Payment Processor's Appeals Case Contains Ramifications for Adult

LOS ANGELES—The outcome of a U.S. Court of Appeals case in the Ninth Circuit involving San Francisco-based payment services company, Square Inc., could have implications for the adult industry.

During oral arguments last week in a case pitting bankruptcy attorney Robert White vs. Square Inc., White's legal team argued that Square Inc. is illegally discriminating against bankruptcy attorneys by blocking them from using its platform; and that a trial court was in error in finding White couldn’t file suit because he never signed up for the service.

According to Square Inc.'s current policy, bankruptcy attorneys, adult entertainment-oriented companies—along with more than two dozen other occupations—are barred from using their services. White first sued Square in 2015, arguing that since most of the banned businesses on the company’s refusal list were legal, Square was in violation of California's Unruh Act and the case should be remanded to state court in California, Law360 reported.

The Unruh Civil Rights Act is a piece of California legislation that outlaws discrimination based on sex, race, color, religion, ancestry, national origin, age, disability, medical condition, genetic information, marital status, or sexual orientation.

An attorney for White told a three-judge panel that Square effectively bars bankruptcy lawyers from using its service by telling prospective customers it will not accept payments in connection with certain activities such as “bankruptcy attorneys or collection agencies engaged in the collection of debt.” That policy is a violation of Unruh, White's legal team argued.

“California’s Unruh Civil Rights Act has been interpreted by the California Supreme Court to ban occupational discrimination, and that’s exactly what this is,” attorney Myron Moskovitz said, according to Law360.

White said he had his attorney ask Square to change the policy in a letter and had exhausted all his options, Law360 reported.

Square said that federal and state rules deem bankruptcy attorneys and their clients to be significant credit risks.