White v. Square, Inc.

Filing 66

ORDER DENYING MOTION FOR NEW TRIAL by Judge Jon S. Tigar; denying #61 Motion for New Trial. (wsn, COURT STAFF) (Filed on 11/9/2016)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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ROBERT E. WHITE,
Plaintiff,

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SQUARE, INC.,

Re: ECF No. 61

Defendant.

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United States District Court
Northern District of California

ORDER DENYING MOTION FOR NEW
TRIAL

v.

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Case No. 15-cv-04539-JST

Plaintiff Robert E. White brought a purported class action against Defendant Square, Inc.

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(“Square”), alleging that Square violates the California Unruh Civil Rights Act by prohibiting

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certain types of businesses from using its services. The Court entered judgment in favor of Square

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after granting its motion to dismiss White’s second amended complaint and denying White’s

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request for leave to file a motion for reconsideration. ECF Nos. 54, 58, 60. White filed the instant

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motion for a new trial pursuant to Federal Rule of Civil Procedure 59(a). ECF No. 61. The Court

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will deny the motion.

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I.

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BACKGROUND
Square provides a service that enables individuals and businesses “to accept electronic

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payments without themselves directly opening up a merchant account with any Visa or

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MasterCard member bank.” ECF No. 39 ¶ 5. White is the principal of a law firm and “actively

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practices bankruptcy law on behalf of his creditor clients.” Id. ¶ 1. White also “is a personal

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friend and business colleague of Jeremy Katz, a member of the State Bar and a partner in

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shierkatz, RLLP.” ECF No. 20 ¶ 8. Shierkatz is the plaintiff in the related case of shierkatz RLLP

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v. Square, Inc., No. 15-cv-02202-JST (N.D. Cal.) (filed on May 15, 2015).

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White “read this District Court’s file in the [shierkatz case] and thereby became aware of”

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Section 6 of Square’s Seller Agreement. ECF No. 20 ¶ 9. As of December 21, 2015, Section 6 of

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the Square Seller Agreement provided that “[b]y creating a Square Account, you . . . confirm that

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you will not accept payments in connection with the following businesses or business

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activities: . . . (28) bankruptcy attorneys or collection agencies engaged in the collection of debt.”

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ECF No. 39 ¶ 6. After reading this portion of Square’s Seller Agreement, White “was . . .

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dissuaded from seeking to become a [Square] customer given the fact his law practice area is

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similar to that of [shierkatz RLLP] and, as such, [White’s law firm] falls within Category 28 of”

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Section 6. ECF No. 22 ¶ 9. White then “formed the strong, definite and specific intent to attempt

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to have [his law firm] become . . . a [Square] subscriber without [his law firm’s] ever once

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submitting itself to [Square’s alleged misconduct].” ECF No. 39 ¶ 10. Evidencing this intent,
White alleges that he “obtain[ed] and then carefully review[ed] portions of the extensive PACER

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United States District Court
Northern District of California

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record in shierkatz RLLP v. Square, Inc.,” “personally visit[ed] Square[’s] Website,” refused to

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“click[] the link marked ‘Continue’ on Square[’s] Website,” “employ[ed] legal counsel to

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investigate [White’s] bringing legal action against [Square],” “instruct[ed] said legal counsel to

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sue [Square],” “continuously visit[ed] [Square[’s] website beginning on January 1, 2016, and on

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each calendar day thereafter,” and “communicat[ed] a formal demand on [Square] that it . . .

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immediately and permanently agree to cease and desist from violating [his] Unruh Law civil rights

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to be free from . . . occupational discrimination.” Id. ¶¶ 11-12, 14-16, 18, 20.

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On October 1, 2015, White filed this putative class action against Square, raising a single

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claim under California’s Unruh Civil Rights Act. ECF No. 1. On December 21, 2015, White filed

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a First Amended Complaint (“FAC”). ECF No. 20. The Court granted Square’s motion to

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dismiss the FAC on April 19, 2016. ECF No. 38. The Court reasoned that under California law,

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“a person must tender the purchase price for a business’s services or products in order to have

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standing to sue it [under the Unruh Act] for alleged discriminatory practices relating thereto.” Id.

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at 5 (quoting Surrey v. TrueBeginnings, LLC, 168 Cal. App. 4th 414, 416 (2008)). By “not

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alleg[ing] that he attempted to subscribe to Square’s services,” White thus “failed to allege

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statutory standing under the Unruh Act.” Id. at 5-6. Subsequently, White filed a Second

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Amended Complaint on April 29, 2016. ECF No. 39. The Court granted Square’s motion to

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dismiss the SAC on September 14, 2016. ECF No. 54. The Court found that though the SAC
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“add[ed] additional detail regarding the various actions White undertook, which allegedly

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evidence his strong, definite and specific intent to attempt to . . . become a [Square] subscriber,” it

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“still fail[ed] to allege that White tender[ed] the purchase price for [Square’s] services or

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products.” Id. at 5 (internal quotation marks omitted). As such, the Court again concluded that

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“White lack[ed] statutory standing under the Unruh Act.” Id. at 5-6. Judgment was entered on

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September 26, 2016. ECF No. 60. On the same day, White filed a motion for new trial, ECF No.

