Case against San Mateo juice bar dismissed

An intent to return is an essential component of “standing” to assert an ADA claim in federal court. Without standing, a federal court has no jurisdiction to hear a case and must dismiss.

The order represents another setback for Whitaker, one of many in the last few months, as well as his lawyers, the San Diego law firm Potter Handy LLP.

In dismissing the case, Rogers gave Whitaker leave to amend his complaint to try to cure the jurisdictional defect. While giving a plaintiff an opportunity to fix a defective complaint is common in federal court, Rogers’ order imposed a series of unusual conditions upon Whitaker and his Potter Handy lawyers if they attempt to go that route.

“Given the substantial allegations raised against plaintiff and his firm concerning a potential fraud on the courts,” she wrote, if Whitaker elects to amend the complaint he must submit declaration under penalty of perjury that substantiates his intent to return. Potter Handy must submit its own declaration describing how it “ensured” that Whitaker intends to return.

The order follows a wide-ranging evidentiary hearing in which the court explored “the factual and legal underpinnings of ADA cases brought by plaintiff and the Potter Handy law firm throughout this District.”

She found that Whitaker had previously “admitted to having no plan to support his return to the thousands of establishments that he has sued to date. Counsel conceded that Whitaker’s plan was previously insufficient.” Based on those concessions, she ordered the case dismissed.

The backdrop to the hearing was a series of matters that have put Potter Handy and several of its clients, including Whitaker, at the center of a brewing controversy over ADA litigation in the Bay Area:

First, there has been an explosion in ADA filings in the U.S. District Court for the Northern District of California.

According an analysis by Bay City News, in 2021 ADA filings in the district tripled compared to 2020. Total ADA filings in 2021 amounted to more than 25 percent of all new cases in the district that year. Potter Handy filed 85% of those cases.

Second, on April 11, the district attorneys of San Francisco and Los Angeles filed an unusual joint civil lawsuit against Potter Handy and 15 of its lawyers, including its two name partners.

The suit alleged that Potter Handy knowingly used false testimony from its clients to manufacture legal standing to bring suits in federal court in order to avoid the more expensive and difficult rules that applied in state court. (Potter Handy says the complaint was brought for political reasons. The firm disputes the allegations and has moved to dismiss the complaint.)

Third, several federal judges held hearings in individual Potter Handy ADA cases to consider, among other things, whether the plaintiff’s alleged intent to return was genuine.

After hearing the evidence in one case from Redwood City, U.S. District Judge Jacqueline Scott Corley found that Whitaker’s testimony on the issue was “not credible.”

In another, U.S. District Judge Vince Chhabria concluded “There is little doubt that Whitaker had no intention of returning to the shop when he filed his lawsuit, and there is good reason to think that he lied under oath about this issue (and perhaps others) at the evidentiary hearing.”

Against that background, Rogers scheduled hearings in five Potter Handy cases for hearing on the same day.

After hearing the evidence and dismissing the complaint in the Salah case, she imposed special conditions if plaintiff decides to submit an amended complaint.

Rogers not only required that an amended complaint be accompanied by declarations from Whitaker and his counsel under penalty of perjury, she went on to require Potter Handy to submit a “chart of all of their client’s cases that have been filed in federal and state court across the country that contain allegations that barriers were encountered” in November 2021, the month when Whitaker visited the juice bar.

The purpose of the chart appears to be to gather the information needed to place Whitaker’s individual lawsuit in context with all the other lawsuits he filed in the same timeframe so the credibility of his allegations about visiting the locations and intending to return can be readily explored through additional jurisdictional discovery.

Ara Sahelian, counsel for Salah, said that in his opinion, “The chances that they will amend the complaint are low. They will avoid, at all cost, providing the information sought by Judge Rogers.”

Potter Handy’s ADA litigation practice, according to the allegations in the district attorneys’ case, involves a lot of money.

The district attorneys say the firm settles its cases for between $10,000 and $20,000 on average. The district attorneys are seeking refunds to parties who settled in the last four years. The Bay City News analysis found that at least 5,942 Potter Handy ADA law suits in California were resolved in that time frame.

While some of the cases were dismissed, most were settled. If the lower end of the district attorneys estimate were to be used as an order-of-magnitude estimate, the firm’s refund exposure would approach $60 million.

A hearing on Potter Handy’s motion to dismiss the district attorneys’ lawsuit is scheduled in San Francisco Superior Court July 7. The law firm argues that the complaint is invalid on First Amendment grounds as well as California’s “legislative privilege” for statements made in connection with court proceedings.

Kate Chatfield, chief of staff to San Francisco’s outgoing district attorney Chesa Boudin, said that in her opinion, the motion to dismiss is “ridiculous” and that “we look forward to the state court hearing [on] our case on the merits and providing relief to the thousands of small businesses across California who have been taken advantage of for years by this predatory firm.”

Dennis Price, the Potter Handy partner who represented Whitaker at the Salah hearing, disputed the idea that Whitaker did not have proper standing. He said that Whitaker had standing within the boundaries established by controlling case law and the firm is already pursuing that issue on appeal in another case.

He said that the controlling case law “is being ignored by these judges looking to clear their dockets ... We are sympathetic to the concern that the judiciary is understaffed, but their solution is with Congress and the president, not scapegoating our clients in violation of Ninth Circuit precedent.”