Law with good intention becomes frivoulous and scamming lawsuits

Suits by disabled raise questions on litigation law

A Senate bill was supposed to reduce inappropriate claims under the Americans With Disabilities Act, but some small businesses faced with litigation say reforms are needed.

By Louis Sahagun, Los Angeles Times, September 18^th, 2010

It didn't take long to figure out why a man in a wheelchair had been snapping photographs of the aisles, counters, shelves and bathrooms inside eateries and watering holes in a fashionable eastern Long Beach enclave.

On June 30, Powell's Sweet Shoppe; Open Sesame, a Lebanese restaurant; and Panama Joe's Grill & Cantina were served with lawsuits on behalf of Eric Moran alleging that they were in violation of the Americans With Disabilities Act. The violations, each of which could cost a minimum $4,000 in damages, ranged from lacking a restroom grab bar to a restaurant chair out in an aisle.

About a week later, each received an identical letter from Moran's Los Angeles attorneys, Miguel Custodio Jr. and Vineet Dubey, seeking an out-of-court settlement of $9,000. "We have photographic evidence of these violations," the letter said. "We will prevail if this case goes to trial."

Moran has filed at least 27 such lawsuits since June. Hundreds more have been filed by a relatively small number of attorneys throughout California.

Custodio and Dubey declined to discuss individual cases. As for critics, Dubey said, "They can call it fraud or extortion. They can whine and cry. But I'm going to win these cases."

"This is a civil rights issue; we're trying to make the world better for the handicapped," Dubey added. "When you hit a business in the pocketbook, they change their ways."

Critics say the rash of litigation underlines the ineffectiveness of Senate Bill 1608, a 2-year-old state law that was designed to reduce certain inappropriate claims under the disabilities act, while promoting increased compliance with laws providing equal public access in places of business.

"We keep hearing from restaurants and businesses that the litigation problem is still happening regularly, yet the goal of SB 1608 was to eliminate exploitation," Assemblywoman Bonnie Lowenthal (D-Long Beach) said. "If that hasn't happened yet, we need to address the problem with a new law in January."

With that goal in mind, she said, "I plan to bring everyone — business owners, organizations for people with disabilities, Chamber of Commerce officials and attorneys — to the table."

"Clearly, the system is not working," said David Warren Peters, chief executive officer and general counsel of a private law firm in San Diego called Lawyers Against Lawsuit Abuse and an expert on disability laws for a number of statewide associations. "With SB 1608, I believe we were able to stop catastrophic claims," he said. "But more reforms are immediately necessary."

Margaret Johnson, chairwoman of a Commission on Disability Access, created by SB 1608 to determine whether the law was meeting its goals, said, "It is too soon to be talking about replacing it with something new."

"The commission has only just begun listening to issues involving business owners and disabled people," said Johnson, who is disabled and uses a wheelchair. "In 2013, we will make recommendations for new legislation, if needed."

"But I can tell you," she added, "that a grab bar placed a half-inch out of compliance with ADA standards may not seem like a lot to a business owner. But for a disabled person trying to get from a wheelchair onto a toilet seat, it could mean the difference between getting on that seat or on the floor."

SB 1608 allows a business accused of disabilities act violations to obtain a 90-day stay of trial and a pretrial conference with the court to try to resolve the dispute, provided the property had been inspected by a state-certified accessibility specialist before it was served with a lawsuit. It also requires that lawsuits be accompanied by a detailed explanation of the defendant's rights.

The trouble is that many business owners have never heard of SB 1608. In any case, "there are still not enough state certified accessibility specialists available to handle the workload," according to Rex Hime, president and chief executive officer of the California Business Properties Assn.

In the meantime, the owners of Panama Joe's, on the advice of their insurance company, have decided to settle with Moran for $6,500. "It's a license to steal; but it would cost a heck of a lot more to battle this case in court," co-owner Greg Newman said. "The deductible is $5,000. The insurance company will pay $1,500."

Open Sesame, Powell's Sweet Shoppe and several other small businesses in Long Beach, San Pedro and Pasadena plan to take their disputes with Moran to court.

