– Summary by Anna Lusk
On March 31st, the Supreme Court of Florida considered whether Airbnb’s Terms of Service that incorporate by reference the American Arbitration Association (AAA) Rules empowers an arbitrator, rather than judge, to hear arbitrability issues for Airbnb users. The Supreme Court held that under the Federal Arbitration Act, Airbnb’s reference to the AAA demonstrates that an arbitrator has the authority to rule on whether arbitration is appropriate.
This case arises out of the following set of facts. John and Jane Doe stayed in a condominium unit they found online through Airbnb. They stayed in Mr. Natt’s condominium unit for three days. The Does allege that Mr. Natt secretly recorded their entire stay in his unit, including some private and intimate interactions. After the Does learned of the recordings, they filed a complaint naming both Mr. Natt and Airbnb as the defendants. In response to the Does’ complaint, Airbnb tried to initiate arbitration. Airbnb argued that the Does’ claims were subject to arbitration under Airbnb’s Terms of Service, which the Does agreed to be bound to when creating their Airbnb accounts online. The Circuit Court found that the parties were bound to submit this issue to arbitration. The Appellate Court reversed this judgment and ruled that the Court had the authority to view this issue. It is at this point that the Supreme Court hears this issue.
In its analysis, the Court first notes that federal precedent has explained that when an agreement incorporates a set of arbitral rules, such as the AAA rules, those rules become part of the agreement. Federal precedent further holds that where those AAA rules specifically empower the arbitrator to resolve questions of arbitrability, incorporation of those rules is enough to show the parties’ intent to empower an arbitrator to resolve questions of arbitrability. The Court notes that here, Airbnb and the Does clearly and unmistakably agreed that an arbitrator decides questions of arbitrability. The Court sided with Airbnb and the Circuit Court. Therefore, the Court held that because Airbnb’s Terms of Service incorporated by reference the AAA Rules, which expressly delegate arbitrability determinations to an arbitrator, the agreement clearly shows the parties’ intent to empower an arbitrator, rather than a court to resolve questions of arbitrability.
Justice Labarga dissented. He noted that according to Florida caselaw, courts should not assume that the parties agreed to arbitrate the arbitrability of an issue unless there is “clear and unmistakable” evidence that they did so. He argued that because the mention of the AAA was buried in mountains of text in the Terms of Service, its reference was not “clear and unmistakable.” He uses this argument to posit that Airbnb’s mere reference to the AAA Rules is insufficient to notify the parties that they were empowering an arbitrator to answer questions.
– Summary by Anna Lusk