A week ago, a business colleague asked me if the ADA covered SaaS (software as a service) products and the conversation was interesting enough that I thought a blog post was in order—both to share with others and to help me remember the analysis. It’s also intended to go deeper than simply the “does the ADA cover the internet” kind of analysis in most of the judicial opinions and other discussions of this topic.
What is SaaS?
This model completely changed with the internet. It started innocently enough as software companies started delivering software (and software updates) through the internet or used the internet to activate or register software. It wasn’t long before the genie was out of the bottle and cloud computing took off. Companies leveraged web browsers to access online versions of their software (e.g. Google Docs or Office 365). Other companies developed lightweight desktop apps that facilitated services like file transfer and sharing documents with others over the internet (e.g. Dropbox or iCloud) or voice and video communication (e.g. Zoom or Teams).
Depending on whom you ask, “Software as a Service” (SaaS) has loose boundaries and generally includes any of the modern technologies described in the last paragraph. In the narrowest definition, SaaS means software that is accessed through a thin client or browser. This obviously means software like Google Docs, where all document creation and editing takes place through the browser and no software gets installed on the user’s computer. A broader definition of SaaS includes any subscription-based model of software that uses the internet for license management and product updates. This would include, for instance, your copy of Windows 11 or MacOS on your laptop or desktop machine.
Dealing with SaaS Itself
Let’s start by defining the scope of this analysis from a legal perspective.
First, as I mentioned, this post is not about whether the ADA covers the internet. For private sector websites, that question has been addressed a million times and this blog talks a lot about the recent decisions. This usually comes down to whether the court believes that a nexus between a website and a physical place of business is necessary or unnecessary.
Second, this post is not about whether the ADA covers the sale of SaaS products over the internet. When a company sells a product to the public, it becomes a “sales or rental establishment” under § 36.104 of the U.S. Department of Justice’s Title III ADA regulations and thus a “place of public accommodation.” Similarly, this post doesn't get into other basic types of places of public accommodation that happen to be on the internet. For instance, it doesn't take a leap of faith to realize that websites that provide educational videos are "places of education" under Title III (e.g. the EdX web accessibility case). The exception here is "service establishments," which I definitely will be talking about... a lot.
Third, this post is not about whether an organization can be held liable under the ADA for relying on or using SaaS products. This is also a fairly straightforward analysis. State and local governments need to ensure access for qualified individuals with disabilities to their programs, services, and activities—and the Justice Department has consistently said that this includes programs, services, and activities through the internet. Private organizations also need to ensure that their goods and services are accessible when provided through SaaS products. For instance, the Justice Department has engaged in a number of enforcement activities where private companies used the internet or SaaS products to discriminate against their customers with disabilities.
Instead, this blog post is about the SaaS product itself. It takes on the question of whether products that don’t rely on their website for service delivery (e.g. Zoom and potentially Windows 11) can be subject to the ADA. Sadly, this is also an examination of first impression because I have not found any opinions that have really examined this issue. As much as I would love to examine and compare judicial opinions, they just don't exist in this (important) space.
Option 1: Manufacturers Do Not Have to Create Special Accessible Products
One answer to the question is that SaaS products are not covered by Title III of the ADA. First, software manufacturers are not places of public accommodation for the simple reason that manufacturers (like companies making automobiles, software, or any other kind of widgets) are not listed as places of public accommodation. Second, just as bookstores are not required to alter its inventory to sell braille or large print books, places of public accommodation are not required to alter their inventory or manufacture special products for the needs of people with disabilities.
To my mind, this answer works well for the old-fashioned model of selling and delivering software. The ADA would not require Microsoft to make its copies of Windows 3.1 (which came in a stack of floppy disks in a cardboard box) to be accessible. But I think this simple answer started to unravel the moment that software companies moved past the traditional model of selling and delivering software.
Option 2: It’s All in the Name: SaaS is a Service and Not a Product
The second option is to look at what SaaS stands for-- "Software as a Service." Viewed this way, SaaS products aren’t really “products” in the traditional sense anymore. Instead, software companies now use the internet to provide a lot of "services" supporting their products-- so much so that they really start shifting from one category ("products") to another ("services") instead. But are they really “services” as envisioned by Title III?
Section 36.104 of the Justice Department regulations defines the 12 categories of “places of public accommodation” and this includes,
A laundromat, dry-cleaner, bank, barber shop, beauty shop, travel service, shoe repair service, funeral parlor, gas station, office of an accountant or lawyer, pharmacy, insurance office, professional office of a health care provider, hospital, or other service establishment.
The word “other” is important because it reflects the need to read the term “service establishment” very broadly to include a far greater range of service establishments than the few examples that Congress specifically outlined. See, e.g., Levorsen v. Octapharma Plasma, Inc., 828 F.3d 1227, 1230 (10th Cir. 2016)(in finding that plasma donation centers are "services establishments," the court noted that the examples in the ADA's definition of places of public accommodations are "illustrations" and that the ADA's definition is intended to be construed liberally).
