Archive for the 'Business Law' Category

Airbnb Host Allegedly Discriminates Potential Guest

We live in a world where we can summon a private driver to our door, along with your favorite meal. We can buy something online and have it arrive the next day, without too much trouble. We can even rent someone’s home for a quick vacation.

But not all of these new advances are without issue. While Uber faces legal trouble and community backlash for their treatment of drivers, Airbnb is now facing backlash for hosts refusing to book people due to their race.

Airbnb faces a civil rights lawsuit from Gregory Selden. He seeks to create a class action claim to represent thousands of other individuals who were denied bookings on Airbnb due to their race. However, Airbnb did not refuse the bookings; instead it was the homeowners who advertise on Airbnb.

What claims can Selden make against the homeowner? Is Airbnb responsible for the actions of the homeowners?

The Details of the Claim

According to Mr. Selden, he attempted to book a place through Airbnb. The accommodation was listed as available on the dates he needed. But when he inquired about the availability and attempted to book the accommodation, the Host said the accommodation was not available. Airbnb

However, Selden, who is African American, was able to book the accommodation under a profile of a Caucasian person. The fake profile is identical to the Plaintiff’s profile. The only difference is the fake profile belonged to a non-existent individual of a different race.

The Plaintiff confronted the Host about the alleged discrimination. But the Host replied by saying that the alleged discrimination was all in the Plaintiff’s head. The Plaintiff was not told or was able to think of any other reason why the Host refused earlier.

What is the Plaintiff Arguing?

Plaintiff Selden’s claim has 3 separate counts. The first count (Count 1) is based on Title II of the Civil Rights Act of 1964 (“CRA”). Title II prohibits discrimination in places of public accommodation, such as hotels.

The second count (Count 2) is based on the federal statute 42 U.S.C. Section 1981. It states that every person in the United States has the same right in every State and Territory. Including, amongst many things, enforcing contracts and enjoy full and equal benefit of the law.

Selden argues that Airbnb broke section 1981 by discriminating him based on his race. They denied him the ability to create a contract and to enjoy the full benefit of the contract and the law.

The third and final count (Count 3) is based on the Fair Housing Act (“FHA”). Under the FHA, Plaintiff asserts that Airbnb violated the law by asserting discriminatory practices on the basis of race by “housing agents for rental accommodation.” In this case, the Host did not give any truthful or valid response to deny his stay, and instead created a “mere pretext for discrimination.”

The Big Question: What is Airbnb’s Relationship with Their Hosts?

Each count brings up a new set of questions the court will need to address or answer. But the overlying question the court will need to establish is: what is the relationship between Airbnb and their hosts? Does Airbnb employee their hosts? Or do their hosts sign up to use Airbnb as a platform to generate business?

In California, a hotel is defined as a “any person, corporation, partnership…or agent of any of [the previously mentioned]…who accepts payment for rooms, sleeping accommodations, or board and lodging…[but] retains the right of access to, and control of, the dwelling unit.”

It seems that Airbnb and their hosts fall under the definition of a hotel in California. If they are a hotel, then they have a significant number of legal responsibilities that they are currently avoiding. If Airbnb is a hotel, then they can be held responsible for the actions of their hosts. The court may consider them to be employees of Airbnb. To figure that out, the court will need to examine the evidence to determine whether they are employees.

First, the court will look at the nature of the relationship between Airbnb and their hosts. They will look at many factors, such as how much direction or control Airbnb has over the hosts. Direction or control like what sort of amenities to offer, how much to charge, or how often they will need to make their location available.

Where Can Airbnb Go From Here?

But what if Airbnb is only a platform for hosts to use to gain business? It seems that Airbnb’s primary function is to accept payment for an accommodation and relay the payment to the host. It seems to be up to the host to take pictures, make a posting, and even determine the price of their listing.

The hosts rely on Airbnb to ensure that their bookings are not fraudulent and they are paid for. These factors seem to show that hosts are not employees of Airbnb, but instead sign up for the service for free.

In the end, the court is facing a difficult question that it has yet to answer. Whatever the outcome, this case may end up deciding a range of impacting questions. Questions like if Airbnb needs to pay additional taxes to the type of liability they may face from injured guests. It is unclear which way the decision will fall, but no matter the decision, it will be a guide for other companies following Airbnb’s path.

Is California’s New Bill to Raise Legal Smoking Age to 21 an Overstep of Power?

California’s Governor Jerry Brown signed a bill into law that raises the legal smoking age from 18 to 21. The bill was introduced as a measure that would reduce adolescent tobacco addiction and, in the long run, save lives.  

