White v. Square, Inc.

• Decision Date: 07 June 2018
• Docket Number: No. 16-17137,16-17137
• Parties: Robert E. WHITE, an individual, and all others similarly situated, Plaintiff-Appellant, v. SQUARE, INC., a Delaware corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

891 F.3d 1174 (Mem)

Robert E. WHITE, an individual, and all others similarly situated, Plaintiff-Appellant,

v.SQUARE, INC., a Delaware corporation, Defendant-Appellee.

No. 16-17137

United States Court of Appeals, Ninth Circuit.

Filed June 7, 2018

William McGrane, McGrane PC, San Francisco, California; Myron Moskovitz, Moskovitz Appellate Team, Piedmont, California; for Plaintiff-Appellant.

Colleen Bal and Joshua A. Baskin, Wilson Sonsini Goodrich & Rosati P.C., San Francisco, California, for Defendant-Appellee.

Before: Richard A. Paez and Sandra S. Ikuta, Circuit Judges, and Eric N. Vitaliano,^* District Judge.

ORDER CERTIFYING QUESTIONS TO THE CALIFORNIA SUPREME COURT

ORDER

We ask the California Supreme Court to resolve an important open question of state law. To have statutory standing under the Unruh Act, a plaintiff must suffer discriminatory conduct. We need guidance, however, in applying the rules for statutory standing in the internet context, in order to determine whether a plaintiff has standing to sue an internet-based service provider after the plaintiff visits the business's website but refuses to accept terms of service that deny the plaintiff full and equal access. The California Supreme Court's guidance is especially necessary in light of current case law, which is divided on the question whether plaintiffs who present themselves to a business with an intent to use its services and encounter an exclusionary policy must nevertheless patronize the business in order to satisfy statutory standing. Accordingly, we certify the following questions:

Does a plaintiff suffer discriminatory conduct, and thus have statutory standing to bring a claim under the Unruh Act, when the plaintiff visits a business's website with the intent of using its services, encounters terms and conditions that deny the plaintiff full and equal access to its services, and then departs without entering into an agreement with the service provider? Alternatively, does the plaintiff have to engage in some further interaction with the business and its website before the plaintiff will be deemed to have been denied full and equal treatment by the business?

Our phrasing of the questions should not restrict the Court's consideration of the issues involved. The Court may rephrase the questions as it sees fit in order to address the contentions of the parties. If the Court agrees to decide these questions, we agree to accept its decision. We recognize that the Court has a substantial caseload, and we submit these questions only because of their significance to claims brought under the Unruh Act.

I

Square, Inc. provides an internet-based service that allows individuals or merchants to "accept electronic payments without themselves directly opening up a merchant account with any Visa or MasterCard member bank." Square's seller agreement states that "[b]y creating a Square Account, you ... confirm that you will not accept payments in connection with the following businesses or business activities: ... (28) bankruptcy attorneys or collection agencies engaged in the collection of debt."¹ Square does not charge a subscription fee or admission fee, but charges a specified percentage of each transaction plus a flat fee per each transaction for its service. See Square Reader For Magstripe , Squareup.com, https://squareup.com/reader (last visited Mar. 27, 2018).

According to his second amended complaint, Robert White, a bankruptcy attorney,"formed the strong, definite and specific intent" to become a subscriber to Square. White stated that before attempting to subscribe, he familiarized himself with the issues arising from Square's seller agreement by reviewing a related case, shierkatz RLLP v. Square, Inc.² White then visited and reviewed the Square website, including the seller agreement. White alleges that he refused to click the link marked "Continue" on Square's website, which would have subjected him to the terms of the seller agreement, because he intended to use the service for his bankruptcy practice.³

Instead, White sued Square in October 2015, alleging Square's seller agreement discriminated against bankruptcy attorneys in violation of the Unruh Act's ban on occupational discrimination. White sought to form a class of bankruptcy attorneys and other persons who had been "dissuaded from either (i) hitting the Continue button [to accept the seller's agreement] on [Square's] website or (ii) otherwise attempting in any other possible manner to become customers of [Square]" due to Square's ban on using its service in a bankruptcy practice. After this suit was filed, White's counsel visited Square's website on a daily basis, presented White's first and second amended complaints to Square, and sent a letter to Square demanding that it allow White to use Square's service to facilitate his bankruptcy practice.

