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WBK Industry News - Litigation Developments

California Supreme Court Finds Website User Plaintiff has Standing Under State’s Unruh Act

The California Supreme Court recently issued an opinion finding that a plaintiff has standing to sue under the state’s anti-discrimination Unruh Act, in a case where the plaintiff attempted to access the defendant’s electronic payment processing website, but did not because of its exclusionary terms of service.

The plaintiff, a California bankruptcy attorney, sued the defendant after determining that the defendant website’s terms of service required users to confirm that they would not accept payments in connection with the business or business activities of bankruptcy attorneys.  The plaintiff’s suit was dismissed at the district court level because that court found the plaintiff only had “mere awareness” of the discriminatory terms of service.  The Ninth Circuit certified the appeal and concluded that the plaintiff satisfied Article III requirements for a concrete and particularized injury.

The Court pointed out that the purpose of California’s Unruh Act is to create and preserve a nondiscriminatory environment in California business establishments by prohibiting “arbitrary, invidious discrimination.”  Furthermore, the opinion notes that California courts consider the Act’s broad remedial purpose and overarching goal of deterring discriminatory practices by businesses in the state, but must also be limited by the standing requirement that a plaintiff must be a victim of a defendant’s discriminatory act.

The plaintiff contended his attempt to use the defendant’s website was similar to a person who intends to patronize a brick-and mortar business, but, when attempting entry, sees a sign indicating that the business does not offer services to a class or group to which he or she belongs.  The defendant argued the plaintiff merely had knowledge of an allegedly discriminatory practice, and therefore, no specific injury or standing to sue.

The Court found plaintiff demonstrated more than mere awareness of an alleged discriminatory practice; he spent time investigating the website and its terms of service, and even looked at the record of another case involving the same defendant and an attempt by another bankruptcy attorney to access the defendant’s payment processing services.  He believed that attempting to access the defendant’s services, i.e., registering to use the website even though he was prohibited from doing so because he was going to use the services to conduct his bankruptcy attorney business, was an act of fraud.

Finding that an individual attempting to access prohibited services need not actually access those services and then suffer the consequences in order to suffer an injury and bring a claim, the Court reasoned that for purposes of standing, when a person visits a business’s website, encounters discriminatory terms, and intends to make use of the business’s services, that confers standing under the Unruh Act to persons with a true interest that is “not merely hypothetical or conjectural.”