According to the National Survey on Drug Use and Health, 90% of tobacco users started smoking before they reached the age of 21 and 80% smoking before the age of 18. The goal of the new legislation is to prevent smoking at a younger age. Preventing smoking early will prevent addiction later in life, according to supporters.

At first glance it doesn’t seem like raising the minimum smoking age to 21 would make much of a difference since the majority of users started smoking before they reached the age of 18, but consider the fact that 15-and 16-year olds are more likely to be associated with 18-year olds than they are with a 21-year old. Making it harder for young adults to buy tobacco makes it harder for teens to have access to it.

Government Is Essentially Regulating What We Do With Our Bodies

Some have very strong opinions about whether the government should be able to regulate our personal consumption of goods. However, it’s been happening for years and as long as constitutional challenges can be met, these laws will stick because a long history of precedent has already been established when it comes to governmental regulation and our health. Regulating water supply, banning the use of lead paint in homes, and regulating food and beverage products, just to name a few. Ever heard of Roe v. Wade?

Of course you have. That’s the first thought that came to mind when considering governmental regulations that restrict choices of personal autonomy. In the historic case, the Supreme Court found that women have a fundamental right to privacy to do what they want with their bodies. The topic of abortion and extending the legal smoking age are obviously on two different ends of the spectrum, but if you’re not familiar with the analysis of how the Justices came up with that decision, it’s definitely worth noting. Tobacco

The case established that women have the right to make decisions concerning their own bodies, but also established that states have legitimate and compelling interests in 1) protecting a woman’s health and 2) protecting the potentiality of human life. The states interest in the woman’s health and the child’s health only get stronger the longer a woman is pregnant, making their interest more compelling and, therefore, giving them the authority to regulate abortions. Now, only one of those interests is applicable here, but protecting the health and safety of citizens is an important one.

A woman’s decision in this instance is far more personal than any decision of whether or not to use tobacco or consume other goods, but the same principles apply. The question becomes whether or not protecting young adults from the harmful effects of smoking is a compelling enough interest. If the government can find a compelling interest, i.e. tobacco use harms your health, then they get to regulate it.

Does the Government Have Enough of a Compelling Interest?

New York recently tried to ban sugary drinks, like soda, from being sold in anything larger than 16 ounces due to links to high-sugar consumption and obesity, but the state’s highest court eventually struck the ban down. Why is it that smoking and drinking alcohol are so taboo that it seems acceptable to regulate, but when it comes to regulating our soda consumption, that’s what seems outrageous? Is it really any different?

I’ll admit, when I first heard of the soda ban, I thought the idea was ridiculous and definitely an overstep of authority, but, when you think about it, smoking tobacco used to be cool and no one thought anything of it being harmful. It wasn’t until years and years later that the public started to become aware of the actual risks of using tobacco. Maybe we’ll learn sugar is the same, who knows. No one seems to complain about the government restricting lead-based paint.

While the government shouldn’t necessarily be able to regulate whether an adult wants to use tobacco, regulating access to teens doesn’t shock the conscious. If you look purely at statistics on tobacco use, regulating it against young adults makes sense, especially when you consider how addictive it is.

Tobacco use remains the leading cause of preventable death in California. With a total of at least 34,000 tobacco-related deaths per year, the Institute of Medicine’s study reflecting a decrease of 200,000 fewer deaths for those born between 2000 and 2019 is enough of a legitimate and compelling reason to back the change.

Don’t get me wrong, regulating soda consumption is a stretch and I’m all for the idea of personal autonomy, but the dangers of tobacco use are well proven enough for the government to meet the constitutional requirements of a compelling health and safety interest. Although California is only the second state to raise the legal smoking age to 21, after Hawaii, many cities have already raised the age limit within their own city limits.

This Evidence Will Self-Destruct in 10 Seconds

Self-destructing messages were once the realm of James Bond, Mission Impossible and Inspector Gadget.  However, ephemeral messaging is now extremely common.  Phone apps such as Snapchat, Cyber Dust, Tiger Talk, and Confide all allow users to send messages which disappear shortly after they are read or watched.

This has allowed users an unprecedented level of privacy in the messages they send.  Services such as Cyber Dust and Confide encrypt your messages, prevent them from having a screen shot taken of them, and (of course) destroy messages you send shortly after they are read—keeping no digital record.  Snapchat, while not as secure, still features messages which “vanish” after they are viewed.

