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Winter 2004
   
The ADA Shakedown Racket
Walter Olson
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If you think you’ve got a stressful life, be glad you’re not Warren Lloyd. As the Philadelphia Inquirer reported in August, Lloyd has sued Casey’s Restaurant and Saloon in the Philly suburb of Drexel Hill under the Americans with Disabilities Act, complaining of the dire emotional distress he suffered when he discovered that the business lacked adequate parking for his wheelchair van and that its restrooms were not fully wheelchair-accessible. And that is by no means the only trauma Lloyd’s psyche has recently weathered: over the past several months, he has sued more than 30 other eating and drinking establishments throughout the Philadelphia area after stressfully finding that their facilities, too, failed to comply with various ADA requirements.

Many of the restaurant owners were astonished by Lloyd’s suits—and felt ambushed by them. Neither he nor any other disabled person, they note, ever complained before about their facilities—which in some cases they had already renovated for handicapped accessibility. And when the owners sought to settle Lloyd’s complaints, one demand invariably rose to the top of the agenda: that they pay thousands in attorneys’ fees to his counsel, Brodsky & Smith. Since late May, the small legal practice has filed more than 100 ADA suits on behalf of Lloyd and a second local man. The two complainants in turn receive backing for their litigation from the nonprofit American Disability Institute, which plans “to roll out 400 to 500 suits a month until more than 5,000 businesses have been cited for ADA violations”—a crusade, it claims, “to bring all businesses in the Philadelphia area into compliance with the ADA.”

High-minded crusade or shakedown racket? Film legend Clint Eastwood would probably call it a shakedown. Back in 2000, Eastwood fought off a complainant who wanted much more than a fistful of dollars—$577,000 in attorneys’ fees, to be exact—after charging ADA violations at the actor’s historic Carmel, California inn. A jury did find Eastwood responsible for two minor infractions but declined to order him to pay anything.

Many in Florida’s business community would cry “shakedown” too. Even as Dirty Harry was making his day in court, stories began to hit the national press about lawyers filing ADA charges throughout the Sunshine State against drugstores, car dealerships, hamburger stands, and even strip joints on behalf of a small group of repeat complainants, and then settling for several thousand dollars per case in attorneys’ fees. One suit actually targeted a wheelchair store with two handicapped owners. Fed up with the rash of suits, Florida Republican congressman Mark Foley introduced legislation that would have required ADA complainants to give firms notice of any violations and 90 days to fix them before resorting to lawsuits. But strong opposition from disabled-rights groups and the Clinton administration got the bill tabled. One bill supporter predicted that if Congress did nothing, “more and more attorneys are going to find out that this is a great way to make fees.” The prediction has proven sadly accurate—and harassed businesses are the losers.

Lawyers can find targets with ease, because Title III of the 1990 Americans with Disabilities Act, covering public accommodations such as stores and theaters, is so hard to comply with. It lays out hundreds of requirements—everything from the permissible height of countertops and mirrors in newer or renovated buildings to how heavy swinging entrance doors can be to the exact location where grab bars must be located in toilets, and on and on. A bathroom alone must meet 95 different standards, on one estimate.

Even a firm that thinks that it’s complying with the law because, say, its architect worked with an ADA consultant, can be in for a rude surprise when a different official swings by looking for violations. “I have not found anything that’s 100 percent compliant with the ADA,” Mariana Nork, senior vice president of the American Association of People with Disabilities, recently observed.

And the ADA is set up so as to encourage complaint-filing. Like other civil-rights laws, it gives winning plaintiffs the right to collect generously calculated attorneys’ fees from losing defendants—though, by contrast, successful defendants don’t get to make the prosecution pay their lawyers’ fees. And courts have traditionally helped plaintiffs by defining “winning” in a liberal way. As one Florida defense lawyer grumbled, plaintiffs can win awards covering all their fees “even if they get [nothing more than] the telephone volume controls changed”—that is, if the court requires the defendant to make even the tiniest adjustments. This tilt in the playing field helps give established disabled-rights advocacy groups a strong hand in forcing settlements when they go to court to challenge access barriers.

