Abusive Federal Disability Lawsuits Shake Down Business Owners on Both Coasts: Business Group Says Some ADA Suits Appear to Be ‘Legalized Extortion’


A California law firm at the center of several precedent-setting Americans with Disability Act (ADA) opinions is being sued by District Attorneys in both Los Angeles County and San Francisco.

The Potter Handy law firm, which operates the Center for Disability Access, is accused of shaking down small businesses using serial ADA filings in violation of California’s Unruh Civil Rights Act.

“Potter Handy’s Serial Filers frequently do not personally encounter barriers themselves and they almost never return to the businesses they sue after the cases resolve,” wrote the DAs in their joint complaint. “These attorney Defendants intentionally adopt false standing allegations in each of the Serial Filer cases they file in order to obtain and keep federal court jurisdiction.”

Procedural reforms established under the Unruh Civil Rights Act prevent boilerplate litigation in California state courts.

“When disability laws are improperly used to target small businesses for financial gain, it not only hurts business owners but also harms the people whom this law was enacted to protect,” Los Angeles County DA George Gascon said in a statement online. “These laws should be used for their intended purposes: to remove barriers and ensure equal access for all people.”

Potter Handy did not immediately respond to requests for comment.

In one federal lawsuit, Orlando Garcia v Nam Hoy Fook Yum Benevolent Society, which Potter Handy filed in the Northern District of California on June 29, 2021, the plaintiff alleges that the storefront failed to provide wheelchair accessible paths of travel.

“There were unramped steps at the entrance of the Store,” the complaint states. “Plaintiff believes that there are other features of the paths of travel that likely fail to comply with ADA standards and seeks to have fully compliant paths of travel available for wheelchair users. As a wheelchair user, the plaintiff benefits from and is entitled to use wheelchair accessible facilities.”

While Mark Potter, a partner in the Potter Handy law firm, admitted on May 12, 2021, to paying ADA investigators $200 an hour in Orlando Garcia v Duquesne Properties, LLC filed in the Central District of California, small business owners allege they are coerced into paying up to some $20,000 to settle claims lodged against them.

Roozbeh Farahanipour, for example, who owns two restaurants in Los Angeles, was sued twice for lacking guard rails and installing a bag hook that was too high in a bathroom stall.

“I had to hire a lawyer to deal with the legal issues and in one of the cases, I had to pay the landlord’s legal fees,” said Farahanipour, who chairs the West Los Angeles Chamber of Commerce. “Instead of suing the restaurant, they go after the title holder, and the landlord just transfers it to the tenant. It cost me $11,000 the first time and $8,000 the second time. I had to borrow money to pay it.”

California is not the only state where businesses are contending with alleged fraudulent ADA lawsuits.

The Greenwich Village Chelsea Chamber of Commerce in Manhattan reports some 20 small businesses have been sued in lower Manhattan in just the last two years. 

“Many thought that because their buildings were old, they were grandfathered in, and that’s not the case,” said Maria Diaz, executive director of the Greenwich Village Chelsea Chamber of Commerce. “A large portion of them are being sued by the same lawyers.”

In a letter delivered to New York Chief Disability Officer Kimberly Hill and New York Attorney General Letitia James, Diaz requested an investigation.

“A small group of lawyers have turned this important civil rights law into what appears to be legalized extortion,” Diaz wrote. “One lawyer, Stuart Finkelstein, was charged with filing more than 300 fraudulent ADA lawsuits in New York City, including some in Chelsea and Greenwich Village, on behalf of two plaintiffs who had no idea he was filing claims in their names.”

In 2019, Finkelstein was charged with stealing the identities of two individuals in order to file hundreds of unauthorized ADA lawsuits, according to charging documents.

Neither Hill nor General James responded to requests for comment.

“These are all small businesses looking to do right by themselves, not looking to harm anybody,” said Israel Klein, an attorney with the Pardalis & Nohavicka law firm in New York. “They just want to stay in business and then they become the target of these serial lawsuits.”

The way the law is written is part of the problem, according to Klein.

“Judges, for the most part, don’t really want to push back much because the law is the law,” he said. “Although the motive may be problematic, under the law plaintiffs are entitled to recourse. There is not much a business can really do other than to resolve it quickly by way of settlement.”

Rep. Ken Calvert (R-Calif.) is trying to do change the federal law with H.R. 77, also known as the ADA Compliance for Customer Entry to Stores and Services (ACCESS) Act.

The proposed legislation is pending in the House Judiciary’s Subcommittee on Crime, Terrorism, and Homeland Security and advocates for giving businesses a chance to fix identified accessibility problems.

Under H.R. 77, a business owner would have 120 days to address a complaint’s allegations.

“If a business owner doesn’t correct, that’s on them but don’t pressure them to pay tens of thousands of dollars to corrupt attorneys plus correct,” said Karen Harned, an attorney and executive director of the National Federation of Independent Business (NFIB)’s Small Business Legal Center in Washington, D.C.

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