On September 19, 2012, Governor Jerry Brown signed Senate Bill 1186 into law, which became effective immediately as an “urgency measure.” SB 1186 reforms California’s disability access laws by, among other things, (1) banning pre-lawsuit letters by lawyers demanding money,
(2) creating new provisions to prevent “stacking” of multiple claims to increase statutory damages, and (3) requiring that demand letters identify the barriers that prevented full and equal access to the business premises or services as well as the dates the disabled person encountered those barriers. The new law also reduces the amount of statutory damages available for unintentional violations of the law, when certain circumstances exist, if needed changes are made quickly after a business is sued. To understand the impact of this new law, it is important to consider the obligations imposed on building owners and tenants who make their business premises available to members of the public.
Required Access for Persons with Disabilities
The federal Americans with Disabilities Act of 1990 (“ADA”) and the California Building Standards Code require buildings, structures and facilities that are made available to the public, such as restaurants, retail stores and office buildings, be accessible to, and usable by, persons with disabilities. The ADA allows persons with disabilities who are denied access to such “public accommodations” to file civil complaints and obtain injunctive relief to ensure full and equal access to those public accommodations as well as recovery of reasonable attorneys’ fees and costs if their lawsuit is successful.
As often happens in California, the state legislature enacted an even tougher statutory scheme that, in addition to injunctive relief and the award of attorneys’ fees, allows for recovery of compensatory damages for injuries resulting from violations of the ADA, but also minimum “statutory damages” of either $4,000 or $1,000, whether or not any injury was suffered by the disabled individual. See California Unruh Civil Rights Act, §§ 51, 52 (a) and the Disabled Persons Act, Civil Code §§ 54.1, 54.3(a). These California laws created financial incentives for persons with disabilities and their lawyers to bring civil lawsuits to enforce disability access laws, in both the federal and state courts, causing a tremendous surge in disability access litigation in past years.
Prior Attempt to Control Abuses
In 2008, in an effort to address what many viewed to be abuses by “professional” litigants and their lawyers, the California legislature enacted Senate Bill 1608, known as the Construction-Related Accessibility Standards Compliance Act (“CRA”). The CRA created a procedure by which business property owners and tenants could seek a suspension or stay of ADA access-related litigation if they had retained a “certified access specialist” (“CASp”), a person certified by the State of California to be an expert in disability access laws and regulations. A CASp conducts an inspection of a business premises and issues a report stating whether the building, structure or facility meets all applicable construction-related accessibility standards, or identifies corrections that need to be made to enable the business premises to meet all applicable access standards.
Armed with a CASp report, business property owners and tenants are entitled to ask the court to stay or delay further action in the lawsuit for 90 days. The parties are required to attend an Early Evaluation Conference and the disabled person is required to produce a written itemization of (1) the specific barriers and issues on the business premises that are the basis for claimed accessibility violations, (2) the amount of claimed damages, (3) the amount of attorneys’ fees and other costs incurred, and (4) a demand for settlement of the case. Any CASp generated report is also provided as part of the exchange of information to facilitate a settlement at the Early Evaluation Conference.
The CRA also limited statutory damages to each particular occasion a person is denied full and equal access, and not upon the number of violations that are identified or may exist at the business premises.
The CRA specified that a disabled person will only be considered to have been denied full and equal access and eligible to recover statutory damages, if he or she (1) personally encountered the violation on a particular occasion, or (2) was deferred from accessing a business open to the public on a particular occasion as a result of a violation.
In practice, most construction-related disability lawsuits simply are not pursued through the courts beyond the filing of a complaint, preparing a demand for money and seeking a promise to make modifications to the business premises. As a result, stays of litigation for 90 days and the other refinements in disability access provisions in the CRA, have not proved to be particularly helpful in addressing abuses by “professional” litigants.
The business community continued to press the state legislature for changes in the law. Working with interested parties, California then enacted SB 1186 in September 2012, chipping away at some of the abuses that have arisen since statutory damages became a part of California disability laws.
No Demands for Money
In the past, business property owners and tenants often received standardized letters from lawyers for disabled persons claiming that their premises were not fully accessible and demanding money to settle a client’s access claim in order to avoid being sued. Now, pre lawsuit demands for money from lawyers to settle accessibility claims are banned. Yet, lawyers may still tell business property owners and tenants that they may be “civilly liable for actual and statutory damages for violations of accessibility laws.”
Required Contents of Demand Letters
Following the enactment of SB 1186, demand letters prepared by lawyers must state sufficient facts for a “reasonable person” to identify the basis of the claim, including the specific access barriers the person encountered, the dates they personally encountered them, and the manner in which the barriers interfered with the person’s full access, or otherwise deterred them from visiting the business. In addition, lawyers must now provide their State Bar numbers in demand letters and send copies to both the State Bar and the State Commission on Disability Access (at least until January 1, 2016). The State Bar is required to review these demand letters to ensure they comply with the provisions of SB 1186. If a lawyer fails to comply, it will be cause for disciplinary action against the lawyer by the State Bar.
In addition, when a lawyer sends a demand letter to a business property owner or tenant, a separate written advisory must also provide detailed information, including among other things: (1) a statement that compliance with disability access laws is a serious responsibility; (2) Internet sites where information can be found regarding an individual’s legal obligations and how to comply with disability laws; and (3) a statement advising the individual to seek the assistance of a lawyer and to contact their insurance carrier. A copy of the demand letter must be sent to the State Bar; the recipient can also provide a copy to the State Bar to determine if it complies with legal requirements.
