On September 19, 2012, California Gov. Brown signed into law SB 1186, a bill that will provide much-needed relief for property owners or tenants facing ADA accessibility cases. The bill has been codified as California Civil Code, §§ 55.3 et seq.

What the Bill Does: 

• It bans “demand for money” letters by lawyers, i.e., requests for money or offers or agreements to accept money before a lawsuit is filed 
• It limits prelitigation “demand letters” to allegations that the site is in violation of one or more construction-related accessibility standards with an offer of prelitigation settlement negotiations, but the letter may only state that the property owner or tenant “may be civilly liable for actual and statutory damages for a violation of a construction-related accessibility requirement”
• It requires attorneys to send a written advisory with each demand letter or complaint sent to a defendant or potential defendant
• It requires claimants (or their attorneys) to send a notice letter listing the alleged construction-related violations in sufficient detail to allow a reasonable person to identify the basis for the claim 30 days before filing suit, allowing time for correction of any deficiencies
• It requires attorneys to submit demand letters and complaints to the California Commission on Disability Access (CCDA) and to the California State Bar, or risk disciplinary action, and it also encourages property owners to send demand letters to the State Bar
• It deters plaintiffs from “stacking” claims based on multiple visits to the same business by requiring courts to consider the reasonableness of the plaintiff’s conduct in light of plaintiff’s obligation to mitigate damages
• It permits the following defendants to file a request for a court stay of the litigation and early evaluation conference:
  • (1) A defendant whose site's new construction or improvement was approved pursuant to the local building permit and inspection process between January 1, 2008, and January 1, 2016
  • (2) A defendant whose site's new construction or improvement was approved by a local public building department inspector who is a certified access specialist (CASp); or
  • (3) A defendant who is a small business¹
• It significantly reduces damages recoverable against businesses to:
  • (1) $1,000 for each offense if the defendant has corrected all construction-related violations that are the basis of the claim within 60 days of being served with the complaint²
  • (2) $2,000 for each offense if the defendant is a small business and has corrected all construction-related violations that are the basis of the claim within 30 days of being served with the complaint
• It requires commercial landlords to disclose on their lease whether their buildings or properties have been inspected by a certified access specialist

The Intended Impact of the Bill:

• It provides relief to property owners who make good faith efforts to come into ADA compliance before they are sued while maintaining protection for the disabled,
• It eliminates scare tactic demand letters
• It discourages frivolous lawsuits filed for financial gain that provide little public benefit and burden the courts, and that threaten the viability of small businesses.

For more information, please contact the author of this Client Alert, or the Reed Smith attorney with whom you regularly work.

1. A small business is defined as one that has employed 25 or fewer employees based on wage report forms filed with the Economic Development Department, and has average annual gross receipts of less than $3.5 million over the previous three years based on federal or state income tax returns.
2. This provision is subject to additional conditions, including, for example, that (1) the property owner’s new construction was approved pursuant to a local building permit and inspection process between January 1, 2008, and January 1, 2016; (2) the new construction was approved by a local public building inspector who is a CASp; or (3) it is a small business as defined above.

Client Alert 2012-236