The Supreme Court Lets a Phony Lawsuit Slink Away

R arely has a single litigant done so much to bring an issue to the attention of the Supreme Court as Deborah Laufer did to raise the issue of when and whether a “tester” has standing to file lawsuits under the Americans with Disabilities Act — and today, in Acheson Hotels, LLC v. Laufer, (its first opinion of this term), the Court let Laufer slink away from the circuit split she created. The result was a whole lot of wasted effort and lingering uncertainty for the hotel industry and lower federal courts alike. Only Justice Clarence Thomas argued that the Court, having heard full briefing and argument on the standing issue, should settle it now instead of waiting for the inevitable sequel to do the whole thing over again from scratch.

Standing, Testers, and ‘Fake Cases’

The point of standing doctrine is to limit federal courts to hearing real, live disputes, rather than fake grievances or generalized arguments against some law or government action. Standing rules aren’t laid out in the Constitution, but they derive from three main sources: (1) the common law’s traditional rules limiting lawsuits to those seeking redress of actual injuries, which reflect the Anglo-American legal tradition’s ideas about what is and isn’t a judicial function; (2) the use in Article III of the terms “Cases” and “Controversies” to describe the kinds of disputes that may be heard by federal courts, which was understood at the time of the Framers to reflect courts that would hear only live disputes between particular parties; and (3) at the margins, the inherent powers of courts to manage their dockets and of the Supreme Court to supervise lower courts and provide uniformity.

The resulting body of standing law is notorious for its inconsistencies, and for the unavoidable degree to which courts end up making some discretionary decisions in close cases. But standing law serves three very real purposes: (1) to limit litigation that wastes social and judicial resources; (2) to preserve the separation of powers by having the courts decide only those questions that affect individual parties; and (3) to ensure that legal issues are decided only after a vigorous adversarial presentation, which will not always happen if the parties don’t have a concrete stake in the case.

In fact, if you let a party without proper standing settle a case, that can harm the people with real claims. For example, a clash over who gets to settle a case was at the heart of Monday’s argument over a $6 billion bankruptcy plan that would release all further claims against Purdue Pharma and the Sackler family. Purdue’s creditors want the $6 billion from the Sacklers, which is conditioned on releasing them from future lawsuits; other people who want to keep suing the Sacklers don’t think the creditors in the bankruptcy should have the right to sell out their interests.

In discrimination law, testers are typically people who apply for something — a job, an apartment — just to see if they get discriminated against, so they can file suit. These are artificial grievances; there is no real injury because the testers don’t actually intend to take the job or rent the apartment. But testers can also often be the most effective way of ferreting out some kinds of discrimination, such as a company treating similar black and white applicants differently. The Court has, since 1982, blessed the use of testers to file Fair Housing Act suits.

The Serial Litigant

Any law that allows businesses to be sued by professional plaintiffs is bound to be abused. That is particularly true of lawsuits targeting small businesses without big legal budgets or sophisticated in-house legal departments. The ADA is not the only such law; perhaps the most infamous is the Telephone Consumer Protection Act. Laufer, who is wheelchair-bound, has filed over 600 ADA lawsuits against hotels in the past five years for failing to give adequate information about their disability access. Nobody travels that much, least of all a woman in a wheelchair who spends a huge amount of her time surfing hotel websites in order to find targets to sue. And yet, there have been so many appeals in these cases that, as Justice Amy Coney Barrett’s opinion for the Court noted, “Laufer has singlehandedly generated a circuit split. The Second, Fifth, and Tenth Circuits have held that she lacks standing; the First, Fourth, and Eleventh Circuits have held that she has it.”

The legal theory underlying these suits is not the ADA itself, but a Justice Department regulation adopted under its auspices called the “Reservation Rule,” which requires hotels to “identify and describe accessible features . . . in enough detail to reasonably permit individuals with disabilities to assess independently whether a given hotel or guest room meets his or her accessibility needs.” Once Laufer has found a website that doesn’t comply with the Reservation Rule, her lawyers file “boilerplate” complaints with identical language, then immediately offer to settle the case in exchange for an agreement to comply with the rule — plus a standard $10,000 in attorneys’ fees. In the case that reached the Court, involving a bed and breakfast in Maine, that boilerplate language included Laufer herself alleging that she intended to visit the place as part of a cross-country trip from Florida to Maine to Colorado — a claim that she retracted in the course of the lawsuit.

Filing a false allegation to kick off a case that reached the Supreme Court is not the last of Laufer’s problems, as the Court noted:

After we granted review, the case took an unusual turn. In July, the United States District Court for the District of Maryland suspended Laufer’s lawyer, Tristan Gillespie, from the practice of law for defrauding hotels by lying in fee petitions and during settlement negotiations. . . . It based the suspension on a report finding that Gillespie demanded $10,000 in attorney’s fees per case even though he used “boilerplate complaints.”. . . In addition, Gillespie funneled six-figure sums to the father of Laufer’s grandchild for investigatory work that he never performed, raising the prospect that either Gillespie or Laufer (or both) got a cut of the money. . . . Making matters still worse, the sanctions order against Gillespie also implicated Laufer’s former counsel of record before this Court, Thomas Bacon. [Citations omitted]

