On April 11, 2022, San Francisco District Attorney Chesa Boudin and Los Angeles District Attorney George Gascon filed a lawsuit against Potter Handy for allegedly filing thousands of fraudulent Americans with Disabilities Act claims. The complaint can be found here.
The 58-page complaint alleges that Potter Handy filed thousands of ADA lawsuits on behalf of three primary serial litigants Brian Whitaker, Orlando Garcia, and Scott Johnson (whom the complaint designates as “Serial Filers”) against small businesses, primarily owned by minorities and immigrants, to pressure these owners for quick settlements between $10,000 and $20,000.
The complaint alleges that “[c]onservatively 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 further alleges that “it is reasonable to assume Potter Handy has drained tens of millions of dollars from California’s small businesses during the statute of limitations period alone.”
The primary allegations of the complaint are that Potter Handy “intentionally include and adopt false allegations that the Serial Filer personally encountered a barrier at the business in question, was deterred or prevented from accessing the business because of it, and intends to return to the business after the violation is cured.”
According to the complaint, Potter Handy is well-aware that their clients do not personally encounter these barriers that are alleged in these serial complaints, are not deterred by them, and have no genuine intent to return to the businesses they sue. Yet, Potter Handy allegedly intentionally adopted false standing allegations in each of the Serial Filer cases they filed for the primary purpose of establishing and maintaining federal court jurisdiction.
As the complaint alleges, Potter Handy purposely files suit in the federal courts, while also alleging the California Unruh Act Claims, to avoid the heightened pleading standard and the more expensive filing fee. While Serial Filers may file these Unruh Act Claims separately in California State Court, the heightened pleading standards and the higher fees allegedly pose “significant barriers to the business model of unscrupulous attorneys like [Potter Handy], who – as the California Legislature recognized – file vast numbers of indiscriminate lawsuits in order to force small businesses who cannot risk the uncertainty and expense of litigation to pay cash settlements.”
The complaint alleges that the filing of these ADA lawsuits violates the State Bar Act, Business and Professions Code Section 6128(a), which prohibits an attorney from committing “deceit or collusion, or consent[ing] to any deceit or collusion, with intent to deceive the court or any party.”
Furthermore, the lawsuits also violate the California Rules of Professional Conduct Section 3.1 and 3.3. Section 3.1, Meritorious Claims states that a lawyer shall not “bring or continue an action, conduct a defense, or assert a position in litigation . . . without probable cause and for the purpose of harassing or maliciously injuring any person.”
Section 3.3, Candor Toward the Tribunal states that a lawyer shall not “knowingly make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer.”
A violation of any of these State Bar Act provisions constitutes an unlawful business practice under California’s Unfair Competition Law, Business and Professions Code Section 17200, et. seq.
The complaint’s prayer for relief requests the Court to enjoin Potter Handy from filing any further ADA lawsuits, and to return settlement money it has received to small businesses.