SAN FRANCISCO (CN) — Accusing law firm Potter Handy of shaking down small businesses for cash payments, the district attorneys of San Francisco and Los Angeles are seeking the return of millions of dollars the owners paid to settle thousands of groundless disability-rights lawsuits.
The lawsuit filed jointly by San Francisco District Attorney Chesa Boudin and Los Angeles District Attorney George Gascón in San Francisco County Superior Court claims the firm files thousands of boilerplate Americans with Disabilities Act lawsuits on behalf of a handful of disabled clients against small businesses, then pressures the owners to settle as quickly as possible for an amount between $10,000 and $20,000.
"Conservatively assuming an average settlement figure of $10,000 per case, Defendants have extracted over $5,000,000 from California’s small businesses from the cases filed on behalf of just one of their serial filers in just over two years,” the complaint says. The district attorneys believe the firm has systematically drained California businesses, many owned by immigrants who do not speak English or fully understand the vagaries of the American legal system, out of millions of dollars over the past four years.
One Potter Handy client, Orlando Garcia, has filed more than 800 lawsuits. Another client, Brian Whitaker, filed more than 1,700 federal cases. The complaint also lists serial filers Chris Langer, Rafael Arroyo, and Scott Johnson, who was indicted by a federal grand jury in 2019 for failing to report the income he received from the lawsuits on his taxes.
“After receiving reports last year that hundreds of small businesses had been served with fraudulent lawsuits under the ADA, our office launched an extensive investigation and today we filed a civil case against the law firm that has filed thousands of these unlawful, boilerplate lawsuits,” Boudin said in a statement. “We will hold accountable those who exploit vulnerable business owners, hurt immigrant communities, and subvert the intent of laws designed to promote accessibility.”
Boudin and Gascón say Potter Handy exploits the federal Americans with Disabilities Act to get their cases into federal court while using the California Unruh Civil Rights Act, which provides damages of at least $4,000 per violation, to get the targeted businesses to pay up.
"By using false standing allegations to get an ADA injunctive relief claim into federal court — where the Legislature’s procedural reforms on abusive Unruh Act litigation do not apply — and coupling the federal claim with a state-law Unruh Act claim, Potter Handy is able to avoid those reforms while demanding small businesses pay it the heavy damages available under the Unruh Act,” the complaint says.
The San Diego-based firm has offices in San Francisco and Los Angeles, as well as Utah and Texas. Its website says it attorneys specialize in disability rights, employee rights and mass tort litigation, and also represent wildfire victims.
Boudin and Gascon say the firm’s filings took an especially nefarious turn during the Covid-19 pandemic, when its attorneys and serial filers Orlando and Whitaker began targeting small businesses in San Francisco’s Chinatown, like Hon’s Wun-Tun House. Whitaker claims to have visited Hon's Wun-Tun House in March 2021 and encountered outdoor dining tables that were wheelchair inaccessible despite that the fact the restaurant was only offering takeout and did not have any sit-down service. The same was true for coffee shop Latte Express, which was also hit with one of Whitaker’s boilerplate lawsuits.
Renmin Yan, who owns Hon’s Wun Tun House, immigrated to the U.S. from China 15 years ago, working for 11 years as a waitress before purchasing the restaurant from its previous owner in 2018. Yan ended up settling with Whitaker, and estimates that it will take her 2-3 months to recover the cost.
The district attorneys’ lawsuit says Johnny Ly, the owner of Latte Express, did not understand Whitaker’s lawsuit and couldn’t afford a lawyer, so his contractor son-in-law sent workers to the cafe to fix the alleged ADA violations. Despite this good faith effort, Whitaker and Potter Handy simply moved for a default judgment against Ly, which they obtained.
Boudin and Gascón believe the sheer number of lawsuits indicate that they are bogus, since the serial filers could not have possibly encountered each barrier they list, let alone intend to return to the businesses since they are located hundreds of miles away from where they live. Security footage from some of the businesses reveal that the serial filers never visited them at all.
“Still others were sued for alleged violations that objectively did not exist; for example, one Chinatown business was sued for allegedly having an illegally steep 12.5% ramp to its front door, when in fact the entranceway was nearly flat,” the lawsuit says.
“We are grateful to District Attorney Boudin’s office for taking seriously the concerns we raised about exploitation of Chinatown businesses and now taking action to protect businesses,” Donald Luu, vice president of the Chinese Chamber of Commerce of San Francisco, said in a statement. “The pandemic has been devastating to many small businesses in Chinatown and misusing the ADA to scam vulnerable business owners is wrong. We respect the ADA and understand the need for such regulations, but we are pleased to see any abuse of ADA laws is not tolerated in San Francisco.”
Potter Handy partner Dennis Price strongly denied the complaint's allegations. "The allegation that we targeted any particular community is a heinous lie and not supported by any evidence," he told Courthouse News. "If any amount of effort had been made to look into where our cases were filed, they would see that our cases are filed throughout the state. They don't target any particular neighborhood or business."
"People with disabilities have just as much need to patronize small businesses as anyone else," Price said, adding that his clients are being blamed merely for noticing that the businesses they sued were out of compliance with the ADA. "Our cases make California significantly more compliant. It's unfortunate that these district attorneys are picking on disabled access advocates."
Price said Boudin and Gascon appear to be trying to curry favor with small business owners at a time when both are up for recall "based on the perception that they are not faithfully executing the duties of their offices."
He added, "We look forward to having the matter heard in court."
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