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61, which motion the Court now considers.

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II.

LEGAL STANDARD
Courts have held that a motion for new trial is only proper where the claims subject to the

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motion were first adjudicated in a trial. See, e.g., Merrill v. County of Madera, 389 Fed. App’x

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United States District Court
Northern District of California

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613, 615 (9th Cir. 2010) (“[A] Rule 59(a) motion for new trial is not available on claims or causes

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of actions for which Plaintiffs never received a trial.”); United States v. Shiozawa, No. 5:12-cv-

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02025-LHK, 2014 WL 522001, at *1 (N.D. Cal. Jan. 2, 2014) (finding the motion for new trial

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under Rule 59 was not proper because there was no trial); Harper v. Costa, No. CIV S-07-2149,

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2010 WL 144427, at *1 (E.D. Cal. Jan. 11, 2010) (finding that, where the plaintiff moved for new

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trial upon the grant of defendants’ motion to dismiss, the Rule 59(a) motion was not appropriate

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because no trial took place). White’s motion for new trial under Federal Rule of Civil Procedure

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59(a) is not a proper method for challenging the Court’s September 14, 2016 order because there

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has been no trial.
As such, the Court construes White’s motion as a “motion to alter or amend a judgment”

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under Federal Rule of Civil Procedure 59(e)1 or a motion to be “relieve[d] . . . from a final

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judgment, order, or proceeding” under Federal Rule of Civil Procedure 60(b). See Shiozawa,

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2014 WL 522001, at *1 (construing the plaintiff’s Rule 59(a) motion as a Rule 59(e) motion or

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Rule 60(b) motion); Harper, 2010 WL 144427, at *1 (construing the plaintiff’s Rule 59(a) motion

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as a Rule 59(e) motion).
Under Rule 59(e), “[r]econsideration is appropriate if the district court (1) is presented with

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The Court notes that White satisfies the requirement that a Rule 59(e) motion “must be filed no
later than 28 days after the entry of the judgment.”
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newly discovered evidence, (2) committed clear error or the initial decision was manifestly unjust,

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or (3) if there is an intervening change in controlling law.” Sch. Dist. No. 1J, Multnomah Cty, Or.

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v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993). “Rule 60(b) provides for reconsideration only

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upon a showing of (1) mistake, surprise, or excusable neglect; (2) newly discovered evidence; (3)

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fraud; (4) a void judgment; (5) a satisfied or discharged judgment; or (6) extraordinary

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circumstances which would justify relief.” Id. (internal quotation marks omitted). A party

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seeking reconsideration under Rule 59 and Rule 60 must do more than rehash arguments or

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recapitulate cases already considered by the court. See Young v. Peery, 163 F. Supp. 3d 751, 753

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(N.D. Cal. Nov. 24, 2015); United States v. Westlands Water Dist., 134 F. Supp. 2d 1111, 1131
(E.D. Cal. Mar. 13, 2001).

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United States District Court
Northern District of California

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III.

DISCUSSION
Here, White seeks reconsideration based on newly discovered evidence. ECF No. 61.

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Accordingly, he “must make three showings”: the evidence must be “newly discovered,” the

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movant must have exercised “due diligence” to discover the evidence, and the evidence “must be

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of such magnitude that production of it earlier would have been likely to change the disposition of

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the case.” Coastal Transfer Co. v. Toyota Motor Sales, U.S.A., 833 F.2d 208, 211 (9th Cir.

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1987).2
Coastal Transfer is instructive. In that case, the court found that the movant failed to meet

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all three criteria. Id. at 212. Coastal Transfer Company (“Coastal”) initiated the action against

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Toyota, alleging an antitrust violation when Toyota discharged Coastal and hired Direct Delivery

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Service to deliver parts to Toyota’s dealers. Id. at 209. Following summary judgment in favor of

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Toyota and entry of final judgment, Coastal argued that it “only recently learned that its expert . . .

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had erred in his original analysis of data” when he had advised Coastal that Direct Delivery

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Service’s illegal shipment rates took place in an incorrect year. Id. at 210. The court concluded

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that the expert’s revised testimony was not newly discovered because “the evidence upon which

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the expert’s testimony was based had been in Coastal’s possession since the start of litigation.” Id.

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The test is the same under either Rule 59 or Rule 60(b)(2). Jones v. Aero/Chem Corp., 921 F.2d
875, 878 (9th Cir. 1990).
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at 212. As to the due diligence inquiry, the court found that “Coastal did not use due diligence to

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discover its expert’s error,” as it should have been “apparent” that the expert analyzed data from

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the wrong year. Id. Finally, the expert testimony “would not have propelled Coastal over the

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hurdle of summary judgment.” Id. In so concluding, the court reasoned that the revised testimony

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alleged only “illegal” rates, which fell “far short” of demonstrating “below-cost” pricing for

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establishing an antitrust violation. Id.

