Case Digest: Butler vs. Adoption Media, LLC, 486 F. Supp 2d 1022 (2007)

Private International Law  

• Petitioner: Michael Butler and Richard Butler, California 

• Respondent: Adoption Media LLC, Arizona

• Forum: California

Recit Version:

• Dale R. Gwilliam and Nathan W. Gwilliam, Arizona residents, operated ParentProfiles.com, a website allowing prospective adoptive parents to post profiles for a fee. In 2002, Michael and Richard Butler, a same-sex couple from California, were denied the opportunity to post on the site due to the company’s policy restricting profiles to opposite-sex married couples. The Butlers filed a lawsuit under California’s Unruh Civil Rights Act, along with claims for unfair competition and false advertising, arguing that the site’s policy discriminated against them based on sexual orientation.

• The court determined that a true conflict existed between the laws of the two states, with California’s Unruh Act offering broader anti-discrimination protections than Arizona’s Civil Rights Act, which did not address sexual orientation or marital status discrimination.

• The court held that California law would govern the case, emphasizing California’s strong public policy against discrimination and the broader protections it offers. Allowing businesses to circumvent California’s anti-discrimination laws by operating from another state would undermine the Unruh Act’s protections. Arizona’s interest in protecting businesses from unexpected liabilities was deemed less significant than California’s interest in enforcing its anti-discrimination statutes.

Facts:

• Dale R. Gwilliam and Nathan W. Gwilliam, Arizona residents, through Adoption Media, LLC, operate the largest U.S. adoption-related websites, including ParentProfiles.com.

• ParentProfiles.com allows prospective adoptive parents to post profiles for a fee, targeting women planning to give up children for adoption.

• In 2002, Michael and Richard Butler, registered domestic partners in California, applied to post a profile on ParentProfiles.com but were rejected since the website had a policy allowing only opposite-sex married couples.

• The Butlers filed a lawsuit, alleging violations of the Unruh Civil Rights Act, California's unfair competition, and false advertising laws, seeking damages and injunctive relief.

• Unruh Civil Rights Act: Prohibits discrimination based on sexual orientation in business establishments.

Issue: Whether California law or Arizona law govern the claim of the Butlers. 

Held: California law governs the claim of the Butlers. 

i. whether the laws of Arizona differ from the laws of California

The parties agree — though for different reasons — that Arizona law differs from California law. 

Defendants assert that the issue for choice-of-law analysis is not merely whether Arizona and California treat sexual orientation and marital status discrimination differently, but whether the acts about which plaintiffs complain could support a claim under Arizona law. They  argue that Arizona does not permit same-sex couples to adopt jointly, and that same-sex couples have no claim for discrimination based on being treated differently than married couples when it comes to adoption or marriage. They also contend that because a same-sex couple cannot jointly adopt in Arizona, there can be no claim for discrimination in Arizona based on the refusal to "publish" a profile for a same-sex couple.

Plaintiffs, on the other hand, focus on the fact that while California law prohibits discrimination on the basis of sexual orientation and marital status, Arizona law does not affirmatively permit Arizona businesses to discriminate against gays or lesbians or  domestic partners, Arizona's public accommodation statute is silent with regard to discrimination on the basis of sexual orientation and marital status, and Arizona courts have not ruled on the question whether the state's public accommodation statute forbids discrimination against same-sex couples. Plaintiffs contend that while Arizona has no state law prohibiting sexual orientation discrimination by business establishments, it does not condone such discrimination. They also note that various localities in Arizona have promulgated local policies prohibiting discrimination based on sexual orientation or marital status in public accommodation and other areas.

Both Arizona and California have enacted anti-discrimination laws, and laws governing adoption and marriage. California's Unruh Act is discussed at length above. The Arizona Civil Rights Act of 1965 prohibits discrimination in places of public accommodation, "against any person because of race, color, religion, sex, national origin or ancestry." Ariz. Rev. Stat. § 41-1442. It is unlawful under this statute to deny or withhold "accommodations, advantages, facilities, or privileges thereof" based on the enumerated characteristics, or to make any distinction "with respect to any person" based on the enumerated characteristics, "in connection with the price or quality of any item, goods or services offered by or at any place of public accommodation." Id.

On March 8, 2000, the voters passed Proposition 22, an initiative providing that "[o]nly marriage between a man and a woman is valid or recognized in California." This law is codified as California Family Code § 308.5. Pursuant to this statute, California will not recognize same-sex marriages even if those marriages are validly formed in other jurisdictions that permit same-sex marriage. Thus, like Arizona, California does not allow same-sex couples to marry.

