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Airbnb Discrimination Case Dismissed Due to Arbitration Clause

By George Khoury, Esq. on November 07, 2016 | Last updated on March 21, 2019

Airbnb, the popular site for short-term lodging, just had a race discrimination case dismissed because of the arbitration clause buried in the site's terms of service. The case alleged that an African American customer was denied accommodations by various Airbnb hosts when using his normal account, but he was allowed to rent when he used a fake account pretending to be white.

While Airbnb has since revamped its anti-discrimination policies and required the hosts to sign a "community commitment," their lawyers are likely breathing a sigh of relief after the federal court ruling. The ruling requires all user grievances against the company, even civil rights complaints and class actions, to be settled via the arbitration process outlined in the website's terms of service.

Terms of Service and User Agreements Are Binding

While the court's opinion notes that the result of the case feels inequitable, the court was bound to follow the law which allows "mutual arbitration provisions in electronic contracts -- so long as their existence is made reasonably known." The court explains that if the result is not something people like, that the court is not the proper place to object, since congress holds the power to make changes to the law.

The decision explicitly describes how online shopping and online services have become commonplace over the last two decades, and that there are various times when the terms of service may not be binding, such as when they are not disclosed at all, or not provided conspicuously enough.

Where Should Airbnb Discrimination Complaints Be Filed?

Although there is an arbitration clause that prevents individual users from filing discrimination complaints in state or federal courts against Airbnb, aggrieved individuals can demand arbitration of their claims directly to Airbnb. Additionally, Airbnb advised that users can sue the hosts directly, just not the company. However, legislation was announced last year that might change things, but until new laws are in place, this is it.

Arbitration is basically a private court-like process where parties present evidence and arguments to a neutral arbiter, who then issues a binding decision. Arbitration can provide much of the same legal remedies as a federal or state court, however, is done privately and without a jury.

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