SANTA CLARA, CALIF. – A gay services Internet company and one of its employees made homeless by Hurricane Katrina have sued Paypal, Inc. for breach of contract and emotional distress, claiming it refused to allow the employee to use an old company account to seek relief donations for him. Plaintiff CFS.com claims it runs an “adult-oriented” Web site for gay men that “is not obscene and does not feature any illegal pornographic content.”

After its employee in New Orleans, plaintiff Dorian Gray Alexander, became homeless, he used an old Paypal account, “cruisingforsex.com,” to seek donations for himself and his friend, Troy. Paypal, which allegedly has a virtual monopoly in online donations and money transfer services, froze the account, claiming it violated Paypal policy on obscenity. Plaintiffs say it does no such thing.