Lawyer’s discrimination suit at high court turns on standing

A California attorney's effort to simplify the business of his practice has made its way to the state Supreme Court, where advocates squared off Thursday over his ability to sue for alleged discrimination he said was caused by an online credit card payment processor's restrictive terms of service.

Robert E. White is a bankruptcy specialist who sought to use an online payment service provided by Square Inc., to more simply accept credit card payments from his clients.

But when he visited Square's website, White says, he was deterred from opening an account because, per the company's terms of service, users may not accept payments in connection with "bankruptcy attorneys or collection agencies."

That exclusion was one of several that forbade users from selling, for instance, illegal goods, firearms, or "adult entertainment ... services" via Square.

White then, in 2015, filed suit in the Northern District of California under the state's Unruh Civil Rights Act. The law forbids businesses from discriminating against customers based on a broad array of characteristics, such as race, disability and citizenship.

California appellate courts have deemed that protection to apply to "members of a particular occupation." Sisemore v. Master Fin., Inc., 151 Cal.App.4th 1386 (2007).

The district court dismissed White's claim, ruling he lacked statutory standing. The 9th U.S. Circuit Court of Appeals then asked California's high court to weigh in. White (Robert E.) et al v. Square, Inc., S249248

On Thursday, Square's attorney, Fred A. Rowley Jr., a partner at Munger, Tolles & Olson LLP, endorsed the district court's view and argued that White hadn't suffered sufficient harm to support standing.

"Plaintiffs should actually suffer a concrete occasion of a denial of equal treatment, not just the anticipation of the denial of equal treatment," Rowley said.

But several justices seemed inclined toward the opposite view, that White's encounter with the expressly exclusionary terms amounted to the sort of discrimination the Unruh Act prohibits.

"I think you are saying that, in order to sue us, to have standing, you have to actually sign up for our service; but you cannot sign up for our service because we will not let you," Justice Carol Corrigan said to Rowley. "And therefore you cannot sue us because we have blocked you at the threshold."

Chief Justice Tani Cantil-Sakauye wondered whether Square sought to "add another element that is unnecessary" to the Unruh Act, and stressed that the law's interpretation was meant to be far-reaching.

"The Unruh Act sold itself as a broad act to ensure economic equality for customers; it did not require you to go through the denial, the humiliation, to get standing," Cantil-Sakauye said. "It is California's belt and suspenders approach to business discrimination."

Justices also challenged White's appellate counsel, Myron Moskovitz, of the Moskovitz Appellate Team, on whether allowing standing in this case would invite a flood of suits against the countless internet companies whose terms of service exclude certain users.

But Moskovitz argued the case was an easy one, at least to his client. He's got to wait until he's actually affected by the discriminatory policy?" Moskovitz asked. "He signs up, waits until he gets a bankruptcy client who wants to use a credit card, and then what does he do?"

"Is that what's required for standing, to go through the humiliation twice?" Moskovitz added.