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Is Airbnb an unlicensed real estate broker in New York City?

Is Airbnb an unlicensed real estate broker in New York City?

In this week’s article, we examine the case of Parker Madison Partners v. Airbnb, Inc., No. 16-CV-8939 (VSB) (S.D.N.Y. September 29, 2017) in which “Plaintiff Parker Madison Partners brings this putative class action on behalf of itself and a class of licensed real estate brokers seeking injunctive and declaratory relief preventing Defendant Airbnb from engaging in alleged unfair competition and conduct violating section 349 of the New York General Business Law (GBL) by virtue of providing real estate brokerage services in New York without the licenses mandated by the New York Real Property Law (RPL). Before me is Defendant Airbnb’s motion to dismiss the Amended Complaint… (which is) granted”.

Terror Targets Update

TripAdvisor’s Posting Policy

In Schwartz, Senator Calls for Investigation of TripAdvisor Over Its Posting Policy, nytimes (11/28/2017) it was noted that “TripAdvisor…should be investigated for possible violations of consumer protection laws for failing to post reviews from travelers who say they were sexually assaulted at Mexican hotels, according to Sen. Tammy Baldwin, Democrat of Wisconsin. ‘This may be a case of putting profits over providing an open, honest forum for traveler reviews on TripAdvisor’, Ms. Baldwin said in a tweet on Nov. 26. ‘I called on the F.T.C. to look into this and they should get to the bottom of it’. It’s unclear if the Federal Trade Commission will act on Ms. Baldwin’s request”.

Climbers Die In Slovakia

In 2 Mountain Climbers Die In Slovakia, rt (11/16/2017) it was noted that “Two Czech mountain climbers, a 47-year-old sportswoman and her 60-year-old partner, died in the Tatra Mountains in Slovakia, TASS reported Sunday, citing local radio. After having climbed one of the mountain tops, they failed to descend before sunset and had to spend the night in the mountains in severe weather conditions…The climbers did not have special equipment and died of exhaustion and freeze burns”.

Uber Fined Over Shady Drivers

In della Cava, Colorado hits Uber with $8.9 million fine over shady drivers, USA Today (11/20/2017) it was noted that “Uber was hit with an $8.9 million fine by Colorado’s public utilities commission Monday, after regulators found that dozens of drivers were operating there despite often egregious criminal histories….Colorado officials said that 57 Uber drivers over the past year and a half were on the job despite having felony convictions, major moving violations or were driving with a suspended, revoked or cancelled driver’s license”.

Uber Hacking Lawsuits

In Claburn, Uber hack coverup: Your next US state lawsuit arrives in four minutes, theregister.co.uk (11/29/2017) it was noted that “Challenged on Monday by US senators to explain its failure to report that it had allowed hackers to grab records of 57 million customers and drivers and then paid hush money in an attempted year-long coverup, Uber has been presented with its second state-backed lawsuit for not alerting authorities for the pilfering…The second (lawsuit) landed Tuesday, from the State of Washington, where the state’s IT security breach law requires notification of consumers within 45 days and, if more than 500 state residents are implicated, notification of the state Attorney General”.

In Marotti, Chicago and Cook County sue Under over 2016 data breach, chicagotribune (11/28/2017) it was noted that “The city of Chicago…filed a lawsuit against Uber Technologies, alleging the ride-hailing company’s 2016 data breach harmed ‘tens, if not hundreds of thousands’ of area residents…Uber waited more than a year to disclose the data breach (involving personal data of 57 million customers and drivers), and that delay, in addition to failing to protect consumers’ personal information, violates city and state laws, according to the lawsuit”.

Uber: “So Many Bad Things Done”

In Metz, Judge Tells Uber Lawyer: ‘It Looks Like You Covered This Up’, nytimes (11/30/2017) it was noted that “The last-minute evidence quickly mounted. A letter and an email full of damning claims. Apps that sent self-destructing messages. A payment of $4.5 million to an employee who threatened to be a whistle-blower-and an additional $3 million to his lawyer. In two days of testimony that ended Wednesday in Federal Court in San Francisco, Uber lawyers had to defend what a federal judge has described as an effort to withhold evidence from an intellectual-theft trial. The case pits the ride hailing company against Waymo, the self-driving car unit of Google’s parent company, Alphabet…On Wednesday, Judge Alsup continued to upbraid Uber’s lawyers for not being more forthcoming with evidence. ‘I have never seen a case where there were so many bad things done like Uber has done in this case’, he said”.

In Liedtke, Uber facing federal probe on allegations of espionage, msn (11/29/2017) it was noted that “Federal prosecutors are investigating allegations that Uber deployed an espionage team to plunder trade secrets from its rivals. The revelation triggered a delay in a high-profile trial over whether the beleaguered ride-hailing service stole self-driving car technology from s Google spinoff”.

