Peterson v. Devita

2023 IL App (1st) 230356No. 1-23-0356
Opinion filed September 22, 2023
Sixth Division
IN THE
APPELLATE COURT OF ILLINOIS
FIRST DISTRICT
)
ANDREW PETERSON,
)
) Appeal from the Circuit Court
Plaintiff-Appellee,
) of Cook County.
)
v.
)
) No. 2021 L 12856
STEFANIA FRANCESCA DEVITA, AIRBNB,
)
INC., AIRBNB RPG, INC., KEN MOORE
)
CONSTRUCTION, INC., and LORIE
) The Honorable
MELHOUS,
) Moira S. Johnson
) Judge, presiding.
Defendants-Appellants.
)
JUSTICE HYMAN delivered the judgment of the court, with opinion.
Justice Pucinski concurred in the judgment and opinion.
Justice Lavin dissented, with opinion.
OPINION
¶1 As a condition for doing business, electronic booking agents often bind consumers to a
lengthy contract, sometimes labeled “Terms of Service.” Usually, these contracts, imposed on
a take-it-or-leave-it basis, contain a mandatory arbitration provision. Their legal ramifications
can be severe. Just how severe is illustrated in this case.
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¶2 Plaintiff Andrew Peterson was permanently injured when the railing gave way on an
elevated porch deck of a home booked by a friend through Airbnb, Inc. Peterson sued Airbnb,
among others, alleging negligence. Airbnb moved to stay the proceedings and compel
arbitration, arguing that Peterson accepted Airbnb’s terms of service by creating an Airbnb
account several years earlier, though he never used the site. The contract mandated that claims
and disputes “arising out of or relating to” use of its platform be arbitrated and an arbitrator
decide the threshold issue of arbitrability. Peterson argued his friend booked the property, so
Peterson was not obligated to arbitrate. The trial court ruled in Peterson’s favor.
¶3 In this interlocutory appeal, Airbnb contends the trial court erred because (i) Peterson
agreed to mandatory arbitration when he created an Airbnb account and accepted its terms of
service and (ii) neither the trial court nor this court has authority to rule on arbitrability which
the arbitration agreement delegates to an arbitrator. Alternatively, Airbnb contends that if we
address the arbitrability issue, we should find that Peterson’s claims (i) fall within the scope of
the arbitration provision or (ii) are barred by principles of agency and equitable estoppel.
¶4 We affirm. First, under the caselaw, the threshold question of arbitrability presents a legal
issue for the courts to decide. Next, because Peterson had nothing to do with booking the
property on Airbnb, his injuries did not arise from his use of the Airbnb platform, so the
arbitration provision does not apply to him. Similarly, the principles of agency and equitable
estoppel do not apply either.
¶5 Background
¶6 Airbnb provides an online “community marketplace” for people to list and book
accommodations worldwide. A host with a property to book creates a listing on Airbnb’s
website. A guest wanting to book a property signs up and uses Airbnb’s marketplace to
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communicate directly with a host to request a booking. If the host accepts, the host and guest
enter an agreement. Airbnb does not own, manage, or operate the properties. Instead, Airbnb
facilitates the booking between a property host and a guest. To reserve property through
Airbnb, a user must create an account and profile and accept Airbnb’s terms of service. Andrew
Peterson created an Airbnb account in January 2017 and accepted the terms of service and its
updated terms in September 2018 and September 2019. The terms provide in part:
“You and Airbnb mutually agree that any dispute, claim or controversy arising out of
or relating to these Terms or the applicability, breach, termination, validity,
enforcement or interpretation thereof, or to the use of the Airbnb Platform, the Host
Services, the Group Payment Service, or the Collective Content (collectively,
‘Disputes’) will be settled by binding individual arbitration (the ‘Arbitration
Agreement’) *** If there is a dispute about whether this Arbitration Agreement can be
enforced or applies to our Dispute, you and Airbnb agree that the arbitrator will decide
the issue.”
¶7 A choice of law provision applies the laws of California, where Airbnb has its headquarters.
