Plazza v. Airbnb, Inc.

289 F.Supp.3d 537

Francesco PLAZZA and Sylvie Naude, individually and on behalf of all others similarly situated, Plaintiffs,

v.AIRBNB, INC., Defendant.

16–CV–1085 (VSB)

United States District Court, S.D. New York.

Signed January 26, 2018

Lucas A. Ferrara, Jeffrey M. Norton, Newman Ferrara LLP, New York, New York, Kent L. Gubrud, Law Office of Kent Gubrud P.C., New York, New York, Counsel for Plaintiffs and the Proposed Class

Roberta A. Kaplan, Kaplan & Company, LLP, New York, New York, Counsel for Defendant

OPINION & ORDER

VERNON S. BRODERICK, United States District Judge:

Plaintiffs Francesco Plazza and Sylvie Naude (collectively, "Plaintiffs") bring this putative class action against Defendant Airbnb, Inc. ("Defendant" or "Airbnb"). Before me is Airbnb's motion to compel arbitration and dismiss the action. Because Plaintiffs and Defendant entered into a valid and enforceable arbitration agreement, Airbnb's motion is granted in part and denied in part, and this action is stayed pending the outcome of arbitration.

I. Background

A. Plaintiffs' Claims

Plaintiff Naude originally created her account and registered as a user with Airbnb on July 29, 2009. (Naude Decl. ¶ 3; Miller Decl. ¶¶ 4–5.)¹ Plaintiff Plazza initially registered with Airbnb on August 21, 2011, and created a second account on October 2, 2014. (Plazza Decl. ¶ 2; Miller Decl. ¶¶ 6–9.)² Plaintiffs allege that by creating and maintaining a website that lists, advertises, and takes fees or commissions for property rentals posted by individual members on the site, Airbnb is acting as an unlicensed real estate broker in violation of New York Real Property Law § 440, et seq . (Compl. ¶¶ 2–4.)³ Plaintiffs assert that in this way Airbnb avoids being subject to the laws governing real estate brokers, and "place[s] itself in the position of sole arbiter and decision-maker in all member disputes and vests itself with complete discretion with regard to the fees and commissions its [sic] takes as well as the distribution of rental payments it processes." (Id. ¶ 7.) Plaintiffs allege that Airbnb's actions and behavior are "deceptive and fraudulent" and result in actual harm to Airbnb's members. (Id. ¶ 8.) Plaintiffs bring this putative class action on behalf of themselves and all similarly situated individuals who "[p]aid any fee, commission, or rent to Airbnb for the purpose of listing and/or renting real property, including apartments, co-ops, condominiums, and houses, within the State of New York within the six year period preceding the filing of the complaint in this action." (Id. ¶ 17.) Specifically, Plaintiffs claim violations under New York Real Property Law § 440, et seq ., deceptive trade practices under New York General Business Law § 349, fraud, and unjust enrichment. (Id. ¶¶ 47–73.)

B. Defendant's Terms of Service

Since at least 2009, in order to use Airbnb's online platform, Hosts (third parties who offer their accommodations on Airbnb's website) and Guests (third parties who book such accommodations) have been required to create an account. (Miller Decl. ¶¶ 2, 4; see also Naude Decl. ¶ 3; Plazza Decl. ¶ 2.)⁴ It is implied, and I assume in connection with my consideration of this motion, that the 2009 Terms of Service ("TOS") did not contain an arbitration clause. (See Miller Decl. ¶¶ 11, 13; Def.'s Mem. 6; Pls.' Mem. 6.)⁵ However, since 2009 Airbnb has modified its TOS numerous times, and since August 15, 2011, the TOS includes a mandatory arbitration provision with a class action waiver. (Miller Decl. ¶¶ 11, 13; Pls.' Mem. 6–11.)⁶ The TOS modifications have effective dates of August 15, 2011, May 22, 2012, April 7, 2014, June 30, 2014, and July 6, 2015. (Miller Decl. ¶ 11, Exs. 4–8.) During each of these years, the arbitration provision in the TOS reads as follows:

You and Airbnb agree that 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 (collectively, "Disputes ") will be settled by binding arbitration, except that each party retains the right to seek injunctive or other equitable relief in a court of competent jurisdiction to prevent the actual or threatened infringement, misappropriation or violation of a party's copyrights, trademarks, trade secrets, patents, or other intellectual property rights. You acknowledge and agree that you and Airbnb are each waiving the right to a trial by jury or to participate as a plaintiff or class member in any purported class action or representative proceeding. Further, unless both you and Airbnb otherwise agree in writing, the arbitrator may not consolidate more than one person's claims, and may not otherwise preside over any form of any class or representative proceeding.

