SAN FRANCISCO (Legal Newsline) - A law firm accused by district attorneys in San Francisco and Los Angeles of filing shakedown lawsuits against immigrant-owned businesses will live to sue another day after an appeals court ruled the litigation privilege protects lawyers against civil suits over virtually anything they do or say in connection with pending litigation.
Codified in California law, the litigation privilege has expanded from protection against defamation suits to shield lawyers against complaints based on unfair competition law or violations of the rules of professional conduct, the First Appellate District Court said.
“Communications made as part of a judicial proceeding are generally privileged, so as to afford litigants ‘the utmost freedom of access to the courts without fear of being harassed subsequently by derivative tort actions,’” the appeals court said in a Dec. 8 decision. If the state wants to crack down on fraudulent Americans With Disabilities Act lawsuits it can bring criminal charges, the court said.
The San Francisco and Los Angeles AGs sued Potter Handy LLC last year, accusing the firm of filing thousands of baseless Americans With Disabilities Act lawsuits using serial plaintiffs who had never visited the businesses they accused of violating the ADA. The law firm files lawsuits in federal court to get around a California law that places tighter restrictions on “high-frequency” ADA litigants including requiring plaintiffs to state when they visited the business they are suing.
Potter Handy targeted immigrant-owned businesses whose owners spoke little English, the DAs said. The lawsuit was supported by the U.S. Chamber of Commerce, which frequently criticizes law firms some describe as “ADA mills.” The U.S. Chamber Institute for Legal Reform owns Legal Newsline.
In the lawsuit, the DAs accused Potter Handy of violating the state’s unfair competition act, which any “unlawful, unfair or fraudulent business act or practice.” A trial judge dismissed the suit, however, ruling the litigation privilege has an exception for criminal conduct like perjury but not for purely civil claims. The First District appeals court agreed.
The DAs argued that as representatives of the government, they should be able to pierce the litigation privilege with claims Potter Handy violated state law. The California Supreme Court upheld the privilege in the case of a witness who testified about a conversation she had illegally overheard, however, and the privilege also shielded a law firm accused of illegally recruiting trailer-park residents to sue the owner. One court found an exception for a lawsuit over illegal debt collection practices, but the First District called that decision an “outlier.”
Filing lawsuits in federal court using plaintiffs with false standing to coerce statements fall “within the broad reach of the privilege and its absolute protection of access to the courts,” the appeals court said.
The court said it “in no way” condoned the conduct alleged in the DA complaints. But “the Legislature took account of pertinent public policy concerns by making it a crime for an attorney to engage in fraudulent or collusive conduct intended to deceive the court or any party, not by carving out an exception to the litigation privilege for UCL cases aimed at this conduct,” the court concluded.
In September, the Fourth Appellate Court delivered a loss to Pacific Trial Attorneys, another serial ADA lawsuit filer, ruling the disability access law doesn’t apply to websites.