¶8 In May 2020, a friend of Peterson’s, Ian Bannon, used Airbnb’s website to book a property
in Galena. (Bannon is not a defendant.) Bannon agreed to Airbnb’s terms of service when he
created an Airbnb account. In making the reservation, Bannon indicated nine guests. Bannon
did not list Peterson as a guest on the reservation.
¶9 While staying at the Galena property, Bannon hosted a party that Peterson attended. As
Peterson stood on an elevated porch deck, its railing gave way. Peterson fell hard, sustaining
serious injuries, including an open ankle fracture that necessitated a below-the-knee
amputation of his left leg.
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¶ 10 Peterson filed a 15-count complaint against Airbnb, Inc., and others, asserting claims for
negligence, res ipsa loquitur, and construction negligence. He sought damages for his physical
injuries and loss of normal enjoyment of life.
¶ 11 Airbnb moved to compel arbitration and stay proceedings, claiming that (i) Peterson
consented to the mandatory arbitration provision by accepting its terms of service and (ii) the
trial court should stay the proceedings and refer arbitrability to an arbitrator. Alternatively,
Airbnb contended the court should compel arbitration because (i) Peterson’s claims come
squarely within the scope of the arbitration agreement, (ii) Bannon agreed to the terms of
service and acted as Peterson’s agent when booking the property, or (iii) principles of equitable
estoppel apply.
¶ 12 Peterson argued that because he has no involvement whatsoever in booking the property,
his claims fall outside the arbitration agreement’s scope. Plus, Bannon’s relationship to
Peterson fails to satisfy the elements of either agency or equitable estoppel.
¶ 13 After a hearing, the trial court entered an order denying Airbnb’s motion. Airbnb filed a
notice of interlocutory appeal, asking this court to vacate the order and compel arbitration.
¶ 14 Analysis
¶ 15 Standard of Review
¶ 16 Under Illinois Supreme Court Rule 307(a)(1) (eff. Nov. 1, 2017), the sole issue concerns
whether the movant made a sufficient showing to sustain the order granting or denying the
relief. Hollingshead v. A.G. Edwards & Sons, Inc., 396 Ill. App. 3d 1095, 1099 (2009). We
review de novo appeals from the denial of a motion to compel arbitration without an
evidentiary hearing. Id. In addition, interpreting an arbitration agreement presents a question
of law reviewed de novo. QuickClick Loans, LLC v. Russell, 407 Ill. App. 3d 46, 52 (2011).
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¶ 17 Choice of Law
¶ 18 Preliminarily, Airbnb asserts that the choice of law provision in its terms of service
specifies California law. That presupposes an enforceable contract binding Peterson. Yet, the
central disputed issue involves whether an enforceable contract even exists. Hence, resorting
to the choice-of-law provision would be premature. See Life Plans, Inc. v. Security Life of
Denver Insurance Co., 800 F.3d 343, 357 (7th Cir. 2015) (court may decline to follow
contractual choice-of-law provision “if the contract’s legality is fairly in doubt, for example, if
the contract is unconscionable, or if there is some other issue as to the validity of the very
formation of the contract”). In the absence of the choice-of-law provision, Illinois law provides
that “the validity, construction and obligations of a contract are governed by the law of the
place where it is made.” Progressive Insurance Co. v. Williams, 379 Ill. App. 3d 541, 546
(2008). Thus, we look to Illinois law.
¶ 19 Arbitrability
¶ 20 When presented with a motion to dismiss or stay an action and compel arbitration, the trial
court limits its inquiry to “gateway” issues, including the arbitration clause’s validity and, if
valid, whether the dispute falls within its scope. Hartz v. Brehm Preparatory School, Inc., 2021
IL App (5th) 190327, ¶ 42; see also United Cable Television Corp. v. Northwest Illinois Cable
Corp., 128 Ill. 2d 301, 306 (1989) (before issue can properly be referred to arbitrator, particular
dispute must be of type parties agreed should be submitted to arbitration).
