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ADA Litigation Update: One Down, More to Go

Last Friday, a federal judge in Virginia granted a credit union's motion to dismiss in a lawsuit alleging the credit union's website was not compliant with the Americans with Disabilities Act (ADA).  The ruling represents a big initial victory for credit unions facing growing litigation threats over unclear website accessibility requirements under the ADA.

The Shakedown

Credit unions nationwide have faced a tide of lawsuits and demand letters over the past year relative to the ADA.  Currently, the ADA and the Department of Justice's (DOJ) implementing regulations are silent on website accessibility standards, and the DOJ recently removed an earlier initiative from its rulemaking agenda and withdrew two advanced notices of proposed rulemaking on the subject.  See, 82 Fed. Reg. 60932 (Dec. 26, 2017).  Ambiguities in the law have spawned a new cottage industry for opportunistic plaintiffs' attorneys looking to make a quick dollar off the backs of credit unions and other well-intentioned entities.  Generally the shakedown goes something like this:  lawyers send multiple, identical demand letters alleging ADA website violations to credit unions, banks, and other entities throughout a targeted state on behalf of one unnamed, repeat complainant, then settle for several thousand dollars per case. If the case doesn't settle, the lawyers file suit. 

Some credit unions are making the business decision to settle, but others have decided to fight the charges in federal court. 

Carroll v. Northwest Federal Credit Union

In the first of these cases involving a credit union to be decided by the court, the plaintiff generally alleged that he is a visually-impaired individual who visited the credit union's website but was unable to navigate the website due to accessibility barriers and, as a result, was denied the full use and enjoyment of the facilities and services of the credit union.  However, the plaintiff did not allege he was a member of the credit union or even clearly within the credit union's limited field of membership (multiple-common bond).  See, Carroll v. Northwest Federal Credit Union, No. 1:17-cv-01205, slip. op. at 5 (E.D. Va. Jan. 26, 2018).

NAFCU filed a brief as amicus curiae (i.e., "friend of the court") in support of the defendant credit union's motion to dismiss on the grounds that, among other things, a website is not a place of public accommodation under Title III of the ADA and the plaintiff lacked standing to sue because he was not a member of the credit union.  

A Credit Union Win

The court's January 26th decision granted the credit union's motion to dismiss, ruling that the plaintiff did not have standing to sue the credit union because he was not a member or eligible for membership and would not likely use the credit union's services.  The court therefore determined the plaintiff did not sufficiently establish an injury-in-fact:

"Here, the defendant, Northwest Federal Credit Union ("Northwest FCU"), is a credit union chartered by the Federal government which only includes a specific membership field. . . . Plaintiff is not included in this membership field, nor has he alleged any facts in his Complaint to suggest he is [a member] or otherwise eligible to become a member of Northwest FCU.  As a result, Plaintiff is unable to deposit money in, or obtain a loan or other services from Defendant. 

Plaintiff is unable to show that he has suffered an injury in fact or that there is certain impending future harm.  [Plaintiff] cannot make this showing because he has not established that he is entitled, or would ever be entitled, to utilize any services provided by Northwest FCU." Carroll v. Northwest Federal Credit Union, No. 1:17-cv-01205, slip. op. at 5 (E.D. Va. Jan. 26, 2018).

In addition, the court found that a website is not a place of public accommodation subject to Title III ADA protections:

"Plaintiff's claim also fails because the website is not a place of public accommodation.  Title III of the ADA prohibits discrimination in public accommodations based on disability.  The statute provides for a list of entities that are considered public accommodations.  Notably absent from the list is the term "website".  Not only is "website" not found on the list, but the statute does not list anything that is not a brick and mortar "place".  Over the years Congress has extensively amended the ADA; however, at no point did Congress choose to add websites as a public accommodation."  Id. (citations omitted).

The War Rages On

The decision is a huge first win for credit unions in the battle against these unwarranted ADA legal actions.  But the war is not over.  The lower court's decision is not considered binding under common law principles: “A single district court decision . . . has little precedential effect[, and i]t is not binding on . . . other district judges in the same district.” See, U.S. v. Articles of Drug Consisting of 203 Paper Bags, 818 F.2d 569, 572 (7th Cir. 1987).

Other judges in the same district and in various other federal jurisdictions will likely consider similar credit union ADA cases soon. While the decision in Carroll is persuasive authority—especially as it is the first case to rule on whether credit union membership is necessary to establish standing—the decision is not binding precedent on other courts or federal jurisdictions. 

NAFCU has filed three additional amicus briefs to support credit unions in several similar cases, and on January 5th NAFCU stood with one of those credit unions while the judge heard oral arguments on their motion to dismiss.  We will continue to fight for our members against these unfair suits.  Meanwhile, the plaintiff in Carroll has filed an amended complaint.  Because the court dismissed the case "without prejudice," the plaintiff was free to amend his complaint and refile a new suit.  Notably, however, the plaintiff is still not a member of the credit union.  Stay tuned

For more information about ADA website litigation and NAFCU's ongoing efforts to stand up for credit unions on this issue, please visit our dedicated ADA webpage here.

About the Author

Pamela Yu, Special Counsel for Compliance and Research, NAFCU

 Pamela Yu, Special Counsel for Compliance and ResearchPamela Yu was named special counsel for compliance and research in September 2016. In this role, Yu works with NAFCU's compliance and research departments to help credit unions with a variety of compliance and operational issues.

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