special program aimed at helping at-risk small businesses comply with the ADA.
In this New Year, let’s work to eliminate this particular burden on small businesses while ensuring that patrons have access to them regardless of physical or other conditions.