¶ 21 As noted, Airbnb contends the trial should have granted its motion to stay and referred
the case to arbitration because the arbitration provision requires an arbitrator to decide issues
of arbitrability. Before determining that issue, however, we first must address whether the
Airbnb terms of service relate to the allegations in Peterson’s complaint.
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¶ 22 As the issue involves arbitration, we note that the provisions of the Federal Arbitration
Act (9 U.S.C. § 1 et seq. (2018)), and not state law, control the putative terms of service. The
Federal Arbitration Act reflects the fundamental principle that arbitration is a matter of
contract. Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 67 (2010); 9 U.S.C. §2 (2018).
Moreover, a court should order arbitration “only where the court is satisfied that neither the
formation of the parties’ arbitration agreement nor (absent a valid provision specifically
committing such disputes to an arbitrator) its enforceability or applicability to the dispute is
in issue.” (Emphasis in original.) Granite Rock Co. v. International Brotherhood of
Teamsters, 561 U.S. 287, 299 (2010). “Where a party contests either or both matters, ‘the
court’ must resolve the disagreement.” Id. at 299-300 (quoting First Options of Chicago, Inc.
v. Kaplan, 514 U.S. 938, 943 (1995)); Janiga v. Questar Capital Corp., 615 F.3d 735, 741
(7th Cir. 2010). State law contract formation principles determine whether a contract exists
between the parties. Janiga, 615 F.3d at 742 (citing Kaplan, 514 U.S. at 944).
¶ 23 Contract formation issues center on the elements of an offer, a strictly conforming
acceptance of the offer, and consideration. Martin v. Government Employees Insurance Co.,
206 Ill. App. 3d 1031, 1035 (1990). Courts treat arbitration agreements like any other
contract (Midland Funding, LLC v. Raney, 2018 IL App (5th) 160479, ¶ 20), and defenses
such as fraud, duress, or unconscionability may invalidate the contract (Zuniga v. Major
League Baseball, 2021 IL App (1st) 201264, ¶ 13).
¶ 24 Airbnb contends that when Peterson created an Airbnb account, he accepted its terms of
service (as updated) and agreed to the mandatory arbitration provision. For support, Airbnb
relies on three cases enforcing its arbitration provision: Selden v. Airbnb, Inc. 4 F.4th 148,
157 (D.C. Cir. 2021), Airbnb, Inc. v. Doe, 336 So. 3d 698, 702 (Fla. 2022), and Airbnb, Inc.
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v. Rice, 518 P.3d 88 (Nev. 2022). Most importantly, all three cases did what Airbnb contends
we have no authority to do—addressed arbitrability of plaintiff’s claims.
¶ 25 In Selden, the plaintiff filed a putative class action complaint against Airbnb in federal
court, alleging racial discrimination and civil rights violations. Selden, 4 F.4th at 153-54. The
plaintiff created an Airbnb account and provided a profile picture as required at the time.
When Selden, an African American, attempted to book a property, the host told him it was
unavailable. Later, Selden used a fake Airbnb account with a profile picture of a white
person, and the host accepted. Id. at 153.
¶ 26 The district court granted Airbnb’s motion to compel arbitration, finding that Airbnb’s
sign-up screen placed Selden on reasonable notice of the terms of service to which he agreed
when he created an account. Id. at 154. The court also found that Selden’s discrimination
claims were arbitrable. Id. at 154-55. Selden appealed, arguing, in part, that he did not have
reasonable notice of the terms of service, including the arbitration clause. The Court of
Appeals disagreed. Id. at 159-60.
