Robert White v. Square, Inc. , 891 F.3d 1174 ( 2018 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
ROBERT E. WHITE, an No. 16-17137
individual, and all others
similarly situated, D.C. No.
Plaintiff-Appellant, 3:15-cv-04539-JST
v.
ORDER CERTIFYING
SQUARE, INC., a Delaware QUESTIONS TO THE
corporation, CALIFORNIA
Defendant-Appellee. SUPREME COURT
Filed June 7, 2018
Before: Richard A. Paez and Sandra S. Ikuta, Circuit
Judges, and Eric N. Vitaliano,* District Judge.
*
The Honorable Eric N. Vitaliano, United States District Judge for
the Eastern District of New York, sitting by designation.
2 WHITE V. SQUARE, INC.
SUMMARY**
Certified Question to California Supreme Court
The panel certified the following questions of state law to
the Supreme Court of California:
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?
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
WHITE V. SQUARE, INC. 3
COUNSEL
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.
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
4 WHITE V. SQUARE, INC.
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
1
Square’s seller agreement also includes an arbitration clause that
requires disputes to be resolved through individual, non-class arbitration.
WHITE V. SQUARE, INC. 5
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
2
In shierkatz RLLP v. Square, Inc., a bankruptcy law firm entered
into Square’s seller agreement, but Square terminated the agreement when
it learned that the firm was accepting payments in connection with its
bankruptcy practice, in violation of the terms of service. No. 3:15-cv-
02202-JST, 2015 WL 9258082, at *1 (N.D. Cal. Dec. 17, 2015). The firm
sued Square under the Unruh Act for unlawful discrimination on the basis
of occupation. Id. The district court compelled arbitration pursuant to the
terms of the seller agreement. Id. at *12–13.
3
White cites a letter from Square to shierkatz RLLP that stated
“[y]our client’s signing up for Square’s service with the intent to violate
the applicable terms of service would be fraudulent.”
6 WHITE V. SQUARE, INC.
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 (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,
136 S. Ct. 1540, 1548 (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
(1992))). In the alternative, White argued that the district
WHITE V. SQUARE, INC. 7
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 (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 (1982) (quoting In re Cox,
8 WHITE V. SQUARE, INC.
3 Cal. 3d 205, 216 (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. 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 (2007); Long v. Valentino, 216 Cal. App. 3d 1287,
1297 (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 (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
WHITE V. SQUARE, INC. 9
discriminatory fee has suffered discriminatory conduct for
purposes of standing. Id. In Angelucci, male patrons of a
nightclub sued the club for charging men an admission fee
higher than that charged to women. Id. at 165. Angelucci
explained that “a business establishment’s policy of affording
price discounts to female patrons purely on the basis of
gender ordinarily constitutes unlawful discrimination against
male patrons within the meaning of the Act,” and male
patrons “were injured within the meaning of the Act when
they presented themselves for admission and were charged
the nondiscounted price.” Id. at 173.
Turning to the specific issue raised by that case,
Angelucci ruled that plaintiffs who patronize a business and
are subjected to discriminatory treatment need not also
demand equal treatment in order to have statutory standing.
Id. at 169. In explaining its reasoning, Angelucci discussed
some early cases under predecessors to the Unruh Act. For
instance, courts held that California’s anti-discrimination
laws were violated “when African-American ticket holders
were admitted to a movie theater or racetrack clubhouse or
gained access to a soda fountain, but, because of their race,
were restricted to a segregated or otherwise substandard
area.” Id. (citing Suttles v. Hollywood Turf Club, 45 Cal.
App. 2d 283, 287 (1941); Hutson v. The Owl Drug Co.,
79 Cal. App. 390, 392 (1926); Jones v. Kehrlein, 49 Cal. App.
646, 651 (1920)). Similarly, “an African-American family
seeking to purchase a home” who were not told about
“eligible homes in a White-majority neighborhood” would
have suffered actionable discrimination. Id. at 170.
