Racial Discrimination Suit Against Airbnb Should Be Settled By Private Arbitration, Says Federal Judge

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LONDON, ENGLAND – AUGUST 03: The Airbnb logo is displayed on a computer screen on August 3, 2016 in London, England. (Photo by Carl Court/Getty Images)

Airbnb dodged a bullet today when a federal judge ruled that its arbitration policy blocked users from suing. Its saving grace was found in a seldom-explored portion of their user experience: Its user agreement.

Gregory Selden, a black man, claimed that the company violated his civil rights when a host refused to rent him a room due to his race. Selden brought his case against the company, valued at $30B as of late September, in May, arguing that the host’s actions amounted to housing discrimination. Today, a federal judge ruled that Airbnb’s user agreement, which states that users waive their right to jury trials and participation in class-action suits, was enforceable.

Judge Christopher Cooper of the United States District Court for the District of Columbia wrote that “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.”

Though Selden and his attorney, Ikechukwu Emejuru, have made clear their plans to appeal Judge Cooper’s ruling, this can only be seen as a victory for the rental company. In December of last year, Harvard University published a working paper that found a pattern of discrimination against prospective renters with “black-sounding” names like Darnell, Tamika, and Rasheed, stating that users with such names were more than 15% less likely to be accepted than users with “white-sounding” monikers.

Airbnb, the San Francisco-based, Google Ventures-backed startup that has been at the forefront of the disruption of the hotel and travel industries, had failed to keep pace with its more old-school competitors with regard to equal treatment. “Overall, our results suggest a cause for concern,” the authors said. “While discrimination has shrunk in more regulated offline markets, it arises and persists in online markets.”

After the publishing of the Harvard paper, a Twitter trending topic on the firsthand accounts of black and brown users, #AirbnbWhileBlack, and a small handful of other user stories similar to Selden’s, Airbnb CEO Brian Chesky announced the company had made a series of moves to combat discrimination and stem the tide of bad press. While its changes did not include removing guest profile photos from the site or app, they did streamline the violation reporting and resolution, and starting in 2017, a host that informs a guest that a property is unavailable will no longer be able to rent to another guest for that period of time. Airbnb hired former both US Attorney General Eric Holder and former ACLU legislative office head Laura Murphy to reshape their anti-discrimination policies, published a 32-page report on their company blog outlining their plans in full, and accompanied the report with a message to users and hosts from Chesky.

“Discrimination is the opposite of belonging, and its existence on our platform jeopardizes this core mission,” Chesky said in the report. “Bias and discrimination have no place on Airbnb, and we have zero tolerance for them. Unfortunately, we have been slow to address these problems, and for this I am sorry.”

At the Brainstorm tech conference in July, Chesky admitted that his company had, like many other Silicon Valley companies, done a poor job of heading off discrimination concerns by promoting and cultivating diversity.