The flip side to this privacy is an easy way to send messages that could never be used as evidence in a lawsuit. Cyber Dust was created after Mark Cuban’s experience in his insider trading lawsuit with the Securities and Exchange Commission (SEC).  Mr. Cuban felt that the SEC mischaracterized every message he sent, so he made Cyber Dust to “save a lot of time and money because nothing sent or received on Cyber Dust is discoverable.” Cyber Dust is specifically pitched as the Snapchat for “a business with a lot of lawsuits.” Snapchat itself has been accused of being used a tool to conceal insider trading.

The evidence from ephemeral messages can often be crucial to cases. Just a few weeks back, an Uber driver sued a woman over brain damage he suffered when she hit his car from behind…while she was recording herself going 107 MPH with a Snapchat speed filter.  The video that the woman took, actually recording herself hitting the Uber driver while simultaneously recording her reckless speed, would be incredible evidence in that case.  However, due to the nature Snapchat, that evidence is likely gone.

Spoliation: Getting Rid of the Evidence

There is no universal duty to maintain anything that could ever be used as evidence. Making people keep every last document in case they get sued just doesn’t make sense.  In fact, most companies have policies regulating what records they maintain and when records should be destroyed.  However, there are situations where destroying or withholding evidence can get you in trouble—this is called spoliation of evidence. Have a Nice Day!

A person who negligently or intentionally withholds or destroys relevant information that will be required in a lawsuit is liable for spoliation of evidence.  To determine whether somebody has committed spoliation, courts look to three things: 1) whether a duty to preserve evidence attached before the evidence was destroyed; 2) whether the person accused of spoliation was at least negligent in destroying the evidence; and 3) the other party was prejudiced by the destruction of the evidence.

Whether the duty to preserve evidence takes effect varies substantially between state and federal law and from state to state. The duty can take effect when you first should know you’re likely to be sued for something or when you actually receive notice of a lawsuit against you.  Once you’re under a duty to preserve evidence, you can’t destroy or hide evidence relevant to the lawsuit you know of or are expecting.

When a court finds that somebody has committed spoliation, the court can bring a number of sanctions against them.  The exact breadth of sanctions varies depending on what court you’re in, but a common sanction is applying a “negative evidentiary inference.”  This means that a jury can assume that the evidence the person destroyed would have been bad for that person.

There are exceptions for destruction of evidence as part of a routine, good faith operation of an electronic information system. However, destruction of records after you know about a lawsuit or likely lawsuit —routine or no—is often as bad faith and sanctioned.  Ephemeral data—such as information stored in RAM—has also been treated differently from normally stored electronic data.  The evidence was treated differently because it would require a Herculean effort to preserve.  However, no court has ever dealt with the obligation to preserve where the data you send self-destructs by design.

Courts have dealt with people deleting social media content in the past. They specifically ruled that deleting either Facebook posts or a Facebook account can be spoliation.  Current law leaves it unclear whether use of ephemeral messaging, like Snapchat, will leave the user in danger of spoliation sanctions.  By using Snapchat, you are creating an electronic message with the knowledge it will be destroyed.  If this is done with relevant evidence after a duty to preserve takes effect, this is arguably spoliation.

Are Snapchats Spoliation?

As it is, spoliation law isn’t really prepared to deal with ephemeral messaging on such an enormous scale. The law is just unclear enough to put people and businesses using the services in a sticky situation.  If there’s a chance that sending that Snapchat will leave you in trouble in front of a judge, using the services can become a risk not worth taking.

The idea behind sanctioning people who commit spoliation is that their destruction of evidence implies a guilty conscience. Do users have such a guilty conscience when they send relevant evidence via a means they know will self-destruct?  Cyber Dust’s pitch, promising its users messaging that can’t be used as evidence against them, certainly makes this argument at least believable.

The exception is for routine, good faith, deletion of electronic records. Where an electronic messaging service automatically deletes all messages, that deletion is certainly routine.  However, after you know of a lawsuit, is sending a message with relevant evidence via a means you know will self-destruct good faith?  The exception explicitly doesn’t apply where routine operation is used to hide evidence.

What’s more, courts have sometimes required people to prevent the deletion of otherwise routinely deleted data in order to avoid spoliation sanctions. How could a user of Snapchat or Cyber Dust preserve something that is designed to disappear?

There is a clear tension between the dangers of compromising the privacy offered by ephemeral messaging and the dangers of allowing some users of ephemeral messaging to shelter from justice by actively destroying evidence. Putting every user of ephemeral messaging services at uncertain risk of serious evidentiary sanctions is obviously not an ideal solution.  However, neither is allowing messaging services to shelter users from legal repercussions for illegal actions.

It is likely that a determination of whether sending any given ephemeral message could constitute spoliation would be highly fact specific. However, as it stands, the framework around the treatment of ephemeral messaging is so unclear as to leave parties incapable of entering a courtroom fully prepared.  It is high time that law catches up with technology. Snapchat and ephemeral messaging have been around for over half a decade.