This is good news for the established advocacy groups, but it also affords an opening for more entrepreneurial sorts, like Miami attorney John Mallah. For the three years leading up to 2001, The National Law Journal reports, Mallah launched ADA complaints against more than 700 Florida businesses, typically settling for $3,000 to $5,000 (and sometimes more) in legal fees and a promise from the defendants to fix the violations. Mallah, who has been particularly active in suing small tourist-oriented businesses such as the Economy Inn Hotel in Clearwater and Best Western Yacht Harbor Inn in Dunedin, brought most of the cases on behalf of one particular disabled-rights plaintiff: his elderly uncle.

Such cozy relationships between complainant and counsel in serial ADA litigation are by no means unheard of. During the late 1990s, attorney Ted Omholt filed more than 500 lawsuits against shops and restaurants in Hawaii on behalf of his octogenarian mother-in-law. Pompano Beach, Florida attorney Robert Bogdan has filed many suits on behalf of a disabled 12-year-old girl who reportedly lives across the street from him. Her targets have included various businesses that youngsters do not customarily patronize: a pawnshop, a liquor store, and a swimming-pool supply shop (the girl’s family has no pool).

The good faith of the complainants in many of these suits is open to doubt. Serial complaint-filers, defense attorneys say, frequently find it hard to recall details of the businesses they claim to have visited. Their lawyers’ allegations read like boilerplate, sometimes repeating the same phrasing used in earlier complaints, or making strange blunders such as suing a hotel for lack of pool access even though it doesn’t have a pool.

Fishier still, some of these suits have the backing of ad hoc nonprofit advocacy groups that seem little more than fronts for the attorneys pushing the suits. Among the nonprofits involved in the Florida cases, Citizens Concerned about Disability Access is Bogdan’s creation, while Mallah helped incorporate Advocates for the Disabled and Access for the Disabled. Do a Nexis search for the American Disability Institute, the nonprofit involved in Lloyd’s Philadelphia suits, and you find no earlier mentions of the organization or its work. A veteran local disability activist told the Inquirer that he’d never heard of it.

Should a business facing objectionable ADA litigation dig in and resist? Clint Eastwood might have proved his point by doing so, but what a celebrity can afford would be beyond most ordinary mortals’ power. If they choose to fight, defendants face a scary prospect: losing and getting hit with the legal fees from a prolonged court battle, which can add up to very serious money. River City Brewing, a popular downtown Sacramento bar, decided to fight an ADA lawsuit and eventually had to declare bankruptcy, after a court ordered it to pay $145,000 to compensate the disabled complainant’s lawyers. The brewpub’s main sin: placing some seating (less than a third) in a mezzanine area not reachable by wheelchair—in accord with architectural plans the city had approved. If a defendant refuses immediately to fold his hand, moreover, the complainant’s counsel may warn that the “price” of settlement will go up.

How the ADA Harms Cities

The harm that the ADA inflicts goes beyond conjuring into existence a lawsuit industry that harasses businesses. Its Byzantine regulations make our cities and towns uglier and less convenient.

ADA demands clash with the aims of the historic preservation movement, since all historic building styles incorporate features now forbidden or discouraged. Even interior doorknobs are suspect, with push levers recommended instead. Many businesses quietly abandon or tear down grand old buildings that are too difficult to retrofit. California banks have repeatedly faced lawsuits for continuing to do business in palatial 1920s-era branches without chopping down any of their beautiful, high, marble-clad teller windows. In 1999, the U.S. Attorney’s office in Boston launched a crackdown on bed-and-breakfasts, pharmacies, and other businesses on the quaint island of Nantucket because—as is typical in the local vernacular architecture—they had their front doors up a few un-ramped steps.