The district court dismissed White's first amended complaint without prejudice on the ground that White lacked statutory standing to sue Square pursuant to the Unruh Act, and then dismissed White's second amended complaint with prejudice on the same ground. The district court reasoned that White had not attempted to obtain services from Square, and under Surrey v. TrueBeginnings , 168 Cal. App. 4th 414, 418, 85 Cal.Rptr.3d 443 (2008), mere awareness of Square's discriminatory policies was insufficient to confer standing. After the district court denied White's subsequent motion for reconsideration and motion for a new trial, White appealed.

On appeal, White first argued that neither the district court nor we had jurisdiction under Article III of the U.S. Constitution because White had not suffered a concrete and particularized injury as defined in Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S.Ct. 1540, 1548, 194 L.Ed.2d 635 (2016) ("To establish injury in fact, a plaintiff must show that he or she suffered ‘an invasion of a legally protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or hypothetical.’ " (quoting Lujan v. Defs. of Wildlife , 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ) ). In the alternative, White argued that the district court erred in holding that he lacked standing under the Unruh Act.

We conclude that White meets the constitutional standing requirements. White alleged that he sought to use Square's services, but was unable to do so because of its discriminatory policy against bankruptcy attorneys. Because "discrimination itself ... can cause serious non-economic injuries to those persons who are denied equal treatment solely because of their membership in a disfavored group," Heckler v. Mathews , 465 U.S. 728, 739–40, 104 S.Ct. 1387, 79 L.Ed.2d 646 (1984), and "state law can create interests that support standing in federal courts," Cantrell v. City of Long Beach , 241 F.3d 674, 684 (9th Cir. 2001), White's allegations satisfy Article III's requirements for a concrete and particularized injury. Therefore we must address White's alternative argument, on which we seek the California Supreme Court's direction.

II

California's Unruh Civil Rights Act provides that "[a]ll persons within the jurisdiction of this state are free and equal, and no matter what their sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status, sexual orientation, citizenship, primary language, or immigration status are entitled to the full and equal accommodations, advantages, facilities, privileges, or services in all business establishments of every kind whatsoever." Cal. Civ. Code § 51(b). The California Supreme Court has held that the "identification of particular bases of discrimination—color, race, religion, ancestry and national origin—[in the current version of the act] ... is illustrative rather than restrictive ." Marina Point, Ltd. v. Wolfson , 30 Cal. 3d 721, 725, 180 Cal.Rptr. 496, 640 P.2d 115 (1982) (quoting In re Cox , 3 Cal. 3d 205, 216, 90 Cal.Rptr. 24, 474 P.2d 992 (1970) ). In other words, "the protection against discrimination afforded by the Unruh Act applies to ‘all persons,’ and is not reserved for restricted categories of prohibited discrimination." Id. at 736, 180 Cal.Rptr. 496, 640 P.2d 115. In this vein, Marina Point cited opinions of the California Attorney General as establishing that the Act applied to "exclusionary policies" directed against members of a "particular occupation." Id. (citing 58 Ops. Cal. Atty. Gen. 608, 613 (1975) ). California Courts of Appeal have interpreted this reference to mean that the Unruh Act prohibits arbitrary occupational discrimination. Sisemore v. Master Fin., Inc. , 151 Cal. App. 4th 1386, 1405–06, 60 Cal.Rptr.3d 719 (2007) ; Long v. Valentino , 216 Cal. App. 3d 1287, 1297, 265 Cal.Rptr. 96 (1989).

A plaintiff must have statutory standing to bring a claim under the Unruh Act. Cal. Civ. Proc. Code § 367. The California Supreme Court has clarified that "a plaintiff cannot sue for discrimination in the abstract, but must actually suffer the discriminatory conduct." Angelucci v. Century Supper Club , 41 Cal. 4th 160, 175, 59 Cal.Rptr.3d 142, 158 P.3d 718 (2007). In order to have standing under the Act, a plaintiff must have "been the victim of the defendant's discriminatory act," meaning that the plaintiff was "actually denied full and equal treatment by a business establishment." Id. If a business establishment has a policy of unequal treatment (such as a policy of gender-based price discounts), the discriminatory policy must be "applied to the plaintiff." Id.

While the California Supreme Court has clearly articulated the statutory standing rule, state appellate courts have not always been consistent in applying it to specific circumstances. In the only California Supreme Court case addressing this issue, Angelucci v. Century Supper Club , the Court made clear that at a minimum, a plaintiff who pays a discriminatory fee has suffered discriminatory conduct for purposes of standing. Id....