ADA and PROP 65 Litigation Continues To Present Substantial Risk To Retailers
The U.S. is known as a litigious society in which a simple mistake can lead to multi-million-dollar claims. Fortunately, it is not as bad as often feared by foreign entrepreneurs, but as with all clichés, there is a bit of truth to be found here. Below, our business partner Carl M.R. van der Zandt, partner at Wuersch & Gering LLP, discusses two types of litigation risks foreign businesses are often not aware of. The good news is that with proper preparation these risks can be limited considerably.
ADA Website Accessibility Litigation
As we reported before, starting in 2018 there has been an explosion in the number of lawsuits filed in the United States in which visually impaired or other disabled individuals claim that a business’s website violates the Americans with Disabilities Act (ADA) because it falls short of accepted website accessibility standards. Parallel to the ADA, some states have local anti-discrimination laws providing plaintiffs with an additional legal basis for their complaints, like the Unruh Act in California and the City Human Rights Law in New York City.
The ADA is a 1990 federal law prohibiting discrimination against individuals with disabilities and applies to private sector businesses that are “places of public accommodations” and requires the removal of any “access barriers” that hinder a disabled person’s access to goods and services. Traditionally, ADA lawsuits have addressed physical access barriers (e.g., service counter heights, wheelchair ramps, bathroom layout) in physical “places of public accommodation” such as stores, restaurants, bars, theaters, and other businesses that serve the public. Although courts are split in the U.S., in many states, including California and New York, courts have decided that the ADA also applies to websites. To promote compliance with its requirements, the ADA permits aggrieved persons to bring a lawsuit to remedy the violation. The ADA does not permit the recovery of monetary damages, but it does permit winning plaintiffs to recover attorneys’ fees and costs. Because of the high legal costs of U.S. litigation, virtually all website-related ADA cases settle early in the litigation.
Several U.S. law firms have made it their main business to sue scores of website owners on behalf of visually impaired individuals with the goal of a quick financial settlement. Especially some Californian law firms are very active in this respect, and they do not hesitate to sue the same website owners again and demand another settlement fee if the website is not made ADA compliant within the term agreed upon in the settlement agreement. Additionally, we have seen increases in “copycat” ADA litigation in other states. These are lawsuits initiated by law firms who screen out of state court dockets and sue the same defendant in their home state on behalf of a different plaintiff, sometimes even copying parts of the complaint in the first lawsuit.
The typical allegation in an ADA lawsuit is that the plaintiff tried to complete a transaction on the business’s website but was prevented from doing so by some feature of the website that presents an access barrier. For example, graphics shown on a website should include so-called Alt‐text describing the graphics for the benefit of visually impaired visitors of the website, and captions should be added to make spoken word content accessible to those with hearing impairment.
To help minimize the lawsuit risk, businesses should take proactive measures to ensure their websites meet the current standard for accessibility. Once a lawsuit has been settled, it is imperative to strictly comply with the terms thereof, which often includes the obligation to become ADA compliant within one or two years of the settlement date.
Website Accessibility Standards
There are no official measures businesses must take to ensure their websites meet any accessibility requirements. Yet ADA advocacy organizations, plaintiffs, and some courts take the position that to be accessible a website must comply with the Web Content Accessibility Guidelines 2.0 Level AA (WCAG 2.0 AA). Developed by World Wide Web Consortium’s Web Accessibility Initiative, WCAG 2.0 AA has become the de facto international standard for website accessibility among web developers, as well as the accessibility standard for federal agency websites.
Online tools are available to screen compliance with WCAG 2.0, and many vendors offer auditing and web development services to help businesses comply with these standards.
PROP 65 Litigation
The 1986 California Safe Drinking Water and Toxic Enforcement Act (Prop 65) requires the governor of California to publish a list of chemicals that are known to the State of California to cause cancer, birth defects, or other reproductive harm. This list contains currently over 900 chemicals and can be found on the website of the Office of Environmental Health Hazard Assessment: https://oehha.ca.gov/proposition-65/proposition-65-list
Amongst others, Prop 65 requires businesses to notify Californians about significant amounts of listed chemicals in the products they purchase to enable them to make informed decisions about protecting themselves from exposure to the chemicals. Several exemptions to this notification requirement apply, including if the exposures to the chemicals are so low that they create no significant risk of cancer or birth defects or other reproductive harm.
If no exemption applies, businesses must provide a clear warning before bringing products into the California market that includes a listed chemical. In the case of consumer products, this warning can be given by proper labeling of the product. Additionally, warnings must be given on the website before completing a website sale to Californians, as well on shelfs or signages at the physical point of sale of the product.
A typical Prop 65 warning looks like this:
“ WARNING: This product can expose you to chemicals including [NAME CHEMICAL], which is known to the State of California to cause cancer. For more information, go to www.P65Warnings.ca.gov.”
Do not use the above warning on your products without professional Prop 65 advice. There are detailed legal requirements for proper Prop 65 warnings and entrepreneurs should always hire a Prop 65 specialist if their products, including packaging and possible giveaways that come with the product, contain a listed chemical.
Prop 65 provisions are enforceable by penalties up to $2,500 per day, per violation. Furthermore, a court may order the product to be removed from the California market.
Like with ADA litigation, private parties may bring suit in case of a violation of Prop 65. These parties are often represented by “bounty hunter law firms”, another parallel with ADA litigation, who take part of the settlement amount as their legal fee. However, before starting litigation, the private party must send a 60-day notice regarding the alleged violation to the alleged violator and the relevant government officials in the jurisdiction where the alleged violation occurs. During this notice period the alleged violator should investigate the claims, prepare defenses, and, if appropriate, add warnings to its products, which can limit the liability exposure. After the notice period expires, the private party can start litigation.
Prop 65 litigation can become very costly very fast because of its highly technical nature which often requires testimony of expert witnesses. This is a big incentive for both parties to settle their Prop 65 litigation early in the proceedings.
Avoiding Prop 65 claims in the first place is of course the best strategy. It is extremely important to know the ingredients of your product, packaging and any third-party product that may be included or added to your product, before introducing it in the California market. Furthermore, if products are sold through resellers, distributors, or local retailers, keep in mind that those parties might hold their suppliers liable if they become the subject of a Prop 65 claim or litigation. Whether or not and to which extent you will have to indemnify your business partners depends largely on the terms and conditions of your sales and supply agreements.
The information in this article does not, and is not intended to, constitute legal advice; instead, all information is for general informational purposes only. Readers of this article should contact their attorney to obtain advice with respect to any legal matter. No reader should act or refrain from acting on the basis of information in this article without first seeking legal advice from counsel in the relevant jurisdiction. Only your individual attorney can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your situation.