Seyfarth Synopsis: Retailer and Texas bankers go on the offense in response to ADA Title III lawsuits and demand letters.

Hundreds, possibly thousands, of banks, retailers, and other businesses have received demand letters from two plaintiffs’-side law firms, acting jointly, on behalf of allegedly blind clients. The letters claim that the businesses’ websites are not accessible to their clients, in violation of the ADA, and offer settlements in lieu of litigation. Previous efforts to fight back had not been particularly successful, but perhaps the tide is turning.  Last week, the Texas Bankers’ Association (TBA) and the Independent Bankers Association of Texas (IBAT) announced that their recent offensive action resulted in relief for all their members.  And earlier this week, retailer Omaha Steaks filed a Complaint against would-be plaintiffs Access Now, Inc., R. David New, and Erica Walz, asking a Nebraska federal court to grant it preemptive relief against the potential litigation the would-be plaintiffs threatened in a demand letter.

The TBA and IBAT Lawsuit and Settlement.  In January 2017, the TBA and IBAT sued Carlson Lynch, KamberLaw, and each of the attorneys in those firms in Texas’s Tarrant County Court. The lawsuit sought penalties and fees against the defendants under the Texas Barratry statute (Section 82.0651 of the Texas Government Code and Section 38.12(a)(3) of the Penal Code), on the theory is that they committed criminal barratry by sending demand letters to TBA and IBAT members.  The Complaint alleged that the defendants were non-Texas attorneys: (1) soliciting business from Texas banks by offering to enter into settlement agreements releasing ADA claims if the banks would retain Carlson Lynch as their ADA attorneys for a period of two years after the agreement, and (2) purporting to represent Texas residents with ADA claims against the banks. Specifically, the Complaint claimed the defendants’ efforts were a calculated attempt to both seek out business in Texas and the benefits and protections of Texas’s laws: they entered into an attorney-client relationship with Texas residents on whose behalf they sent the demand letters to take action in Texas via the demand letters as “testers” of the banks’ websites for ADA compliance purposes — all in an effort to strong-arm Texas banks into hiring the defendant law firms in the future to avoid an ADA Title III lawsuit about the banks’ websites.

On Friday of last week, TBA and IBAT announced the matter settled via a confidential agreement with Access Now and several of its members that:

• Reaffirms TBA and IBAT’s continuing commitment to accessibility to visually-impaired persons by adopting and recommending to its members a non-binding Restatement of Voluntary Access Principles that are acceptable to Access Now; and
• Releases all TBA and IBAT members from all Access Now and several of its members’ “ADA claims related to the provision of Electronic Banking Services, which is defined as website accessibility, online banking, mobile banking, and telephone banking.”

We’ve not seen the confidential settlement agreement, but this seems like a very favorable outcome for the TBA, IBAT, and their members and underscores that efforts to combat these types of demands and lawsuits may be more effective when an industry segment mobilizes its defense efforts through its associations.

The Omaha Steaks Case. Omaha Steaks employed a different strategy to fight back against the demand letter it received from Carlson Lynch and Kamber Law on behalf of their clients Access Now, Inc., R. David New, and Erica Walz — filing a pre-emptive lawsuit for a declaratory judgment against the would-be plaintiffs. In the Complaint, Omaha Steaks laid out the contents of the January 7, 2017, demand letter. It also stated that it had previously begun – after becoming independently aware of the WCAG 2.0 AA Guidelines and “troll-like lawsuits” – its own efforts to bring its website into conformance with the Guidelines, including retention of a company specializing in website accessibility.  Omaha Steaks discussed the delayed (until 2018) status of potential website regulations that would apply to public accommodations, and noted the Access Board’s announcement of a final regulation requiring federal agencies’ websites to conform to WCAG 2.0 AA by January 2018. Omaha Steaks acknowledged that, “even in the absence of federal regulations, the Guidelines are recognized as setting the baseline requirements for website accessibility.” Therefore, it asserted, its website accessibility efforts are sufficient under the Guidelines and it should not be held to a higher standard or earlier deadline than federal agencies.

Omaha Steaks concluded that the above demonstrates the existence of an actual and justiciable controversy between Omaha Steaks and the would-be plaintiffs as to the applicability and requirements of the ADA. It asked the court to issue an order declaring:

• The legal standard under Title III of the ADA for an accessible website, with which it must comply;
• That the would-be plaintiffs’ threatened lawsuit is not ripe, and that Omaha Steaks cannot be held liable for having failed to timely comply with that legal standard, in the absence of any federal regulation dictating an applicable deadline; and
• That the would-be plaintiffs’ threatened lawsuit is moot, in light of Omaha Steaks’ efforts to comply with the Guidelines.

It also seeks Omaha Steaks’ attorneys’ fees and costs incurred in bringing the action for declaratory relief.

Omaha Steaks is not the first to employ a declaratory relief strategy in response to a demand letter from these law firms. Retailer Harbor Freight filed a declaratory judgment action last year, but the suit was dismissed because the suit was against the law firms, not the would-be plaintiffs. The court held that there was no justiciable controversy between the law firms and Harbor Freight. (The law firms, on behalf of their client, quickly filed their own website accessibility action against Harbor Freight in federal court in Pennsylvania, which settled shortly thereafter.) The Omaha Steaks lawsuit does not suffer from this deficiency as it names the would-be plaintiffs. We will be watching to see how the court rules, or whether the offensive action will prompt a quick settlement.