"This lawsuit doesn't make sense," said Judith Smith, co-owner of Powell's Sweet Shoppe, which opened for business on Second Street about two years ago. "In this economy, why would we want to limit access to anyone with cash in their pockets?"

"We have an employee bathroom that is in full compliance with disability access laws, and we carefully designed the place for access by baby strollers and wheelchairs," she added. "We also have a blue handicapped sign at the entrance, which sends this message: If you need assistance, we're here to help."

Store surveillance cameras videotaped Moran as he explored the premises on his wheelchair, methodically photographing aisles and displays from a variety of angles while eating candy his girlfriend had bought at the store.

According to his lawsuit, Moran "suffered physical discomfort, emotional distress, Amental distress, mental suffering, mental anguish, which includes, but is not limited to, shame, humiliation, embarrassment, anger, disappointment and worry, expectedly and naturally associated with a person with physical disabilities being denied access…."

The complaint was not accompanied by an explanation of the defendant's rights, as required by SB 1608.

Long Beach attorney Roland R. Salameh, who is representing Powell's Sweet Shoppe, said: "What these guys are doing smells like predatory ambulance chasing, and that is unethical and not allowed by the bar."

"They get some photographs, and then file multiple identical lawsuits within a matter of days," Salameh said. "Clearly, reform of existing laws is essential, because some attorneys and disabled clients are simply using them as tools to make money."

louis.sahagun@latimes.com

Copyright © 2010, Los Angeles Times

A real True Crook in city hall!

Rizzo obscured true salary

Ex-Bell official said his pay was lower than it was. Some experts say his actions could invalidate his contracts and require that he repay money he earned.

By Jeff Gottlieb and Ruben Vives, Los Angeles Times

September 15, 2010

Former Bell City Manager Robert Rizzo went to considerable lengths to keep his huge salary secret, including actions that could invalidate his contracts and potentially require him to repay money he received, some experts believe.

According to records and interviews, the city of Bell and Rizzo himself represented his salary as being significantly lower than it was. When one councilman asked Rizzo about his salary last year, the city manager gave him a sum that was less than half the approximately $700,000 Rizzo was actually earning at the time.

The steps Rizzo took that obscured his true pay began in September 2008. At that point, he was already earning about $632,700 a year, making him one of the highest-paid city managers in the nation. That month, Rizzo signed five new contracts that kept his salary the same but changed the way he was paid. Rather than getting his entire salary from his primary job as city manager, he would now be paid in chunks from a variety of city agencies.

The contracts were signed by Oscar Hernandez, who in the documents was identified as Bell's mayor, a position that rotates among council members. At the time, Hernandez was a councilman but not the mayor. The contracts were never approved by the City Council and never placed on the council agenda.

City officials are reviewing the contracts, looking at whether Rizzo attached a previous signature from Hernandez to them or persuaded him to sign the documents even though he was not mayor. Hernandez and the man who was mayor at the time, George Mirabal, both declined to comment.

"With many practices in Bell there appears to be a disregard for process and procedure under Mr. Rizzo's tenure," said interim City Atty. Jamie Casso, adding that officials are trying to determine whether the contracts could be invalidated.

Rizzo and other top city officials stepped down this summer after their high salaries were reported by The Times. City Council members, who received some of the highest salaries in the state, slashed their pay. The state Legislature approved bills aimed at making it easier for the public to see the salaries of city leaders.

On at least two occasions, Rizzo or other city officials provided inaccurate information about his salary. The month Rizzo received the new contracts, Roger Ramirez, a Bell resident, filed a request under the California Public Records Act asking for the salaries of Rizzo, the mayor and the other council members. Ramirez received a memo from the city saying Rizzo received $15,478 a month — or $185,736 a year.

The document also says the mayor and other council members were paid $673 a month — about $8,000 a year. Council members actually made about $92,000 annually. Like Rizzo, the council members drew their salaries from multiple city boards and commissions.

