POTTER HANDY, THE law firm at the center of controversy about litigation under the Americans With Disabilities Act, has fired back at the district attorneys of San Francisco and Los Angeles.

Potter Handy responded to a civil complaint initiated in April by the district attorneys alleging that Potter Handy and 15 of its attorneys knowingly relied on false allegations about their clients’ legal standing to bring ADA cases in federal court.

In the June 10 filing, Potter Handy’s lawyers — the Santa Ana law firm of Callahan & Blaine, APLC — assert that the district attorneys’ complaint is defeated, on its face, and accuse the district attorneys of harassing the law firm with “vexatious re-litigation of legal issues that have already been decided.”

The filing is the first official response by the law firm to the district attorneys’ suit, though Dennis Price, a Potter Handy partner, issued a statement the day after the suit was filed expressing concern about the motivation of the district attorneys.

Price said that the district attorneys were both facing recall threats “and are filing these claims in order to generate support.”

San Francisco District Attorney Chesa Boudin was successfully recalled in the June 7 primary election, according to the unofficial results. Requests to the San Francisco District Attorney’s Office for comment on whether Boudin’s recall would affect the lawsuit have not been answered.

A cottage industry disrupted

The district attorneys’ massive lawsuit — the filing was more than 300 pages with attachments — roiled the cottage industry that has grown up around ADA litigation in California.

The complaint laid out an alleged “scheme” by which Potter Handy and a handful of disabled clients filed thousands of ADA lawsuits against small businesses to pocket quick settlements.

At the crux of the district attorneys’ suit is the issue of whether Potter Handy’s disabled clients had proper legal standing to bring their cases in federal court. The district attorneys say the plaintiffs lied — with the knowledge of their lawyers — to make it seem that they had standing and, in the process, extracted millions of dollars of settlement payments from the small business owners they sued.

The district attorneys — suing on behalf of the “People of California” — requested a San Francisco Superior Court judge to enjoin the law firm from further violations of California’s unfair competition law and compel it to repay thousands of small businesses the money they paid to settle claims brought over the last four years.

The lawsuit had immediate effect: new Potter Handy lawsuits in the U.S. District Court for the Northern District of California — where in 2022 the firm had been filing an average of three new lawsuits a day — slowed to a trickle and then stopped altogether.

The standing issue arises because claims under the ADA are only for injunctive relief — that is, to force a defendant to remedy a violation of the statute. To have standing to obtain an injunction, the plaintiff must not only encounter a barrier to accessibility in a place of “public accommodation” like a store or a restaurant, but must also face the risk of continued injury if the violation is not remedied.

Because a future injury would only be incurred by the plaintiff if he or she were to return to the store or restaurant, the issue of the plaintiff’s “intent to return” has surfaced as a flashpoint in the litigation.

The district attorneys allege that thousands of settlements have been obtained only because plaintiffs falsely told the courts that they intended to return.

Noting the thousands and thousands of cases filed by Potter Handy’s most aggressive serial filers, the district attorneys allege that the plaintiffs never genuinely intended to return to the establishments they sued. And without an intent to return, the federal courts had no authority to hear the cases.

Potter Handy responds

Potter Handy responded to the district attorneys suit by filing a “demurrer,” a motion that says that a state court complaint is deficient on its face and must be dismissed.

According to the filing, the district attorneys’ suit should be dismissed based on four separate legal doctrines:

First, it says that the complaint is barred by the legal doctrine of “collateral estoppel” because the same claims have been litigated unsuccessfully in another case by another district attorney who also sued on behalf of the People of California.

This argument is based on a lawsuit filed by the district attorney of Riverside County against two different law firms and several of the clients of those firms who filed many ADA claims in Southern California. The defendants in that case were successfully represented by the same lawyers now representing Potter Handy.

Second, it asserts that California’s “litigation privilege” protects statements made in court, and the allegedly false standing allegations in Potter Handy’s cases are just such statements. The idea is that to allow parties to freely assert claims in court without fear of collateral challenge, such statements are legally privileged and cannot be used as the basis for a separate lawsuit.

Potter Handy accuses the district attorneys of attacking people who are on the front lines combatting discrimination against disabled people and fighting for their civil rights.

Third, it asserts that the ADA lawsuits Potter Handy has filed on behalf of its clients are examples of petitioning the government for redress and therefore protected under the First Amendment.

Last, it asserts that the district attorneys’ lawsuit is retaliation for federally protected actions under the ADA and therefore barred by the ADA statute’s anti-retaliation provision.

Based on these arguments, Potter Handy asks the state court to dismiss the complaint without a chance to try to fix the defects.

Potter Handy’s filing presents a vastly different picture of the firm’s ADA practice than the one presented by the district attorneys.

Potter Handy accuses the district attorneys of attacking people who are on the front lines combatting discrimination against disabled people and fighting for their civil rights.

Potter Handy says that its attorneys are “a group of committed attorneys who have successfully facilitated the correction of countless ADA violations over the years.”

Its clients are fulfilling the “grand promise” of the ADA that ”[n]o individual shall be discriminated against based on disability in the full and equal enjoyment … of goods, services, facilities, privileges, advantages, or accommodations.”

Rather than apologizing for the serial lawsuits its clients have filed, Potter Handy says that the disabled litigants are doing just what the statute contemplates.

“While such plaintiffs have sometimes been disparaged — as the DA has done here — as ‘serial’ or ‘high-volume’ litigants, they are in fact a necessary component of ADA enforcement.”

A high-stakes contest

A key issue in the legal maneuvering is who will decide the credibility of the disabled plaintiffs and their lawyers, a question complicated by the number of courts and judges involved.

