District Attorneys’ Unfair Competition Claim Against Serial ADA Litigant Barred By Litigation Privilege | CDF Labor Law LLP

Companies hit with website accessibility or physical access claims brought under the Americans with Disabilities Act of 1990 (ADA) and/or California’s Unruh Civil Rights Act (Unruh Act) may experience great frustration upon learning that it too has been sued by a serial ADA litigant through what appears to be nothing more than a copy and paste complaint. Each year, hundreds of website accessibility and physical access lawsuits are filed in both California state and federal courts and many (but, not all) by a handful of disabled individuals represented by an even fewer number of law firms. These complaints often contain nearly identical allegations from one matter to the next, with only one substantive change: the named Defendant company. Individual companies, many times small California businesses, feel helpless when hit with these lawsuits and urge a curtailing of what appears to be part of a larger scheme to extract settlements.

District Attorneys’ of Los Angeles and San Francisco (the People) appeared to be heading in this direction by initiating an action in April 2022 against the law of firm Potter Handy, LLP, which according to Court papers has filed countless complaints against businesses in California federal courts alleging violations of the ADA. The People allege that these lawsuits contain allegations that the law firm knew to be false and that it “files the complaints as part of a shakedown scheme to extract coerced settlements from small business owners in California,” which the People allege constitutes “unlawful” business practices under California’s Unfair Competition Law (UCL).

The primary basis for the People’s UCL claim derives from Business and Professions Code § 6128(a), which makes it a misdemeanor for an attorney who, “[i]s guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party.” In June 2022, the law firm demurred to the People’s complaint on multiple grounds, including that the People’s UCL claim was barred by California’s litigation privilege.  Under the litigation privilege, communications made as part of a judicial proceeding are generally privileged under the concept that litigants should be free to access the court without the concern of facing derivative tort actions. One of the recognized exceptions to this privilege is where a statute, like Business and Professions Code § 6128(a), is more specific than the litigation privilege and its enforcement frustrated when in conflict with the privilege’s application.Under this exception, courts limit the privilege’s reach if its application is inconsistent with another statute. 

Months later, the trial court sustained the law firm’s demurrer without leave to amend finding that the People’s UCL claim is based on conduct that falls directly within the purview of the litigation privilege, and that no exception applied. The People then appealed this ruling. At issue on appeal was whether the People’s UCL claim can survive a demurrer (for which material alleged facts are taken as true) that is brought on the grounds that the litigation privilege protects the law firm’s alleged conduct at issue.

Earlier this month, in People v Potter Handy, LLP, the Court of Appeal of the State of California, First Appellate District answered this question in the affirmative and affirmed the trial court’s ruling finding that no exception existed to the litigation privilege for the People’s UCL claim. The Court of Appeal opined that here, an exception to the litigation privilege was not proper because other remedies under which the People can prosecute such claims remain viable, such as State Bar disciplinary proceedings and criminal prosecution under Business and Professions Code § 6128(a). While the Court of Appeal ultimately affirmed the trial court’s ruling to sustain the demurrer without leave to amend, it remains yet to be seen whether this alleged conduct by a described serial ADA litigant sees an Act Two and is prosecuted under one of the other viable remedies.

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