Filing Civil Complaints
After the enactment of SB 1186, all complaints that allege a construction-related accessibility claim must be verified under oath by the person who is suing (at least for complaints filed in state courts). Two separate, written advisories must also accompany all civil complaints served on a business property owner or tenant. The first is an application form to stay the litigation and request an Early Evaluation Conference with a judge, along with information about the right to seek such relief. The second is a detailed written advisory that clarifies, among other things, the conditions that must be met in order for reduced statutory damages to be applicable.
Reduction in Statutory Damages
Two means have been created to allow “qualified defendants” to reduce liability for statutory damages from $4,000 to a lesser amount. SB 1186 allows liability to be reduced to a minimum of $1,000 “for each offense,” if the business demonstrates all construction-related violations that form the basis of the complaint are corrected within 60 days of receiving the complaint, if any of the following also occurs:
1. CASp Inspections/Building Official Approval:
a. The business premises has been “CASp-inspected” or determined by a CASp inspection to “meet applicable standards,” so long as there have been no modifications or alterations that impacted compliance with accessibility standards since the inspection, or
b. The structure or area of the business premises where the alleged violation occurred was subject to a CASp inspection and (i) “reasonable measures” had been implemented to correct the alleged violations before the alleged denial of full access occurred, or (ii) the business owner or tenant was in “the process of correcting the alleged violation within a reasonable time and manner” prior to the occurrence of the alleged violation, or
c. The structure or area of the business premises where the alleged violation occurred was “new construction” or an improvement that was approved and passed inspection by a local building department permit and inspection process, on or after January 1, 2008 and before January 1, 2016, and there were no modifications or alterations to those affected areas had since occurred, or
d. The new construction or improvement was approved or passed inspection by a local building official who was a CASp and there were no modifications or alterations that affected compliance since that inspection.
Thus, a relatively small financial incentive has been created for business owners and tenants to have a CASp inspection performed and limit their financial exposure to ADA access lawsuits. The incentive created is a result of political compromise that few seem satisfied with – disabled persons or business owners. While potential statutory damages are reduced, the limits only apply per offense – each occasion a disabled person personally encountered a barrier to full and equal access, or was deterred from visiting the business.
2. Small Businesses
The second means for reducing statutory damages for construction-related accessibility claims allows statutory damages to be reduced to $2,000 for each offense, if the business property owner or tenant can demonstrate that (1) all construction-related violations were corrected within 30 days after receiving the complaint and (2) it is a small business as defined by the statute. A “small business” is a business that employed 25 or fewer employees on average over the past three years and has an average of less than $3.5 million of gross receipts “as evidenced by federal or state income tax returns.” The gross receipts maximum is to be adjusted “bi-annually” by the Department of General Services for changes in the California Consumer Price Index for all Urban Consumers.
The CASp inspection reports are to remain “confidential” during the course of the litigation and the business’ tax returns/employee information are only to be provided to the court, confidentially, and not to the disabled litigant or his or her lawyer.
Beyond the legal thresholds that must be satisfied, reduced statutory damages seemingly affect a relatively small number of business premises – those with minor building standards violations that can be cured almost immediately. Very little time is allowed for a business property owner or tenant to respond, contact a lawyer, retain an access specialist to determine what corrections are required and then hire a qualified contractor to make the improvements or modifications within 30 or 60 days of being served with the complaint.
Further, the above allowances for reductions in statutory damages do not apply to “intentional violations,” (an undefined term), nor do they in any way affect actual damages, if any, suffered by the disabled person, or the potential for awarding triple actual damages as otherwise may be permitted under the law. Finally, the reduction in statutory damages only applies to complaints filed after September 19, 2012, the date of the enactment of SB 1186.
SB 1186 has tightened disability access laws to further reduce past abuses. Yet, no dramatic changes in disability access lawsuits in California can be expected. The added burdens imposed on “professional” litigants can easily be overcome and incorporated into their means of initiating such lawsuits. Nonetheless, the steps business property owners and tenants must undertake to reduce statutory damages from $4,000 to either $2,000 or $1,000 “for each offense,” will create some, but not large financial benefits. However, the significance of SB 1186 to business property owners and tenants may be the importance placed on conducting CASp inspections of their commercial properties, now, rather than after a lawsuit is filed. CASp inspections will limit financial exposure to accessibility lawsuits. The CASp inspection stickers that are provided and should be displayed at one’s business premises, alone, are likely to reduce exposure to disability access lawsuits. Not surprisingly, being proactive can save a lot of grief and financial exposure, compared with ignorance of legal requirements and waiting, unknowingly, until an ADA complaint is filed.
Commercial Leases – July 2013
Many business property owners and tenants still remain uninformed about disability access legal requirements. This may change with the addition of California Civil Code Section 1938 that was enacted as part of SB 1186. Section 1938 requires all commercial property owners or lessors to state “on every lease form or rental agreement executed on or after July 1, 2013,” whether the property being leased has undergone inspection by a CASp and, if so, whether the property has or has not been determined to meet applicable construction-related accessibility standards.
While Section 1938 does not identify the consequences if a lease does not contain the required information, it’s feasible that a commercial tenant could raise a claim to rescind a commercial lease if he was sued for failing to comply with disability access laws and the lease did not expressly comply with the requirements of Section 1938. Alternatively, a claim could be asserted by way of a cross-complaint that the landlord’s failure to comply with state law exposed the tenant to damages for which the landlord should be responsible.
Clearly, it is time to become familiar with the legal requirements business property owners and tenants must fulfill to ensure equal access to their premises for persons with disabilities. Education and prompt action is the solution to avoid, if not minimize, financial exposure for violations of state disability access laws.