The district attorneys’ case is proceeding under the usual state court timeline and may take months or years to resolve. However, the individual ADA cases pending in federal court — the ones based on the allegedly false allegations about standing — are all proceeding according to their own schedules.

According to an analysis by Bay City News, on May 15 there were 994 pending ADA cases in the U.S. District Court for the Northern District of California and Potter Handy was counsel in 800 of them.

ADA cases filed in the district are assigned randomly, meaning that most of the judges and magistrate judges in the district have their own portfolio of ADA cases. The open ADA cases are divided among 19 federal judges and 11 magistrate judges.

Potter Handy argues that the best place for the standing issue to be resolved is in the federal courts that have the ADA cases, not the state court. In fact, it asserts that the district attorneys are asking the state court to “re-litigate each and every ADA claim that was previously vetted by the federal courts.”

The district attorneys, on the other hand, contemplate that the state court will make the ultimate decision and, if they are successful, they want to get relief not only in the pending cases but also in the thousands of cases that have been closed after settlement. The district attorneys have asked the court to order Potter Handy to repay all the settlements made in the last four years.

The stakes are high.

According to the Bay City News analysis, in the last four years at least 3,142 cases in the district that were handled by Potter Handy firm have been resolved and the cases closed. While some of the resolutions were dismissals, most were settlements.

Settlement amounts are not made public, but the district attorneys allege in their suit that Potter Handy typically settles its ADA cases for between $10,000 and $20,000.

Using the lower number as an order-of-magnitude estimate of the law firm’s potential exposure were the district attorneys to be successful, refunding settlement payments in the Bay Area alone would cost the firm more than $30 million.

However, the district attorneys’ suit seeks a refund of settlement payments made in all federal cases throughout the state, not just the Bay Area.

Potter Handy represented clients in at least 2,800 cases in other California district courts that were closed in the last four years. If the payments made to resolve those cases are added to the bill, the firm’s exposure would be close to double.

Formidable headwinds

If Potter Handy wants the federal courts to determine standing, it faces some formidable headwinds. In the seven weeks since the district attorneys sued, several federal judges have been heard from on issues involved in the state case.

On May 5, U.S. District Judge Jacqueline Scott Corley found that the testimony given at an evidentiary hearing in her court by Brian Whitaker, one of Potter Handy’s most prolific clients, was “not credible” when it came to the question of whether he intended to return to the defendant’s place of business. Based on that lack of credibility, she ruled that Whitaker had no standing and dismissed the case.

Dennis Price, the Potter Handy attorney involved in the case, said afterward, “This decision flouts multiple Ninth Circuit decisions about standing in ADA cases. We will be appealing.”

Potter Handy filed an appeal in the case June 4.

Meanwhile, in the 10 days following the district attorneys’ suit, U.S. District Judge Vince Chhabria, acting on his own initiative, issued orders to show cause in at least 10 pending Potter Handy cases requiring the plaintiffs and their lawyers to file detailed declarations under penalty of perjury to “substantiate” the basis for standing in the individual cases. The judge said that he would likely hold evidentiary hearings after the declarations were filed to test their “veracity.”

On May 10, Potter Handy filed a response to Chhabria’s orders. In each case, the response included a declaration from the firm’s client and one from Mark Potter, a name partner in the firm and one of the lawyers named in the district attorneys’ suit.

The responses stated that each Potter Handy client was aware of the standing issue and knew of his or her obligation to return to the place where they encountered the barrier to accessibility. Potter said that based on his relationship with each of his clients, he was confident that their intent to return was genuine.

However, in one of those matters — this one involving Potter Handy client Scott Johnson — Chhabria stated that papers filed by Johnson and the law firm were “boilerplate submissions” that “were incomplete and misleading.”

In the judge’s opinion, “they omitted several important facts about this case, raising serious questions about the credibility of Johnson and his attorneys from the Potter Handy firm.”

Notwithstanding those observations, the judge did not convene an evidentiary hearing on the standing question because Potter Handy filed a notice conceding that the ADA violations had been corrected and Johnson’s claim was moot. Given that there was no longer anything in contest, the judge dismissed the case without further exploration of the facts around standing.

However, a few days later, on May 31, Chhabria convened an evidentiary hearing in a case captioned Whitaker v. Peet’s Coffee, Inc.

In that case the defendant presented evidence that Whitaker flew to San Francisco from his home in LA and spent perhaps two hours visiting various stores and restaurants “to dine” or “to shop.” He encountered ADA violations in many of the places he visited and in consequence filed 34 lawsuits from that one-day trip.

Peet’s counsel, Brett Burns of the firm Hunton Andrews Kurth, argued that Whitaker had no connection to San Francisco and his interest in dining or shopping at any of the restaurants or stores was pretextual. Pointing out that Whitaker had sued nearly 2,000 businesses in the past, Burns argued that Whitaker had no genuine intent to return to patronize them in the future.

As in the case before Corley, Whitaker testified that he intended to return to each location when the barrier to access was removed. However, in this case, he outlined a new strategic plan that he said he had developed with Potter Handy attorneys “in last month or two.”

Under the new plan, Whitaker testified, after a lawsuit is settled and the time to remediate the ADA violation has passed, Potter Handy will notify him of that fact and he will then revisit the site to assess compliance.

Whitaker testified that he has begun functioning under the new strategic plan and has revisited a number of stores and restaurants although, so far, in Northern California he had only revisited establishments in Roseville.

The matter is waiting Chhabria’s decision but based on comments made by the judge during the hearing, he appeared skeptical about Whitaker’s testimony.