As for lost convenience, folks who live in densely populated cities, where space is at a premium, should consider this: lawyers have warned that cramped retail store layouts may violate the ADA, since they prevent disabled customers from negotiating aisles and reaching every bit of merchandise. In 2001, a disabled-rights advocacy group sued the Duane Reade drugstore chain, charging that many of its outlets in Manhattan violated the ADA. One plaintiff complained that some non-prescription medicines stood on shelves too high for her to reach; another felt uncomfortable when store employees had to help her get to the pharmacy area. Mandates for uncrowded drugstores will probably lead to the closing of some locations in places like midtown Manhattan—thus making everyone, handicapped people included, go farther to get their prescriptions filled or pay higher prices, since rent per square foot is a major element of overhead.

California has taken the lead in the proliferation of disability filing mills, and no wonder, since its state law offers the Number One encouragement for complaint filing—lots of crisp greenbacks. Unlike the federal ADA, California’s Unruh Civil Rights Act offers the aggrieved not just attorneys’ fees but—until recently, when the amount increased—“at least” $1,000 in cash payouts. Incredibly, it lets plaintiffs claim the payouts without needing to allege the slightest psychic or physical trauma, or even inconvenience.

The result has been to attract busy legal entrepreneurs such as Ted Omholt. By 2001, having finished his Hawaii spree, Omholt refocused his practice on the Bay Area and sent out the following form letter to local households with known wheelchair users:

    I am the attorney (age 48) who for the past three years has had the privilege to represent a small action group of six wonderful individuals who use wheelchairs age 37 to 66. . . . Their shopping at inaccessible stores in San Francisco and then filing lawsuits as clients of mine against those inaccessible stores nets them each an income which makes them financially independent. For each of them, the lack of funds which used to limit them to life’s bare necessities and which plagues so many disabled individuals today has become only an unpleasant memory from the past. As a reward for implementing the law and making stores more accessible for other disabled shoppers, group members now use their stream of income to eat out at good restaurants when they want to, buy new clothes and computers and televisions and gifts for family members, travel and take vacations wherever and whenever they want to go, and live a lifestyle they could only imagine prior to joining the group. . . . The group has room for a small number of additional members. Once that small number of additional members has been selected, the group will again close to new members.

Serial complainants roam other parts of California too. They include Riverside’s Kornel Botosan, who has filed more than 200 cases against such defendants as Madeline Johnston of Long Beach, a woman in her seventies, who, her lawyer told the Sacramento Business Journal, “owns a building that she leases to six businesses. It’s her only source of income.” Johnston was hit with a lawsuit because there was no handicapped parking or ramp leading into the building, and she couldn’t afford the $16,000 needed for improvements.

With California businesses vehemently protesting that the cash-payout provisions were transforming the filing of complaints into a cottage industry for lawyers, what did state legislators in their wisdom do? They decided—effective last year—to quadruple the automatic payouts under the law to $4,000. The increase sparked jubilation in some litigious quarters of the Golden State. “Now if you go in with five people, it’s $20,000,” says the state’s most celebrated disabled-rights complainant, George Louie. “Now they don’t think it’s a big joke.” (Disabled-access litigation isn’t the only area where aspiring victims benefit from the quadrupling of damages: this summer, two men made the rounds of San Diego’s singles’ bars during “Ladies’ Night” promotions and unsuccessfully demanded the same discounts as the gals; the next step—you guessed it—was to sue the errant bar owners, extracting big damages from six of them.)

No one exemplifies the emergent disability-shakedown industry better than the wheelchair-using Louie, whose past includes multiple felony convictions on assault, grand-theft, and other charges—though he says he is straight with the law today, having after all prospered as one of its enforcers. Over the years, he has filed at least 500 lawsuits against a wide variety of firms—from Sears, Blockbuster Video, and McDonald’s to small mom-and-pop proprietorships. Some of his individual settlements have reached $100,000, and revenues from his nonprofit Americans with Disabilities Advocates, which he runs out of his Oakland apartment, topped $500,000 in one recent year. Louie, who is not a lawyer and thus not even in theory subject to state bar discipline, claims that he’s “not in this for the money.” Well, maybe; but it’s worth noting that for a while he was looking to expand his disability operations to Las Vegas but eventually decided against suing the casinos. “Nevada,” he explained, “does not have damage provisions” for access violations.

