The ADA, Testers, and the Impact on Shopping Centers

Updated: Mar 10, 2020

Picture of the inside of a shopping center

During this year’s annual International Council of Shopping Centers (ICSC) Florida Conference and Deal Making, the topic of ADA lawsuits remains front and center, along with the usual standards of e-commerce fairness and the state of the economy.

While most shopping center owners and their attorneys focus on either avoiding ADA complaints altogether or mitigating the cost impacts that such lawsuits bring, they should have a completely different focus. Owners and attorneys should pay particular attention on how to settle ADA lawsuits with as little upfront costs and exposure as is practical, for both the short and the long term.

The following list constitutes the basics of ADA settlement tactics:

1) ADA is not a building code but an anti-discrimination law defined by Federal guidelines. Guidelines that affect the built environment can be found in the latest design directives implemented by the US Justice Department. They are incorporated to eliminate barriers that are inadvertently or deliberately placed by building owners that deny access to challenged people, which is otherwise available to the public.

2) Because the ADA is a Federal discrimination law, it is framed under labor law, not commercial law. When retaining a counsel for an ADA complaint, attorneys who specialize in labor law, not construction or commercial law, are better equipped to understand the nuances of the laws that apply to ADA. Moreover, labor attorneys know their way around Federal courts where these matters are adjudicated.

3) ADA complaints are inevitable and are a cost of owning real estate. The whole world cannot be barrier free. The hot topic in Congress regarding the ADA is a stalled bill in the Senate, the ADA Education and Reform Act, which calls for a 60-day notice period prior to filing an ADA suit against a premises owner. In other words, under this new law, premises owners must be given notice by the aggrieved party that they are about to be sued prior to the filing of the lawsuit. There is some marginal benefit to this in that it saves court costs. There is also the potential benefit of removal of it from the public records, which may be damaging to the owner in the way of notice to tenants and the marketplace.

4) Financial settlements are typically in the form of legal fees, not major cures of the deficiencies in the built environment. Testers are comprised typically of three entities: an attorney, a challenged person who is the victim of the discrimination, and an ADA design expert. These testers, who have been known to file hundreds of serial “drive by law suits” against property owners, are usually not incentivized by cures to remove the physical barriers that deny access to challenged people. Their major incentive is remuneration of legal fees.

5) Given the above, why would a shopping center owner promise an ADA tester anything in the way of onerous design and construction cures, particularly when they can come back and do it again if the cures are not executed in the specified period under the agreement? Settlements therefore should be comprised of fair, butminimal, payments to opposing counsel as well as technically plausible design remedies. Some of those design and construction deficiencies that are technically plausible and can be cured with minimal costs such as moving mirrors, lowering paper dispensers, and posting ADA compliant signage.

6) Producing discoverable reports is not advisable unless the owner has an intent to cure all deficiencies. Instead, producing a list of deficiencies in a settlement agreement that needs to be cured, those that are alleged but are not, and those that are technically implausible is a better choice. Retaining an engineer to write a comprehensive list of deficiencies is not recommended because it could find its way into the hands of the plaintiff pursuant to demands for production. An engineer typically wants to avoid professional errors and omissions and they will likely produce a report that details every single possible deficiency. In their zeal to produce accurate reports, the unintended outcome is to offer up the premises owner’s weaknesses to opposing counsel. In other words in such a case the engineer has inadvertently compromised the defense providing the opposition with more leverage to obtain a larger monetary settlement.

7) Cures that are onerous and the owner wants to avoid should be termed “not technically plausible” in lieu of “not readily achievable”. The former is an industry approach and the latter is included as a formal guideline right out of the ADA Accessibility Guidelines (ADAAG). First, there is no grandfathering older structures to avoid compliance to ADA design standards. The only relief available is to those structures occupied prior to the enactment of the 1991 ADA Standards for Accessible Design. The only legal avenue is to establish that the cures are not readily achievable. This means that the required cures would pose an undue financial burden on the owner. Those in the industry will know that credit tenants and landowners will not qualify for this relief, only small, independent business owners. To establish the inability of the property owner to cure, a forensic accounting must be undertaken to discover the assets of the owner. This gives the tester access to the defendant’s assets and facilitates collections in the event of an award and judgement.

8) To avoid curing over the top deficiencies alleged by the tester that pose an undue burden we recommend that we establish that any such potential cures are not technically plausible. Technical non-plausibility falls into two categories: 1) two parties who agree cannot bind an uninvolved third party to the terms of the agreement. The agreeing parties (the property owner and the tester) may have no control over the governing body that must approve of the improvements. In short, they may not view the improvements as such, but oppositely as detriments to the public that they serve. For example, the tester may think the property owner should be able to easily obtain approval to eliminate stalls to provide a handicapped accessible route for wheel chairs through a parking area, but there are no guarantees. 2) A property owner and his professional engineer cannot breach one code requirement to satisfy another. An architect cannot knowingly submit plans to the building permit officials that substitutes one handicap toilet stall for two standard stalls. This could technically violate the plumbing code that requires a certain number of plumbing fixtures for the amount of occupiable area.

RGA can help mitigate the costs associated with ADA settlement agreements. The exposures to ADA lawsuits however cannot be totally eliminated unless the structure was occupied post 1991. Even in post 1991 structures, certain deficiencies can arise via design errors or latent construction defects.