From Our Blog

By the time this is published, the first stakeholder meeting regarding the compromise legislation to stop abusive Americans with Disabilities Act (ADA) lawsuits, SB 1186 by State Senators Darrell Steinberg and Bob Dutton, will have occurred.

CALA is supportive of the intent of this legislation and applauds this bipartisan effort to simultaneously fight abusive ADA lawsuits and increase compliance with the ADA. As it is currently written, SB 1186 will forbid demand letters in ADA lawsuits and give business owners an opportunity to correct an ADA violation before a lawsuit can proceed.

We remain focused on fighting all abusive lawsuits in California and will continue to support other legal reform measures at both the state and federal level. This includes HR 3356 by Congressman Dan Lungren, which will be heard in the House Judiciary Committee in late June and will help fight abusive ADA lawsuits in federal court. U.S. Senator Dianne Feinstein may also introduce ADA lawsuit reform legislation, which we would likely support as well.

It seems like everyone I talk to is fed up with the predatory ADA lawsuits. I have spoken to members of the disabled community, legislators on both sides of the aisle and business owners, and they all hate what these unscrupulous lawyers are doing.

Will SB 1186 be another SB 1608 from 2008? This bill was supposed to stop predatory ADA lawsuits, but has not been effective. More importantly, can California move closer to complete ADA compliance? About 98% of California businesses are not compliant with the ADA.

SB 1186 has the potential to be the answer. While SB 1608 moved the football a little, it has not stopped abusive ADA lawsuits in California. Once again, a lot of people from all sides are coming together to see if we can fix this problem. We remain hopeful that California can achieve widespread ADA compliance without more litigation.

In light of the recent news of our state's $16 billion dollar budget deficit and our continuing struggle to lower our 11 percent unemployment rate, our focus needs to be on creating more jobs, not more lawsuits. SB 1186 would be one place to start.

Despite arbitration’s endorsement by Congress and the U.S. Supreme Court, it seems like the Securities and Exchange Commission (SEC) has a problem with it.

Hal Scott and Leslie Silverman recently wrote a commentary for the Wall Street Journal in which they point out that the SEC rejected proposals by the Carlyle Group, Pfizer and Gannett to mandate arbitration instead of litigation in disputes between investors and management. The SEC gave no explanation for the decision related to the Carlyle Group and said only that the other proposals from Pfizer and Gannett "might" violate securities laws.

Securities class actions undercut the competitiveness of the U.S. capital markets. From 2000 to 2011, the total value of all U.S. securities class action settlements was approximately $64.4 billion, according to NERA Economic Consulting. As Scott and Silverman point out in their opinion piece, securities class actions, unlike mass tort litigation, involve stockholders who are often both plaintiffs and investors in the defendant corporation.

These suits are invariably settled before trial, generally for pennies on the dollar. Small investors recover so little they often do not bother to file for their money. Between 40 to 60 percent of settlement funds generally go unclaimed, while plaintiffs’ attorneys walk away with 35 percent of the total settlement.

These lawsuits do little to deter wrongdoing. The stockholders funding a settlement generally have no knowledge of management misdeeds while the actual wrongdoers rarely pay a dime. The corporation's directors' and officers' insurance covers the settlement cost.

On an issue as big as this, the SEC has to explain its reasoning for not allowing arbitration. They should be protecting shareholders, not plaintiffs’ lawyers.

CALA in the News