SF and LA County District Attorneys Wage War Against Potter Handy LLP Over Meritless Disability Lawsuits; Provide Roadmap For Private Defendants To Defeat Claims

Jun 30, 2022

By Carl Mueller, Esq., The Maloney Firm, APC

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Potter Handy LLP (“Potter Handy”) has long been a scourge to Southern California small businesses. Using repeat “serial filers,” Potter Handy has filed thousands of lawsuits against small businesses under the Americans with Disabilities Act (“ADA”) and the California Unruh Civil Rights Act (“Unruh Act”). While ADA legislation applies nationwide, Potter Handy’s business model succeeds in California because violations of the Unruh Act result in $4000 civil penalties. According to a recent lawsuit, Potter Handy leverages the Unruh Act’s civil penalty—and a prevailing party attorney’s fees provision—to bully defendants into settling lawsuits, regardless of the lawsuits’ merit. Undoubtedly, the ADA and Unruh Act ensure necessary access for disabled Americans; however, Potter Handy’s abuse of their statutory schemes serves only themselves at the expense of small businesses.

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The California legislature has attempted to curb this abuse of the Unruh Act in the past, making it more difficult for serial filers to bring claims for construction-related barriers in California’s state courts. However, these procedural rules do not apply to claims filed in Federal Courts, which has led Potter Handy—and many other serial ADA/Unruh Act case filers—to relocate its construction-related cases to Federal Court.

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People of State of California v. Potter Handy LLP

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Ultimately, the California legislature has failed to protect the public from predatory law firms like Potter Handy. Because the legislature has not found an effective solution, the District Attorneys for the Counties of Los Angeles and San Francisco (together, the “DAs”) sued Potter Handy to stop its abusive practices. The lawsuit, styled as People of State of California v. Potter Handy LLP, et al, San Francisco Superior Court Case No. CGC-22-599079, alleges that Potter Handy violated Bus. & Prof. Code § 17200 in its repeated filings of ADA and Unruh Act claims in federal court. Specifically, the DAs allege that Potter Handy and its attorneys violated Bus. & Prof. Code § 6128(a)’s bar on deceiving the courts, as well as Cal. Rules of Professional Conduct 3.1 (requirement of bringing meritorious actions) and 3.3 (duty of candor to the court) by making false claims relating to standing under the ADA and Unruh Act. The DAs claim that Potter Handy’s repeated and intentional breaches of these laws and rules form the basis of the civil claim under Bus. & Prof. Code § 17200.

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The Takeaway

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This lawsuit presents hope and practical help to California’s business owners trying to avoid paying Potter Handy’s settlement demands. While the DAs may succeed in this lawsuit, it’s impossible to predict the outcome of any litigation. Rather, the real value of the complaint is the detailed legal and factual analysis of Potter Handy’s litigation weaknesses. The DAs’ complaint provides a veritable roadmap to defend against Potter Handy’s lawsuits. Even if the DAs’ lawsuit ultimately fails, the research and investigation shortcuts provided in the complaint makes defending against Potter Handy more cost effective for all litigants moving forward.

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However, the economics of the situation remain unchanged, and still heavily favor Potter Handy. As observed in the DAs’ complaint:

Because it regularly costs between $50,000 and $100,000 to defend against an ADA/Unruh lawsuit, small “mom and pop” businesses have little choice but to submit and pay Potter Handy to leave them alone.

While the DAs’ complaint can’t effectively stop Potter Handy right now (indeed, Potter Handy seems determined to defend the case, having already filed papers seeking to have the lawsuit dismissed), hopefully it will help a few businesses defend against Potter Handy in the short term. Over time, the DAs may prove the winner, simply by making it harder for Potter Handy to bully California’s small business owners into settling meritless claims.

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About the Author:

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Carl Mueller is a business litigation attorney that represents clients in all phases of civil litigation. Mr. Mueller’s practice has a focus on attorney-client disputes of all kinds. If you have questions regarding this article contact Carl Mueller at cmueller@maloneyfirm.com.

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