The document Ramirez received says it was prepared by Bell's finance department. But Casso said the memo appears not to have come from that department. Acting City Administrative Officer Pedro Carrillo raised the possibility that Rizzo wrote the document himself.

James Spertus, Rizzo's attorney, has strongly denied that his client did anything wrong. Asked about the 2008 changes from one contract to five, the attorney said that they were orchestrated by then-City Atty. Edward Lee and that Rizzo went along with the changes because his overall compensation was unchanged.

Lee denied that account in an interview with The Times, saying he never saw the contracts. Lee did not sign the documents, as he had with most of Rizzo's previous contracts.

The issue of exactly how much Rizzo made came up again in 2008, when Luis Artiga was appointed to the council. Artiga said that soon after he took office, community activist Nestor Valencia began asking how much the city manager made.

"I asked Rizzo, 'Nestor says you make over $250,000.' He says, 'No. I make $350,000.' " Artiga said.

Rizzo then gave him a document that showed he was paid $185,736, Artiga said, acknowledging that he didn't ask about the discrepancy at the time. The document turned out to be the same memo Ramirez had received.

"Obviously, [Rizzo] lied to me," Artiga said.

The councilman said he learned of Rizzo's full salary only on July 9, a few hours before Rizzo was scheduled to meet with two Times reporters to discuss his compensation. Rizzo called the councilman and Hernandez into his office and told them he actually made $700,000, Artiga said. (In fact, Rizzo's salary was close to $800,000.)

A few months earlier, Bell resident William Fick had asked for taxable-income information about city officials but was told in a letter from an assistant city attorney that the information was not public, Fick said.

He then asked for a list of all city employees and contractors who made more than $100,000 a year. The city said it had the information on an electronic database and would charge Fick $475 to retrieve the information.

Fick, who is retired, said he couldn't afford that fee and never got the data.

Some experts said Rizzo's contracts raised several red flags.

Patrick Whitnell, general counsel for the League of California Cities, said "there is a very good likelihood a court will look to invalidate" them, he said. "If you have someone executing the agreement on behalf of the city who wasn't legally authorized to do that, there's a very valid question as to whether that's an enforceable agreement."

He also said a judge could order Rizzo to repay the money he received, if the contracts were not executed properly, ruling them an improper payment of public funds.

California pension officials are already investigating whether pay Rizzo received for jobs other than city manager should count toward his pension. Rizzo is set to receive about $600,000 a year, which would make him the highest paid employee in the California Public Employees' Retirement System fund.

jeff.gottlieb@latimes.com
ruben.vives@latimes.com             

Copyright © 2010, Los Angeles Times

Jerry Brown wants Bell officials to resign, give up pensions; says they defrauded public

September 15, 2010 

California Atty. Gen. Jerry Brown, as part of a sweeping civil lawsuit filed Wednesday against Bell city leaders, is asking a court to order city officials to vacate their positions and nullify contracts that inflated pay for other top administrators.

“What is clear is that the City Council and city administrator and other officials abused their public trust. They engaged in a collaboration that [amounted] to a civil conspiracy to defraud the public,” Brown said at a news conference Wednesday morning in announcing the lawsuit.

The attorney general is also launching a probe into salaries and other issues in the neighboring city of Vernon and also looking at excessive salaries statewide.

“This is a matter that cries out for justice," Brown said.

Brown's requests are laid out in a lawsuit filed Wednesday morning in Los Angeles County Superior Court. The lawsuit, which alleges fraud and misuse of public funds, names eight top Bell officials, including former City Manager Robert Rizzo, former Assistant City Manager Angela Spaccia, former Police Chief Randy Adams and several current and former city council members.

The lawsuit also asks for an order requiring defendants to make restitution to the city for excessive compensation they approved or accepted as well as for excessive contributions made to their California Public Employees' Retirement System pension fund and supplemental retirement fund.

The lawsuit also seeks a judgment that would disqualify the high salaries from being used to determine pension payments.