¶ 27 In Doe, Airbnb filed a motion to compel arbitration where the plaintiffs booked a
condominium unit through their Airbnb account and later learned the owner had installed
hidden cameras throughout the unit. Doe, 336 So. 3d at 699-700. Airbnb moved for arbitration,
arguing that plaintiffs agreed to arbitrate by accepting the terms of service when creating their
accounts. Id. at 700. The trial court granted Airbnb’s motion, finding “that the parties entered
an express agreement which incorporated the AAA rules, and that [it was] therefore bound to
submit the issue of arbitrability to the arbitrator.” (Internal quotation marks omitted.) Id. at
701. The Florida Supreme Court affirmed. Id. at 703.
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¶ 28 In both Selden and Doe, the plaintiffs’ claims relate to their using the Airbnb platform
when booking or attempting to book properties. Unlike in Selden and Doe, Peterson’s claims
did not arise from his use of the Airbnb platform. Peterson happened to be at the property as
a guest of someone who booked through Airbnb. Thus, Selden and Doe do not support
binding Peterson.
¶ 29 The other case Airbnb relies on, Rice, is factually similar. In Rice, the plaintiffs were on
their way to a party hosted at a property booked through Airbnb. Rice, 518 P.3d at 89. Both
plaintiffs had Airbnb accounts, but neither booked the property. Id. An unknown person shot
plaintiffs, killing one and injuring the other. Id. The father and administrator of the deceased
plaintiff’s estate sued Airbnb for wrongful death and personal injury. Id. The trial court
denied Airbnb’s motion to compel arbitration, finding, in part, that the dispute “did not arise
from the agreements.” Id. at 90.
¶ 30 Airbnb appealed, arguing the trial court lacked discretion to determine whether the
dispute was arbitrable because its terms of service delegated the issue or arbitrability to an
arbitrator. Id. The Nevada Supreme Court agreed and reversed, relying on Henry Schein, Inc.
v. Archer & White Sales, Inc., 586 U.S. ___, ___, 139 S. Ct. 524, 529 (2019), which held that
when parties clearly and unmistakably delegate the issue of arbitrability to an arbitrator, a
court may not disregard that intent, even if the arguments favoring arbitration are “wholly
groundless.” See Rice, 518 P.3d at 90-92.
¶ 31 Nevertheless, the Rice court acknowledged that, unlike in Henry Schein, the plaintiffs’
“dispute *** did not arise out of a contract between the parties” and their claims “have no
relation to [their] use of Airbnb’s services or platform.” Id. at 91. Still, the court stated that
Henry Schein “expressly rejected use of the ‘wholly groundless’ exception to get around the
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delegation provision” and “infer[red] from this that wholly groundless exception is improper
even where the arbitration agreement clearly is unrelated to the dispute.” Id. at 92.
¶ 32 Two dissenting justices contended that the majority misread Henry Schein and that the
decision “will lead to absurd consequences in the future.” Id. at 93 (Stiglich, J., dissenting,
joined by Herndon, J.). The dissent suggested that the court should have followed the “path
tread by” the California Court of Appeals in Moritz v. Universal Studios LLC, 268 Cal. Rptr.
3d 467 (Ct. App. 2020), which “harmonize[d] Henry Schein with common sense.” Rice, 518
P.3d at 93 (Stiglich, J., dissenting, joined by Herndon, J.) As the dissent noted, the Moritz
court explained that “[a]n arbitration agreement is tied to the underlying contract containing
it, and applies ‘only where a dispute has its real source in the contract.’ ” Moritz, 268 Cal.
Rptr. 3d at 473 (quoting Litton Financial Printing Division v. National Labor Relations
Board, 501 U.S. 190, 205 (1991)).
¶ 33 Further, the Moritz court concluded that Henry Schein “expressly understood that the
[FAA] requires enforcement of arbitration clauses with respect to disputes ‘thereafter arising
out of such contract’ ” but rejected the argument that “ ‘an arbitration provision creates a
perpetual obligation to arbitrate any conceivable claim that [plaintiff] might ever have against
them.’ ” (Internal quotation marks omitted.) Rice, 518 P.3d at 93 (Stiglich, J., dissenting,
joined by Herndon, J.) (quoting Moritz, 268 Cal. Rptr. 3d at 475-76).
