Construction Projects and Construction Projects and ADA Accessibility - - PowerPoint PPT Presentation

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Construction Projects and Construction Projects and ADA Accessibility Compliance

Drafting Design and Construction Contracts to Manage ADA Risks

T d ’ f l f

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific TUES DAY, MAY 21, 2013

Today’s faculty features:

Jean Weil, Partner, Weil & Drage, Laguna Hills, Calif. Eric A. Grasberger, Partner, Stoel Rives, Portland, Ore.

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CO S C O O C S d CONSTRUCTION PROJECTS and ADA ACCESSIBILITY COMPLIANCE STRAFFORD WEBINAR

May 21 2013 1:00‐2:30pm EDT May 21, 2013, 1:00 2:30pm EDT

Jean A. Weil Esq. Weil & Drage, APC 23212 Mill Creek Drive Laguna Hills, CA 92653 g , 949‐837‐8200 jweil@weildrage.com California Nevada Arizona California, Nevada, Arizona

Jean A. Weil Esq.

jweil@weildrage.com Weil & Drage, APC g , CA, NV, AZ

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NEW CASE LAW ON INDEMNITY FOR ADA AND FHA VIOLATIONS ADA AND FHA VIOLATIONS

• In 2010 a Federal Appellate Court sitting in

0 0 a ede a ppe ate Cou t s tt g Maryland (4th Circuit) broke new ground on whether owners and developers can seek d f h d f h indemnity from third parties for their own ADA and FHA violations I 2012 th N d S C t b th

• In 2012 the Nevada Supreme Court became the

first high state court in the country to rule on this controversial issue controversial issue

• Before we get to those cases, let’s take a step

back to review the ADA and the FHA

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WHY WAS THE ADA ENACTED? WHY WAS THE ADA ENACTED?

The Americans with Disabilities Act (ADA) of ( ) 1990 (and amended 2008)

ADA enacted to address Effective July 29, 1992, ADA prohibits discrimination “pervasive social problem” of the disabled being excluded from full participation in society prohibits discrimination against the disabled in employment, public services, public accommodations and telecommunications George Bush signed the ADA on July 26 1990 (amended in 2008 telecommunications ADA was the world’s first civil July 26, 1990 (amended in 2008 to broaden the definition of those covered and their protections) ADA was the world s first civil rights law protecting the disabled

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WHAT IS THE PURPOSE OF THE ADA? WHAT IS THE PURPOSE OF THE ADA?

To provide a clear and To ensure the federal To provide a clear and comprehensive mandate for elimination of discrimination against To ensure the federal government enforces standards on behalf of individuals with discrimination against individuals with disabilities individuals with disabilities To provide clear, strong, consistent, enforceable standards addressing To invoke congressional authority to address standards addressing discrimination y discrimination

9 This presentation may not be duplicated or distributed without the express written permission of Weil & Drage, APC

WHO’S RESPONSIBLE FOR ADA COMPLIANCE?

• What does the ADA apply to?

pp y

– The ADA applies to both public and private places of public accommodation accommodation – Essentially any place (public or private) which is open to b f th bli d members of the public and relates to “commerce” but not “residential” – Exemptions for private clubs and religious organizations and special rules for historic properties rules for historic properties

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10

WHO’S RESPONSIBLE FOR ADA COMPLIANCE?

• What is a “disability”?

What is a disability ?

– An individual with a physical or mental impairment that substantially limits one or p y more major life activities of such individual

• What is a “major life activity”?

– Caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, di lif i b di ki standing, lifting, bending, speaking, breathing, learning, reading, concentrating, communicating and working communicating and working

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11

WHO’S RESPONSIBLE FOR ADA COMPLIANCE?

• Who must comply with the ADA as related
• ust co p y

t t e as e ated to public and private places of public accommodation”?

– Potentially everyone involved in the design and construction of such places and those who own,

• perate, maintain and control such places
• perate, maintain and control such places

– Includes the entire design and construction team whose scope of work touches upon ADA compliance

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12

WHO’S RESPONSIBLE FOR ADA COMPLIANCE?

Such entities could include but Such entities could include but could include, but are not limited to: could include, but are not limited to:

Owners Owners Tenants Tenants Developers Developers Landlords Landlords Operators Operators Licensees Licensees p

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13

WHO’S RESPONSIBLE FOR ADA COMPLIANCE?

Construction Managers General Contractors Consultants and Interior Designers

• Usually ADA and

Specialty Consultants Specialty Consultants (i.e., restaurants, theatres, stadiums, convention centers, hotels, etc.)

