A STATE COURT judge on Monday dismissed a high-profile lawsuit that former San Francisco District Attorney Chesa Boudin and his Los Angeles counterpart, George Gascon, brought against the San Diego law firm Potter Handy LLP.
The civil case, filed April 11 in San Francisco Superior Court, accused Potter Handy and 15 of its lawyers — including name partners Mark Potter and Russell Handy — of violating California’s Unfair Competition Law by bringing fraudulent and deceitful litigation under the Americans with Disabilities Act.
The filing alleged that the firm schemed to avoid state court rules designed to rein in serial ADA plaintiffs by filing their new cases in federal court where the state rules did not apply. The problem, according to the district attorneys, was that litigants in federal court can only bring suit when they have proper legal “standing.”
The district attorneys asserted that many — perhaps most — of Potter Handy’ clients lied to make it appear that they had standing, and that even though the firm allegedly knew that, Potter Handy filed the cases anyway.
The district attorneys asked the court to enjoin the law firm from further violations and make it repay thousands of small businesses that settled claims over the last four years.
Potter Handy moved to dismiss the case on a variety of grounds. It also argued that the case was brought for political reasons, noting that it was filed while Boudin was being recalled and suggesting that the case was an attempt to curry favor with small businesses and their owners.
In dismissing the district attorneys’ case, San Francisco Superior Court Judge Curtis Karnow found that the conduct of Potter Handy attorneys was covered by California’s “litigation privilege” that attaches to court filings and communications related thereto. The judge found that the privilege applied “irrespective of the communication’s maliciousness or untruthfulness.”
The privilege was intended to protect access to courts, “not because we desire to protect the shady practitioner,” Karnow said, quoting an earlier court case, “but because we do not want the honest one to have to be concerned” about later challenges in other courts.
Karnow dismissed the case without giving the district attorneys an opportunity to amend their complaint.
The ruling — if it survives challenge — puts an end to a case Boudin said was “righteous” and “stands out in my memory of areas of work I’m most proud of.”
Filings skyrocketed in 2021
The district attorneys’ lawsuit came after a staggering increase in ADA lawsuits in the U.S. District Court for the Northern District of California.
The ADA allows disabled individuals who encounter barriers to accessibility in public accommodations like stores and restaurants to obtain an injunction compelling the owner to remove the barrier to access. If successful, the plaintiff is allowed to recover his or her legal fees and out of pocket charges.
Moreover, in California, a violation of the ADA is also a violation of the state Unruh Act and allows the plaintiff to recover statutory damages equal to $4,000 for each visit (up to three) to the store or the restaurant while the inaccessible condition persisted.
The ADA is a civil rights statute and was intended to address discrimination against disabled people who were denied equal access to public accommodations. No federal agency was made responsible for enforcing the statute; instead, the act is enforced by disabled individuals suing to correct violations.
During the 32 years the law has been in place, a cottage industry of disabled plaintiffs and their lawyers has developed to litigate ADA cases. In part because of the statutory damages that the Unruh Act adds to a potential injunction, California has been home to a substantial amount of ADA litigation.
A Bay City News analysis in April 2022 found that since 2010, more than 36,397 ADA lawsuits had been filed in federal court in California.
The Northern District of California has been the fastest growing area for new lawsuits.
ADA lawsuits in the district in 2021 leapt from 873 to 2,463, a nearly threefold increase.
To put that in context, the total number of civil cases filed that year in the district — everything from free speech cases to antitrust and securities class actions to billion-dollar intellectual property suits to mass tort litigation — amounted to just over 9,000 cases.
ADA litigation in 2021, at least as measured by new filings, constituted more than 25 percent of the court’s business.
Ten plaintiffs filed 85 percent of those cases and they had one thing in common: they were all represented by Potter Handy.
Potter Handy
The district attorneys’ lawsuit noted that Potter Handy brands itself with the seemingly nonprofit title — Center for Disability Access — when it asserts an ADA claim, although the law firm is a distinctly for-profit operation.
