San Francisco DA announces appeal in ADA lawsuit dismissal
SAN FRANCISCO - Recently appointed San Francisco District Attorney Brooke Jenkins announced Thursday that her office is appealing the dismissal of a civil lawsuit against Potter Handy, a San Diego law firm known for filing thousands of lawsuits under the Americans with Disabilities Act.
Standing in the crowded dining area of New Lun Ting Cafe in San Francisco's Chinatown neighborhood, Jenkins said, "We are taking this action to protect businesses from predatory law firms that are abusing disability protections by filing these fraudulent lawsuits."
Jenkins was accompanied by Lily Lo of the nonprofit BeChinatown, and Larry Yee, former presiding president of the Chinese Consolidated Benevolent Association.
In appealing the lawsuit, Jenkins finds herself in the ironic position of agreeing with former San Francisco District Attorney Chesa Boudin, a man she actively worked to recall.
In an interview with Bay City News shortly after he left office, Boudin said that the lawsuit was "righteous" and "stands out in my memory of areas of work I'm most proud of."
The civil lawsuit was initiated this April 2022 in San Francisco Superior Court by Boudin and Los Angeles County District Attorney George Gascon, himself a former district attorney and police chief in San Francisco.
The case attracted widespread attention because it accused the Potter Handy law firm and 15 of its individual lawyers of orchestrating a massive fraud on the federal courts throughout the state in order to shake down thousands of small business owners who paid monetary settlements to resolve the cases.
The district attorneys' suit alleged that Potter Handy's clients -- a dozen or so disabled plaintiffs -- fabricated testimony in order to obtain legal "standing" to sue. Potter Handy allegedly knew of the false standing testimony but filed the lawsuits anyway.
The law firm lashed out against Boudin and Gascon, accusing them of filing the lawsuit for political purposes. Dennis Price, a partner in the firm, said, "Both DAs are facing serious recall threats for the perception of not faithfully executing the duties of their offices and are filing these claims in order to generate support."
At the time, both district attorneys were threatened with recall proceedings. The recall efforts against Boudin ultimately qualified for the ballot and he was voted out of office on June 7. Jenkins was appointed to take his place pending the Nov. 8 general election.
Notwithstanding Boudin's recall, the suit had an immediate impact. Potter Handy filings under the ADA in the Northern District of California -- then running at a pace of three suits a day, seven days a week -- slowed to a trickle and then stopped completely.
Moreover, a number of federal judges in the district cited the lawsuit as grounds to require Potter Handy and its clients to file declarations under penalty of perjury in their pending cases setting forth the basis for the claimed standing to sue. In subsequent proceedings, several judges found that the testimony of Brian Whitaker, one of Potter Handy's most prolific clients, was not credible.
In a recent case referenced by Jenkins at Thursday's news conference, U.S. District Court Judge Vince Chhabria imposed monetary sanctions against Whitaker and Potter Handy, stating that they "feel so strongly about their mission" that they were "willing to peddle whatever lie they thought necessary to allow their lawsuit to survive."
Chhabria said he wasn't sure if their "mission" was "to get businesses in compliance, a mission to make money, or both," but he found the law firm and client had "engaged in an egregious pattern of bad faith misconduct."
The backdrop for Jenkins' announcement had significance not only for the District Attorney's Office but also for Potter Handy.
The district attorneys' lawsuit grew out of an investigation that Boudin announced after a wave of more than a hundred ADA lawsuits were filed against owners of shops and restaurants in Chinatown in the summer of 2021. At a July 2021 news conference, Boudin said, "We will not tolerate fraud or abuse of legal process ... We will stand with our small businesses."
Despite the lofty rhetoric, the lawsuit ran into trouble from the beginning.
Shortly after the suit was filed, Potter Handy filed a "demurrer," a motion asking to the court to dismiss the case without a trial. The theory was that California's "litigation privilege" required the case to be dismissed.
At an initial hearing on the demurrer in July, San Francisco Superior Court Judge Richard Ulmer declined to "spend judicial resources" on the dispute until he found out if Boudin's successor would pursue the case. Boudin had been recalled by that time but Jenkins had not yet been appointed.
Gabriel Markoff, lead counsel for the plaintiffs, argued that there was no reason to delay. In his view, the case was no different than any of the other 5,600 active cases the San Francisco District Attorney's Office was then handling.
Ulmer said that there was a big difference between the case and most of the others in the District Attorney's Office, because the other cases weren't filed "in the middle of a political campaign, like this one was."
Markoff responded that he did not think that fact had any relevance; the judge shot back, "You might not, but I do."
After Jenkins was appointed, the District Attorney's Office asked Ulmer to recuse himself, which he did without explaining his reasons. The demurrer hearing was then rescheduled in front of San Francisco Superior Court Judge Curtis Karnow.
In an Aug. 27 ruling, Karnow explained that California's litigation privilege attaches to court filings and communications related thereto. He then found that the conduct of the Potter Handy attorneys was covered by the privilege. The judge found that the privilege applied "irrespective of the communication's maliciousness or untruthfulness."
The privilege was intended to protect access to courts, "not because we desire to protect the shady practitioner," Karnow said, quoting an earlier court case, "but because we do not want the honest one to have to be concerned" about later challenges in other courts.
Karnow dismissed the case without giving the district attorneys an opportunity to amend their complaint.
By appealing the dismissal, Jenkins has another shot to obtain relief for thousands of small business owners who settled lawsuits brought by Potter Handy clients. The lawsuit seeks not only to prevent future suits but to require the law firm to refund settlements paid to the firm and its clients in the preceding four years.
A Bay City News analysis found that nearly 6,000 Potter Handy ADA cases were resolved in California during that period. Not all of the cases settled, but most did.
The district attorneys alleged in their suit that Potter Handy cases generally settle for between $10,000 and $20,000 per case. If the lower end of the district attorneys' estimate were to be used as an order-of-magnitude estimate, the firm's settlements on behalf of its clients for that period would approach $60 million.
The location of the news conference was also significant to Price, the Potter Handy partner, who noted that the New Tun Ling Cafe was not compliant with the ADA, thereby "ensuring that all members of the public couldn't attend."
Price referenced a several-inch step up from the sidewalk to enter the restaurant, the same issue that was identified in Potter Handy's 2021 suit against the landlord/owner of the property in which the restaurant is located. Price said the suit was against the landlord, not against the restaurant.
According to the court records, a settlement in the suit against the landlord was reached in December 2021. Price said that he understood that under the settlement, the landlord was given a period of time to remediate the issue, but had not done so by the time of Thursday's news conference.
Price added, "The media narrative on what is happening is wrong. My clients make California more compliant. The DA has the same authority to enforce the ADA but they don't. Instead, rather than doing their jobs of enforcing the law, they are attacking victims. It's despicable ... villainizing my clients and acting as a mouthpiece for politicians, who cannot be held liable when they lie about what is going on, will not make California more accessible."