Subcontractors Design Professionals

• Usually Architects,

MEP’s and Civil Engineers This presentation may not be duplicated or distributed without the express written permission of Weil & Drage, APC

14

WHO’S RESPONSIBLE FOR ADA COMPLIANCE?

• Who has standing to sue under the ADA?

Who has standing to sue under the ADA?

– Any individual with a disability who has been denied equal access to a public or private place

• f public accommodation

– Any qualified organization representing the disabled who have been denied equal access disabled who have been denied equal access – The Department of Justice (DOJ) seeking to enforce standards of compliance to ensure equal access

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15

WHO’S RESPONSIBLE FOR FHA COMPLIANCE?

• Who is protected by the

p y Fair Housing Act (FHA) of 1968 (and as amended 1988)?

– The original act protected against di i i ti b d li i discrimination based on race, religion, national origin and sex – The 1988 amendment added disability and family status to the list of those protected protected

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WHO’S RESPONSIBLE FOR FHA COMPLIANCE?

• What is the purpose of the Fair Housing Act

What is the purpose of the Fair Housing Act (FHA) of 1968 (and as amended 1988)?

– To eliminate housing discrimination against l i l l f i di id l multiple classes of individuals including disabled individuals – To promote residential integration

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17

WHO’S RESPONSIBLE FOR FHA COMPLIANCE?

• What does the FHA apply to?

pp y

– Applies to all single family homes owned by private persons where a real estate broker is used All i l f il h d b ti – All single family homes owned by corporations or partnerships – Does not require single family homes to be accessible; rather cannot not discriminate against the not discriminate against the disabled (among other classes) in any transaction y

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WHO’S RESPONSIBLE FOR FHA COMPLIANCE?

– All multifamily dwellings including:

• Townhouses

C d i i

• Condominiums
• Apartments
• Certain % must be modifiable

Certain % must be modifiable

– Exemptions:

• If dwelling has four or less units and if the owner lives

If dwelling has four or less units and if the owner lives in one of the units

• Qualified senior housing
• Private clubs and organizations (if limited to members
• nly)

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19

WHO’S RESPONSIBLE FOR FHA COMPLIANCE?

Who must comply with the FHA? Who must comply with the FHA? Direct providers of housing including, but not limited to: Landlords Real estate companies Real estate companies Municipalities Banks and other lending institutions Homeowners insurance companies

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WHO IS RESPONSIBLE FOR FHA COMPLIANCE?

But could also include the same universe of entities But could also include the same universe of entities who must comply with the ADA, including but not limited to, the entire design and construction team due to “Catch All’ provision “Catch‐all” Provision: Any person or entity who has “engaged in a pattern or practice of discrimination or engaged in a pattern or practice of discrimination or where denial of rights to a group of persons raises an issue of general public importance”

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WHO IS RESPONSIBLE FOR FHA COMPLIANCE?

Who has standing to sue under the disabilities

Individuals with disabilities (or their parents or associates who

provision of the FHA?

Individuals with disabilities (or their parents or associates who were denied housing) Housing providers prevented from building or operating housing Fair Housing organizations representing the disabled or others denied housing

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LAWSUITS UNDER ADA AND FHA LAWSUITS UNDER ADA AND FHA

• What are the typical scenarios where design

yp g professionals, owner and developers are sued for ADA or FHA violations?

Di i b di bl d – Direct suit by disabled person – Direct suit by organization representing the disabled – Direct suit by Department of Housing and Urban Direct suit by Department of Housing and Urban Development (HUD) – DOJ as enforcement arm for ADA and FHA C ti b th h h – Cross action by others who have been sued directly by one or more of the above

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ADA/FHA LAWSUITS ADA/FHA LAWSUITS

Thus design professionals,

• wners and developers

can be sued a number of ways by a number of ti f b f

Can be sued directly by l l l

Design professonals and others have been sued by owners who hired them and are

parties for a number of violations all relating to the same design of one or more projects

multiple classes

• f plaintiffs; and

now seeking indemnity for their damages

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NEW ADA/FHA CASES INVOLVING DESIGN PROFESSIONALS

• In Equal Rights Center v. Niles Bolton 602 F.3d

In Equal Rights Center v. Niles Bolton 602 F.3d 597 (2010) (“Niles Bolton”) the architect was retained by developer Archstone to design multiple apartment complexes nation wide