Angelucci pointed out that “[i]t would be absurd to conclude
that such civil rights act violations occurred only when the
African-American patrons expressly demanded that their
treatment be equivalent to that accorded the White patrons in
10 WHITE V. SQUARE, INC.
those situations.” Id. at 169–70. Angelucci also recognized
certain early cases that “arose in the context of a business
establishment’s asserted discriminatory exclusion of patrons
and stand at most for the proposition that persons who were
not patrons of a business establishment or who did not present
themselves for service or access as a patron and tender the
price of admission did not adequately allege injury under the
predecessor to the Act.” Id. at 170. For instance, a state
appellate court held that a plaintiff ejected from a racetrack
could not seek damages “for days on which he had not
presented himself for admission and tendered the price of a
ticket” because “the defendant had no duty to the plaintiff
under the Act until the plaintiff tendered either an admission
ticket or the price of admission.” Id. at 171 (citing Orloff v.
Hollywood Turf Club, 110 Cal. App. 2d 340, 342–43 (1952)).
Although Angelucci ruled on a discrete question not at
issue here, it is reasonable to read Angelucci as holding that
plaintiffs lack statutory standing to bring a claim for
discrimination if they neither present themselves nor pay a
fee to the allegedly discriminatory business. However, the
California Supreme Court has not directly addressed a
situation where persons present themselves for service at a
business establishment, but are deterred by the business’s
discriminatory policy from using or paying for the business’s
services or products. We therefore turn to the opinions of the
state appellate courts.
The appellate courts have taken different approaches to
determining whether persons who have not patronized a
business have standing to raise an Unruh Act claim. One
state appellate court adopted “a bright-line rule that a person
must tender the purchase price for a business’s services or
products in order to have standing to sue it for alleged
WHITE V. SQUARE, INC. 11
discriminatory practices relating thereto.” Surrey, 168 Cal.
App. 4th at 416. In Surrey, an internet matchmaking service
offered free services to women who joined. Id. at 417. A
male plaintiff visited the website “with the intent of utilizing
its services,” but “after discovering the discrepancy in its
charges,” he declined to “subscribe to or pay for its services.”
Id. Surrey held that the plaintiff’s awareness of the discount
policy “at the time he accessed its website did not constitute
a denial of his anti-discrimination rights.” Id. at 418.
Because the plaintiff “did not attempt to or actually subscribe
to” the matchmaker’s services, he was not subject to the
business’s discriminatory pricing scheme, and therefore
lacked standing to seek relief for violation of the Unruh Act.
Id. at 420. The court distinguished Angelucci on the ground
that the plaintiffs in that case had “paid the price for
admission to the night club.” Id. Surrey therefore, indicates
that plaintiffs must actually pay the discriminatory charge for
services in order to have standing to bring an Unruh Act
claim; it is not enough for plaintiffs to present themselves for
service, encounter the discriminatory policy, and turn away.
Other appellate courts have not adopted such a bright-line
rule, and instead suggest that plaintiffs may have standing so
long as they have presented themselves for service and been
deterred from patronizing the business due to its
discriminatory policy. In Reycraft v. Lee, a disabled plaintiff
visited her sister-in-law at a mobile home park and
discovered that the community pool was not compliant with
the Americans with Disability Act (ADA), which also
constituted a violation of the California Disabled Persons Act
12 WHITE V. SQUARE, INC.
(DPA).4 177 Cal. App. 4th 1211, 1224–26 (2009). The court
declined to adopt the ADA’s standing rule, i.e., that “a
plaintiff acquires standing and suffers an injury as soon as he
or she actually becomes aware of the existence of
discriminatory conditions at a public accommodation and is
thereby deterred from visiting or patronizing that
accommodation.” Id. at 1218. Rather, a plaintiff has
standing under the DPA only when the plaintiff “actually
presented himself or herself to a business or public place with
the intent of purchasing its products or utilizing its services in
the manner in which those products and/or services are
typically offered to the public and was actually denied equal
access on a particular occasion.” Id. at 1224. The court
concluded that because the community pool was open only to
registered guests, and the plaintiff had not registered or
attempted to register as a guest, she lacked standing to bring
discrimination claims. Id. at 1224–25. This conclusion
suggests that the plaintiff in Reycraft would have had
standing to sue the mobile home park if she had merely
attempted to register as a guest with the intent of using its
services.