However, unlike Arizona, the California Legislature has enacted legislation allowing civil unions (domestic partnerships). California created a "domestic partner registry" in 1999. See Cal. Fam. Code § 297 (effective January 1, 2000). The statute was subsequently amended to expand the rights and obligations of domestic partners. In 2001, the California Legislature enacted AB 25, which became effective on January 1, 2002. Among other things, AB 25 provided that registered domestic partners were entitled to use the streamlined step-parent adoption procedures.See Cal. Fam. Code § 9000(g). Thus, AB 25 equalized registered domestic partners with married spouses with regard to the issue of adoption in California.

As of January 1, 2005, California's domestic partner law provides most of the same rights and responsibilities of spouses under California law, such as complete inheritance  rights, community property, joint responsibility for debt, and the right to request support from the other partner upon dissolution of the partnership. Cal. Fam. Code § 297.5.

While Arizona law does not authorize civil unions, the voters of the state recently rejected an attempt to make the enactment of such laws impossible in the future,  by rejecting Proposition 107 in the Arizona November 2006 state-wide election. Proposition 107 would have amended the Arizona Constitution to state that marriage consists of a union of one man and one woman, and to prohibit the state and its political subdivisions from creating or recognizing any legal status for unmarried persons that is similar to that of marriage.See http://www.azsos.gov/election/2006/General/ballotmeasures.htm.

Thus, as of 2002, when the Butlers sought to have their profile posted on ParentProfiles.com, Arizona state law did not prohibit discrimination on the basis of sexual orientation or marital status; any single person could petition to adopt in Arizona; there was no prohibition against single homosexual persons becoming adoptive parents; there was no law prohibiting joint adoptions by same-sex couples, although the law explicitly provided for joint adoptions only by "husband and wife;" and there was no law explicitly prohibiting same-sex second-parent adoptions. The law regarding adoptions is the same today — plus, the Arizona Legislature recently defeated a bill that would have given preference to married couples over single people in adoption.

As of 2002, California prohibited discrimination in public accommodations on the basis of sexual orientation; it was an open question whether discrimination on the basis of marital status was also prohibited; any single person could adopt in California; there was no law prohibiting adoptions by same-sex couples; and California allowed stepparent and second-parent adoptions without reference to sexual orientation or marital status, and had equalized registered domestic partners with married spouses with regard to the issue of  adoption.

Having determined that the laws of the two states differ in some respects, as explained above, the court now considers whether a true conflict exists.

ii. whether a true conflict exists

The California Supreme Court found a "true conflict" in Bernhard, in Offshore Rental, and in Kearney because in each of those cases, the laws of two states were in conflict, and that conflict reflected competing state interests. 

In Bernhard, Nevada law held that tavern owners were not liable for injuries caused by drunk drivers who had obtained alcohol from the tavern owners, while California law imposed liability on the tavern owners for such injuries. 

In Offshore Rental, Louisiana law held that a corporate plaintiff could not bring a claim for the loss of services of one of its officers, while California law arguably allowed such a claim. 

In Kearney, it was legal under Georgia law to record a  telephone conversation if only one of the participants knew it was being recorded, but illegal under California law to record such a conversation unless both participants were aware of the recording.

In the present case, neither the Arizona Civil Rights Law nor the Unruh Act specifically prohibited discrimination on the basis of sexual orientation or marital status in 2002. However, while there are no reported Arizona cases holding (even up to the present) that either of those characteristics can provide a basis for a claim of discrimination in public accommodations under the Arizona Civil Rights Law, a number of California cases had held by 1984, at least with regard to discrimination on the basis of sexual orientation, that such discrimination was prohibited by the Unruh Act. As of January 2006, of course, the Unruh Act unambiguously prohibits discrimination on the basis of both sexual orientation and marital status.

Also as of October 2002, both Arizona and California allowed any single person to adopt. Neither Arizona nor California had a law prohibiting adoptions by same-sex couples — although Arizona law explicitly provided for joint adoptions only by "husband and wife," and defined "stepparent" adoption as adoption by the "spouse" of the child's parent; while California allowed both stepparent and second-parent adoptions, regardless of the gender of the adoptive parents. 

