
California Supreme Court: Transaction is not required to sue online providers - hhs
https://harvardlawreview.org/2020/04/white-v-square/
======
rgbrenner
To require a transaction would mean you can discriminate based on anything and
everything. Exclude black people from entering your store? no problem because
they haven't bought anything.

That's so obviously wrong and exactly what civil rights legislation was
created to address, that I feel like the lower courts made a big mistake and
this should have never reached the SC. There's nothing surprising in the CA SC
ruling.. I'm surprised Harvard Law Review decided to write an article on it.

~~~
netcan
Well, that seems to be the analogy the judge saw... and common law works by
analogy.

Analogies and metaphors break though.. when stacked too high or precariously.
Here we stack the segregation analogy _and_ the metaphor of "corporation are
people, with rights." So, discriminating against a class of corporations is a
violation of civil rights. In this case, the civil rights of bankruptcy
attorneys & collection agencies... who probably do unsavoury things with
square's service.

~~~
rgbrenner
The CA SC didn't address that..

 _our opinion does not preclude Square from disputing White’s factual
allegations. ... Nor do we express any view on whether a defendant violates
the Act by discriminating on the basis of occupation or on White’s adequacy as
a representative for a class of bankruptcy attorneys excluded from Square’s
services. The question of an individual plaintiff’s standing under the Unruh
Civil Rights Act is distinct from the question of that plaintiff’s ability to
serve as a representative for a class of allegedly aggrieved individuals._ [0]

White only won standing to bring his case. He's still prohibited from using
Square; and he needs to win his case against Square before that'll change.

0\. [https://law.justia.com/cases/california/supreme-
court/2019/s...](https://law.justia.com/cases/california/supreme-
court/2019/s249248.html)

~~~
ineedasername
Precisely. This is a "win" in terms of providing _standing_ to litigate issues
that previously would have been precluded under arbitration clauses, or
through lack of transaction per the _Surrey v. TrueBeginnings_ precedent,
which is what was overturned.

It get's around the arbitration clause by overturning _Surrey_ , so plaintiffs
who are not a party to the arbitration clause can be found that may (through
class representation) act for those who _are_ subject to the arbitration
clause.

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anw
This is an interesting article, and one that is important for people who run a
SMB in California to take note of.

> The court then noted that even if allowing plaintiffs to sue prior to
> signing up could lead to abusive litigation, that issue should be left to
> the legislature.

This was my concern, as well. I hope that the opening this allows for later
lawsuits will be handled by the larger corporations who have deep pockets and
can afford to fight these battles. My fear is that this would create a bunch
of drive-by-lawsuits aimed at small businesses in the hopes that they will
just settle (much the same as patent trolls).

I would love to hear from any lawyers on the board who have thoughts on this
case.

~~~
joecasson
I agree with you on the risk.

This seems to have tremendous implications for any digital business. I'm
reading into this a bit, but it seems that part of Square's case rested on the
fact that White didn't actually want to do business with him. He may have just
heard about the Shierkatz case from his friends' firm and then saw an opening
for a class action.

If that's the case, just the passing intention to do business - real or not -
becomes grounds? Yikes. I feel like I agree with the decision to have business
be open to all consumers, but I didn't see much in the way of proof-of-intent
on the plaintiff's behalf.

~~~
stefan_
This is the same nonsense discussion we are having with the unfiltered NSA
data collection: you know it's happening, they say it's happening, but no one
can have standing to sue because you know, you being spied on is secret.

 _Standing_ should never be the hurdle these kinds of claims fail on.

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kccqzy
I hope this title can be clarified, but that although a transaction is indeed
not required, an intention to enter into a transaction seems to be required.

> Writing for a unanimous court, Justice Liu emphasized that “a person suffers
> discrimination under the Act when the person presents himself or herself to
> a business with an intent to use its services but encounters an exclusionary
> policy or practice that prevents him or her from using those services,” […]

And merely awareness is not enough.

~~~
myrryr
How does that interact with understanding that some businesses carry a lot
more risk than others?

~~~
hamandcheese
Those business should price the risk into their fees?

~~~
ineedasername
In this case, the business with the risk is the bank lending the money through
the credit card. And credit card purchases made just before declaring
bankruptcy are _highly_ scrutinized as potential fraud. Paying the lawyer with
additional debt you're attempting to get discharged would seem to fall under
that category. As a result, in practice, you won't find bankruptcy lawyers
accepting CC payments from their clients. If they accept CC payments, it must
be from someone other than the client. (family, friend, etc.)

Given this, there is no reason to price the risk (a customer paying their
lawyer with debt that will be discharged) into their pricing: it is already
prohibited by statute.

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LatteLazy
The ruling seems reasonable, the law... Very surprising. Since when is line of
work/business a protected class? And its also not clear whether the "person"
applying needs to be a natural person or if it can be an llc etc. I wasn't
aware LLCs could suffer discrimination (at least not directly)...

~~~
sio8ohPi
The 9th circuit discusses this briefly at the bottom of page 7 here:

[http://cdn.ca9.uscourts.gov/datastore/opinions/2018/06/07/16...](http://cdn.ca9.uscourts.gov/datastore/opinions/2018/06/07/16-17137.pdf)

> 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).

~~~
LatteLazy
It's interesting.

I always get frustrated when companies arbitrarily decide they don't want
certain industries (alcohol or firearms or porn).