A sampling of Potter Handy’s complaints show a typical pattern. A lawsuit is filed against a store or a restaurant or a hotel. The filing comes without a prior notice or demand. The defendant is generally a small business, frequently — though not exclusively — a mom and pop operation.
The complaint says that the plaintiff has a disability and visited the defendant’s place of business “with the intention to avail himself of its goods or services motivated in part to determine if the defendants comply with the disability access laws.”
The filing says that the disabled plaintiff personally encountered “unlawful barriers” to access and although he wanted to return and patronize the business, he was deterred by his knowledge of the barriers.
The barriers encountered could be physical or design features that create challenges for equal access. Frequently called out are door handles that are too hard to grasp or pull, counters that are too high, pathways too narrow for wheelchairs, handicapped parking slots not adequately marked, and doorways that lack ramps.
The complaint then asserts a federal claim under the ADA for the accessibility barrier and adds a claim for damages under California’s Unruh Act.
Most of the cases settle. The district attorneys’ lawsuit alleged that Potter Handy typically settles its cases for between $10,000 and $20,000 apiece.
According to a 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.
Using the lower number of the settlement range used in the DA’s suit 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 Northern District alone would cost the firm more than $30 million.
However, the district attorneys’ suit sought a refund of settlement payments made in all federal cases throughout the state. 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, the firm’s exposure would be well over $50 million.
Of course, not all cases settle and some of the settlement proceeds go to reimburse the law firm’s out of pocket costs.
The demurrer
Potter Handy responded to the district attorneys suit by filing a “demurrer,” a motion that says the state court complaint is deficient on its face and must be dismissed.
The filing presented a very different picture of the firm’s ADA practice than the one presented by the district attorneys.
Potter Handy accused the district attorneys of attacking people who are on the front lines combatting discrimination against disabled people and fighting for their civil rights.
The firm said 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 on the basis of 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.”
The first demurrer hearing
Karnow was the second judge presented with Potter Handy’s demurrer.
At an initial hearing in July, San Francisco Superior Court Judge Richard Ulmer declined to “spend judicial resources” on the dispute until he found out if Boudin’s successor would pursue the case. Boudin had been recalled by that time but no successor yet appointed. On July 7, San Francisco Mayor London Breed appointed Brooke Jenkins to replace Boudin.
Gabriel Markoff, lead counsel for the plaintiffs, argued that there was no reason to delay. In his view, the case was no different than any of the other 5,600 active cases the San Francisco District Attorney’s Office was then handling.
Judge Ulmer did not agree.
Ulmer said that there was a big difference between the case and most of the others in the District Attorney’s Office, because the other cases weren’t filed “in the middle of a political campaign, like this one was.”
Markoff responded that he did not think that fact had any relevance; the judge shot back, “You might not, but I do.”
The district attorneys moved forward with the case and filed a motion asking Ulmer to recuse himself, saying that the judge’s comments showed bias.
Ulmer ultimately granted that motion and Karnow was appointed to hear the demurrer.
Former District Attorney Boudin
In an interview with Bay City News six week after leaving office as a result of the recall, Boudin dismissed the suggestion that the suit was brought for political reasons.
“There’s absolutely nothing political about seeking to enforce laws to protect vulnerable victims and to do justice,” he said.
Boudin said the case is emblematic of the position he made known during his election campaign that there is “a broader role in pursuing public safety for district attorneys, a role that recognizes the need to prevent not just to respond to violence.”
As district attorney, “I wanted to think more broadly about prevention, not just reaction to a crime. I wanted to think more broadly about ways we can enforce laws equally, not only against the poor and people of color, but also against those who are powerful, big law firms, corrupt government officials, police who use excessive force,” Boudin said.
“There’s absolutely nothing political about seeking to enforce laws to protect vulnerable victims and to do justice.”
Former San Francisco District Attorney Chesa Boudin
“This case was really a quintessential example of my effort to do that, to stand up for the underdog, to take on powerful, private or public interests, that are used to being able to break the law with impunity,” he said.
Boudin said the case was already a success.