SoftBank Buying Uber At Big Discount

In Somerville & Baker, SoftBank offers to buy Uber shares at big discount, msn (11/29/2017) it was noted that “Japan’s SoftBank Group is offering to purchase shares of Uber Technologies at a valuation of $48 billion, a 30 percent discount to its most recent valuation of $68.5 billion, a person familiar with the matter said Monday. The investment…would also trigger a string of governance changes at Uber that would limit some early shareholder’s voting power, expand the board from 11 to 17 directors and cut the influence of former Chief Executive Travis Kalanick”.

No Selfies, Please

In Saudi Arabia Bans Selfies, Photos & Videos At Two Holiest Mosques, travelwirenews (11/25/2017) it was noted that “The Hajj became just a bit less hip” Saudi Arabia has banned pilgrims from taking selfies at Islam’s two holiest mosques, effective immediately”.

More Guns, Please

In FBI processes record 200,000 gun background checks on Black Friday, travelwirenews (11/25/2017) it was noted that “Buying a gun in the United States could hardly be described as difficult, and bargain hunting weapons enthusiasts were out in force on Black Friday with the FBI receiving over 200,000 requests for background checks in a single day”.

Travel Agents Still Alive

In Peterson, In Battle of Online Booking Versus Travel Agents, Most Consumers Still Rely on Agents, travelmarketreport (11/29/2017) it was noted that “Despite the rise of OTAs, mobile apps and other digital booking tools, a recent survey of U.S. travelers found that a majority ‘are still highly dependent on advice from travel professionals’ according to an official with Travelport, which conducted the poll”.

Airline Uniforms May Cause Skin Rashes

In Nelson, American Airlines Flight Attendants Sue Uniform Maker, Allege Health Concerns, thepointsguy (11/21/2017) it was noted that “A pair of American Airlines flight attendants filed a class-action lawsuit against uniform manufacturer Twin Hill last week, alleging that its new uniforms have caused health problems for thousands of employees. The plaintiffs…claim…that as many as 7,000 AA flight attendants may have suffered skin rashes, vertigo and even impaired liver functions as a direct result of the new uniforms”.

Stay Out Of Malibu, Please

In ‘Stay out of Malibu’: Beach Community’s needy get the Big Lebowski treatment, rt (11/27/2017) it was noted that “A church tucked away in the idyllic beach community of Malibu, California has decided to stop providing meals to the homeless. City officials allegedly complained that the selfless acts of charity were attracting the wrong, non-condo owning crowd. The United Methodist Church, located in upmarket Malibu, has been offering free meals twice a week to those in need. However, according to one parishioner familiar with the dispute, city officials recently sent the church an angry email complaining that the good deeds were ‘increasing homelessness’ in the exclusive beach community”.

Hotel Sued For Menu Surcharge

In Joseph, Class Action Seeks More than $5 Million for Ritz-Carlton Menu Surcharge, law (12/1/2017) it was noted that “The complaint alleges the hotel illegally attaches an automatic 18-20 percent gratuity to every food and beverage purchase through its restaurants, mini-bars and room service. A patron who says a surprise charge was tacked onto his restaurant check at a Florida Ritz-Carlton is now the name plaintiff in a Miami class action…seeking more than $5 million in damages…The Ritz-Carlton Hotel Company, LLC’s menus offer appetizers priced at $65 and grilled Japanese wagyu-highly marbled Kobe beef-for at least $112 for a four-once portion. But what’s harder to see, according to (plaintiff’s) suit filed Tuesday in federal court is a hidden surcharge-an automatic 18-20 percent gratuity tacked on to every food and beverage purchase”.

Kuala Lumpur Taxes Airbnb

In Tourism tax will continue to be imposed on Airbnb, thesundaily.my (11/29/2017) it was noted that “The government will continue to impose tourism tax on Airbnb accommodation even though it is not recognized by local authorities (PBT), said Tourism and Culture Minister Datuk Seri Mohamed Nazri Abdul Aziz. He said this was to ensure justice for other hotel operators in the country”.

Insect Bread In Finland

In ‘Jiminy Cricket’: Finnish bakery introduces insect bread, travelwirenews (11/24/2017) it was noted that “One of the largest food manufacturers in Finland has started selling what it claims to be the first bread made of traditional flour, seeds and if you could believe-ground crickets. The new product, called Sirkkaleipa bread, contains about 70 dried ‘house’ crickets, that have been ground into powder and added to the flour. The insects apparently make up three percent of the loaf’s weight”.

Hotel Fire In Black Sea Resort

In 11 dead in hotel fire in Georgia’s Black Sea resort, travelwirenews (11/25/2017) it was noted that “A fire at a luxury hotel in the Georgian Black See resort city of Batumi left 11 people dead and 21 others hurt…The fire erupted late Friday evening at the Leograd hotel where participants in the Miss Georgia 2017 beauty pageant were having dinner…All 20 participants escaped unhurt”.

Train Derailment In India

In Train derailment in India kills at least 3, travelwirenews (11/24/2017) it was noted that “Eleven coaches of a train derailed early Friday in northern India, killing at least three people and injuring another 13, police said…the derailment of the Vasco Da Gama Express occurred near Manikpura station in Utlar Pradesh state”.