¶ 34 According to the dissent, Moritz is “sound as a matter of law and policy” because the
respondents’ tort claims should not be subject to arbitration provision in the absence of
evidence, they “ever utilized Airbnb’s services.” (Emphasis in original.) Id. “The Terms of
Service bind hosts and guests who utilize Airbnb. As relevant to the underlying tort claims,
respondents were neither.” Id. at 94. Further, “ ‘the parties happened to have a contractual
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relationship’ completely unrelated to the underlying tort claims” and chance should not
engender a contractual relationship. Id. (quoting Coors Brewing Co. v. Molson Breweries, 51
F.3d 1511, 1516 (10th Cir. 1995)).
¶ 35 As a decision from another jurisdiction, Rice is not binding on this court but may be
considered persuasive authority. Eckhardt v. The Idea Factory, LLC, 2021 IL App (1st)
210813, ¶ 15. We find persuasive the reasoning in the Rice dissent and the majority opinion
in Moritz—that Henry Schein can be harmonized with common sense “ ‘only where a dispute
has its real source in the contract.’ ” Moritz, 268 Cal. Rptr. 3d at 473 (quoting Litton
Financial Printing Division, 501 U.S. at 205). As the Rice dissent noted, a plaintiff’s tort
claims should not be subject to the arbitration provision in the absence of evidence they “ever
utilized Airbnb’s services.” (Emphasis in original.) Rice, 518 P.3d at 93. The arbitration
provision should apply only when the claims arise from a plaintiff’s use of the Airbnb
platform and not on the fortuity of a plaintiff having created an account. Holding otherwise
leads to the absurd result of the majority’s decision in Rice. A contract—and not fate—
dictates arbitrability. See Arbogast v. Chicago Cubs Baseball Club, LLC, 2021 IL App (1st)
210526, ¶ 18 (photographer was not on reasonable notice of contractual relationship between
himself and Major League Baseball club merely because he used media credential his
employer procured, which included provision requiring arbitration of all claims asserted
against club).
¶ 36 Like the Rice court, the dissent asserts that creating an Airbnb account alone binds Peterson
to arbitration in perpetuity even if, as here, his claims have no connection whatsoever with his
use of the website. Were the law as the dissent would have it, a member of a hotel chain’s
internet site with an arbitration clause like Airbnb’s could attend a wedding at one of its hotels
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years later, sustain an injury from a falling chandelier, and have to arbitrate, even if the
wedding host had an account too. Under the dissent’s theory, every wedding guest, whether or
not they belonged to the hotel chain’s Internet site, would have to arbitrate either because they
had an account or the host had an account. As the Rice dissent noted, an “absurd consequence,”
indeed.
¶ 37 Peterson was not a party or participant in booking the property where the accident
occurred and cannot be required to arbitrate under the facts in this case. Because we find no
binding arbitration agreement, we need not address Airbnb’s arguments on whether
Peterson’s claims fall within the agreement’s scope.
¶ 38 Agency
¶ 39 Alternatively, Airbnb contends that Bannon acted as Peterson’s agent when he booked
the property, thereby binding Peterson.
¶ 40 A non-signatory may be bound to an arbitration agreement according to ordinary
principles of agency. Curto v. Illini Manors, Inc., 405 Ill. App. 3d 888, 891 (2010). In an
agency relationship, the principal can be legally bound by action taken by the agent where
the principal confers actual authority on the agent. Granite Properties Ltd. Partnership v.
Granite Investment Co., 220 Ill. App. 3d 711, 714 (1991). Actual authority may be express or
implied. Buckholtz v. MacNeal Hospital, 337 Ill. App. 3d 163, 172 (2003). Express authority
directly grants power to the agent to perform a particular act. Zahl v. Krupa, 365 Ill. App. 3d
653, 660-61 (2006). Implied authority involves actual authority proved circumstantially by
evidence of the agent’s position. Buckholtz, 337 Ill. App. 3d at 172. Implied authority
happens when the conduct of the principal, reasonably interpreted, causes the agent to
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believe that the principal wants him or her to act on the principal’s behalf. See Restatement
(Second) of Agency § 26 (1958).