• Equal Rights Center (“ERC”) sued Archstone

and Niles Bolton for violations of ADA and FHA

• Archstone settled with the ERC

Archstone settled with the ERC

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25

NEW ADA/FHA CASES INVOLVING DESIGN PROFESSIONALS

• Archstone agreed to pay $1.4 million to ERC and

g p y $ agreed to retrofit 71 properties (15 of which were designed by Niles Bolton)

• Niles Bolton settled separately with ERC with no

admission of fault admission of fault

• Archstone filed a cross‐claim in federal court

against Niles Bolton for express indemnity, implied indemnity, breach of contract and negligence negligence

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NEW ADA/FHA CASES INVOLVING DESIGN PROFESSIONALS

• Archstone sought to recover from Niles Bolton all

c sto e soug t to eco e

• es o to a

monies paid to ERC, the cost of the retrofits plus attorneys fees and costs

• Niles Bolton filed summary judgment arguing:

– ADA/FHA do not expressly provide rights of indemnity

/

• ADA exception for landlord/tenant relationships

– Thus it would undermine the purpose of ADA and FHA if Archstone could seek indemnity c sto e cou d see de ty – Archstone’s state‐law claims were preempted by federal law under the doctrine of obstacle preemption

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NEW ADA/FHA CASES INVOLVING DESIGN PROFESSIONALS

• Archstone argued that Niles Bolton was hired to

c sto e a gued t at es o to as ed to comply with ADA and FHA and had superior knowledge and skills and it would be “unfair” if it ld h d could not recover their damages

• Trial court disagreed and held that:

– ADA and FHA did not expressly permit indemnity – All of Archstone’s claims were at their core, merely de facto indemnity claims facto indemnity claims – Allowing such claims would undermine the purpose of ADA/FHA and were thus preempted

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NEW ADA/FHA CASES INVOLVING DESIGN PROFESSIONALS

• Archstone appealed to the United States Court of

c sto e appea ed to t e U ted States Cou t o Appeals (Fourth Circuit in Maryland)

• Archstone argued that allowing it to pursue its

g g p state‐law claims did not pose an obstacle to enforcement of the underlying purpose of the ADA FHA d th t th fli t ith ADA or FHA and that there was no conflict with any federal law

• However the federal appellate court affirmed the
• However, the federal appellate court affirmed the

lower court’s ruling and upheld summary judgment in favor of Niles Bolton j g

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NEW ADA/FHA CASES INVOLVING DESIGN PROFESSIONALS

• The Niles Bolton appellate decision

pp was published in 2010

• The appellate court went to great

lengths to explain the doctrine of

• bstacle preemption which applies
• bstacle preemption which applies

“where state law stands as an

• bstacle to the accomplishment and

execution of the full purposes and

• bjectives of Congress”.

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NEW ADA/FHA CASES INVOLVING DESIGN PROFESSIONALS

Recall the purposes of the p p ADA:

To provide a clear and comprehensive mandate for elimination of discrimination against for elimination of discrimination against individuals with disabilities To provide clear, strong, consistent, enforceable d d dd i di i i i standards addressing discrimination To ensure the federal government enforces standards on behalf of individuals with disabilities standards on behalf of individuals with disabilities To invoke congressional authority to address discrimination discrimination

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NEW ADA/FHA CASES INVOLVING DESIGN PROFESSIONALS

Recall the purposes of the FHA:

To eliminate housing discrimination against multiple classes of individuals against multiple classes of individuals including disabled individuals To promote residential integration

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NEW ADA/FHA CASES INVOLVING DESIGN PROFESSIONALS

• In Niles Bolton the Court of Appeal reasoned that

In Niles Bolton the Court of Appeal reasoned that those purposes would be undermined if parties could seek indemnity for their own ADA or FHA violations

• Thus it didn’t matter if it was “unfair” to Archstone
• All that mattered is what would maximize

compliance and accessibility in the long run

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NEW ADA/FHA CASES INVOLVING DESIGN PROFESSIONALS

The problem is that while the Niles Bolton case The legal community was watching the Niles Bolton action very closely, i ll h f would be very persuasive in another federal court hearing the same issue, it t bi di th it especially those of us with ADA or FHA lawsuits pending in other states was not binding authority

• n other state courts

(except perhaps Maryland) y )