(Id. ¶ 13, Exs. 4–8.)⁷ The arbitration provision also includes paragraphs addressing the arbitration rules and governing law, arbitration process, arbitration location and procedure, arbitrator's decision, and the responsibility for paying any arbitration-related fees. (Id. Exs. 4–8.)⁸ Additionally, the initial paragraphs of the TOS state that "[b]y using the Site and Application, you agree to comply with and be legally bound by the terms and conditions of these Terms of Service." (Id. )⁹ As of May 22, 2012, the TOS was also preceded by a capitalized admonition to users to

PLEASE READ THESE TERMS OF SERVICE CAREFULLY AS THEY CONTAIN IMPORTANT INFORMATION REGARDING YOUR LEGAL RIGHTS, REMEDIES AND OBLIGATIONS. THESE INCLUDE VARIOUS LIMITATIONS AND EXCLUSIONS, A CLAUSE THAT GOVERNS THE JURISDICTION AND VENUE OF DISPUTES ....

(Id. Exs. 5–8.)¹⁰

According to Airbnb's archived computer code, as of 2009, the sign-up screen for potential users included a sentence, directly below the sign-up button, stating that "By clicking ‘Sign Up,’ you confirm that you accept the Terms of Service." (Id. ¶ 5, Ex. 1.)¹¹ The TOS were hyperlinked, and there was one other hyperlink allowing existing members to sign in. (Id. ) As of August 21, 2011, Airbnb presented users with one of two possible alternate sign-up screens. (Id. ¶¶ 6–7, Ex. 2.) The first allowed potential users to either "Connect with Facebook" or "Create an account with your email address." (Id. Ex. 2.) The phrase "[c]reate an account with your email address" was hyperlinked. (Id. ) Below those two options was a sentence stating that "By clicking ‘Connect with Facebook,’ you confirm that you accept the Terms of Service." (Id. ) The phrase "Terms of Service" was in blue text and underlined, indicating a hyperlink. (Id. )

The second alternate screen similarly presented users with two options; however, users could now click a button stating "Connect with Facebook" or input their first name, last name, email address, password, and password confirmation prior to clicking on a button stating "Create Account." (Id. ) Above the button "Connect with Facebook" was text stating "Sign up using Facebook." (Id. ) Directly underneath the two options was text stating "By clicking ‘Sign Up’ or ‘Connect with Facebook,’ you confirm that you accept the Terms of Service." (Id. ) "Terms of Service" was in blue text, indicating a hyperlink. (Id. ) There was one other hyperlink allowing existing members to sign in. (Id. ) Finally, as of October 2, 2014, although the two alternate sign-up screens now allowed three methods of signing up, including "Sign up with Facebook," "Sign up with Google" or "Sign up with Email,"¹² they still noted that "[b]y signing up," the user "agree[s] to Airbnb's Terms of Service, Privacy Policy, Guest Refund Policy, and Host Guarantee Terms." (Id. ¶¶ 8–9, Ex. 3.) The Terms of Service, Privacy Policy, Guest Refund Policy, and Host Guarantee Terms were all separately hyperlinked. (Id. )

Plaintiffs further referenced, and presented in advance of an April 28, 2016 conference in this matter, a "screenshot" of a 2016 sign-up screen. (Norton Decl. ¶¶ 2–4, Ex. A; Pls.' Pre–Mot. Letter.)¹³ This sign-up screen displayed three options for signing up—"Continue with Facebook," "Continue with Google," or "Sign up with Email"—and included, underneath the third option, the sentence stating that "[b]y signing up, I agree to Airbnb's Terms of Service, Privacy Policy, Guest Refund Policy, and Host Guarantee Terms." (Norton Decl. Ex. A; Pls.' Pre–Mot. Letter.) As with the other sign-up screens, the TOS and other documents were separately hyperlinked. (Id. )

Quite apart from the initial sign-up process, Airbnb presented its modified TOS to users the first time they attempted to log in to their Airbnb accounts after the particular modified TOS took effect. (Miller Decl. ¶ 16.) Users were required to accept the modified TOS prior to accessing any part of the Airbnb platform. (Id. ; see Naude Decl. ¶ 7; Plazza Decl. ¶ 6.) Airbnb terms these acceptances "consent events." (Miller Decl. ¶ 16.) The 2012, 2014, and 2015 modifications of the TOS each presented Airbnb users with a screen box titled either "Updated Terms of Service and Privacy Policy," "Terms of Service," or "Updated Terms of Service." (Id. Exs. 9–11.) Below the title was a short paragraph notifying users that Airbnb recently updated its terms. (Id. ) In that introductory paragraph, the 2014 and 2015 screen boxes further told users to read each term carefully and provided a hyperlink for users to "[l]earn more about what's changed." (Id. Exs. 10–11.) Below the introductory paragraph, each screen box provided a scrollable version of the TOS and tabs to the other relevant agreements that had been modified. (Id. Exs. 9–11.) Finally, each screen box required users, underneath the scrollable TOS, both to click a check box next to text stating "I agree to the terms and conditions of the updated Terms of Service" or other similar language, and to click a red button reading "I Agree" or "Agree." (Id. ¶¶ 17–19, Exs. 9–11.)

Airbnb's records indicate that Plaintiff Naude "consented" to the TOS on July 29, 2009, May 23,...