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SF DA meets with Chinatown business owners targeted in ADA shakedown

As they try to recover from a drop in foot traffic and tourism from the Covid-19 pandemic, the indoor bazaars, hair salons and hole-in-the wall restaurants that line the narrow streets of San Francisco’s Chinatown face yet another existential threat — so-called “shakedown” lawsuits over disability code violations.

SAN FRANCISCO (CN) — A contingent of Chinatown merchants crammed into a small conference room on Stockton Street in San Francisco on Friday anxious for answers from District Attorney Chesa Boudin, who vowed to help them protect their livelihoods by taking “unscrupulous” attorneys and law firms to court to recover thousands of dollars already paid to settle boilerplate Americans with Disabilities Act cases.

Friday’s group represented just a handful of the 300 small business owners hit with lawsuits by Potter Handy, a San Diego-based law firm accused of exploiting state and federal disability laws to make a quick buck.

A lawsuit filed jointly by Boudin and Los Angeles District Attorney George Gascón in San Francisco County Superior Court in April claims the firm’s attorneys file thousands of ADA lawsuits on behalf of a handful of disabled clients, then pressure the owners to settle as quickly as possible for amounts between $10,000 and $20,000.

“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,” said Boudin, whose office began investigating Potter Handy and its “drive-by” ADA lawsuits a year ago.

“This lawsuit is a major step in not only protecting all of you and other businesses against similar lawsuits in the future, it is also a major step in our effort to get you back the money this law firm has taken from you improperly,” Boudin said, triggering a round of applause from the crowd.

Potter Handy has not yet responded formally to the lawsuit, but partner Dennis Price called its allegations a "heinous lie" in an interview last month.

He accused Boudin and Gascón — both facing recall elections in June — of using the lawsuit to garner votes from the Asian American and small business communities.

But the district attorneys believe the sheer number of lawsuits filed by Potter Handy indicate they are bogus, since the plaintiffs could not have possibly encountered each barrier they list, let alone intend to return to the businesses that in many cases are located hundreds of miles from where they live.

At Friday’s town hall, Assistant District Attorney Gabriel Markoff called the suits wide-scale fraud and said the courts are beginning to take notice.

"The federal judges who oversee the cases Potter Handy files are beginning to issue orders requiring Potter Handy to start actually backing up what they’re saying,” he said.

These orders to show cause demand that the disabled plaintiffs show that they have standing to pursue their cases in federal court by proving a genuine intent to return to the business in the future.

“Two facts give us a lot of hope. Potter Handy has at least for now stopped filing new cases of this kind in the Bay Area,” Markoff said, citing a recent report by Bay City News. "Also it was just brought to our attention yesterday that one of the federal magistrate judges overseeing a Potter Handy case threw out one of these cases, and even pointed out numerous discrepancies in Brian Whitaker’s sworn testimony.”

Plaintiff Whitaker, a serial filer in the Northern District, brought that case against the owner of the Alhambra Irish House in Redwood City. U.S. District Judge Jacqueline Scott Corley tossed the case Thursday, finding that Whitaker lacks standing to bring his case in federal court because he has no present or future residential connection to Redwood City aside from traveling there “for the purpose of finding business establishments to sue.”

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She noted Whitaker filed roughly 560 cases in 2021 in the Northern District of California alone, and that a recent short trip to Burlingame resulted in 14 new lawsuits.

Speaking through interpreters provided by Boudin’s office, the merchants seemed heartened by the possibility of recompense but expressed skepticism that Boudin’s lawsuit will result in actual financial recovery for business owners who've already paid thousands to settle their cases.

"You’ve publicly promised that you would help the merchants get the money back. How likely is that going to happen? There’s a Chinese saying that once the money goes to the scammer, there’s no way for it to be returned,” said Edward Siu, president of the Chinatown Merchants United Association. His comment drew some guffaws from the group.

Markoff, Boudin's chief investigator on the case, acknowledged recovery is still an unknown factor. “It’s good to be realistic and practical about it because obviously one of these firms that’s committing fraud has the money and we don’t know what they’ve done with it or where it’s gone. But that's something we’re interested in finding out,” he said.

Boudin’s office is also suing Potter Handy law partners individually. "We’re not suing just the law firm which may declare bankruptcy or try to change its name. We are also suing the partners of the law firm as individuals. We are going after the attorneys themselves," Markoff said.

Other business owners said while they would like to comply with the law, their buildings are decades old and can’t possibly meet the stringent standards of the ADA requiring certain height clearances, wide pathways and wheelchair-accessible bathrooms. “You want me to be compliant — you’ll force me out of business,” one woman said.

Attorney Allan Low, a partner with law firm Perkins Coie in San Francisco, has helped defend many of the merchants pro bono along with counsel Aaron Ver.

“We want to ensure equal access to businesses and at the same time not destroy the business and allow them to cure the defects in order to provide that access,” Low said. “There has to be a solution that allows businesses to come into compliance, taking into consideration the property, the historical nature of the building, and economic feasibility. It's going to take the local, state, and possibly the federal level to come up with a legislative solution.”

Daisy Wei Yu, who owns the Golden Daisy Restaurant, said that even if Boudin can stop one law firm, there could be others who rise up in its place to target her business. Boudin said he hopes a legal victory will act as a deterrent.

“We understand and share the concerns that other law firms might try to do something similar in the future. You have my commitment that as long as I am your district attorney, my office will fight back against these law firms and these frivolous lawsuits. We will stand with and for our small businesses,” he said.

Raymond Hong, who owns Rainbow Express 1 Hour Photo on Stockton Street, said it's not enough. “It’s not only that we need to stop future cases. We need to punish and shame acts like this,” he said.

Boudin replied, “I agree. It’s offensive to see the really important rights of the disabled community abused by frivolous lawsuits and unscrupulous lawyers to further impact and harm business like your own."

In an interview after the event, Hong said, “I myself am a disabled person and to me it's a huge impact. It’s really a shame that they’re using me to get money.”

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