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NEW ADA/FHA CASES INVOLVING DESIGN PROFESSIONALS

F th Aft ll th Further, even legal scholars had to h

Topically, there were good reasons why

• wners should be able

to “pass through” i id t ttl

After all, they hired the ADA “experts” to h l th b

• vercome the

“it’s not fair” argument

monies paid to settle lawsuits and to retrofit non‐compliant conditions

help them be fully compliant

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NEW ADA/FHA CASES INVOLVING DESIGN PROFESSIONALS

• In the same timeframe that Niles Bolton was working its

g way through the federal lower and appellate courts, our

• ffice was litigating a similar case in Nevada state court

/

• In 2005/2006, the DOJ investigated Mandalay Corporation

and its related entities for alleged ADA violations

• The investigation focused
• The investigation focused
• n multiple properties

including Mandalay Bay Hotel including Mandalay Bay Hotel and Casino and THEhotel in Las Vegas g

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NEW ADA/FHA CASES INVOLVING DESIGN PROFESSIONALS

• In approximately 2006, MGM acquired Mandalay Bay

In approximately 2006, MGM acquired Mandalay Bay

• In 2007 MGM settled with the DOJ and agreed to pay

a fine and retrofit aspects of both the original hotel p g as well as the expansion project

• Shortly after the settlement, Mandalay sued multiple

y y p design professionals and contractors that worked on the project

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NEW ADA/FHA CASES INVOLVING DESIGN PROFESSIONALS

• In 2008, Mandalay amended its complaint to name Rolf

, y p Jensen & Associates (RJA) as a defendant B k i 1996 RJA d fi

• Back in 1996, RJA served as a fire

protection consultant retained by the architect on the original hotel the architect on the original hotel

• In 1997, during construction, a question

arose about toilet room doors in non‐accessible rooms

• Do they need to be “extra wide”?

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NEW ADA/FHA CASES INVOLVING DESIGN PROFESSIONALS

• Although RJA was not serving in

Although RJA was not serving in the capacity of an ADA consultant, it was asked to review the general contractor’s RFI

• RJA commented that while the
• RJA commented that while the

issue was not definitive (under the then‐current guidelines) the

• wner would be wise to take the

most conservative approach and most conservative approach and maximize accessibility to avoid a civil lawsuit

• But, RJA was not aware of the then

l bli h d D I d newly published Days Inn case and its impact on the “doctrine of visitability” as related to the toilet room doors

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ADA/FHA LAWSUITS AGAINST DESIGN PROFESSIONALS

• Mandalay elected not to change out the doors

Mandalay elected not to change out the doors

• Mandalay thus avoided a significant time and cost

impact associated with changing out some 4000 p g g doors that had been partially framed or installed

• In 1998, the project opened up on time and within

p j p p budget

• But, RJA’s words about a potential civil lawsuit

turned out to be prophetic

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NEW ADA/FHA CASES INVOLVING DESIGN PROFESSIONALS

In 2002, Mandalay retained RJA directly as an ADA consultant for the expansion project RJA was tasked with reviewing only limited portions of the project wherein the owner had questions about ADA project wherein the owner had questions about ADA compliance Later, RJA learned that much of their advice was ignored

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NEW ADA/FHA CASES INVOLVING DESIGN PROFESSIONALS

• Shortly after the Niles Bolton case was published, on

Shortly after the Niles Bolton case was published, on behalf of RJA, we filed a motion for summary judgment seeking dismissal of all of Mandalay’s state‐based claims for:

– Express indemnity – Breach of contract – Breach of warranty Negligent misrepresentation – Negligent misrepresentation

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NEW ADA/FHA CASES INVOLVING DESIGN PROFESSIONALS

We argued the facts and law of Niles Bolton and We argued the facts and law of Niles Bolton and We argued the facts and law of Niles Bolton and asserted while not binding authority in Nevada, the decision was nonetheless very persuasive We argued the facts and law of Niles Bolton and asserted while not binding authority in Nevada, the decision was nonetheless very persuasive Mandalay made all the same arguments that h h d d Mandalay made all the same arguments that h h d d Archstone had made Archstone had made The trial court found that Niles Bolton was not binding on a Nevada state court and declined to follow it, thus denied summary judgment The trial court found that Niles Bolton was not binding on a Nevada state court and declined to follow it, thus denied summary judgment , y j g , y j g

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NEW ADA/FHA CASES INVOLVING DESIGN PROFESSIONALS

• On behalf of RJA we filed a Petition for Writ of

On behalf of RJA we filed a Petition for Writ of Mandamus to the Nevada Supreme Court seeking review and reversal of the trial court’s denial of RJA’s summary judgment