But forcing all companies to take every comer on the same terms seems a bit
extreme. I freelance in IT. I would want more money or would downright refuse
certain jobs on moral grounds (I wouldn't work with the Saudi government at
any price). Am I being unreasonable in that?

~~~
surfpel
Those industries you mentioned may be more likely to have fraudulent
transactions. In that case it makes sense not work with them then.

You should have every right to deny service to them and the law supports you
on that.

~~~
sio8ohPi
I'm not a lawyer, but it's not clear to me that the law does actually support
you in that. Quoting the CA supreme court, in Marina Point v Wolfson:

> Indeed, the basic rights guaranteed by section 51 would be drastically
> undermined if, as the landlord contends, a business enterprise could exclude
> from its premises or services entire classes of the public simply because
> the owner of the enterprise had some reason to believe that the class, taken
> as a whole, might present greater problems than other groups. _Under such an
> approach, for example, members of entire occupations or avocations, e.g.,
> sailors or motorcyclists, might find themselves excluded as a class from
> some places of public accommodation simply because the proprietors could
> show that, as a statistical matter, members of their occupation or avocation
> were more likely than others to be involved in a disturbance._ (See, e.g.,
> Atwater v. Sawyer (1884) 76 Me. 539 [49 Am.Rep. 634] (innkeeper's exclusion
> of all members of the militia, because of disorderly conduct of other
> militiamen, held impermissible).) Similarly, members of a particular
> nationality or ethnic group might be excluded from an apartment complex
> simply because the landlord had found from his experience that members of
> that nationality or ethnic group were more likely to play [30 Cal. 3d 740]
> loud music or to damage the landlord's property than tenants of other
> backgrounds.

> As these examples demonstrate, the exclusion of individuals from places of
> public accommodation or other business enterprises covered by the Unruh Act
> on the basis of class or group affiliation basically conflicts with the
> individual nature of the right afforded by the act of access to such
> enterprises.

(emphasis added)

[https://law.justia.com/cases/california/supreme-
court/3d/30/...](https://law.justia.com/cases/california/supreme-
court/3d/30/721.html)

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TACIXAT
Is this going to affect similar practices for all payment processors? I feel
almost any payment processor refuses to deal with "vice" business (porn,
gambling) due to high risk of fraud. This will be very interesting if they are
no longer allowed to do that.

~~~
jedberg
They'll just make the fees be 110% of the transaction or something similar.
That's how credit card processors do it now.

They charge a variable rate based on the nature of the business and the risk
it involves. Porn sites get charged 10-20% in credit card fees because of the
high number of chargebacks.

~~~
mritun
Isn't that discrimination too if we go by this precedent?

IceCreme? We can't refuse you, but it's $4500 for you!

Where do you draw the line? Litigation is expensive!

~~~
staller
I'm curious about this too. If your business has high risk than raising your
fees for select people sounds like discrimination. Raising them for your whole
platform could really hurt your business

~~~
lotsofpulp
The fees are raised due the riskier nature of the business, not due to “select
people”.

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TomMckenny
Square bans the use of its service for debt collection. The ruling says doing
so is a violation of civil rights.

Does this actually strengthen rights for minorities or does it dilute those
right by including bill collectors under the law?

Edit: as pointed out below, I am extrapolating from a ruling on standing an
implication that has not explicitly been decided one way or another. I have
done this so strongly that what I posted in the second sentence above is
essentially false. I'll leave it as full disclosure of my error.

~~~
asdfasgasdgasdg
Was there a final ruling in the suit? Or was it simply decided that Square
could not use this particular argument to get the suit dismissed.

~~~
Gaelan
The latter, I believe:

> Finally, the court declined to address whether _occupational discrimination
> is covered by the Unruh Act_ or if White was an adequate representative to
> support the class action

Emphasis mine.

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pm_me_ur_fullz
A few years ago Silicon Valley Bank wouldn't open an account for an entity
with blockchain in the name, no matter what it actually did.

I can use this ruling, doesn't matter how skittish their compliance officer is
nor the lack of clarity from their federal regulators. Should be a good time
and accelerant!

~~~
cjensen
Yes and no. This means you can sue despite not being a customer. It does not
mean your suit will succeed.

~~~
pm_me_ur_fullz
I understand, it just won't be dismissed for "not having standing" on the
plaintiff's side.

Progress!

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hamandcheese
> However, it is unclear whether a class containing members bound by
> arbitration agreements can be certified. At the same time, the broad
> conception of statutory standing under the Unruh Act would be much less
> effective as a deterrent if class certification were denied based on the
> inclusion of class members who have signed arbitration agreements. While the
> White court declined to address the class certification issue, similar
> classes containing members bound by arbitration agreements have been
> certified in California federal district court cases against Uber and
> Toyota.

This is very interesting to me. This case seems to (or at least might, once
it’s fully litigated) further open the door to class action led by a plaintiff
who is not bound under an arbitration agreement, but with the class still
representing members who are bound under arbitration agreements.

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valuearb
When a panel of lawyers is asked if someone can be sued, the answer is always
yes.

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based2
& historical pre-transaction contexts should be available for online
transactions. Ex: How to complain, if a transaction is cut and then the price
raised automagically.

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Quanttek
Great ruling! Anything else would've been quite absurd or inconsistent as it
would allow for e.g. a grocerer to pin a "whites only" sign onto the door and
anyone deterred would not have standing.

I also want to laud the beautiful design of the webpage.

