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Law firm Potter Handy prevails against DAs’ claims of ADA shakedowns

Litigation privilege doomed the lawsuit, though the judge said criminal prosecution or state bar discipline remain open avenues.

SAN FRANCISCO (CN) — A well-publicized fraud lawsuit brought by the district attorneys of San Francisco and Los Angeles accusing California law firm Potter Handy of shaking down small businesses with phony disability rights complaints met its end this week with a San Francisco judge’s dismissal of the case on privilege grounds.

Then-San Francisco DA Chesa Boudin and his LA counterpart George Gascón filed the high-profile case seeking the return of millions of dollars the business owners paid to settle thousands of groundless disability-rights lawsuits.

The pair claimed lawyers for the San Diego-based firm file thousands of boilerplate Americans with Disabilities Act lawsuits on behalf of a handful of disabled clients against small businesses only to pressure the owners to quickly settle for an amount between $10,000 and $20,000.

Boudin, who was recalled by voters this past June, told Chinatown small business owners at a town hall in May that his office was committed to helping their community fend off predatory lawsuits and recoup the funds they’d already spent on settlements.

“We cannot and will not allow lawyers to enrich themselves by abusing the law and shaking down and extorting money from hardworking small business owners, particularly when they are targeting folks they know do not have access linguistically or financially to any ability to defend themselves,” Boudin said.

In a brief ruling Monday, San Francisco Superior Court Judge Curtis Karnow found the DAs’ case barred by rules governing “litigation privilege” that protect the filings and communications connected to Potter Handy’s ADA lawsuits from being used against them as they pursue their clients’ interests.

"The gist is that there is a recognition that bringing civil litigation is protected by the First Amendment right to petition the government. Prosecuting claims based on filing a lawsuit is a direct attack on this right, and inherently implicates numerous other rights,” Potter Handy partner Dennis Price said in an email Wednesday. “How do you engage in civil discovery when virtually every document is covered by attorney-client privilege? Further, if there is a threat of future litigation derived from bringing a lawsuit, it can have a chilling effect on future claims.”

Price said ADA filings from firms have dropped off since the district attorneys' lawsuit, but Potter Handy is still filing cases.

Karnow did not give the attorneys an opportunity to amend the case, but said they can still bring criminal charges against Potter Handy, and that its lawyers could be disciplined by the State Bar for ethics violations "if the complaint's allegations are true."

Randy Quezada, a spokesperson for Boudin’s successor Brooke Jenkins said Wednesday that that are "considering all options before making any decisions."

Price described the original civil suit as a “publicity stunt” meant to drum up support for Boudin and Gascón, who were both facing recall elections at the time. Only Gascón remains in the job.

“Gascón and Boudin wasted taxpayer money to shore up support from the small business communities that had lost faith in each of them by attacking a convenient scapegoat,” Price said. “People with disabilities are a small, politically forgotten, minority. This is the same cold calculation California businesses often make: disabled patrons represent a tiny fraction of their potential customer base, and people with disabilities face some of the highest rates of poverty of any minority group. Why invest in making physical changes to accommodate persons with disabilities? This is the reason the ADA was needed over 30 years ago and why it is still needed today.”
 

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