• After nearly two years, on August 9, 2012, the

Nevada Supreme Court issued its opinion in Rolf Jensen v. Eighth Judicial District Court 128 Nev. Advance Opinion 42 (“Rolf Jensen”) Advance Opinion 42 (“Rolf Jensen”)

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NEW ADA/FHA CASES INVOLVING DESIGN PROFESSIONALS

In a 17 page en banc decision with no dissent, the Court ordered the trial court to reverse its denial of The Court based its ruling that all

• f Mandalay’s pending state‐

based claims were an obstacle to h bj i f h ADA d

RJA’s motion for summary judgment and instead order judgment in RJA’s favor

the objectives of the ADA and therefore preempted by federal law

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NEW ADA/FHA CASES INVOLVING DESIGN PROFESSIONALS

The Court held that the ADA was enacted to remedy discrimination against the disabled and therefore any

• wner who constructs a facility of

The Court further held that except for landlord‐tenant relationships, the ADA does not provide for a private right of i d i d h M d l ’ l i

• wner who constructs a facility of

public accommodation not readily accessible is liable for unlawful discrimination indemnity and that Mandalay’s claims were merely de facto indemnity claims and thus barred

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NEW ADA/FHA CASES INVOLVING DESIGN PROFESSIONALS

• Applying the law, the Court found that allowing

Applying the law, the Court found that allowing Mandalay to maintain its indemnity claims would weaken owners’ incentives to prevent violations and thus conflicted with the ADA’s purpose and intent because owners could contractually maneuver th l t i th i d l bl d ti t themselves to ignore their non‐delegable duties to comply with the ADA.

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NEW ADA/FHA CASES INVOLVING DESIGN PROFESSIONALS

• The Court stated that allowing such maneuvering

The Court stated that allowing such maneuvering would frustrate Congress’ goal of preventing discrimination and intrude on the remedial scheme

• f the ADA, which does not expressly or impliedly

permit rights of indemnity (except in the limited l dl d t t l ti hi ) landlord‐tenant relationship)

• Relying on Niles Bolton, the Court found that

Mandalay’s state law claims were preempted and Mandalay’s state‐law claims were preempted and thus barred under the doctrine of

• bstacle preemption
• bstacle preemption

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NEW ADA/FHA CASES INVOLVING DESIGN PROFESSIONALS DESIGN PROFESSIONALS

• Niles Bolton and Rolf Jensen have changed

the legal landscape of ADA and FHA cases the legal landscape of ADA and FHA cases

• Owners and developers across the country

i l d i f i l d i routinely sue design professionals during or after settlement of lawsuits brought by HUD, DOJ or other organizations representing the disabled

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NEW ADA/FHA CASES INVOLVING DESIGN PROFESSIONALS

Owners and developers uniformly have decision‐ making authority on making authority on ADA compliance and may exert pressure on all members of the

Design team members are almost always incentivized to maximize

all members of the design team to minimize the scope and cost of compliance or worse

incentivized to maximize compliance and rarely if ever have any financial incentive to do otherwise

compliance, or worse,

• verride their

recommendations

incentive to do otherwise

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NEW ADA/FHA CASES INVOLVING DESIGN PROFESSIONALS

By contrast, owners are almost always financially incentivized to minimize compliance, particularly where there is a time or cost impact at stake Even if the design team has good defenses, they have historically been dragged into these costly and protracted cases

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WHAT CAN YOU DO? WHAT CAN YOU DO?

• What can your A/E clients do to prevent

b d d l d being dragged into a costly and protracted ADA or FHA case?

Maximize compliance in every project – Maximize compliance in every project, especially in the “gray areas” – Not succumb to pressure from their client – If their client disregards their g recommendations, they must document their file in in writing – If it is not in writing “it didn’t happen” If your A/E clients see construction team – If your A/E clients see construction team members disregarding or misapplying design intent, they must call to owner’s attention and document same in writing

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WHAT CAN YOU DO? WHAT CAN YOU DO?

• What can your A/E clients do if despite their best

y / p efforts, they are still dragged into a lawsuit?

