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California Supreme Court Expands Potential Unruh Civil Rights Act Claims Against Online Businesses

by D. Gregory Valenza | | August 13, 2019

This is not an “employment” case per se. But any employer with an online presence must take note. 

California’s Unruh Civil Rights Act prohibits a wide variety of discriminatory conduct by businesses.  It’s not directly applicable to employment, but rather to business practices directed towards the public. In general, the Unruh Act applies to business practices that disfavor certain groups.  For example, it has most “infamously” been used against businesses’ “Ladies Night” promotions, by men who claimed discriminatory pricing.

The Act’s text, at Cal. Civil. Code section 51:

All 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.” 

Section 52 provides for injunctive relief, as well as actual damages, plus penalties and attorney’s fees.   Given this law applies to public accommodations, one can imagine how quickly class action liability can add up.

Now, for background, 

Bankruptcy attorney Robert White sued Square, Inc. (Square) in October 2015, alleging that Square’s seller agreement discriminated against bankruptcy attorneys in violation of the Unruh Civil Rights Act. Square offers an internet service that allows individuals and merchants to “ ‘accept electronic payments without themselves directly opening up a merchant account with any Visa or MasterCard member bank.’ ”  * * * *Square’s terms of service state that when a user creates an account, the user must “ ‘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.’ ” (Ibid.) 

The Court did NOT address the interesting issue of whether White has any case at all under the Unruh Act based on “occupational discrimination.”  That is, does the Unruh Act protect bankruptcy attorneys from discrimination in the provision of services?  Apparently that issue will be left for another day. The statute is vague, and courts infer categories that are covered and excluded from the Act. 

The question in White v. Square, Inc. is whether White had “standing” to sue Square, Inc. under the Unruh Act, merits of his case aside.  That is, had White suffered an adequate injury by visiting the Square website and considering signing up for Square’s electronic payment services, even though he did not ultimately sign up.

Square argued that White did not have a contract with Square, had not been denied any access to Square, and that White did not go far enough in the process to have standing. But the Court disagreed with Square’s arguments.  The Court analogized to other “public accommodation” cases in which standing existed even though the plaintiff did not go through with a discriminatory transaction.  

The Court’s holding is as follows:

an individual bringing an Unruh Civil Rights Act claim against an online business must allege, for purposes of standing, that he or she visited the business’s website, encountered discriminatory terms, and intended to make use of the business’s services. These requirements are sufficient to limit standing under the Unruh Civil Rights Act to persons with a concrete and actual interest that is not merely hypothetical or conjectural.

What this means is that there will be significant litigation over whether the plaintiff or plaintiffs indeed engaged in the above conduct.  It also means that many people will qualify for standing and will be able to make claims against online businesses.

Again, the reach of the Unruh Act to online businesses is an important development that will in part depend on what categories of “discrimination” are included within the Act.  For example, will it include discrimination against those who hold certain political viewpoints, or those who hold certain jobs or professions as in the White case?  That is going to be an important issue to watch in the coming months.

For now, White is permitted to proceed against Square for excluding bankruptcy attorneys from the Square service.  

The case is White v. Square, Inc. and the opinion is here.

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