Legal Corner: ADA Ruling Allows Business Owners to Recover Fees

OCBC member Rutan & Tucker offers the following analysis of a recent ADA ruling.

In Jankey v. Lee, the California Supreme Court established fee shifting rules for winning defendants in disability access lawsuits, where the plaintiff argues both a federal claim under the Americans with Disabilities Act (ADA) and a California state law claim under Civil Code 55. The League of California Cities filed an amicus brief on behalf of the winning small business owner in this case, and the Supreme Court conceded the fee award in favor of the winning small business owner.

The owner of a corner store in the Mission District of San Francisco successfully defended an ADA lawsuit by a customer who alleged that a step on the entrance of the store made the store inaccessible. The store owner proved that it was not feasible to remove the step and install a ramp, and that the owner had been serving disabled patrons through alternative means. The store owner spent $140,000 in attorney fees to defend the lawsuit.

The ADA only allows a prevailing defendant to recover fees if the action wasn’t substantially justified. Cal Civil Code 55, on the other hand, mandates fee shifting equally for the prevailing party, whether is the plaintiff or defendant.  The Supreme Court granted the fee award for the prevailing defendant store owner, under Civil Code 55, without determining if the action was indeed unjustified.   The Supreme Court opinion explicitly disagrees with a recent Ninth Circuit case that earlier held the ADA prevents Section 55’s mandatory fee shifting rule in favor of a prevailing defendant.  In the Jankey case, the Supreme Court held that where a plaintiff declares an ADA claim under federal law and a Section 55 claim under California law,  the prevailing defendant is entitled to fees for all the time reasonably spent defending the Section 55 cause of action, even if that time overlaps with time spent defending the ADA cause of action.

This case, with its careful analysis of the state and federal statutes and legislative histories, will allow small business owners and government entities in California to recover their fees if they triumph in a lawsuit alleging a cause of action under Civil Code 55, even if the plaintiff has also alleged under the ADA. When this scenario arises in federal court, a prevailing defendant is still confronted with the Ninth Circuit’s contrary decision in Hubbard v. SoBreck, LLC (9th Cir. 2009) 554 F.3d 742.  Perhaps, over time, the Ninth Circuit will have the same ruling as the careful and well-reasoned result in Jankey v. Lee. For more information contact Bryan Starr, Senior Vice President of Government Affairs.

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