– If the matter is venued in state court, counsel should seek to have it transferred to federal court which should follow Niles Bolton and federal law – Counsel should file early motions seeking dismissal based

• n new law

If unsuccessful counsel should seek to demonstrate that – If unsuccessful, counsel should seek to demonstrate that the A/E employed all reasonable efforts to secure compliance

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CONSTRUCTION PROJECTS CONSTRUCTION PROJECTS AND ADA ACCESSIBILITY CO C COMPLIANCE

Th O /D l P ti

Eric A. Grasberger Stoel Rives LLP

900 SW 5th Ave Suite 2300

The Owner/Developer Perspective

900 SW 5th Ave. Suite 2300 Portland, OR 97204 503.294.9439 eagrasberger@stoel.com OR, WA, CA, AK, MN UT, ID, DC

54

, ,

73897090.2

Strafford Webinar ● May 21, 2013 ● 1:00-2:30 p.m. EDT

Eric A Grasberger Esq Eric A. Grasberger, Esq.

eagrasberger@stoel.com One of 17 firms nationwide to receive the

55

One of 17 firms nationwide to receive the “National Tier 1” ranking in Construction Law from U.S. News – Best Lawyers (Best Law firms) survey

The Owner/Developer Perspective The Owner/Developer Perspective

• A. Problems with the Legal Analysis in

R lf J M d l Rolf Jensen v. Mandalay

• B. Problems with the Policy Rationale in
• B. Problems with the Policy Rationale in

Rolf Jensen v. Mandalay C S l ti f th O /D l

• C. Solutions for the Owner/Developer

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The Owner/Developer Perspective The Owner/Developer Perspective

• A. Problems with the Legal Analysis in Rolf

Jensen v Mandalay Jensen v. Mandalay

Court wrongly concludes there is “conflict preemption” or “obstacle preemption” RJ v. Mandalay quote:

“Conflict preemption, or obstacle preemption, as it is oftentimes called, occurs when “federal l t ll fli t ith t t l ” Id t 371

57

law actually conflicts with any state law.” Id. at 371, 168 P.3d at 80.”

The Owner/Developer Perspective The Owner/Developer Perspective

The Court further explains the principle…

“Conflict preemption analysis examines the federal t t t h l t d t i h th t ’ statute as a whole to determine whether a party’s compliance with both federal and state requirements is impossible or whether, in light of the federal statute’s purpose and intended effects state law poses an purpose and intended effects, state law poses an

• bstacle to the accomplishment of Congress’s objectives.”

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The Owner/Developer Perspective The Owner/Developer Perspective

The Court correctly recites the “ ti i t ti ” “presumption against preemption”…

“Second, the Court has instructed that “‘[i]n all pre- emption cases, and particularly in those in which Congress has legislated … in a field which the States have traditionally occupied we start with the have traditionally occupied, … we start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose

59

Act unless that was the clear and manifest purpose

• f Congress.’””

The Owner/Developer Perspective The Owner/Developer Perspective

The Court correctly recites the “ ti i t ti ” “presumption against preemption”…

“The second principle, known as the “presumption against preemption,” arises out of “respect for the States as ‘independent sovereigns in our federal t ’” system.’”

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The Owner/Developer Perspective The Owner/Developer Perspective

Yet the Court concludes the presumption d t l does not apply…

“Thus, because this petition does not involve a legislative landscape traditionally occupied by the states, the presumption against preemption does not apply with particular force here.”

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The Owner/Developer Perspective The Owner/Developer Perspective

The Court’s first mistake: It concludes that ADA type issues are not in the “landscape ADA type issues are not in the “landscape traditionally occupied by states”

Despite the fact that Despite the fact that…

a. 90% of all construction law is state-based b Building codes are state- and local-based b. Building codes are state and local based c. Indemnity, contribution and tort concepts are state-based

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d. Enforcement of building codes and industry tolerances are state- and local-based

The Owner/Developer Perspective The Owner/Developer Perspective

The Court’s second mistake: It finds the lack of an express indemnification or allocation provision in e p ess de cat o

• a ocat o

p o s o the ADA text to be a significant indicator of Congress’ intent

“Notably, however, with the exception of landlord- tenant relationships, 28 C.F.R. § 36.201(b) (2010), there are no provisions within the ADA, or its i l ti th t it i d ifi ti accompanying regulations, that permit indemnification

• r the allocation of liability between the various

entities subject to the ADA.” But…

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But… a. There are no provisions prohibiting it either b. Many statutes do not address ability to seek indemnity for statutory violations

The Owner/Developer Perspective The Owner/Developer Perspective

The Court’s third mistake: It finds instructive the fact that the ADA does mention “allocation of fact that the ADA does mention allocation of responsibility” between a landlord and tenant for ADA defects

“(b) Landlord and tenant responsibilities. Both the landlord who owns the building that houses a place of public accommodation and the tenant who place of public accommodation and the tenant who

• wns or operates the place of public accommodation

are public accommodations subject to the requirements

• f this part As between the parties allocation of

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• f this part. As between the parties, allocation of

responsibility for complying with the obligations of this part may be determined by lease or other contract.”

