Serial ADA litigant pleads guilty to tax evasion; home confinement sentence proposed
SACRAMENTO -- A 60-year-old Carmichael man pleaded guilty Tuesday in federal court in Sacramento to filing a false tax return and admitted that he failed to report more than a million dollars he received from settling litigation he initiated under the Americans with Disabilities Act.
Scott Norris Johnson, a quadriplegic who uses a wheelchair for mobility, is well known in the Bay Area for suing small businesses where he allegedly encounters barriers to accessibility that violate the ADA. In 2021 alone, he filed more than 1,000 cases in U.S. District Court for the Northern District of California.
Under the plea agreement, Johnson admitted that between the years 2012 and 2014, he and a corporation that he owned filed federal tax returns that willfully failed to report all the monies that received from settling his ADA cases.
If the terms of a plea agreement between Johnson and the U.S. Attorney's Office for the Eastern District of California are accepted by the court, Johnson will receive 18 months of home confinement, a year of supervised release, and will make a restitution payment of $250,000.
Johnson is an attorney and holds a bachelor's degree in accounting and a master's degree in taxation. The plea agreement notes that he took eight tax-related courses in law school and graduated at the top of his class. After graduating, he worked for the IRS for more than two years.
Settlement payments under the ADA are required to be included in income for federal income tax purposes unless paid on account of personal physical injury or physical sickness. According to the plea agreement, Johnson knew that the payments he received "were not payments received on account of a personal physical injury or physical sickness."
Johnson holds the distinction of having filed the most ADA lawsuits in California federal courts in the period from 2010 to 2021. According to a Bay City News analysis in April 2022, Johnson filed 4,040 lawsuits in federal courts throughout the state over that period.
Under the ADA, a disabled person who encounters a barrier to access to a store, a restaurant or other place of public accommodation, may sue to enjoin the violation. A successful plaintiff is entitled to recover his or her attorneys' fees and under applicable state law, statutory damages of $4,000 per visit.
Johnson has been a leader in ADA litigation in California and as the plea agreement evidences, has collected substantial revenue from his settlements. According to the agreement, Johnson and his corporation received $1.3 million in lawsuit settlement proceeds in 2013 alone. He only declared $346,000 on his return.
For many years, Johnson filed most of his cases in the Sacramento area. However, after he was indicted in May 2019, he turned his attention to the Bay Area.
In a deposition this August, Johnson testified that since 2020, on average he spends three nights a week in the Bay Area, generally sleeping in hotels, pursuing what he described as his "ADA activism."
Johnson is frequently represented in ADA litigation by the Potter Handy law firm of San Diego.
Potter Handy was sued this April by the district attorneys of San Francisco and Los Angeles in a civil case. The district attorneys alleged that the law firm's clients regularly lied to get their cases into federal court, and the firm knew of the false testimony but filed the cases anyway. That case was dismissed in August in San Francisco Superior Court and is currently under appeal.
In an interview with Bay City News back in March, Dennis Price, a Potter Handy partner who directs litigation strategy for the firm's ADA practice, acknowledged that "there's a lot of very, very bad press that gets written on these types of cases."
He said that was unfair. "Mr. Johnson is somebody that the people like to kind of pick on in this area. But if you go to Sacramento, Sacramento is viewed widely as one of the most accessible places in America. And that is entirely because of Mr. Johnson."
The plea agreement does not directly address the issue of whether Johnson will be able to continue to file new ADA cases while he is in home confinement.
The terms say that Johnson will be restricted to his residence "at all times except for employment, education, religious services, medical, substance abuse, or mental health treatment, attorney visits, court appearances, court-ordered obligations, or other activities in advance as pre-approved by the supervising officer."
One of the undertakings in the plea agreement is that Johnson will not argue to the probation office or the court that his ADA advocacy constitutes "employment."
Ara Sahelian, an ADA defense lawyer who has litigated a number of cases in which Johnson is the plaintiff, is skeptical that the plea agreement will slow down Johnson's litigation, speculating that Johnson will find barriers to access while he is out of his home confinement for reasons other than employment.
Philip Stillman, another ADA defense litigator, thinks the proposed sentence is lenient and that Johnson should be precluded from filing any ADA cases during his home confinement.
The San Francisco District Attorney's Office declined to comment on the plea agreement. A request for comment from the U.S. Attorney's Office was not immediately returned.
Johnson will be sentenced at a hearing in Sacramento on March 7, 2023. The sentence proposed in the plea agreement is not binding on the court. According to the U.S. Attorney's Office, the maximum sentence for filing a false tax return is three years in prison as well as supervised release, restitution, and monetary penalties.
