Judge: Airbnb Can Force Users’ Racial Discrimination Claims Out Of Courtroom

A large — and growing — number of companies use arbitration clauses in their overlong, legalese-stuffed customer agreements to prevent customers from bringing lawsuits and joining together in class actions, but can that arbitration agreement be used to avoid legal liability for possible violations of federal civil rights law? According to one federal judge, yes.

In March 2015, a man named Gregory Selden was planning a visit to Philadelphia and signed up for Airbnb on his iPhone. He created his account and uploaded a photo of himself to the site. Selden, an African-American, then says he tried to rent a listed home from a host named Paul, only to have Paul give him the bad news that this room was no longer available.

However, Selden says that he soon noticed that this same listing was still posted as available to rent on Airbnb. Curious to find out if he’d been rejected by the host because of the color of his skin, Selden created copycat accounts under the name of “Jessie,” a white male whose profile was otherwise no different from Selden’s, and “Todd,” an older white male. Both accounts tried to reserve the same listing and same time period for which Selden had been rejected, and he says both fictional guests’ requests were accepted by Paul.

Selden claims that he repeatedly tried, with no success, to bring this incident to Airbnb’s attention, and so he ultimately filed a lawsuit [PDF], alleging violations of the Civil Rights Act of 1964 and the Fair Housing Act. He hoped to represent all Airbnb users who may have been similarly wronged.

What Selden’s complaint didn’t address at the time was Airbnb’s terms of service, which include an arbitration clause and a ban on customers bring class actions against the company (even through arbitration).

And so, in response to Selden’s lawsuit, Airbnb asked the court to compel arbitration, meaning Selden’s dispute could not be heard in the public forum of a courtroom, but in private arbitration. Additionally, anyone with a similar dispute would have to enter into arbitration on their own, rather than merely joining on to Selden’s class action.

Selden and his attorneys fired back [PDF], arguing that Selden had not actually agreed to the arbitration clause because Airbnb failed to give adequate notice of these terms.

When Selden signed up for Airbnb on his iPhone, he did not even have to check a box to say that he’d read the site’s user agreement. Instead, as you can see on the left, the Airbnb terms are passively agreed to by simply “signing up” for the site.

It’s an argument that some courts have agreed with. Recently, a federal judge in New York denied Uber’s attempt to compel arbitration because its terms of service were similarly positioned on the company’s mobile app.

Even if you accept that he did agree to the terms, argued Selden, the contractual mouseprint can’t be used to compel a civil rights case into arbitration. His response cites the portion of Title II of the Civil Rights Act that states that “The district courts of the United States shall have jurisdiction of proceedings instituted pursuant to this title and shall exercise the same without regard to whether the aggrieved party shall have exhausted any administrative or other remedies that may be provided by law,” and that the “remedies provided in this title shall be the exclusive means of enforcing the rights based on this title.”

Additionally, argued Selden, the arbitration agreement should only apply to those issues that are within the scope of the Airbnb contract. The alleged civil rights violations fall outside of that agreement, he contends.

This morning, D.C. District Court Judge Christopher Cooper sided with Airbnb, issuing an order [PDF] to compel arbitration.

“No matter one’s opinion of the widespread and controversial practice of requiring consumers to relinquish their fundamental right to a jury trial — and to forego class actions — as a condition of simply participating in today’s digital economy, the applicable law is clear,” explains Cooper. “Mutual arbitration provisions in electronic contracts — so long as their existence is made reasonably known to consumers — are enforceable, in commercial disputes and discrimination cases alike.”

The judge concluded that Airbnb’s link to its terms of service, and its explanation that “by signing up” you agree to those terms, was sufficiently conspicuous to pass legal muster.

“Although the text is not directly under the first or second alternative sign-up buttons, any reasonably-observant user would notice the text and accompanying hyperlinks. So even if Selden only clicked ‘Sign up with Facebook’ at the top of the page, he would have seen the relevant text from a quick glance down the rest of the page,” writes the judge. “Thus, by choosing to sign up for Airbnb, Selden manifested his assent to the Terms of Service.”

Additionally, because terms of service and user agreements are so commonplace in the current era, the judge said that almost all consumers are already aware that they must be agreeing to some sort of conditions when they sign up for an online service.

“[I]gnorance of the precise terms does not mean that consumers are unaware they are entering contracts by signing up for internet-based services,” explains Cooper.

As for Selden’s contention that the Airbnb arbitration agreement can’t be applied to civil rights claims, the judge once again disagreed, noting that the clause in question applies to “any dispute, claim or controversy arising out of or relating to these Terms or the breach, termination, enforcement, interpretation or validity thereof, or to the use of the Services or use of the Site or Application.”

Other courts have given a broad interpretation to similar language, says Cooper, and so he must follow their lead.

“Applying this broad interpretation, it is clear that Selden’s claims of unlawful race discrimination ‘arise out of or relate to’ his use of the Airbnb service,” writes the judge. “They therefore fall within the scope of the mandatory arbitration clause.”

With that, the judge stayed Selden’s federal suit and compelled the dispute into private arbitration.

UPDATE: In an emailed statement to Consumerist, Selden’s attorneys say their client will be appealing today’s ruling to the D.C. Circuit Court of Appeals.

“Airbnb continues to request that their customers who still experience Airbnb’s ongoing pattern of discrimination, be placed into arbitration,” reads the statement. “By placing Mr. Selden’s claims into arbitration, a consumer’s constitutional rights to a jury trial and access to the courts of law continues to be whittled down gradually but surely.

“Airbnb cannot and should not be able to avoid complying with historic public accommodations and housing laws put in place for decades with mere computer software,” concludes the statement. “In other words, consumers in a protected class like Selden should not continue to play a guessing game, nor be exhaustively apprehensive about whether they can book a place to stay.”

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