Today, I ran across the story of California attorney Scott Johnson. He’s known for filing lawsuits, perhaps frivolous, against California businesses for violating the Americans with Disabilities Act. Johnson has filed over 4,000 lawsuits in California federal courts with himself named as plaintiff.
The ADA is a well-known law with great intentions – prohibiting discrimination against those with disabilities. But like any law or any great intention, there is often areas ripe for abuse.
Many businesses claim that Scott Johnson has abused the ADA for his own personal gain. He is well-known among San Francisco and northern California attorneys as a prolific filer of lawsuits against companies, alleging various violations of ADA compliance issues – no accessible handicap parking in the parking lot, no wheelchair ramps over curbs, inaccessible restrooms or counters, and more.
While all of these are issues that should be corrected, both as a matter of law under the ADA and as good business sense to allow as many customers as possible to use your store, the businesses in these lawsuits say that they are not fair.
The businesses often say that Johnson never actually went into their stores or tried to visit and thus he wasn’t actually a customer. That while he was out canvassing for potential targets, he was violating the California stay-at-home orders during the pandemic. That he was not actually concerned about forcing these companies into compliance to make the businesses accessible, but rather Johnson was after hefty settlements from the companies and personal gain.
There are two lessons that should be learned from this case.
Comply with the ADA and make your business accessible
The first lesson that you should take from this story is that you should take reasonable efforts to make your business accessible to disabled customers and visitors.
First and foremost, you should make your business accessible because it is the right thing to do. You should work to include as many people in your business as is reasonably possible.
Second, being accessible is good for business. Removing barriers for customers to be able to visit your business and buy your products or services means that you can serve more customers. The CDC estimates that 1 in 4 Americans have some form of disability, with the most common form of disability affecting mobility. That’s a lot of potential customers that you could be losing by not being accessible to those with disabilities.
Third, being accessible is the law. And while you may scoff at the lack of criminal enforcement, these lawsuits are not cheap, even if they are quickly settled. Your insurance may not cover these settlements. Lawsuits such as those by Johnson have been known to cause companies to move locations, incur costly renovation expenses, and even go out of business.
Don’t Cheat Uncle Sam
The second lesson is that you should never cheat Uncle Sam. The tax man will eventually catch up with you.
Johnson was in the news this week because on Tuesday, November 29, 2022, Johnson pleaded guilty to federal tax fraud.
Lawsuit settlements are taxable unless paid on account of personal physical injury or physical sickness. While you may at initial glance think that the ADA settlements would be on account of personal physical injury, that is not the case. It’s for when you suffer the injury based on the activity in the lawsuit (think: car accident medical bills).
And Johnson had a lot of ADA lawsuit settlements in 2012, 2013, and 2014. That he failed to disclose to the IRS and failed to pay income taxes on. The IRS says that Johnson under-reported his tax liability by $250,000.
Johnson is set to be sentenced on March 7, 2023. He faces a maximum sentence of three years in prison. The plea bargain is reported to call for 18 months in home confinement, partly because he is a quadriplegic, as well as pay the IRS $250,000 in restitution.
Bottom line: report all your income to the IRS.