How Airbnb Makes It Hard to Sue for Discrimination
In March of 2015, Gregory Selden, a twenty-five-year-old black man from Virginia, was planning a trip to Philadelphia. He’d heard it could be cheaper to stay at someone’s house, through Airbnb, than to rent a hotel, so he created an Airbnb profile, with a photo and some basic details about himself, and sent an inquiry to a host whose place looked appealing. The host quickly wrote back: the accommodation was already taken for those dates. But Selden thought there was something strange about the exchange—for one thing, the Airbnb site described the place as available—so he decided to conduct an experiment. He created two fake Airbnb profiles, for white people named “Jessie” and “Todd,” and put in requests for accommodations at the same property over the same dates. Again, a reply arrived right away, but this time they were different: Jessie and Todd were welcome.
Selden alleged all this in a lawsuit, filed in May in the U.S. District Court for the District of Columbia, accusing Airbnb of facilitating racial discrimination. Selden sought to make his case a class action. He figured that other Airbnb users must have had similar experiences, and he had good reason to think so. The previous December, a Harvard working paper had found that Airbnb users with stereotypically black names are likelier to have accommodation requests rejected than those with white-sounding names. (The authors of the paper, like Selden, used fake profiles.) More recently, people began venting their discrimination stories online with the hashtag #AirbnbWhileBlack.
But two months after Selden filed suit, Airbnb made an argument that would have confounded most non-lawyers. It had nothing to do with whether Airbnb had been involved in discrimination. Instead, Airbnb pointed out that, in the fine print of its seventeen-page terms of service—which every Airbnb user, including Selden, had to accept before signing up for the service—was a clause barring customers from either bringing a civil suit against Airbnb that could lead to a jury trial or filing a class action against it; instead, they have to go through a private arbitration process outside of the legal system, overseen by a paid arbitrator who acts as a kind of extralegal judge. Airbnb wanted the court to force Selden into arbitration. On Tuesday, Judge Christopher R. Cooper agreed to do so.
Arbitration clauses aren’t well understood outside of the legal world, but they’ve become increasingly common, including in Silicon Valley, with companies describing arbitration as faster, cheaper, and easier than going to court. Netflix and Amazon, among others, embed these clauses into their terms of service. But the benefits of arbitration clauses tend to skew toward the businesses that require them—not to the consumers. Last fall, the Times investigated the practice in a three-part series, calling arbitration “a far-reaching power play orchestrated by American corporations” that makes it much more difficult for consumers to challenge companies for improper practices. Because the people hired to carry out arbitration sessions often work for the same companies over and over, the arbitrators have an incentive to bias their decisions toward the companies and against individuals. (Companies apply these clauses to employees, too, often enough that the subject turned up as a plot point in an episode of “Silicon Valley.”) One federal judge, William G. Young, told the Times, “Ominously, business has a good chance of opting out of the legal system altogether and misbehaving without reproach.”
Often arbitration clauses are invoked in cases where consumers feel they have been financially slighted—seeing charges on their phone bills for services they never wanted, for instance—but the Times investigation found arbitrations used in more serious cases of medical malpractice, theft, hate crimes, and discrimination. The Airbnb situation highlights how far the practice extends. In light of all the negative attention around claims of racial bias, Airbnb recently created a stronger, more detailed anti-discrimination policy for “hosts”—the people who rent out their places on the site—and created a system to investigate claims of discrimination. “We have launched an aggressive effort to ensure our platform is fair for everyone and we will continue to work as hard as we know how to fight bias,” a spokesman for Airbnb, Nick Papas, wrote Tuesday in a statement sent to journalists.
Yet Airbnb maintains that arbitration remains the best way to resolve disputes—including charges of discrimination—and has benefits for the disputing parties. In most cases, Airbnb pays its users’ arbitration fees and conducts hearings wherever the user lives. On Wednesday, when I e-mailed Papas about criticism of arbitration, he replied, “Our policies are similar to most companies and we’ve found that arbitration is an effective way to resolve many issues.” Then Papas made another striking point: that “guests also retain the ability to take action against hosts.” In other words, Airbnb’s customers can sue homeowners for discrimination, even while they’re barred from suing Airbnb itself. Most corporate spokesmen wouldn’t make a point of stressing that customers should feel free to sue the company’s employees even if they can’t sue the company itself. But at businesses like Airbnb, which facilitate transactions between customers and those who provide a service—ride-sharing services like Uber are another example—the service providers aren’t employees at all.
Selden himself, not surprisingly, disagrees with the judge’s perspective and with Airbnb’s position. On Tuesday, his lawyer, Ikechukwu Emejuru, wrote in a statement that Selden was “very disappointed” and would appeal the judge’s decision. He added, “By placing Mr. Selden’s claims into arbitration, a consumer’s constitutional right to a jury trial and access to the courts of law continues to be whittled down gradually but surely.”
Judge Cooper, for his part, is well versed in the controversy surrounding arbitration—it’s just that he doesn’t believe his court is the right venue for resolving it. “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 forgo class actions—as a condition of simply participating in today’s digital economy, the applicable law is clear,” he wrote. Arbitration provisions in contracts are enforceable, including in discrimination cases. “While that result might seem inequitable to some, this Court is not the proper forum for policy objections to mandatory arbitration clauses in online adhesion contracts,” Cooper added. “Such objections should be taken up with the appropriate regulators or with Congress.”
In fact, the objections are already being taken up. In April of 2015—a month after Selden’s bad Airbnb experience—Senator Al Franken, of Minnesota, and Congressman Hank Johnson, of Georgia, both Democrats, introduced a bill, the Arbitration Fairness Act, that would get rid of mandatory-arbitration clauses for consumers and employees. A vote could come as early as this year. The lawyers at Airbnb and throughout the corporate world are surely paying close attention.