Is this definition broad enough to cover SaaS products? Well, like any good lawyer, I’m going to say, “it depends.” And, in this case, I’m going to say it specifically depends on the type or level of service that the SaaS product provides.
What the heck does that mean? On the one hand, there are SaaS products that clearly support a service for the customer. For instance, teleconferencing solutions make it easier and more effective to communicate in real-time with distant participants. To my mind, this isn’t very different from a travel agent who provides the service of arranging air travel and hotel rooms. The "service" is easy to identify (facilitating communications in real time) and the software is a vital part of it. Just as importantly, the software isn't static; real-time interaction with the company’s servers is vital to the basic operation of the software and providing the service.
On the other hand, other SaaS products appear less like a service. For instance, an operating system lets a user independently accomplish tasks using a set of software tools created by the manufacturer. The broad definition of SaaS would include subscription-based software that receives updates through the internet (and would thus include most modern operating systems) but the level of interaction with the company’s servers is far less important than it is for the teleconferencing solution. To my thinking, it’s harder (but not impossible) to say that this kind of product is a “service” and thus covered by the ADA. Instead, this kind of SaaS looks more like a product first and a service second.
In outlining these examples, I find that it’s very tempting to say that the distinction between a “product” and “service” comes down to whether the provider is just “selling something” to the customer or actually “doing something” for the customer. If relying on regular interaction with a company’s servers for the customer's benefit is vital to the nature of the SaaS, then it’s easier to say that it is more like a “service" and less like a "product"-- and thus subject to coverage by the ADA. Interestingly, this idea of "doing something" for the customer as the key component of "service establishments" has some basis in case law. Earlier I mentioned the Levorsen opinion, which held that plasma donation centers were "service establishments" under the ADA. But in Silguero v. CSL Plasma, Inc., 907 F.3d 323 (5th Cir. 2018), the (very) conservative Fifth Circuit Court of Appeals disagreed with the Levorsen opinion and held that plasma donation centers were not service establishments because customers did not benefit from the service. The Fifth Circuit laid out three reasons for disagreeing with the Levorsen-- and all three support the idea that SaaS products should be considered service establishments under Title III.
Based on these dictionary definitions, a "service establishment" is an establishment that performs some act or work for an individual who benefits from the act or work. Our definition is materially similar to the one developed by the Tenth Circuit, the only other federal court of appeals to address the ADA's applicability to plasma collection centers. It defined a "service establishment" to mean "a place of business or a public or private institution that, by its conduct or performance, assists or benefits someone or something or provides useful labor without producing a tangible good for a customer or client." Though its definition has additional verbs, each of the verbs connote aid or benefit performed by the establishment for the customer.
We disagree with the Tenth Circuit, however, about whether plasma collection centers provide a "service" to customers. Three textual clues lead us to that result. First, the word "service" implies that the customer is benefitted by the act, and no such benefit occurs here. Second, the list preceding the catchall term "other service establishment" does not include any establishments that provide a "service" without a detectable benefit to the customer. Finally, third, the structure of the ADA indicates that an establishment typically does not pay a customer for a "service" it provides.
Id., at 328-29. Unlike plasma donation centers, SaaS products obvious provide benefits for customers-- just like the other examples in the definition of a service establishment. Plus, customers (and not SaaS companies) pay for the services provided.
No Clear Answers Except Settle Fast and Fix the Problem
While I believe that Option 2 is the more logical answer for SaaS products, it does leave a ton of uncertainty because there are vast differences between SaaS products. With some SaaS products, it's all about the service that customers are paying for. This would include typical cloud products and videoconferencing solutions. With other SaaS products, the service performs more of a background function (such as providing product updates or validating a subscription for the manufacturer). And most modern SaaS products aren't clearly on one side of the line or the other. This kind of uncertainty makes judges and clients really uncomfortable. It's no surprise therefore that the complaint against Zoom two years ago settled pretty quickly without any published opinions.
My advice? First, if you’re in litigation over this issue, get your lawyer to settle quickly regardless of whether you’re a plaintiff or a defendant. No one likes risk and uncertainty—not clients, not lawyers, and certainly not judges (who may get overruled on appeal).
Second, if you make SaaS products, start thinking about how to make your products more accessible because, as long as they can be a thorn in the side of a disability advocate, the longer you will be at risk of that uncomfortable, uncertain litigation possibly repeating itself over and over again.
Third, if you’d like us to help, set up a call. We can help your attorney strategize. We can also help make products more accessible while respecting the risks of litigation. While it would be nice if Congress or the Justice Department would clarify how the ADA covers SaaS products, that clarity just doesn't exist right now-- but that doesn't mean there are not basic steps you can take today.
Nothing in this post should be interpreted as legal advice or as forming an attorney-client relationship. It is offered for educational purposes only. You should always contact a qualified attorney in your area to discuss your legal rights and responsibilities.
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