Travel Law Case Of The Week

In the Parker case the Court noted that “Airbnb was founded in 2008 and is a ‘marketplace for people to list, discover and book unique accommodations around the world-online or from a mobile phone or tablet’ Airbnb facilitates approximately 25,000transactions per day in New York City. Those who are members of Airbnb can either list and rent their properties (Hosts) or find properties to rent (Guests). Plaintiff and (the purported class) are licensed real estate brokers and real estate brokerage companies in the State of New York. Airbnb is not a licensed real estate broker, but provides services such as listing and advertising rentals, and regulating and controlling an online forum through which its members must conduct their communications and negotiations. Airbnb members have to agree to its terms (TOS) and Airbnb (1) requires Guests to agree to permit Airbnb to handle the rental funds, (2) requires members to agree to give Airbnb absolute discretion to resolve disputes between its members, (3) offers Hosta the option of allowing Airbnb to set the prices of their rentals, (4) makes a free-of-charge photographer available to take pictures of Host properties, and (5) purchases outside advertising to; promote its website. Furthermore, Airbnb’s TOS advises visitors to its website that Airbnb is not a ‘real estate broker’”.

Processing Payments

“Airbnb also processes rental payments and takes a percentage of the payment as a fee and/or commission from the Hosts and Guests…Airbnb charges Hosts three percent of the rental payments and processes that percentage prior to distributing the balance of the payments to the Hosts. Airbnb also charges Guests a commission. Airbnb does not disclose the precise percentage of those commissions, but rather states that they fall somewhere between six percent and twelve percent of the rental contract”.

“Massive-Scale Market Competitor”

“Airbnb does not avoid conflicts of interest and does not provide the standard disclosures and waivers provided by real estate brokers. Plaintiff claims that as a result, ‘licensed brokers…are harmed by a massive-scale market competitor that performs real estate brokerage services without a license and without oversight’. Plaintiff states that it and the putative class ‘have an interest in not being subject to competition in a commercial arena reserved exclusively for licensed brokers, and in maintaining the integrity of the licensed real estate broken profession’. Plaintiff further claims that by not following the RPL (Real Property Law), ‘Airbnb takes unfair advantage of the real estate market and the consumers who are entitled to the protections afforded by licensed and regulated real estate brokers’ and that allowing Airbnb to continue operating in this way ‘will have severe repercussions for the commercial space reserved for licensed real estate brokers and render the protections of [the RPL] meaningless’”.

Lack Of Article III Standing

“Article III of the (U.S.) Constitution…(requires as a threshold that) a plaintiff must establish ‘first, that it has sustained an ‘injury in fact’…second, that the injury was in some sense caused by the opponent’s action or omission and, finally, that a favorable resolution of the case is ‘likely’ to redress the injury’…Injury-in-fact is the ‘first and foremost’ of the three standing elements…Upon examining the allegations…it is clear Plaintiff does not allege any actual injury tied to Airbnb’s actions. Rather, Plaintiff’s allegations consist of conclusory statements and untethered assertions culminating in the claim that Airbnb’s continued operation would have ‘severe repercussions to the commercial space reserved for licensed real estate brokers and render the protections of RPL (section) 440, et seq. meaningless’…These conclusory statements are insufficient to establish injury-in-fact”.

Not Operating In The Same Market

“In fact, as Defendant points out in its brief, there are no allegations in the Amended Complaint concerning any current or potential clients that have been lost to Airbnb, nor are there even claims stating the Plaintiff operates in the same market as Airbnb, let alone allegations revealing how Plaintiff competes with Airbnb…In its opposition, Plaintiff does respond or address these points, or in any way offer how it has been actually injured by Airbnb’s actions”.

Conclusion

“Ultimately, any alleged ‘injury’ derives solely from Airbnb’s purported violation of the RPL by acting as a real estate broker without procuring the proper license…Plaintiff does not point to specific improper acts of Defendant that have caused actual harm to it or its customers other than he alleged violation of the RPL. However, Plaintiff cannot establish a cognizable injury based solely on an alleged statutory violation, particularly a practice that ‘is not inherently [problematic] but becomes problematic only ‘because it [allegedly] violates a ‘provision of New York law’”. Plaintiff has not established an injury-in-fact that was caused by Airbnb’s actions sufficient to support Article III standing. Therefore, Defendant’s motion to dismiss the Amended Complaint is granted”.

airbnb

The author, Thomas A. Dickerson, is a retired Associate Justice of the Appellate Division, Second Department of the New York State Supreme Court and has been writing about Travel Law for 41 years including his annually updated law books, Travel Law, Law Journal Press (2016), Litigating International Torts in U.S. Courts, Thomson Reuters WestLaw (2016), Class Actions: The Law of 50 States, Law Journal Press (2016) and over 400 legal articles many of which are available at nycourts.gov/courts/9jd/taxcertatd.shtml. For additional travel law news and developments, especially, in the member states of the EU see IFTTA.org

This article may not be reproduced without the permission of Thomas A. Dickerson.

Read many of Justice Dickerson’s articles here.

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