California’s Unruh Civil Rights Act outlaws discrimination based on, among other things, disability. Unlike the analogous federal Americans with Disabilities Act, which affords only injunctive relief, the Unruh Act also provides statutory damages to private litigants (of a minimum of US$4,000 per violation), even without a showing of discriminatory intent. As construed by recent precedent, the Unruh Act’s statutory damages provision may create substantial legal risks to large California retailers, permitting more plaintiffs alleging violations of the Act to survive motions to dismiss. A class action complaint alleging Unruh Act violations filed this month against Office Depot in the Central District of California follows recent settlements by Target and Burger King of Unruh Act class actions for substantial damages and attorneys’ fees. This may indicate an unsettling trend for California retailers, suggesting that the in terrorem effect of potentially expansive litigation may force settlement of claims regardless of merit.

The Unruh Act provides that “all persons” in California “are entitled to the full and equal accommodations, advantages, facilities, privileges or services in all business establishments of every kind whatsoever.” Cal. Civil Code § 51(b). An amendment in 1992 specified that a “violation of the right of any individual under the Americans with Disabilities Act of 1990 [which does not itself permit damages to private litigants] shall also constitute a violation” of the Unruh Act. The California legislature has steadily increased the Unruh Act’s statutory damages provision from its original US$50 in 1905 to its current minimum of US$4,000 per violation, as amended in 2001. Cal. Civil Code § 52(a).

Courts and commentators around the country have lamented the proliferation of plaintiffs’ attorneys who abuse the attorneys’ fees provision of the ADA by filing serial complaints against small business owners hoping to secure quick settlements with minimal litigation costs. The Unruh Act’s statutory damages provision has made California a prime jurisdiction for the filing of such complaints. Such claims historically have been limited to individual actions, making them of less concern to national retailers. Several recent court decisions, however, appear to open the door to an increase in class actions alleging Unruh Act violations against national retailers with a significant California footprint, exposing them to greater liability.

First, plaintiffs are not required to allege or prove intent to show an Unruh Act violation. The ADA has long been interpreted to prohibit not only intentionally discriminatory actions, but also “the discriminatory effects of architectural, transportation and communication barriers” and the “failure to make modifications to existing facilities.” In Munson v. Del Taco, Inc., the California Supreme Court held that, by expressly incorporating ADA violations into the statutory definition of Unruh Act violations, the California legislature also decided to incorporate the ADA’s standard for what constituted a discriminatory act. 46 Cal. Rptr. 3d 685 (2009). Freed from an obligation to plead and prove intent, plaintiffs alleging mere discriminatory effect (e.g., actually being deprived of access to covered facilities) are more likely to survive a motion to dismiss and proceed to discovery.

Notably, however, a 2008 amendment to the Act permits recovery only if “the plaintiff personally encountered the violation on a particular occasion, or the plaintiff was deterred from accessing a place of public accommodation on a particular occasion.” Cal. Civil Code § 55.56(b). It also limits statutory damages to one assessment per occasion of access denial, rather than basing damages on the number of accessibility standards violated. Cal. Civil Code § 55.56(e). Thus, plaintiffs cannot allege and recover damages based on the number of disabled people in a given geographic location alone. Rather, each plaintiff must prove that he or she actually attempted to access a public accommodation, or had actual knowledge of the violation and would have been denied full and equal access if the plaintiff had attempted to access the place of public accommodation. Cal. Civil Code § 55.56(d). This may provide a significant defense to certification of class actions or limitation on the size of damages awards.

Second, in Park v. Ralph’s Grocery, a federal court in California found that plaintiffs seeking injunctive relief under the ADA and damages under the Unruh Act could seek class certification under Federal Rule of Civil Procedure 23(b)(2) (intended for actions seeking primarily injunctive relief), which is a more easily met standard for certification than Rule 23(b)(3). 254 F.R.D. 112 (C.D. Cal. 2008). Unlike the process for certifying a class under Rule 23(b)(3), discovery is often unnecessary to demonstrate that certification is warranted under Rule 23(b)(2). With access to the lower standard of Rule 23(b)(2) and its less costly process, plaintiffs may be more likely to file class actions against larger California retailers. The US Supreme Court, however, recently heard arguments in a case that may afford the Court the opportunity to rule that plaintiffs seeking damages must meet Rule 23’s higher certification standard. See Wal Mart v. Dukes, No. 10-277 (argued Mar. 29, 2011).

Third, at least one California federal court has permitted bifurcation of Unruh Act liability from damages, which may lead to more defendants finding it necessary to settle. In Nat’l Federation of the Blind v. Target Corp., the Northern District of California held that issues of liability were “distinct from the inquiries related to damages determinations and separating the issues will aid in their determination.” 582 F. Supp. 2d 1185, 1209 (N.D. Cal. 2007). Since Unruh Act disability access complaints may allege statutory violations difficult or impossible to deny (e.g., insufficient space permitted to handicapped parking spaces), the most resourceintensive phase of the litigation will come later, during the damages phase (and especially in determining the number of plaintiffs who actually sought and were denied access, or were dissuaded from seeking access by barriers). Bifurcation could allow plaintiffs to win a decision on liability without expending significant resources, and then force defendants to accept a settlement rather than submit to expansive discovery obligations. This bifurcated process is currently being employed in a class action against Taco Bell Corp. in the Northern District of California (Moeller v. Taco Bell Corp., No. 02 Civ. 5849).

Two recent cases out of the Northern District of California exemplify the risks retailers with a large presence in California face from Unruh Act claims. In National Federation of the Blind v. Target Corp., plaintiffs alleged that Target’s website did not employ technology that would make the website accessible to the blind. 582 F. Supp. 2d 1185. Target settled the case for US$6 million in damages and more than US$3.7 million in attorneys’ fees and costs. See DE # 210, No. 06 Civ. 1802 (N.D. Cal. Mar. 10, 2009). In Castaneda v. Burger King Corp., plaintiffs alleged that certain Burger King restaurants contained various architectural barriers to full access for people using wheelchairs or scooters for mobility. See No. 08 Civ. 4262, 2010 WL 2735091 (N.D. Cal. July 12, 2010). Even after the court limited the case to only 10 restaurants and required class members to opt-in, 382 people opted in by the deadline. Burger King settled for US$5 million in damages and US$2.5 million in attorneys’ fees and costs. Id.

Plaintiffs in the recently filed Bell v. Office Depot (No. 11 Civ. 2840, C.D. Cal.) will have the advantage of the recent court decisions favorable to plaintiffs and have likely been emboldened by the recent settlements in class actions against national retail chains in the Northern District of California. In light of these decisions and settlements, it is more important than ever for large retailers to conduct thorough compliance reviews of their retail facilities in California and otherwise take steps to minimize or avoid exposure due to Unruh Act claims.