Laufer asked the Court to dismiss her case, arguing that the dispute was now moot because she was no longer pursuing the lawsuit. To sweeten the deal and perhaps forestall or ameliorate further investigations, she dismissed all of her other pending cases and pledged not to file any more ADA suits. The Court insisted that the parties should finish briefing the case and argue it, so that the Court could at least get a full hearing on whether to dismiss the case as moot. (One senses here the extent to which the justices have been stung by criticism of dispositions without argument as a “shadow docket.”) But after all of that, the Court unanimously dismissed the case, with all justices other than Thomas deciding that Laufer abandoning the case was genuinely moot and not a strategic effort to avoid a bad ruling. Barrett’s opinion warned, however, that the Court was exercising its discretion in resolving the case on the basis of mootness rather than standing, and “we emphasize, however, that we might exercise our discretion differently in a future case.” Presumably, the justices calculated that Laufer will be bound to her pledge to sue no more by the fact that it is now incorporated in an opinion of the nation’s highest court and by the degree of legal hot water in which her lawyers are immersed.

Still Standing

Justice Thomas argued that it was irresponsible and a waste of resources for the Court to duck the standing question, after having already been given a full adversarial presentation of the issues, at considerable expense to the hotel company, on a question with an open circuit split still being pursued by other testers. As he noted, because standing and mootness are both jurisdictional questions of the Court’s power to hear a case, all the justices agreed that the Court could resolve the standing issue even if it thought the case was moot — and the arguments for dismissing an appeal in a moot case were weaker with an issue that was already fully briefed and was all but certain to end up back on the Court’s doorstep soon. He was also skeptical of Laufer’s sincerity, arguing that the sanctions had been imposed on a lawyer who was not even involved in the case: “We have needlessly invited litigants to follow Laufer’s path to manipulate our docket.”

Thomas also argued that testers have no standing to sue under the Reservation Rule. He did not challenge the standing of some testers to sue under other statutes. Instead, he argued that the Court’s decision in Havens Realty Corp. v. Coleman (1982), which found that testers had standing under the Fair Housing Act, was different because the FHA itself

explicitly prohibits “represent[ing] to any person because of race . . . that any dwelling is not available for inspection, sale, or rental when such dwelling is in fact so available.”. . . Accordingly, when Havens Realty told a black tester that no apartments were available but told a white tester that it had vacancies . . . the statute created a legal right to truthful information about available housing. . . . The black tester had been personally denied that truthful information, so she had standing to bring her claim. [Alterations omitted]

In concluding that the ADA doesn’t create any such right to information, Thomas cast some doubt on the Reservation Rule’s basis in the statute, or at least on the ability of plaintiffs to file lawsuits solely for violations of the rule. But he did not quite go there, for two reasons. First, depending upon how a statute is written, federal agencies are sometimes authorized to issue valid rules that go beyond the statute if they are designed to enforce compliance. Second, Thomas noted that Laufer’s lack of intent to visit the hotel meant that she had suffered no injury under the ADA, because the actual right created under the ADA is not a right to information but a right to accessible accommodations.

Leaving It Standing

If Justice Thomas was concerned that Laufer was unduly rewarded by the Court dismissing her case, Justice Ketanji Brown Jackson was concerned that she wasn’t rewarded enough. Jackson’s opinion, while it also concurred in dismissing the case as moot, protested that the Court had done so by ordering that Laufer’s victory in the First Circuit be vacated — an outcome that results in the First Circuit’s decision no longer being precedent. The Court’s routine practice of vacating lower-court decisions when the case becomes moot dates back to its decision in United States v. Munsingwear, Inc., (1950), and Jackson has previously argued alone against this practice. The other eight justices expressly declined to revisit the question.

In addition to questioning the Court’s power to vacate a lower-court ruling when it no longer has a live dispute of its own in front of it, Jackson argues that the lower-court decision wasn’t moot, and that its work should not be just discarded:

Automatic vacatur is flatly inconsistent with our common-law tradition of case-by-case adjudication, which assumes that judicial decisions are valuable and should not be cast aside lightly. . . . Our legal system rests not only on the holdings of this Court, but also on the reasoned decisions of duly authorized lower court judges. Jurists presiding over cases at every level have a duty to say what the law is. . . . That mootness can sometimes leave parties unable to appeal does not bear on the continued validity of those lower court opinions in any respect.

We do not consider a court’s judgment to be any less binding on the parties simply because there is not an appeal; appeal or not, lower court rulings are still law. And it is not as if a decision rendered by a lower court is less than final, or is not perfected, unless and until it receives the imprimatur of this Court. . . . I am aware that a party who is deprived of the opportunity to appeal due to mootness (like Acheson) might feel that loss acutely. It might even experience the thwarting of its chance to obtain a reversal on appeal as a grave injustice, on par with any other fairness-based justification for vacatur of the lower court’s ruling. . . . I disagree. There is nothing inherently inequitable about not being able to pursue an appeal.

She has a point, but it is hard to see a less sympathetic case for this than a serial abusive litigant abandoning a case after having obtained a ruling encouraging more suits by other serial abusive litigants against the same defendant. Jackson acknowledges that, if the Court were to abandon its Munsingwear practice and make vacatur decisions on a case-by-case basis, “any perception that mootness has been procured tactically, based on its timing . . . or otherwise, would be relevant to determining whether the equitable vacatur remedy is warranted.” Laufer’s case may be, as the Court noted, motivated by problems larger than just fear of an adverse ruling, but her dismissal very plainly arose from her repeated abuses of the legal system. The least the Court could do is erase from the books the precedent that she obtained by that abuse and then thwarted from being reviewed on appeal.