I review almost all reported ADA decisions concerning website accessibility claims and so I often see orders adopting a consent decree to resolve a putative class action lawsuit. These decrees generally look very much like a private settlement agreement except that they do not say how much the plaintiff’s lawyer was paid and they contain provisions intended make the consent decree useful in defending later lawsuits. Settling once and avoiding future lawsuits is an attractive idea, of course, but after reviewing the very scant case law I don’t think it is clear a defendant saves money in the long run with a consent decree settlement. I have written about the effectiveness of these decrees before, most recently in a Quick Hits blog that refers back to earlier posts. A recent decision from Judge Limon in the Southern District of New York offers a convenient reason to revisit the issue because it so thoroughly discusses the matter. Cruz v. JKS Ventures, Inc., No. 23-CV-8311 (LJL), 2024 WL 3209398, at *8 (S.D.N.Y. June 25, 2024).
While Judge Limon’s decision prompted this blog, the discussion must start with Judge Carter’s decision in Hanyzkiewicz v. Allegiance Retail Services, LLC, No. 22-CV-4051 (ALC), 2023 WL 2758355, at *1 (S.D.N.Y. Apr. 3, 2023). In Hanyzkiewicz the plaintiff filed a typical ADA website lawsuit against a defendant who had been sued a few years earlier by a different plaintiff. That earlier case, Slade v. Allegiance Retail Services, LLC, was also in Judge Carter’s court and had been settled with a consent decree he approved. Slade v. Allegiance Retail Services, LLC, No. 20-CV-08358 (ALC), 2021 WL 1222692, at *1 (S.D.N.Y. Apr. 1, 2021). That decree provided that it could be enforced by non-parties who were members of the putative class although no class was ever approved. The defendant in both cases naturally raised the earlier consent decree as a defense to the later lawsuit; that was its purpose after all.
The defendant’s first defense was that the consent decree in Slade mooted the later lawsuit by providing the same relief Hanyzkiewicz was seeking. Judge Carter did not agree for the very good reason that Hanyzkiewica alleged that accessibility barriers remained in the website. The allegation that it had not been fixed meant that her claims had not been mooted, at least for the purpose of the defendant’s Rule 12(b) motion to dismiss.
Nonetheless, Judge Carter arrived at the desired conclusion by determining that the new lawsuit might frustrate the earlier consent decree because as a putative class action it included individuals who were not members of the original putative class and it requested relief not provided for in the consent decree. Judge Carter noted that if Hanykiewicz was not content with the remediation of the website she could always sue to enforce the decree because it expressly made persons like her its beneficiaries. Because she had a remedy and her lawsuit might interfere with the consent decree Judge Carter enjoined her from pursuing the case and dismissed it. She was given 14 days to amend the lawsuit to turn it into one that merely enforced the Slade consent decree.
The parties in Cruz v JKS Ventures, Inc. were trying to accomplish exactly what Allegiance Retail Services had accomplished; obtain a court approved consent decree that would forestall later lawsuits by other plaintiffs. Judge Limon was not, however, willing to rubber stamp their agreed consent decree. In his first opinion, entered on February 26, 2024, he observed that using a consent decree to effect a private settlement was “atypical” and that it seemed to have been agreed to in unusual haste just before the Christmas holiday. Looking at the four prong test for approving consent decrees created by the Second Circuit Court of Appeals¹ he said the circumstances raised a suspicion of collusion and. that a hearing was required to determine whether the decree was “fair and reasonable” and in the public interest.
That hearing took place in March. When it was over Judge Limon expressed concern as to:
The Court’s first concern was that the consent degree might not meet the legality requirement if it was intended to both require that third parties follow the procedures for complaints about compliance imposed on the plaintiff and limited them to the relief granted in the consent decree. After concluding the consent decree did not include such limitations on third party claims it concluded the decree met the legality test. It even noted that by effectively requiring that all third party claims be brought in one court it would have the “salutary effect of centralizing in one court in one District all efforts to reform the Website.”
The Court concluded without difficulty that the consent decree met the clarity test and resolved the claims in the complaint and then turned to the question of improper collusion. The haste in which the consent decree was originally proposed suggested that it was no more than a payoff to the plaintiff to obtain a bulwark against subsequent litigation, but after three months, a hearing and a revised consent decree meeting the Court’s standards the Court was willing to conclude there was no improper collusion and enter the consent decree as an order of the Court.