¶ 41 Airbnb contends Bannon acted with actual authority on Peterson’s behalf when he
booked the property. For support, Airbnb relies on Hofer v. Gap, Inc., 516 F. Supp. 2d 161,
174-76 (D. Mass. 2007). There, with the plaintiff’s consent, the plaintiff’s friend purchased
airline tickets and booked accommodations for a trip for herself and the plaintiff through
Expedia, a travel website. Id. at 166. To finalize the reservation, the plaintiff’s friend had to
“ click through” Expedia’s terms and conditions, which included a liability disclaimer. Id. at
166-67. The plaintiff was injured on the trip and filed suit against Expedia, among others. Id.
at 165. The district court, enforcing the liability disclaimer, granted Expedia summary
judgment. Id. at 175-76. The court reasoned that the plaintiff’s friend acted as her agent when
the plaintiff authorized the friend to purchase tickets and book accommodations. Id. at 175.
¶ 42 Airbnb and the dissent assert that, as in Hofer, Bannon acted as Peterson’s agent when he
made the Airbnb reservation because Peterson’s complaint acknowledges that he was a
“renter” or “guest” at the property. But Airbnb would have to establish that Peterson
authorized Bannon, and nothing in the record shows that Peterson authorized Bannon to
make the reservation on his behalf. And while the reservation indicated nine guests, it did not
list Peterson.
¶ 43 Nor can Airbnb establish that Bannon acted with implied authority. The record is silent
about what would have led Airbnb to reasonably believe Bannon acted as Peterson’s agent.
¶ 44 Equitable Estoppel
¶ 45 Lastly, Airbnb argues principles of equitable estoppel. For support, Airbnb cites Jensen v.
U-Haul Co. of California, 226 Cal. Rptr. 3d 797, 806 (Ct. App. 2017), which states that non-
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signatory plaintiffs may be estopped from refusing to arbitrate if their claims “depend[ ] upon,
or [are] inextricably intertwined with” the contractual obligations of the contract containing
the arbitration clause. (Internal quotation marks omitted.) Although Jensen does not bind us,
the court acknowledged, “[e]ven if a plaintiff’s claims touch matters relating to the arbitration
agreement, the claims are not arbitrable unless the plaintiff relies on the agreement to establish
its cause of action.” (Internal quotation marks omitted.) Id. Peterson’s causes of action do not
rely on Bannon’s booking agreement. So, Jensen does not jumpstart Airbnb’s argument.
¶ 46 Airbnb also invokes another nonstarter, the “direct benefits” theory applied in some federal
court cases. The “direct benefits” theory estops a party from “ ‘asserting that the lack of his [or
her] signature on a written contract precludes enforcement of the contract’s arbitration clause
when he [or she] has consistently maintained that other provisions of the same contract should
be enforced to benefit him [or her].’ ” Snyder v. Jack Schmitt Ford, Inc., 2022 IL App (5th)
210413-U, ¶ 39 (quoting International Paper Co. v. Schwabedissen Maschinen & Anlagen
GMBH, 206 F.3d 411, 418 (4th Cir. 2000)).
¶ 47 Airbnb contends that Peterson’s claims stem from the benefits he received from Bannon’s
booking through Airbnb (presumably use of the property), implicating the direct benefits
estoppel theory. Not so. Peterson’s common law negligence claims do not rely on the terms to
which Bannon agreed when he booked the property. Further, other than as an invitee to a party,
Peterson did not benefit from Bannon’s booking. Thus, the “direct benefits” theory does not
apply.
¶ 48 Affirmed.
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¶ 49 JUSTICE LAVIN, dissenting:
¶ 50 Because I believe that Peterson agreed to arbitrate disputes with Airbnb, I respectfully
dissent. At the outset, our task is to determine whether a valid arbitration agreement exists.
Henry Schein, 586 U.S. at ___, 139 S. Ct. at 530; Tortoriello v. Gerald Nissan of North Aurora,
Inc., 379 Ill. App. 3d 214, 226 (2008); see also Selden, 4 F.4th at 155 (“arbitration is a matter
of contract” (internal quotation marks omitted)). Here, there are two such separate agreements.
