Peterson v. Devita
237 N.E.3d 1010
Ill. App. Ct.2023Background
- Plaintiff Andrew Peterson attended a party at a Galena property that a friend (Ian Bannon) booked through Airbnb; while on an elevated porch deck the railing collapsed and Peterson suffered catastrophic injuries.
- Peterson created an Airbnb account in 2017 and accepted updated Terms of Service in 2018 and 2019; he never used Airbnb to book the Galena stay and was not listed on Bannon’s reservation.
- Peterson sued Airbnb and others in state court on negligence and related tort theories; Airbnb moved to compel arbitration under its Terms of Service (which include a delegation clause assigning arbitrability to an arbitrator).
- The trial court denied Airbnb’s motion to compel arbitration; Airbnb appealed interlocutorily to the Illinois Appellate Court (1st Dist.).
- The appellate court (majority) affirmed: it held the threshold arbitrability question is for the court when contract formation/applicability is disputed and found Peterson was not bound to arbitrate because his claims did not arise from his use of Airbnb and agency/estoppel arguments failed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who decides arbitrability when formation/applicability is disputed? | Court should decide threshold arbitrability. | Delegation clause gives arbitrator exclusive authority. | Court decides threshold arbitrability when formation/applicability is contested; here court resolved and declined arbitration. |
| Did Peterson assent to a binding arbitration agreement by creating an Airbnb account? | Creating an account years earlier, without booking this stay, does not bind Peterson to arbitrate this tort claim. | Peterson accepted the Terms of Service when he created his account and is therefore bound. | No—the court found no binding arbitration agreement for Peterson under these facts. |
| Do Peterson’s tort claims fall within the arbitration clause’s scope (“arising out of or relating to” use of platform)? | Claims did not arise from Peterson’s use of the Airbnb platform; he was a social guest of a renter. | The clause is broad and covers disputes relating to use of the Airbnb platform. | Held that Peterson’s injuries did not arise from his use of Airbnb; arbitration clause does not apply to him. |
| Can non-signatory principles (agency or equitable estoppel/direct-benefits) bind Peterson? | No agency or estoppel: no evidence Bannon was authorized to bind Peterson or that Peterson relied on the rental contract. | Bannon acted as Peterson’s agent when booking; or Peterson received direct benefits and is estopped from denying arbitration. | Rejected—insufficient evidence of actual or implied agency and direct-benefits/equitable estoppel theories did not apply. |
Key Cases Cited
- Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524 (2019) (courts cannot override a clear delegation clause that commits arbitrability to an arbitrator).
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (arbitration is a matter of contract; courts must ensure formation/enforceability unless delegated).
- Granite Rock Co. v. International Brotherhood of Teamsters, 561 U.S. 287 (2010) (courts must resolve disputes about formation/enforceability of arbitration agreements absent clear delegation).
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (allocation of arbitrability depends on contract and parties’ intent).
- Selden v. Airbnb, Inc., 4 F.4th 148 (D.C. Cir. 2021) (enforcing Airbnb arbitration clause where plaintiff’s claims arose from use of the platform).
- Doe v. Airbnb, Inc., 336 So. 3d 698 (Fla. 2022) (Florida Supreme Court enforced arbitration clause for plaintiffs who booked and used Airbnb services).
- Rice v. Airbnb, Inc., 518 P.3d 88 (Nev. 2022) (Nevada Supreme Court majority found delegation clause required arbitrator to decide arbitrability, though opinion acknowledged the force of arguments limiting arbitration to disputes tied to the contract).
- Moritz v. Universal Studios LLC, 268 Cal. Rptr. 3d 467 (Cal. Ct. App. 2020) (arbitration applies where dispute has its real source in the contract; rejects treating arbitration clause as perpetual obligation for unrelated torts).
- Litton Fin. Printing Div. v. NLRB, 501 U.S. 190 (1991) (arbitration clause applies to disputes arising out of the underlying contract).