Similarly, in Osborne v. Yasmeh, a state appellate court
concluded that a plaintiff who was informed of a business’s
discriminatory charges when he attempted to use the
business’s services had standing to bring an Unruh Act claim
even though he did not pay the discriminatory charge. 1 Cal.
4
Reycraft concerns standing under section 54.3 of the California
Disabled Persons Act, not the Unruh Act. 177 Cal. App. 4th at 1227 n.6.
Yet, because the statutes “have significant areas of overlapping
application,” id. (quoting Munson v. Del Taco, Inc., 46 Cal. 4th 661, 675
(2009)), Reycraft applied cases dealing with Unruh Act standing, id. at
1221, 1224.
WHITE V. SQUARE, INC. 13
Ohio App. 5th 1118, 1122 (2016). Osborne involved four
plaintiffs, including a paraplegic individual with a service
dog, who attempted to rent a hotel room. Id. at 1121. The
hotel refused to rent the plaintiffs a room unless they paid a
$300 nonrefundable cleaning fee for the dog, in addition to
the $80 charge for the hotel room. Id. After plaintiffs left
without paying the fee or checking into the hotel they sued
the hotel for a violation of the Unruh Act, among other
things. Id. The hotel argued that plaintiffs lacked standing
under the bright-line rule established by Surrey, because they
failed to “tender the purchase price for a business’s services
or products.” Id. at 1133 (quoting Surrey, 168 Cal. App. 4th
at 416). Osborne agreed with the reasoning in Surrey that “a
plaintiff who only learns about the defendant’s allegedly
discriminatory conduct, but has not personally experienced it,
cannot establish standing.” Id. But the court found “that the
articulated bright-line rule in Surrey is not appropriate on the
facts before us,” id., because the “tender of payment of a
discriminatory fee is not required to establish standing under
the Unruh Act where a disabled individual has personally
experienced discriminatory treatment at a business
establishment,” id. at 1135; see also id. at 1122. It was
enough that the plaintiffs were asked to pay the
discriminatory fee; they did not need to tender payment. Id.
at 1122, 1135.
III
The issue that has not been resolved by these state
appellate decisions — whether plaintiffs must actually
patronize a business with a discriminatory policy in order to
have standing to sue the business under the Unruh Act — is
raised by this case.
14 WHITE V. SQUARE, INC.
White claims he has standing to sue Square under the rule
set forth in Reycraft and Osborne. According to White, he
presented himself to Square to access its products or services
“in the manner in which those products and/or services are
typically offered to the public,” by accessing Square’s
website. Reycraft, 177 Cal. App. 4th at 1224. Further, White
claims that he was actually denied equal access to Square’s
services when he encountered Square’s seller agreement,
which clearly states that its services are not available for use
in bankruptcy practice. White analogizes this situation to that
of a non-white person who attempts to patronize a restaurant
only to find a “Whites Only” sign. See Suttles, 45 Cal. App.
2d at 287 (plaintiffs suffered injury when they presented
tickets for admission to the racetrack, but were denied entry
because of their race) (discussed in Angelucci, 41 Cal. 4th at
169). White contends that Surrey, which held that a plaintiff
must “attempt to or actually subscribe to” a website and
experience the discriminatory fee in order to have standing,
does not apply here because Square did not charge a
subscription fee. 168 Cal. App. 4th at 420. Finally, even if
White could have used Square for other, non-bankruptcy
purposes, White contends that he still suffered from the
discriminatory policy because (1) his only purpose in using
Square was to process bankruptcy transactions and
(2) allowing him to use the service for only a limited purpose
denies him the “full and equal” access guaranteed by the
Unruh Act. Cal. Civ. Code § 51(b); see Angelucci, 41 Cal.
4th at 169 (discussing race-discrimination cases and
explaining that plaintiffs suffered injury when they “were
admitted to a movie theater or racetrack clubhouse or gained
access to a soda fountain, but, because of their race, were
restricted to a segregated or otherwise substandard area”).