¶ 51 As to the first, Airbnb offered Peterson the opportunity to utilize its services, which consist
of providing an online platform to connect individuals seeking to rent out their properties
(colloquially, the hosts) with those seeking to rent the properties (colloquially, the guests).
Airbnb also facilitates the payments between hosts and guests. Peterson, by creating and
maintaining an Airbnb account, accepted Airbnb’s terms of service and policies. The terms of
service identified the scope of Airbnb’s services, eligibility, registration, and other such
matters.
¶ 52 Under the title of the applicable “Terms of Service,” a bolded paragraph appeared
providing that the arbitration clause applied to all Airbnb members and all disputes with
Airbnb. In accepting those terms, Peterson agreed “to be bound by this arbitration clause.”
Later, the terms of service more specifically stated:
“any dispute, claim or controversy arising out of or relating to these Terms or the
applicability, break, termination, validity, enforcement or interpretation thereof, or to the
use of the Airbnb Platform, the Host Services, the Group Payment Service, or the Collective
Content (collectively, ‘Disputes’) will be settled by binding individual arbitration (the
‘Arbitration Agreement’). If there is a dispute about whether this Arbitration Agreement
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can be enforced or applies to our Dispute, you and Airbnb agree that the arbitrator will
decide that issue.” (Emphases added.)
The “Airbnb Platform” consists of the “Site” (the Airbnb website and other websites utilizing
Airbnb), the “Application” (Airbnb’s mobile, tablet and other smart device applications, and
application program interfaces), and “Airbnb Services” (all associated services).
¶ 53 In this case, Airbnb offered Peterson, among other things, use of the platform, and Peterson
accepted that offer. See Martin, 206 Ill. App. 3d at 1035. I also find that consideration
supported the contract. See id. Peterson received the benefit of the ability to view properties,
correspond with hosts, and potentially book those properties—all in a manner consistent with
Airbnb’s terms/policies. See Ross v. May Co., 377 Ill. App. 3d 387, 391 (2007) (noting, “[t]he
essential element of consideration is a bargained-for exchange of promises or performances
that may consist of a promise, an act, a forbearance, or the creation, modification, or destruction
of a legal relation”). Importantly, this benefit existed even if Peterson did not himself fully
utilize it. Furthermore, Airbnb benefited from Peterson signing up for the website and agreeing
to its terms with the understanding that it could potentially make money with future bookings.
Notwithstanding the majority’s finding to the contrary, the consideration supporting this
contract did not require Peterson to actually book a stay at a property through Airbnb. The
mere ability to do so was itself a benefit constituting consideration for this particular contract.
¶ 54 As to the second agreement, Peterson concedes that Bannon booked the property in
question through Airbnb and thereby also agreed to Airbnb’s same terms and conditions,
including the arbitration of disputes arising out of the rental of the property. The terms of that
agreement provided that each Airbnb guest must be “made aware of and agree” to the terms,
and the booking provided only a limited license to enter, occupy, and use the accommodation
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for the appointed duration. Peterson’s complaint makes clear that he lawfully entered the
property in question as an invitee and guest of his friend Bannon, even if he was not formally
listed on the Airbnb guest reservation. 1 As such, by his own admission, Peterson would not
have been present on the property or in a position to sue Airbnb but for Bannon’s rental
agreement through Airbnb. As set forth, we are not dealing with a guest who is unfamiliar with
Airbnb or its terms and can claim ignorance as to the rental conditions. Peterson does not claim
he lacked knowledge that he had entered into an Airbnb rental. I would add that there is also
some irony in Peterson’s position that Airbnb owed him a duty of care, “as would an innkeeper
to a guest,” but he was not bound by any of the burdens that apply to Airbnb’s guests. Based
on the foregoing, I would conclude that Bannon was acting as an agent for Peterson (the
principal). See Curto, 405 Ill. App. 3d at 891 (a nonsignatory to an arbitration agreement can
be bound through agency); see also Bowyer v. Adono, 2020 IL App (3d) 180685, ¶ 39 (with
undisputed facts, agency can sometimes be a question of law).