Before the suit, the Potter Handy firm was filing an average of three new suits a day, seven days a week, in the U.S. District Court for the Northern District of California.
After the filing, Potter Handy ADA lawsuits in the district slowed to a trickle and then stopped altogether.
“Unlike probably any other case that perhaps any district attorney in the history of state district attorney offices has filed, we saw an immediate change in behavior in federal court … It’s very rare to see that kind of an immediate deterrent effect.”
Formidable headwinds in federal court
Regardless of whether the dismissal of the district attorneys’ lawsuit stands, Potter Handy’s ADA practice faces some formidable headwinds in federal court. In the four months since the district attorneys sued, several federal judges have considered issues involved in the state case.
At least four judges have considered whether Potter handy clients have been truthful when they alleged that they had a genuine intent to return to the places that they sued for ADA violations. An intent to return is an essential component of standing.
In one case, U.S. District Court Judge Jacqueline Scott Corley found that Brian Whitaker, one of Potter Handy’s most prolific disabled clients “travelled to Redwood City for the purpose of finding business establishments to sue,” not because he was visiting the Bay Area two to three times a month, as he testified, to canvas neighborhoods as possible places to relocate from his home in Los Angeles.
“Nothing in the record supports a finding that in May 2021 he intended to return to every business he had sued, let alone an intent to return to the [defendant] Alhambra Irish House. Indeed, he could not identify a single Bay Area business he had returned to, despite having sued — and settled with — hundreds.”
Following the decision, Whitaker’s attorney, Dennis Price of Potter Handy, responded to a request for comment stating, “This decision flouts multiple Ninth Circuit decisions about standing in ADA cases. We will be appealing.”
The firm subsequently filed an appeal, which remains pending.
Meanwhile, 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.”
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.”
A few days later, on May 31, Chhabria convened an evidentiary hearing in another one of the cases, this one 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.
“There is little doubt,” Chhabria wrote, “that [plaintiff] Whitaker had no intention of returning to the shop when he filed his lawsuit, and there is good reason to think that he lied under oath about this issue (and perhaps others) at the evidentiary hearing.”
Chhabria dismissed Whitaker’s lawsuit and authorized the defendant, Peet’s Coffee, to seek attorney’s fees and sanctions against Whitaker and his lawyers.
Peet’s followed through on that authorization, and its motion against Whitaker and Potter Handy is currently pending before Chhabria.
In addition to the adverse findings from Judges Corley and Chhabria, Potter Handy has received several other unfavorable decisions from federal judges in the district and has also confronted numerous orders declining to entertain Unruh Act claims under the court’s supplemental jurisdiction. Potter Handy has pushed hard to persuade the federal courts that judicial economy and convenience favor resolving the Unruh Act claim with the ADA claim.
Going forward
Many questions remain after the decision. Karnow left open the possibility that the district attorneys could choose to pursue criminal proceedings against the Potter Handy firm. He also said that litigation privilege would not prevent disciplinary charges against the firm and its attorneys for alleged violations of the rules of professional responsibility that apply to lawyers practicing in California.
Randolph Quezada, communications director for the San Francisco District Attorney’s Office, responded to a request about whether it intends to appeal or take other action, stating that the office “is considering all options before making any decisions.” In an earlier statement, Quezada stated “we believe all the recent federal court rulings finding Potter Handy’s clients lied vindicate our allegations and case, regardless whether Potter Handy wins the demurrer on a legal immunity point.”
Ara Sahelian, an ADA defense lawyer and frequent opponent of Potter Handy, reacted sharply to the judge’s decision, saying, “If the district attorneys are to maintain their credibility, they must, without hesitation, proceed by way of a criminal action. There are hundreds of businesses that are relying on them for protection.”
Potter Handy partner Dennis Price responded to a request for a statement by repeating his allegations that he case was politically motivated, calling it a “publicity stunt.” Price also stated that “Our clients’ cases make a huge difference in the community. Their work leads to the removal of thousands of accessibility barriers per year. California is dramatically more accessible because of their cases. As long as our clients continue to experience discrimination we will advocate on their behalf.”