In retirement, Rizzo would become the state's highest-paid pensioner, earning at least $600,000 annually.  Adams would be the third-highest, receiving an estimated $411,000. CalPERS officials have said they are looking into the pensions and that the highly paid administrators would not be able to draw their pensions until it is determined whether city officials broke any laws.

Brown is also seeking to bar the council members, as well as the former top administrators, from ever holding public office.

In response, Rizzo's attorney, Jim Spertus, noted that Brown is running for governor. "At this particular point in the election cycle, it doesn't surprise me that charges have been filed," Spertus said.

"I have not reviewed the charges but I will do so."

Brown launched the investigation after The Times reported that Rizzo was earning nearly $800,000 and council members were being paid nearly $100,000 a year for council and agency meetings, some of which met for only one minute.

Both the attorney general and the Los Angeles County district attorney's office have opened wide-ranging investigations into allegations of voter fraud, conflict of interest and excessive salaries in the Southeast L.A. County city. Earlier this month, the U.S. Justice Department also said it had launched an investigation into civil-rights violations focusing in part on allegations that the city improperly used towing fees and other municipal fines to generate revenues.

Bell has about 40,000 residents. It is one of the poorest cities in the county, with a population that is about 90% Latino and 53% foreign-born. Its per-capita income is about half that of the U.S. average.

In addition to Rizzo's $787,637 salary, he received additional benefits that boosted his total annual compensation to more than $1.5 million. Other top administrators were also well-compensated. Bell paid  Adams $457,000 a year, about 50% more than Los Angeles Police Chief Charlie Beck or Los Angeles County Sheriff Lee Baca, and more than double New York City's police commissioner. Spaccia made $376,288 annually, more than most city managers. All three resigned amid public uproar.

Brown's lawsuit was filed against Rizzo, Spaccia, Adams, Mayor Oscar Hernandez, council members Teresa Jacobo and George Mirabel and former council members Victor Bello and George Cole.

-- Jeff Gottlieb and Ruben Vives

The recession Beat Goes On

Once-trendy Melrose Avenue shopping area losing its cachet

A third of the stores are vacant along one stretch, despite drastic rent reductions. Remaining merchants are complaining of weak sales and are slashing prices to move inventory.

By Andrea Chang, Los Angeles Times

September 11, 2010

Among the funky boutiques, tattoo parlors and foodie restaurants that line eclectic Melrose Avenue, there's a new sight that has longtime store owners and shoppers alarmed: a glut of empty storefronts and for-lease signs.

The situation has gotten so bleak in recent months that along one stretch of Melrose, between Fuller and Martel avenues, one-third of the stores are vacant. And that's despite drastic rent reductions from landlords: A few years ago, retail space went for $5 to $6 a square foot, commercial real estate agents said, but prices lately have fallen to $2 to $3 a square foot — rates not seen in more than a decade.

Since the recession began, shoppers have lamented the closure of some of their favorite businesses, such as longtime vintage haunt Aaardvarks and Italian restaurants Louise's Trattoria and All' Angelo. Remaining merchants have complained about light foot traffic and weak sales, prompting them to slash prices to move inventory.

That's a far cry from two summers ago, when Bill Ortiz owned two women's clothing boutiques in the heart of the bustling shopping district. Sales at the Twisted shops were robust, and Ortiz was just weeks away from signing a lease at the Westside Pavilion and thinking about buying a bigger house for his growing family.

But those plans never materialized after the financial markets plummeted in the fall of 2008. With the economy in a tailspin, shoppers dramatically cut their spending at Ortiz's stores, where bright summer dresses, funky T-shirts and dark-washed denim languished on store shelves.

"Within a couple months, I was losing sleep," he said. "Things changed so fast. I've been in retail since I was 16 and I've never seen anything turn so quickly."

Faced with an uncertain future, Ortiz backed out of the shopping center lease and scrapped plans to buy a new house. One of his stores began losing money, forcing him to close it in December. Business is still way down at the remaining location, a 2,000-square-foot shop that saw sales plunge 30% year-over-year in July.

At the height of its popularity in the 1990s, Melrose was a destination shopping neighborhood and people-watching haven that attracted locals and tourists from around the world.