¶ 55 As astutely stated by one federal district court:
“Nothing in [this] arrangement is remarkable in the slightest respect; family members,
friends, and work colleagues routinely book travel plans for others, and it would be
extraordinarily cumbersome to require that each traveler book his or her own ticket.
Each such arrangement is necessarily an agency relationship: the person booking the
tickets is acting as an agent on behalf of the other members of the traveling party.
Implicit in that agency relationship is the power to bind the principal as to matters
1
In his appellee brief, Peterson writes that “coincidentally, on the date in question, the Appellee
attended a social gathering at the property rented by Bannon.” I find this at odds with Peterson’s
complaint, wherein he writes that, on the day in question, he was “a renter and invitee, guest, and
rightfully and lawfully walking upon and within the Property.”
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within the scope of the relationship, including the acceptance of the terms of a
disclaimer.” Hofer, 516 F. Supp. 2d at 175.
Furthermore, as to consideration for the agency contract, Peterson enjoyed the same benefit as
Bannon—the use and enjoyment of the property (although it turned out not to be so enjoyable
for Peterson).
¶ 56 Bannon thus had the authority, even if implicit or apparent, to book the Airbnb on behalf
of his guests and invitees to the property, which included Peterson, and to agree to arbitration
of disputes under Airbnb’s requirements. See Testa v. Emeritus Corp., 168 F. Supp. 3d 1103,
1108 (N.D. Ill. 2016); Curto, 405 Ill. App. 3d at 895 (noting, “[a]pparent authority arises when
a principal creates a reasonable impression to a third party that the agent has the authority to
perform a given act”). Accordingly, Peterson is bound by those same terms and conditions,
which unequivocally require him to arbitrate disputes with Airbnb.
¶ 57 The question of which arbitration agreement applies in this instance—Peterson’s initial
signatory agreement with Airbnb, Bannon’s agreement made on behalf of guests, or both—is
a question of scope for the arbitrator to decide, as set forth in the contracts. Each agreement
stated that an arbitrator would decide whether the agreement covered the dispute in question.
Henry Schein makes this abundantly clear:
“When the parties’ contract delegates the arbitrability question to an arbitrator, a court may
not override the contract. In those circumstances, a court possesses no power to decide the
arbitrability issue. That is true even if the court thinks that the argument that the arbitration
agreement applies to a particular dispute is wholly groundless.” Henry Schein, 586 U.S. at
___, 139 S. Ct. at 529.
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In addition, Schein states: “Just as a court may not decide a merits question that the parties
have delegated to an arbitrator, a court may not decide an arbitrability question that the parties
have delegated to an arbitrator.” Id. at 530.
¶ 58 Last, I disagree with the majority’s conclusion that the arbitration clause does not apply to
Peterson because Peterson’s injuries “did not arise from his use of the Airbnb platform.” See
supra ¶¶ 4, 28. This argument enters within the realm scope (which we are not supposed
consider at this point). Regardless, if we were to go there, I would conclude that in addition to
Bannon’s agreement with Airbnb on behalf of Peterson, Peterson was also using Airbnb’s
platform and therefore its “services” under his initial signatory contract when this dispute
arose.
¶ 59 For the aforementioned reasons, I dissent.
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Peterson v. Devita, 2023 IL App (1st) 230356Decision Under Review: Appeal from the Circuit Court of Cook County, No. 2021-L-
12856; the Hon. Moira S. Johnson, Judge, presiding.
Attorneys John C. Ellis and David DeSchepper, of Ellis Legal, P.C., of
for Chicago, and Raechel Keay Kummer (pro hac vice), of Morgan,
Appellant: Lewis & Bockius LLP, of Washington, D.C., for appellants
Airbnb, Inc. and Airbnb RPG, Inc.
No briefs filed for other appellants.
Attorneys Matthew A. Saltzman, of Sherwood Law Group, LLC, of
for Chicago, for appellee.
Appellee:
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