Litigation
Apr. 25, 2015
Bankruptcy law firm sues Square for closing its account
A bankruptcy law firm has filed a putative class action claiming civil rights violations after an e-commerce company terminated its account.
Daily Journal Staff Writer
A bankruptcy law firm has filed a putative class action claiming civil rights violations
after an e-commerce company terminated its account.
Square Inc. closed San Francisco-based Shierkatz RLLP's account earlier this month,
citing a violation of the company's seller agreement. The agreement lists 28 business
activities from which the company does not allow clients to accept payments.
The list includes "bankruptcy attorneys or collection agencies engaged in the collection
of debt." Other businesses refused service by Square include gun dealers and escort
services.
The lawsuit, filed last week in San Francisco County Superior Court, seeks to represent
individuals and businesses that also had accounts cancelled during the last three
years for seller agreement violations.
The complaint alleges more than 10,000 similarly situated parties. Shierkatz RLLP v. Square Inc., CGC-15-545398 (S.F. County Super. Ct., filed April 17, 2015).
Attorney William N. McGrane argues his client was arbitrarily discriminated against,
resulting in a violation of the Unruh Civil Rights Act, as well as California Business
and Professions Code 17200, which disallows unlawful, unfair and fraudulent business
acts.
McGrane of McGrane LLP said he was unaware of similar pending lawsuits against San
Francisco-based Square.
According to the complaint, the law firm never actually agreed to any version of Square's
agreement. Instead, it argues, Square underhandedly attempted to entrap customers
into accepting the agreement when opening an account.
When Shierkatz opened its account, according to the complaint, the only way to view
the seller agreement was by clicking a small hyperlink at the bottom of Square's website
marked "Legal." The suit alleges an account could be opened without ever clicking
on the link.
The complaint also takes umbrage with Square, Inc.'s description of its services as
"fast and free - no commitments or long-term contracts." The complaint argues the
seller agreement is a commitment to several terms, including a requirement that any
dispute be resolved in arbitration.
The law firm opened its account with Square in June 2013. It was terminated earlier
this month, a day before the complaint was filed.
Square rejected the claims. "This case is completely without merit and we will defend
ourselves vigorously against it," a company spokesperson said Thursday.
The lawsuit seeks damages and an injunction against the dissemination of further termination
notices.
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Philip Johnsonn
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