The area between La Brea and Fairfax avenues had cultivated a unique image as an offbeat street where well-designed, high-quality items could be bought for a decent price — a place "filled exclusively with trend-setting shops, not trend followers," said Philip Klaparda, a commercial real estate broker who leases properties along Melrose.

A tight budget kept Laura Marion, a painter and aspiring singer, away from Melrose for the last two years, but the 22-year-old recently ventured to the area with a friend for an afternoon shopping trip. After browsing in a handful of stores over two hours, the pair still hadn't bought anything.

"The stuff we liked was overpriced, and the stuff we didn't like looked cheap," Marion said. "For me, I only have enough money to buy a shirt. I don't have much disposable income, even for gas."

Although store owners blame the recession for their woes, others contend that Melrose's problems go deeper than the economy. They say the shopping district has fallen from its glory days because of an increasingly run-down feel, restrictive parking measures and an excess of shops all selling the same poorly made apparel from downtown L.A.'s Fashion District.

That has sent savvy shoppers elsewhere to seek out cool, alternative fashions and, Klaparda said, is "driving away several tenants that used to consider Melrose the only place to locate in L.A." to nearby areas such as Fairfax Avenue.

He's advising Melrose landlords to make better decisions about which tenants to bring in, hoping to diversify the shopping choices along the street and protect its "authentic" independent feel.

"There are still plenty of retailers on Melrose that do offer higher-caliber clothing from up-and-coming designers that are distinctive and unique," Klaparda said. "But the emergence of these other retailers who are grabbing things from downtown to target the tourist market has hurt the overall integrity of the street."

The shops along Melrose also appear to be lagging behind mainstream chain stores, which have generally been reporting positive sales figures this year after suffering huge declines last year.

Retail experts said today's budget-conscious, time-strapped shoppers may be more inclined to hit familiar big-box retailers and shopping malls instead of heading to Melrose, where the shopping experience can take longer and be more hit-or-miss.

The prolonged troubles on Melrose have led a group of business owners to form the Melrose Avenue Merchant Alliance, a group that "works to ensure that the Melrose business corridor remains a vibrant destination that — true to its roots — marches to its own unique beat," according to pamphlets that the group is passing around to store owners.

"It took us to hit bottom for us to get together and do it," said alliance member Mat Joseph, owner of Freak Chic, a tattoo and piercing shop on Melrose. Hoping to spur a revival, Joseph said, the group is working to get more regular sidewalk cleaning and better security patrols, and is thinking about organizing community events such as a monthly art walk.

The stores themselves are working to woo shoppers back too, including changing their merchandise lineups and pricing strategies.

At Melrose boutique Timeless, which was devoid of shoppers on a recent afternoon, salesclerk Cat Yeun said that since the recession the store has focused on stocking merchandise that is "more different and eclectic."

"When we first opened we had a lot of high-end stuff, but we've weeded some of that out," she said.

A few doors down, at boutique My Signature, employees are increasingly caving in to shoppers' haggling tactics, store manager Sherry Kashani said.

"I'm not going to lie, it is a little annoying," she said. "But I think in the end they know we're going to budge because desperate times call for desperate measures."

For Ortiz, keeping his remaining store afloat has required drastic changes, including cutting store hours and laying off most of the 15 workers he used to employ. He's down to just four employees and is increasingly taking on "menial tasks" at the store, answering phones, pricing merchandise and ringing up purchases.

"I'm 50 years old. I haven't made the kind of money I'm making now since I graduated from college," he said. "What I take home has gone down about 60% to 70% in two years."

If business gets better, Ortiz hopes to bring back some of the small customer-friendly touches that he's had to do away with, such as wrapping purchases in tissue paper and printing the name of his store on its shopping bags.

"Three years ago or four years ago, if another store that was selling similar products went out of business, I'd be like, 'Yes!' " he said. "Now I don't care if they sell similar products — I just want businesses to open up."

andrea.chang@latimes.com

Copyright © 2010, Los Angeles Times