Airbnb Gets Broker's Retread NY Antitrust Suit Evicted

Published on:
April 29th, 2019
Image: Airbnb

A Manhattan real estate brokerage already had its shot at Airbnb in federal court and missed, a New York state court judge said Friday in tossing the firm’s second proposed class action alleging the home-sharing site illegally and deceptively competes in the city’s rental market.

Parker Madison Partners’ allegations are blocked by the principle of “collateral estoppel,” which bars parties from relitigating issues that have already been decided in another proceeding, New York Supreme Court Judge Saliann Scarpulla said, tossing the suit accusing the unlicensed Airbnb of unfairly competing against firms bound by the rules of a real estate brokerage license.

“Parker Madison’s claims in the present action are substantially identical to its claims in the federal action. Moreover, contrary to Parker Madison’s assertion, almost all of the allegations in the complaint here were also made in the federal action,” Judge Scarpulla said.

The judge rejected the brokerage’s assertions that the issues are not the same between the current case and the tossed New York federal court case it followed.

Parker Madison had argued, according to the decision, that the federal case was thrown out because the brokerage hadn’t shown injury to establish standing to sue, while the issue in state court was based on the sufficiency of its allegations to show a cause of action under New York’s consumer protection laws against unfair competition and deceptive acts. Judge Scarpulla didn’t buy the argument, instead saying that the only new allegation in the current case is Parker Madison’s assertion that Airbnb listed the brokerage’s units without authorization.

“No units are identified nor does Parker Madison allege any injury resulting from this allegation. Indeed, Parker Madison’s allegations here, as in the second federal complaint, remain general and conclusory. Significantly, any ‘new’ allegations here do not remedy the defects in the second federal complaint regarding the establishment of injury,” Judge Scarpulla said.

U.S. District Judge Vernon S. Broderick “plainly decided” Parker Madison’s failure to establish injury “based on the same allegations as asserted in this action,” the state court judge said. That the injury in federal court was decided based on Article III standing, he said further, “does not change that conclusion,” with injury also required for the state court allegations.

Judge Broderick tossed the federal case in September 2017, ruling that the brokerage failed to state a claim specifying harm to business interests suffered because of Airbnb. All Parker Madison had, Judge Broderick said at the time, were “conclusory statements and untethered assertions” alleging that Airbnb’s continued operation would damage licensed brokers and render real property law protections “meaningless.”

Parker Madison filed the current suit in June 2018, stating that while licensed residential real estate brokers such as itself are required to follow strict guidelines and regulations, Airbnb skirts those rules, giving it an unfair competitive advantage.

On Friday, the state court judge also rejected Parker Madison’s assertions that it was denied “a full and fair opportunity to litigate the issue of injury in the federal action,” based on the federal court’s refusal to allow it to amend its complaint a second time. Parker Madison, according to the new decision, had the chance to try to show injury but failed to do so and instead of appealing the federal judge’s refusal to permit a third complaint, it took the allegations to state court.

“Parker Madison may not bring its identical claims to state court to re-litigate the unfavorable outcome it received in federal court,” Judge Scarpulla said.

An attorney for Airbnb welcomed the decision Friday.

“Justice Scarpulla’s thorough and well-reasoned decision made clear that the federal court had given the plaintiff a full and fair opportunity to make its case and that the plaintiff was not permitted to have a second bite at the apple in state court,” Kaplan Hecker & Fink LLP’s John Quinn said in a statement.

Counsel for Parker Madison did not immediately respond to a press inquiry Friday.

Parker Madison Partners is represented by Jeffrey M. Norton and Ryan M. Jerome of Newman Ferrara LLP.

Airbnb Inc. is represented by Roberta Kaplan and John Quinn of Kaplan Hecker & Fink LLP.

The case is Parker Madison Partners v. Airbnb Inc., case number 155490/2018, in the Supreme Court of the State of New York, New York County.


Read this at Law360.