The Owner/Developer Perspective The Owner/Developer Perspective

But…

• a. The unique LL/T relationship involves both
• wners or operators who share control of

the space the space

• b. Again, if Congress really intended this to be

the only relationship allowed to allocate y p liability, why not say so

• c. The Court reads too much into the Act and

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reads too much out of the Act to accomplish the desired outcome

The Owner/Developer Perspective The Owner/Developer Perspective

The Court’s fourth mistake: It ignores closely analogous FHA authority analogous FHA authority…

“Mandalay relies upon Meyer v. Holley, 537 U.S. 280, 285 (2003) h th S C t t t d th t 285 (2003), where the Supreme Court stated that an action brought under the FHA “is, in effect, a tort action,” and that “when Congress creates a tort action, it legislates against a legal background of ordinary tort related vicarious against a legal background of ordinary tort-related vicarious liability rules and consequently intends its legislation to incorporate those rules.” But neither Meyer nor Norfolk involved preemption much less the specific issue of

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involved preemption, much less the specific issue of preemption by the ADA…”

The Owner/Developer Perspective The Owner/Developer Perspective

But the FHA is indistinguishable from the ADA on whether obstacle or conflict ADA on whether obstacle or conflict preemption is justified where states have traditionally occupied the “field” of both traditionally occupied the field of both specific building code requirements and tort principles. tort principles.

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The Owner/Developer Perspective The Owner/Developer Perspective

• B. Problems with the Policy Rationale in Rolf

Jensen v Mandalay Jensen v. Mandalay

“Thus, the goal of the ADA is twofold. It is intended not only to remedy discrimination against disabled individuals but to prevent it.”

AGREED! But then the Court’s analysis goes awry…

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The Owner/Developer Perspective The Owner/Developer Perspective

The Court relies heavily on Niles Bolton:

“In Niles Bolton, the United States Court of Appeals for the Fourth Circuit reasoned that permitting an for the Fourth Circuit reasoned that permitting an

• wner to, in essence, circumvent responsibility for

its violations of the ADA and the Fair Housing Act (FHA) through an indemnification claim would (FHA) through an indemnification claim would lessen the owner’s incentive to ensure compliance with the ADA and FHA.”

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The Owner/Developer Perspective The Owner/Developer Perspective

The Court concludes that indemnification rights “diminish the incentive” of rights diminish the incentive of developers to avoid ADA defects…

“Allowing an owner to completely insulate itself from liability for an ADA or FHA violation through contract diminishes its incentive to ensure compliance with di i i i l If d l h d dl discrimination laws. If a developer ... who concededly has a non-delegable duty to comply with the ADA and FHA, can be indemnified under state law for its ADA and FHA violations then the developer will not be accountable for

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violations, then the developer will not be accountable for discriminatory practices. …Such a result is antithetical to the purposes of the FHA and ADA.”

The Owner/Developer Perspective The Owner/Developer Perspective

The Court continues…

“Simply put, such claims would allow owners to contractually maneuver themselves into a position contractually maneuver themselves into a position where, in essence, they can ignore their nondelegable responsibilities under the ADA. As previously noted, eliminating this type of neglectful environment was one eliminating this type of neglectful environment was one

• f the specific aims of Congress in enacting the ADA.”

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The Owner/Developer Perspective The Owner/Developer Perspective

The Court concludes that the ADA’s purpose would be frustrated if indemnification is would be frustrated if indemnification is allowed…

“It follows that if owners were permitted to pursue indemnification for their own ADA violations, Congress’s goal of preventing discrimination would be frustrated. In addition, such claims would intrude upon the remedial scheme set forth in the ADA, which, we reiterate, does not provide for a right to indemnification despite having

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not provide for a right to indemnification, despite having a sweeping and comprehensive scope.”

The Owner/Developer Perspective The Owner/Developer Perspective

Finally, the Court makes a broad ti th t ll b t suggestion that all owners are best positioned to avoid ADA defects…

“I t d ’ i l t ti i d t it i l “In today’s commercial construction industry, it is surely an owner such as Mandalay—a highly sophisticated entity with ultimate authority over all construction decisions—who is in the best position to prevent violations of the ADA is in the best position to prevent violations of the ADA. Furthermore, contrary to Mandalay’s contention, Rolf Jensen is not immunized from liability for the role that it allegedly played in Mandalay’s violations of the ADA Rolf Jensen’s

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played in Mandalay s violations of the ADA. Rolf Jensen s liability, however, simply runs to disabled individuals rather than to Mandalay.”