WHITE V. SQUARE, INC. 15
Square argues that White does not have standing under
the bright-line rule set forth in Surrey, because White did not
enroll in Square and therefore did not suffer any
discriminatory act. According to Square, the seller agreement
did not exclude White because it prohibits its members only
from “accept[ing] payments in connection with . . .
bankruptcy attorneys.” White was free to join the service and
use it for non-bankruptcy-related transactions. Because he
did not do so, Square’s policy against processing bankruptcy
transactions was never “applied” to White, and as in Surrey,
his mere awareness of a potentially discriminatory policy is
insufficient to give him standing. See Surrey, 168 Cal. App.
4th at 418–19. In short, Square argues, White lacks standing
because he opted to walk away rather than patronize the
business and potentially experience the allegedly
discriminatory terms.
Existing California case law does not give us clear
direction for resolving this dispute. First, there is tension
between California appellate courts. Surrey indicates that a
person must subscribe to a business’s services or purchase its
products to have standing. Id. at 416, 420. But Reycraft and
Osborne take a broader approach, requiring that plaintiffs
present themselves to a business with the intent of using its
products or services “in the manner in which those products
and/or services are typically offered to the public,” and that
the business actually deny them equal access. Reycraft,
177 Cal. App. 4th at 1224; see also Osborne, 1 Cal. App. 5th
16 WHITE V. SQUARE, INC.
at 1133–34.5 The California Supreme Court has not directly
addressed this inconsistency.
Second, it is not clear how the cases apply in the absence
of brick and mortar to internet-based services. For instance,
Reycraft and Osborne suggest White may have standing if he
presents himself to Square and is denied equal access to
Square’s services. But it is not clear what steps are necessary
for plaintiffs to “present themselves” to an internet-based
business or to be denied equal access. For instance, White
argues that he presented himself to Square merely by visiting
the website, and was denied equal access merely by
reviewing the exclusionary seller agreement. Surrey suggests
that this would not be enough: plaintiffs who merely visit a
website and discover a discriminatory fee do not have
standing. Yet it is not clear Surrey applies in this context,
because, as White argues, Square does not impose a
discriminatory fee. Additionally, Square’s seller agreement
presents, on its face, an exclusionary policy that precludes a
bankruptcy attorney from full and equal access to Square’s
services. Questions such as these are likely to arise
frequently in the future, as internet-based services become
more prevalent. We therefore need guidance from the
California Supreme Court.
5
This tension also appears in recent district court decisions. Compare
Abu Maisa, Inc. v. Google, Inc., No. 15-CV-06338-JST, 2016 WL
7178580, at *3 (N.D. Cal. Dec. 8, 2016) (holding, under Surrey, that the
plaintiff lacked statutory standing because it did not attempt to enroll in
the defendant’s service), with Rios v. N. Y. & Co., Inc., No. 2:17-CV-
04676-ODW(AGRX), 2017 WL 5564530, at *4 (C.D. Cal. Nov. 16, 2017)
(holding, under Osborne, that the plaintiff had standing under the Unruh
Act, even though “Plaintiff never tendered the purchase price for any of
Defendant’s services or products”).
WHITE V. SQUARE, INC. 17
The California Supreme Court’s answer to these questions
will be dispositive and we will follow its decision in this case.
If White has not experienced Square’s allegedly
discriminatory policy, then he lacks statutory standing and we
must affirm the district court’s dismissal of his claim. But if
White has experienced Square’s policy, then he has statutory
standing and we must vacate the district court’s order and
remand for the case to continue.
We therefore respectfully ask that the California Supreme
Court decide the certified questions.
IV
The Clerk of Court is hereby directed to transmit
forthwith to the California Supreme Court, under official seal
of the Ninth Circuit, a copy of this order and request for
certification and all relevant briefs and excerpts of record
pursuant to California Rule of Court 8.548. Submission of
this case is withdrawn, and the case will be resubmitted
following receipt of the California Supreme Court’s opinion
on the certified questions or notification that it declines to
answer the certified questions. The Clerk shall
administratively close this docket pending a ruling by the
California Supreme Court regarding the certified questions.
The panel shall retain jurisdiction over further proceedings in
this court. The parties shall notify the Clerk of this court
within one week after the California Supreme Court accepts
or rejects certification. In the event the California Supreme
Court grants certification, the parties shall notify the Clerk
within one week after the Court renders its opinion.
QUESTION CERTIFIED; PROCEEDINGS
STAYED.