In order to truly know whether use of ephemeral messaging services are spoliation, two things need to be firmly established. First, the exact classification of ephemeral messages.  Whether they will be treated like other types of ephemeral data or like other types of social media.  Second, whether their deletion is routine and in good faith.  Seeing as it is nigh impossible to preserve ephemeral messages, will sending them be subject to an exception to spoliation?  Until this murky area of law is cleared up, users of ephemeral messaging services will be forever left in the lurch.

Three Things to Know When Buying Your First Home

For most people, your home purchase will be your biggest financial investment you will ever face. Buying your first home is one of the most exciting things you can do, but it’s also one of the scariest. Suddenly, a large sum of your monthly income is spent on your mortgage and unexpected maintenance such as electrical repairs, insulation, and re-roofing. The expenses can add up, and what once was a seemingly sound investment can turn into a huge regret.

Here’s a list of things every new homeowner should know as they become homeowners.

Lender Responsibilities: TILA and RESPA Requirements

Finding the right lender is just as important as finding the right home. Some lenders make promises they can’t keep, and borrowers suffer as a result. Lenders who are unable to provide funding can result in the borrower losing their earnest money deposit and the offer on the home. It is important to find a lender that you feel you can work with and who can get you a good mortgage insurance rate. Home Sold

Lenders are bound by Federal laws such as the Truth in Lending Act (“TILA”) and Real Estate Settlement Procedures Act (“RESPA”). These regulations were enacted to protect consumers in their dealings with lenders and creditors. All lenders must provide their customers with disclosures consistent with TILA and RESPA before closing. These requirements include a loan estimate and closing disclosure, which contains the final details about the mortgage loan, such as projected monthly payments, loan terms, and how much you will pay in fees and closing.

What Happens if Something Affects the Property?

Say you found your home, you’re in escrow, and you’re waiting to close, but then the unthinkable happens: a fire breaks out and destroys the property, or a random “Act of God.” What happens then?

If the purchase contract between the parties does not specify who is to bear the risk of damage or loss between execution of the purchase contract and close of escrow, the liability of the parties is governed by the state in which the property resides. Each state is different. For instance, California statute assumes no fault on the part of the buyer for the risk of loss or damage to the premises. In that regard, the seller bears the risk should the property unexpectedly go up in flames.

If all or a material part of the premises are damaged before title or possession is given to the buyer in California, the buyer can cancel the contract and recover any portion of the purchase price paid. If, however, the “Act of God” occurs after the buyer has taken possession or received title, the buyer bears the risk of loss or damages to the premises. Thus, if the premises are damaged, the buyer still must complete the contract and pay the balance of the purchase.

Title Insurance

Another thing to consider when buying your first home is title insurance. When you purchase your house, you may not realize that it is encumbered. In other words, a third party may have legal right to your land which may be superior to yours and restricts your ability to use and enjoy your land. Sometimes, the encumbrance is minor. Other encumbrances may be more substantial.

For example, a government agency may have a utility easement running through your property which prevents you from building that Olympic-size swimming pool you always dreamed of.

Title insurance is meant to protect against these types of unforeseen property disputes by searching the property’s title history before you purchase. The title history should disclose what rights others may have with respect to the property.

Moreover, title insurance insures against any additional “defects” which were not found through the title search and not otherwise expected or excluded in the policy. Depending on the type of title insurance, the insurance may be able to pay off your mortgage in the event that a defect causes you to lose the property. If you buy a property using a home loan, your lender will require that you also obtain title insurance.

Snapchatting Speed Demons: Is Snapchat Liable for their Speed Filter Function?

In 2014, approximately 431,000 people were injured due to distracted driving in the U.S. All these people, hurt because somebody was distracted by something like a text or using social media. One of the most popular social media applications available today is Snapchat. Snapchat allows users to take “self-destructing” pictures or videos of themselves that disappear soon after they are sent.

Snapchat recently added a “speed filter” to its product.  The filter detects what speed you are going and posts it with your snapchat as an overlay. This led, perhaps predictably, to a trend of people snapchatting themselves while driving as fast as possible.

Christal McGee—18-years-old—was driving with three of her friends last September and decided to snapchat herself going over 100mph.  She used her phone to record herself driving her Mercedes at 107 MPH in a 55 MPH zone. She ultimately recorded herself rear ending an Uber driver, Wentworth Maynard, as he pulled out into the road.