While the differences between the laws of Arizona and California are not as distinct as the differences at issue in Bernhard, Offshore Rental, and Kearney, this case arguably presents a true conflict, if only for the reason that it is unlikely that plaintiffs could have brought a similar discrimination claim under Arizona law. California has a strong interest in enforcing its anti-discrimination laws. It is less clear what interest Arizona might have in allowing discrimination in public accommodations on the basis of sexual orientation or marital status, or in applying its own law to California residents. The only interest plaintiffs have articulated is Arizona's interest in protecting its resident businesses from uncertainty.

Plaintiffs have supported their position with citations to the Unruh Act and the cases that have interpreted it, while defendants have provided no support for their claim that Arizona has a strong interest in protecting its businesses from "surprise" penalties in the form of liability under the anti-discrimination laws of other states. It is true that the courts in Kearney, Offshore Rental, and Bernhard considered a similar interest under the facts of those cases with regard to Georgia, Louisiana, and Nevada, respectively. But defendants have not pointed to any Arizona statute or judicial decision establishing that Arizona has a paramount interest in ensuring certainty in business dealings for Arizona businesses. Moreover, as the court in Kearney pointed out, "a company that conducts business in numerous states ordinarily is required to make itself aware of and comply with the law of a state in which it chooses to do business." Nevertheless, in view of this finding that the interests of the two states are not entirely in accord, the court will consider the "comparative impairment" of each state's interest.

iii. which state's interest would be more impaired if its law were not applied

Once it has determined that a true conflict exists, the court must carefully  evaluate and compare the nature and strength of the interest of each jurisdiction in the application of its own law "to determine which state's interest would be more impaired if its policy were  subordinated to the policy of the other state," and must apply the law of the state whose interest would be more impaired if its law were not applied. 

Plaintiffs, on the other hand, argue that California's interest would be more impaired if California law were not applied in this case. They argue that California's strong interest is shown in this case by the facts that the principal purpose underlying the Unruh Act is the protection of California residents from discrimination in California business transactions, and that the Legislature has continued to modify the Act and the courts have vigorously enforced it. Plaintiffs also contend that California has a significant interest in this case  because this case involves family and adoption-related issues — issues that traditionally lie in the domain of the states. Plaintiffs claim that in light of these strong public policies, California's interests would be significantly impaired by the failure to apply California law.

Plaintiffs argue further that defendants have not shown and cannot show that Arizona has an actual or significant stake in this litigation or that its interests will be impaired if California law is applied. With regard to defendants' claim that Arizona has an interest in promoting "free enterprise," plaintiffs argue that defendants have not shown that this alleged interest would be promoted by permitting defendants to discriminate against same-sex couples.

In sum, plaintiffs argue that the factors that led the Kearney court to find that California law applied to the recording of telephone conversations between California residents and persons located in other states also apply in this action, while defendants maintain that California's interest does not come into play because this case does not involve discrimination against  California residents in California. Defendants submit that all the activity occurred in Arizona, where defendants and ParentProfiles.com's server are located. They argue that plaintiffs, in contacting defendants via the Internet, "traveled" from California to Arizona, and were therefore "in" Arizona at the time of the alleged discrimination. They argue that California has no interest in having its law applied extraterritorially.

The court finds that the failure to apply California law in the present case would undermine the Unruh Act for the same reasons. If businesses with headquarters in other states could maintain a regular practice of discriminating against California residents, that practice would substantially impair the protection afforded by the statute.

The court is not persuaded by defendants' argument that Arizona's interests would be seriously impaired by applying California law. In Kearney, the court found that because California law was more protective of privacy interests than the comparable Georgia statute, "the application of California law would not violate any interest protected by Georgia law." Moreover, the court noted, because there was "nothing in Georgia law that requires any person or business to record  a telephone call without providing notice to the other parties to the call, . . . persons could comply with Georgia law without violating any provision of Georgia law." I

Similarly, in the present case, the Unruh Act is more protective of consumers than  the comparable Arizona law. Application of California law would not violate any right protected by Arizona law, and the Unruh Act merely provides protections in addition to those specifically enumerated protections in Arizona. Arizona law does not require, or even permit, discrimination by businesses against same-sex couples.

Thus, defendants can comply with California law while doing business in California without violating any provision of Arizona law, and any interest Arizona may have in its own law would not be seriously impaired by the application of California law. As in Kearney, where the court found that it would be feasible for a business located outside California to identify the calls that its employees were making to California residents, or were taking from California residents, it would be feasible in the present case for defendants to identify those potential customers of ParentProfiles.com who were living in, and certified to adopt in, California.