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Commercial Litigation

Florida High Court Says Airbnb Arbitration Sticks- It’s in the Fine Print

Florida High Court Says Airbnb Arbitration Sticks- It’s in the Fine Print

In a 6-1 decision, the Supreme Court of Florida reversed the Second District Court of Appeal and found that a Texas couple who accepted a “clickwrap” terms of service agreement when booking a vacation rental had also accepted the incorporated arbitration rules, including a rule that empowered the arbitrator to determine whether their claims were arbitrable.

John and Jane Doe sued Airbnb and the rental property owner after they discovered that they had been recorded by hidden cameras during their stay at the rental property. Amongst their claims, the Does alleged that Airbnb had failed to warn them of past invasions of privacy at other properties rented through the Airbnb platform. They also alleged that Airbnb had failed to ensure that the rental property was free of recording devices.

In response to the Does’ claims, Airbnb filed a motion to compel arbitration, arguing that the Does had accepted its terms of service when they registered and were required to arbitrate their claims. The arbitration provision did not expressly provide who would determine arbitrability. Instead, that term was included within the American Arbitration Association (AAA) Rules, which were incorporated into the agreement only by reference. The AAA Rules stated that the arbitrator “shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim.”

In response to Airbnb’s motion, the Does argued that the clickwrap agreement – terms agreed to by clicking an “I agree” box on a website or phone app – did not make it sufficiently clear that the arbitrator would have exclusive power to determine whether their dispute would be arbitrated.

The circuit court granted Airbnb’s motion, and the Does appealed to the Second District, arguing that the terms of service did not clearly and unmistakably demonstrate that the parties had delegated arbitrability to the arbitrator. The Second District denied the motion and found that Airbnb’s clickwrap agreement did not rise to “clear and unmistakable” evidence of the parties’ intent, which departed from virtually unanimous rulings at both the federal and states level on this issue.

After Airbnb’s appeal, the Florida Supreme Court rejected the Second District’s reasoning and enforced the arbitration provision, approved decisions in the Third and Fifth Districts reaching the same conclusion, and found that the AAA Rules were incorporated and expressly empowered the arbitrator to adjudicate the Does’ claims. The sole dissent came from Justice Jorge Labarga, who likened the incorporation of hundreds of pages of arbitration rules to asking consumers to find the proverbial needle in the haystack.

While the decision is a relief to numerous companies that rely on similar clickwrap agreements and incorporate arbitration terms by reference, it may still be prudent to consider including arbitrability and other forum terms within the express language of the terms of service rather than by incorporation only.