The Owner/Developer Perspective The Owner/Developer Perspective

The Court’s policy rationale is wrong for several reasons: reasons:

• a. Even the largest owners are not ADA experts

b Few owners would ever tell designers to violate ADA

• b. Few owners would ever tell designers to violate ADA
• c. Indemnification and contribution rarely make the owner

whole – not an incentive to violate the ADA d W h t t hit t’ d t t ’

• d. We have to promote architect’s and contractor’s

incentives too!

• e. Joint and several liability would force all to “behave”

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y f. Congress should not interfere with common law tort, indemnity or freedom of contract principles

The Owner/Developer Perspective The Owner/Developer Perspective

• g. Fairness dictates allocation on case by case basis

ith t C di t ti t i d without Congress dictating outcomes in advance

• h. Nor should plaintiff’s alone pick which party bears the

burden (what if the architect is sued by DOJ – can it seek indemnity from owner?) i. Building code violations are to protect “life” and “safety” at least an equal goal and most would argue safety , at least an equal goal and most would argue a higher goal than preventing “discrimination” j. But liability for building code violations gets allocated d l i i l t t i i l d

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under common law principles, contract principles and basic fairness (in the eyes of a jury)

The Owner/Developer Perspective The Owner/Developer Perspective

• C. Solutions for the Owner/Developer
• 1. Prevention
• a. Hire architects with ADA expertise
• b. Hire 3rd party ADA consultants

i. for design review ii for review during construction

• ii. for review during construction
• 2. Perform “ADA Audit” as a Condition of

Substantial or Final Completion (or in the due

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diligence period if purchasing an existing building)

The Owner/Developer Perspective The Owner/Developer Perspective

• 3. File First

a. Case law does not prevent direct suits, only a. Case law does not prevent direct suits, only indemnity

• b. If you file first, designers and contractors can be

liable liable c. Added benefit: you correct defects before enforcement suits come

4 Verify Proper Insurance at Time of Contracting

• 4. Verify Proper Insurance at Time of Contracting

a. Professional liability policies (A/Es) typically provide coverage b Some owner/developer general liability policies

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• b. Some owner/developer general liability policies

provide coverage c. Maintain insurance for years after construction

The Owner/Developer Perspective The Owner/Developer Perspective

• 5. Are contribution claims precluded?

a Not clear in RJ v Mandalay that contribution is a. Not clear in RJ v. Mandalay that contribution is preempted b. Consider a contract clause along the following lines:

“Owner Architect and Contractor shall resolve through Owner, Architect and Contractor shall resolve through negotiations or through the dispute resolution process prescribed herein a proper allocation of contribution from each party for costs, penalties, fines and other damages resulting from any ADA/FHA violations found to exist in the project and which arise from 3rd party claims against Owner, Contractor or Architect. In recognition of the parties’ joint responsibility to ensure project compliance with the ADA/FHA

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responsibility to ensure project compliance with the ADA/FHA requirements, the minimum allocated contribution from any party shall be 10% regardless of the circumstances.”

The Owner/Developer Perspective The Owner/Developer Perspective

• 6. Integrated Project Delivery (“IPD”)
• a. IPD is a process by which architects or contractors

are sometimes “members” in the project specific LLC

• b. As members in the ownership entity, they would

share in the liability for suits against owner c How they share would depend largely on language c. How they share would depend largely on language in the LLC operating agreement

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The Owner/Developer Perspective The Owner/Developer Perspective

• 7. Traditional Indemnity Clauses

D t b d th l a. Do not abandon these clauses

• b. Case law could change

8 L i l ti S l ti

• 8. Legislative Solution

a. Owners need to wake up b There is a good case to be made that ADA should not b. There is a good case to be made that ADA should not prevent proper allocation of responsibility

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The Owner/Developer Perspective The Owner/Developer Perspective

CONCLUSION

*All l d “ l t it li bilit ” t *All players need “equal opportunity liability” to maximize incentives for compliance all around *Recognize that without a US Supreme Court decision, any state supreme court or other federal circuit court f l ld d id th tt diff tl

• f appeals could decide the matter differently

*Employ solutions above to protect owner/developer

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Employ solutions above to protect owner/developer interests