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Here, White alleges that the “new evidence,” a September 19, 2016 letter from Square’s
counsel to his counsel, “reveals, for the first time, Square’s general legal position that any

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bankruptcy lawyer signing up for Square’s service in order to facilitate the practice of bankruptcy

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law would expose himself to a claim back of promissory fraud from Square.” ECF No. 61 at 2-3.

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United States District Court
Northern District of California

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The letter, “directly addressing shierkatz, RLLP’s situation,” was written to address “the theory

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that Square’s terms of services have supposedly been revised to allow payment processing for

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bankruptcy legal services.” Id. at 2; ECF No. 61-1 at 15. In the letter, Square’s counsel explains

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that “[t]here has been no such revision” and that “Square’s terms of service continue to require

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subscribers to agree that they will not use the service to process payments because of the economic

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risk associated with those transactions.” ECF No. 61-1 at 15. “[S]igning up for Square’s service

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with the intent to violate the applicable terms of service would [therefore] be fraudulent.” Id.

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Though White did not fail to exercise due diligence in raising the issue of the September

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19, 2016 letter one week after his counsel received it, he fails to meet the other two criteria of the

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test. First, the evidence is not newly discovered. In both the FAC and SAC, White alleges that

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Square’s Seller Agreement states, “By creating a Square Account, you . . . confirm that you will

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not accept payments in connection with . . . (28) bankruptcy attorneys or collection agencies

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engaged in the collection of debt.” ECF No. 20 ¶ 6; ECF No. 39 ¶ 6. The September 19, 2016

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letter merely confirms that “[t]here has been no . . . revision” to this requirement. ECF No. 61-1 at

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15. As such, Square’s terms of service—which form the basis of the letter—have been in White’s

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possession since the start of litigation, similar to how “the evidence upon which the expert’s

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testimony was based had been in Coastal’s possession since the start of litigation.” See Coastal

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Transfer, 833 F.2d at 212. In addition, Square notes correctly that “the legal proposition
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referenced in the letter is long-established California law regarding promissory fraud.” ECF No.

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63 at 4 (citing Lazar v. Superior Court, 12 Cal. 4th 631, 638 (1996)). Accordingly, the Court

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concludes that neither the facts nor the legal position raised by the letter constitutes newly

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discovered evidence.

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Finally, the evidence raised by the letter is not of “such magnitude that production of it

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earlier would have been likely to change the disposition of the case.” See Coastal Transfer, 833

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F.2d at 211. In Coastal Transfer, the revised expert testimony “would not have propelled Coastal

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over the hurdle of summary judgment.” Id. at 212. Here, the evidence would not have changed

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the Court’s decision to grant Square’s motion to dismiss the SAC. The Court has made clear in its
previous orders that White has failed to allege statutory standing under the Unruh Act by not

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United States District Court
Northern District of California

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attempting to subscribe to Square’s services. See ECF No. 38 at 5-6 (order granting motion to

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dismiss FAC due to lack of standing); ECF No. 54 at 5 (order granting motion to dismiss SAC due

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to lack of standing). The letter— clarifying that the terms remain unchanged and detailing

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Square’s legal position should shierkatz RLLP subscribe for Square’s service with the intent to

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violate the terms—falls well short of demonstrating White’s required “tender [of] the purchase

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price for a business’s services or products in order to have standing to sue.” See ECF No. 38 at 5

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(quoting Surrey, 168 Cal. App. 4th at 416)).

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Further, the Court dismisses White’s argument that the new “facts would and should

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change the result because Square cannot enforceably demand . . . something illegal as a condition

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precedent to . . . obtaining standing.” ECF No. 64 at 2. First, White mischaracterizes the facts, as

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Square is not “demanding” anything illegal. Additionally, Square is not making any demand on

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White, as the letter addresses the plaintiff in the shierkatz RLLP v. Square, Inc. case. See ECF

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No. 61-1 at 15. Second, White’s argument does not change the fact that he has not met the tender

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requirement. Finally, White cites to Scaduto v. Esmailzadeh in his reply brief, but the Court had

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already concluded in its previous order that the case “provides no support for White’s argument

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that he has statutory standing under the Unruh Act.” ECF No. 54 at 7 n.2 (citing No. 07-cv-4069,

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2007 WL 8435679 (C.D. Cal. Aug. 9, 2007)). The Court found Scaduto unpersuasive because of

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the factual distinction between the “housing discrimination” situation in that case and “the context
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[here] of a consumer’s desire to purchase a product.” Id. White’s reliance on Scaduto is

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misguided because he must do more than rehash arguments and recapitulate cases already

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considered. See Young, 163 F. Supp. 3d at 753; Westlands, 134 F. Supp. 2d at 1131.

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Because the evidence is not newly discovered and would not have changed the Court’s

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decision to grant Square’s motion to dismiss, White fails to “make [the] three showings” required

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for reconsideration based on newly discovered evidence. See Coastal Transfer, 833 F.2d at 211.
CONCLUSION

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For the foregoing reasons, the Court denies Plaintiff’s motion for new trial.

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IT IS SO ORDERED.

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Dated: November 9, 2016

United States District Court
Northern District of California

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______________________________________
JON S. TIGAR
United States District Judge

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