Since the 2002 boost in damages, Louie has taken an even higher profile, hurling more than 130 suits against California wineries, including big names Beringer, Fetzer, Kendall-Jackson, and Mondavi, as well as smaller family outfits. His suits generally target the wineries’ on-site visitor centers and tasting rooms, a major tourist draw in the state. Some run afoul of accessibility rules by, for example, using gravel outdoors for a more rustic appearance rather than paving over parking lots and pathways with asphalt or concrete, as ADA guidelines require. Louie has helpfully told wineries that they can settle out of court for $10,700 or so—that’s $4,000 for him (as provided in the Unruh Act), the same amount for a second disabled visitor, plus $2,700 in fees for the lawyer working in cahoots with them. That’s a sizable amount of money for a business to pay out, but it’s a lot cheaper than the hundreds of thousands that they might have to cough up if they get into a lengthy court battle.

A colorful and media-friendly character, known for his combative language (“We hunt you down. . . . We really do you in”), Louie brusquely dismisses the notion of notifying firms before filing suit. They’ve had more than a decade to learn the rules, haven’t they? he asks rhetorically. He tells the wineries: “You can’t hide from us—you’re a sitting duck. You go to any winery in California and they’ll give you a map of another 10 or 15. With all these vehicles we have, they’re easy to find.”

Louie recently had a revealing falling-out with one of his lawyers, Paul Rein—the Oakland attorney who had sued Clint Eastwood. Louie filed an action alleging that the bathroom at Rein’s office violated ADA rules, its toilet two inches too close to the wall and its grab bars “not positioned right.” In a complaint to the state bar, he called Rein “a 'set-up' specialist who on four occasions asked me to visit four businesses in my wheelchair to provide a pretext for suing them.” Louie conceded to the press that the complaints represented “retaliation time” against Rein for “messing with me.” Rein struck back, saying Louie “totally made this up,” had never used Rein’s office restroom, which was fully accessible, and—a truly interesting detail, if true—”never came into this office in a wheelchair.” He called Louie a “professional con man.” Eventually, Louie dropped his lawsuit against Rein, reportedly without payment.

So what do established disability-rights groups think about the ADA shakedown racket? Many agree with the veteran activist, quoted by the Philadelphia Inquirer, who found himself “appalled” by the grind-’em-out restaurant lawsuits. Activists in California will speak critically of George Louie’s activities, though not often on the record. (Louie, who is black, attributes some of the criticism to racism.) Nearly all the established activist groups say they try to work with business owners to fix violations before running off to court. Many are emphatic that they view litigation as a last resort.

Nonetheless, such groups are virtually unanimous in opposing any sort of notification requirement before complainants can file suit, so as to provide a safe-harbor period during which businesses could carry out needed alterations. And—especially around the Bay Area, where the modern disability-rights movement got its start and where it is still more radical than anywhere else—there is often a barely concealed attitude that, well, George Louie’s targets really brought it on themselves, didn’t they? “If there were compliance with the law, there wouldn’t be any industry at all,” says Linda Kilb, an attorney with the Disability Rights Education and Defense Fund in Berkeley.

The Bush administration has taken no official position on ADA notification. But it would be unwise for notification-backers to count on administration support, since George W. Bush, like his father (who first signed the ADA into law), has signaled his down-the-line support for the ADA and would seem to have little stomach for a fight with its defenders. At an April hearing of the House Committee on Small Business, Kevin Maher of the American Hotel and Lodging Association said that, in addition to California, Florida, Hawaii, and Pennsylvania, a number of other states around the country had started to see mass filings, including North Carolina, Tennessee, and Oregon. Very likely a hungry lawyer or freelancer in a town near you—right now—is studying the methods of John Mallah and George Louie, and is getting ready to swoop down for his first payday.

 

 

 
The Americans with Disabilities Act has spawned a sleazy lawsuit industry.
City Journal Winter 2004.
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