Insurance and ADA Public Accommodations Claims

Navigating common insurance issues for claims under Title III of the ADA

Title III of the Americans with Disabilities Act (ADA) requires that businesses which offer goods and services to the public (i.e. “public accommodations”) take steps to ensure that their facilities are accessible to individuals with disabilities.  In addition to the ADA’s general accessibility mandate, its governing regulations provide detailed requirements for businesses that range from the minimum number of accessible parking spaces to the height of mirrors and toilets in restrooms.  The failure to comply with these guidelines can lead to lawsuits in federal court.  If you follow this blog, you know that these lawsuits are on the rise across the country.  These lawsuits not only raise liability issues that are different from ADA employment claims, but also distinct considerations concerning insurance coverage.  When analyzing a new ADA Title III case, it is important to consider the following:

1.  What type of claim is this?
ADA public accommodations claims can create confusion when trying to pigeon hole them with respect to insurance coverage.  At first glance, they often appear to be similar to building code violations, or other facilities claims.  Rather, these public accommodations lawsuits are civil rights claims in the same respect as employment-based lawsuits under the ADA.

2. Is there insurance for this claim?
Of course, any question of whether insurance coverage exists for a particular claim must be examined on a policy-by-policy basis.  Generally, however, many business insurance policies do provide coverage for claims brought under Title III of the ADA which allege a failure to provide an accessible facility.

3. Are there issues of indemnification or secondary insurance coverage?
Many ADA public accommodations cases involve situations where a plaintiff sues multiple parties for the same alleged violation(s).  For example, a plaintiff may sue both a shopping center and one or more businesses operating within the shopping center.  Another common situation is where a plaintiff brings a lawsuit against a franchisee and its franchisor.  In such cases, it is important to determine at the very early stages of the litigation how insurance coverage will apply.  In some cases there may be indemnification language in a lease, tenant agreement, or franchise agreement.  In other cases, coverage may extend from one defendant to another as an additional insured.  These decisions can have an impact on both litigation strategy for multi-defendant cases and settlement issues.

4. How does case strategy differ from ADA employment claims?
Although both employment and public accommodations claims under the ADA are federal civil rights claims, the strategy for how to defend each can be different.  Unlike employment claims, an ADA Title III plaintiff is not entitled to recover damages.  Under ADA Title III, a plaintiff can obtain injunctive relief and recover attorney’s fees (unquestionably a primary reason why these claims are so popular with the plaintiff’s bar).  To survive a motion to dismiss a plaintiff must plead facts sufficient to show a likelihood of future harm.  This requires a showing that he or she is likely to visit the business again in the future.  Many courts will dismiss cases where a plaintiff lives many miles from the business and appears to be nothing more than an ADA “tester” visiting businesses to file lawsuits.

5. What about settlement?
Unlike employment discrimination suits, the key facts in public accommodations claims are generally known, or knowable, to the defendant and its insurers very early in the litigation process.  A business can quickly determine whether the alleged issues with the facility exist and, if so, the cost and expense associated with making changes.  In some cases the cost of making modifications is expensive enough to warrant making an aggressive defense, including obtaining experts and proceeding with discovery.  In other circumstances, a case might involve clear, but minor, ADA violation that is easy to correct.  In the latter circumstance, it may be prudent to explore early settlement before legal costs rise.  Finally, in multi-defendant cases, a joint defense agreement is often a good idea.  This allows for internal discussions concerning settlement and can help prevent a plaintiff from playing the defendants off each other to increase the settlement amount.

Public accommodations claims brought under Title III of the ADA have their own unique characteristics with respect to both insurance issues and claim defense.  It is, therefore, important that insurers and businesses properly evaluate and devise an effective strategy at the early stages of the litigation process.

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