Despite the final ruling in JKS Ventures and the injunction against litigation in Allegiance Retail Services it is not at all clear that settling a case with a consent decree will be effective as a means to reduce the cost of future litigation. Individual settlements in the Southern District of New York are confidential, but it appears that the cost of a private settlement is no more than $15,000 in most cases. Depending on the plaintiffs’ firm it can be less, especially in other districts. A defendant’s very first settlement, whether private or by consent decree, will require remediation. With the cost of remediation having already been incurred the only cost of a future lawsuit is the settlement cost plus attorneys’ fees to the defendant’s attorneys. The question is whether incurring the additional cost associated with a consent decree, especially if the judge is quite particular, will result in a benefit in terms of money saved later on.
The first reason the additional cost might not make sense is that having a consent decree is of no benefit at all unless there is a later lawsuit. Many companies have been hit with multiple ADA website lawsuits, but this doesn’t seem to be common. With perhaps a million business websites in the U.S. and less than 10,000 new lawsuits a year the odds of getting sued again are low no matter how a defendant chooses to settle and ADA website lawsuit.
A second consideration is whether the new plaintiff will choose to sue in the court that issued the consent decree. While the purpose of the consent decree is to bring all future claimants into one proceeding it cannot bind non-parties. A defendant with a consent decree from the Southern District of New York can easily be sued in the Northern District of California and there is no guarantee a judge in the Northern District of California will decide to transfer the case to New York or give any weight at all to the consent decree. Even if the defendant prevails and persuades the new court to move the case to the court that issued the consent decree the defendant will have incurred thousands of dollars in attorneys fees just to get the case moved.
If the case is moved to the court that issued the consent decree it is far from certain that the new court will do as Judge Carter did and enjoin the new lawsuit while remediation proceeds under the consent decree. One of Judge Limon’s concerns was that a new plaintiff might have new complaints not addressed by the consent decree. A new plaintiff would at least have the chance to argue that their claim was not met by the consent decree and that while they would have to litigation in the court that issued the consent decree they would still be allowed to litigate. An of course moving for an injunction against the new plaintiff is going to cost thousands of dollars in attorneys fees even if the motion succeeds.
If the case winds up in the original court and if the judge is willing to enjoin the new lawsuit the plaintiff still retains the option to pursue their claims concerning the extent of remediation in the original court. Settling that claim is going to cost money, of course, and fighting it will cost even more.
Finally, of course, we have exactly one federal judge (out of 677 nationwide) who has issued an injunction against a new lawsuit based on a consent decree in a website accessibility cases. The decisions of individual federal district judges are not binding on other judges; in fact, the same judge is not required to rule the same way in a future case. There is no assurance that a consent decree settlement will yield any positive results in a future lawsuit.
My conclusion is that even with a consent decree in place, shutting down a future lawsuit using the consent decree may be more expensive than just paying off the plaintiff and agreeing to the same remediation that has already been agreed to. This is especially true since it appears that most plaintiffs ask for a much higher settlement amount if the case is to be settled by consent decree instead of private settlement. Lawyers helping their clients choose between a consent decree settlement and a private settlement will have to carefully consider (1) how much more the plaintiff wants for a consent decree settlement, (2) whether the judge assigned to their case will scrutinize it as Judge Limon did, thus adding to the cost, (3) whether the judge assigned to their case is likely to be willing to enforce the decree in the future as Judge Carter did, and if so how much will that enforcement cost, and (4) whether their client is likely to be sued again, and if that happens whether it will be in the same court or even the same state as the court that issued the consent decree?
A consent decree settlement is not a magic bullet and may be nothing more than a way to spend money enforcing the decree rather than settling new lawsuits. The questions above cannot be answered in the abstract, so I can’t say what would be the right decision in any given case, but I can say that thinking about these questions is critical to making a good decision about a consent decree settlement instead of a purely private settlement.²
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¹. “The Second Circuit held that, at a minimum, the court must “assess (1) the basic legality of the decree; (2) whether the terms of the decree, including its enforcement mechanism, are clear; (3) whether the consent decree reflects a resolution of the actual claims in the complaint; and (4) whether the consent decree is tainted by improper collusion or corruption of some kind.”” U.S.S.E.C. v. Citigroup Global Markets, Inc., 752 F.3d 285 (2d Cir. 2014).
² The other alternative to a private settlement is a class action settlement after approval of the lawsuit as a class action as in Murphy v. Hundreds is Huge, Inc., No. 1:21-CV-00204-RAL, 2022 WL 17075712, at *1 (W.D. Pa. Nov. 17, 2022). A class action settlement binds all the members of the class and should result in the relatively easy dismissal of later lawsuits, but that protection isn’t cheap. The Hundreds is Huge settlement took more than a year to finalize and required that the defendant pay $77,500 in attorneys’ fees to the plaintiffs’ attorneys.