By Mofetoluwa Obadina

 

Judge Christopher R. Cooper, federal judge for the U.S. District Court for the District of Columbia just ruled that AIRBNB’s arbitration agreement, which effectively halts users from suing the company in court, is enforceable.[1] Gregory Selden, a Virginia native, initiated the lawsuit in March 2015 against the $30 billion dollar online rental company claiming that his civil rights were violated when a host in Philadelphia denied him a room based on his race.[2] Selden intended to sue the company in a class action suit, knowing that other African American users have likely experienced the same manner of discrimination.[3] However, AIRBNB’s saving grace came in the form of its user agreement: the fine print of warnings, instructions, and liabilities located at the end of the agreement page, which each registered user must agree to prior to creating an account.[4] AIRBNB’S user agreement provided that the company can neither be sued in a class action suit nor can any user bring a civil suit against them; instead requiring users to go through private arbitration and waive their right to a jury trial.[5] Thus, Judge Cooper made it clear that as long as arbitration provisions are made known to consumers, they are “enforceable in commercial disputes and discrimination cases,” and agreed to compel Selden to arbitration.[6]

This ruling potentially presents a problem for consumers who do not fully understand arbitration, even though it is increasingly pursued by many businesses as a faster, cheaper, and easier alternative method of conflict resolution.[7] The decision allows businesses that decide to pursue the non-traditional route of arbitration to opt out of the legal system, reinforcing the argument that arbitration has become necessary in today’s global, digital world.[8] Furthermore, this decision highlights a new trend in arbitration that subjects federal civil rights claims and potentially even more serious cases such as medical malpractice and theft, to arbitration agreements, thereby limiting the time and resources businesses spend in answering lawsuits.[9]

For rising consumer-interactive and sharing economy businesses, this decision can further limit their liability in responding to consumers’ claims of civil rights violations.[10] Moreover, this decision will make it more difficult and tedious for consumers that sign up with AIRBNB to obtain redress for discrimination and other civil rights violations because it unfairly places the burden on the consumers.[11] As a result, consumers have to seek out the actual homeowners in order to initiate a suit, which on its own can likely raise additional legal concerns of jurisdiction, venue and other pre-trial issues.[12] Also, there are implications for corporate social responsibility as this ruling can prevent AIRBNB from accepting some responsibility for giving rise to the liability that a lawsuit is premised upon and could further encourage poor business practices by the agents of the business (i.e. the homeowners).[13] However, the Court reasoned that consumers have already been put on notice and this ruling will only compel the users to thoroughly read the contractual terms contained in the online adhesion contract, a crucial step many users often overlook when creating an account.[14]

Interestingly enough, there are critical pieces included in the user agreement that warrant positive merits: AIRBNB agrees to cover any fees incurred by the plaintiff, agrees to hear the dispute in the plaintiff’s forum and reiterates that the agreement does not bar the user from suing the homeowners for discrimination.[15] However, Selden and his attorney, Ikechukwu Emejuru, intend to appeal Judge Cooper’s decision, but this is perceived as a victory for the rental company and businesses all around in how they can alter and amend contractual terms to better suit them in discrimination claims.[16]

 

 

[1] Selden v. Airbnb Inc., No. 16-CV-00933 1, 2(D.D.C. 2015); Jordan Lebeau, Racial Discrimination Suit Against AIRBNB Should Be Settled By Private Arbitration, Says Federal Judge, Forbes (Nov. 2, 2016, 4:52pm), https://www.forbes.com/sites/jordanlebeau/2016/11/02/racial-discrimination-suit-against-Airbnb-should-be-settled-by-private-arbitration-says-federal-judge/#289f71ab575f.

[2] Vauhini Vara, How AIRBNB Makes It Hard To Sue For Discrimination, The New Yorker (Nov. 3, 2016), https://www.newyorker.com/business/currency/how-Airbnb-makes-it-hard-to-sue-for-discrimination?mbid=social_twitter&mbid=social_twitter&mbid=social_twitter&mbid=social_twitter.

[3] Id.

[4] Lebeau, supra note 1.

[5] Id.

[6] Id.; Vara, supra note 2.

[7] Vara, supra note 2.

[8] Id.

[9] Vara, supra note 2.

[10] Selden v. Airbnb Inc., No. 16-CV-00933 1, 2(D.D.C. 2015); Elaine Glusac, As AIRBNB Grows, So Do Claims of Discrimination, New York Times (Jun. 21, 2016), https://www.nytimes.com/2016/06/26/travel/Airbnb-discrimination-lawsuit.html?_r=0.

 

[11] Vara, supra note 2.

[12] Id.

[13] Glusac, supra note 10.

[14] Lebeau, supra note 1 ; Selden v. Airbnb Inc., No. 16-CV-00933 1, 7(D.D.C. 2015).

[15] Id.

[16] Lebeau, supra note 1 ; Glusac, supra note 10.