The people in Ms. McGee’s car suffered minor injuries. Shortly after the accident, McGee snapchatted a picture of herself strapped to a gurney captioned “Lucky to be alive.” Mr. Maynard was not so lucky, suffering permanent brain damage.

Mr. Maynard and his family are suing Ms. McGee, claiming negligence and loss of consortium. Ms. McGee’s family have issued statements that they believe Mr. Maynard was at fault for pulling out into traffic without giving Ms. McGee time to stop—calling the case “a big setup for somebody who is young and innocent.” However, with the passengers of the car coming forward to corroborate both Ms. McGee’s speed and the fact that she was recording herself, Mr. Maynard’s case against Ms. McGee is very strong.

Mr. Maynard’s injuries are tragic, but his case against Ms. McGee is a fairly standard negligence case. Or it would be if Mr. Maynard and his family weren’t also suing Snapchat for including the speed filter feature in their app.

An Unsafe Product?

The Snapchat speed filter seems like a functionality with very few safe uses. The filter is obviously dangerous while driving, but is there really a safe time to record yourself going as fast as possible? Do we want people distractedly recording themselves while they bike, or skateboard, or jet ski, or even while they run?

Mr. Maynard’s lawyers have described this case as a “products liability” case. Products liability is an area of law dealing with a party trying to recover for damages caused by a defective product. Such a claim can generally be brought by a purchaser of the product, somebody who uses the product, or a bystander injured by the product. SnapChat

A product is considered defective in three situations: where the product is unsafe by design, where the manufacture of the product is defective, or where the product does not have sufficient warnings about its use.

The law in this area varies a bit from state to state, but cases all stem from the same three theories: negligence, strict liability, and breach of warrantee. The first two could come into play in Mr. Maynard’s case against Snapchat.

Negligence

Negligence is one of the most common civil causes of action.  While the exact requirements for negligence vary slightly state-to-state, the accusing party generally needs to establish five things:

  • Duty– That the accused had a duty.  You are always under a duty to act with the care of a reasonable person.
  • Breach of Duty– The accused has failed to act in accordance with their duty to another.         
  • Cause in Fact- But-for the act of the accused, the accuser would not have suffered injury.
  • Proximate Cause- A reasonable person could have foreseen the damages of the accuser arising out of their act.
  • Damages- The accuser has suffered some loss as a result of the accused’s negligent act.

In a products liability context, a duty to exercise ordinary care in providing safe, non-defective products to the public applies to everybody in the chain of distribution for a product—from the designer to the business selling the product. In this case, Snapchat is all of the above.

Where a business designs a product that is not safe when used as intended, they have breached their duty of care. Also, where a product does not include sufficient warnings, the duty of care is breached.

There have been numerous reported incidents of people snapchatting as they speed. A Brazilian woman snapchatted a picture of herself going 110 MPH only to snapchat pictures of her car wreck moments later. Draymond Green of the Golden State Warriors made headlines when he snapped himself driving 118 MPH.  There was even a petition, prior to Mr. Maynard’s accident, asking Snapchat to remove the speed filter.

This being said, Snapchat has taken some steps to try and make the speed filter safer. Snapchat has released a statement that they actively discourage “snapping and driving.”  The app itself includes a very visible warning when the speed filter is used that reads “Do NOT snap and drive.” Their terms of service include a section stating “do not use our Services in a way that could distract you from obeying traffic or safety laws.”

Warning Defect

Snapchat’s many warnings not to drive and snap seem like sufficient warning to avoid liability for deficient warning.  However, Snapchat’s speed filter is arguable unsafe when used as intended—recording yourself moving at a certain speed. If you introduce a product that records how fast people are going, people will record themselves going fast—a danger regardless of speed and mode of transportation.

It seems unlikely the speed filter was made to record people walking slowly and carefully. Snapchat, however, can credibly argue that the intended use of the filter does not involve recording yourself while you move at speed—instead it is for recording speed as a passenger or, if such a thing exists, at safe speeds.

Snapchat’s failure to recall their product after they knew its dangers, a step they still have not taken, could also open them up to negligence liability.

Proving negligent design has always been difficult. Courts are reluctant to question the cost-benefit decisions behind “reasonable” design. It generally comes down to expensive expert testimony. What’s more, a negligently dangerous design must usually be more dangerous than an ordinary customer might contemplate. Snapchat will be able to argue that their design was not the cause of Mr. Maynard’s injury—Ms. McGee’s poor judgment in her use of it was.

Snapchat has several defenses available to it, including asserting that Ms. McGee misused their product. No matter which theory Mr. Maynard ultimately uses, keep your speed filters at the ready, Snapchat will have to move quick to beat this lawsuit.



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