Opinion
20-CV-7771 (PGG) (VF)
09-29-2023
DR. PHILIP BALDEO et al., Plaintiffs, v. AIRBNB, INC. et al, Defendants.
TO: THE HONORABLE PAUL G. GARDEPHE, United States District Judge
REPORT AND RECOMMENDATION
VALERIE FIGUEREDO, United States Magistrate Judge.
Plaintiffs, Dr. Philip Baldeo and 156 West 15th Street Chelsea LLC, commenced this suit on September 21, 2020, asserting claims of common-law negligence and fraud, and a claim under the New York General Business Law § 349, against Defendants Airbnb, Inc., John Does #1-10, and Jane Does #1-10.Defendant Airbnb, Inc. moved to dismiss all of Plaintiffs' claims under Federal Rule of Civil Procedure 12(b)(6). For the reasons that follow, I respectfully recommend that Defendant Airbnb Inc.'s motion be GRANTED with prejudice.
The Complaint identifies the John and Jane Doe defendants as “persons and/or other entities who or which are presently unknown to Plaintiffs but who facilitated and assisted Airbnb in subleasing the Subject Building unlawfully using Airbnb's website, legal and real estate services as described in this complaint, including those lawyers and other persons who assisted Airbnb in drafting or amending its false, deceptive and/or misleading [Terms of Service] that Airbnb published on its website during the four or more years that Airbnb advertised, marketed and subleased Plaintiffs' apartments within its NYC building on 156 W. 15th Street (at least 2014 through 2017), including possibly, but not limited to, Roberta Kaplan, Darren Weingard and Belinda Johnson, Attorneys at law.” See ECF No. 2 (“Compl”) ¶ 42. Plaintiffs do not appear to have made any efforts to identify these John and Jane Doe defendants, and at this stage in the litigation, only Defendant Airbnb has appeared in the case.
The page numbers referenced herein for citations to the electronic docket (“ECF”) are to the original pagination in those documents.
The following facts are taken from Plaintiffs' Complaint and are accepted as true for purposes of this motion. LaFaro v. New York Cardiothoracic Group, PLLC, 570 F.3d 471, 475 (2d Cir. 2009).
Plaintiff Philip Baldeo is the majority shareholder of a multi-unit apartment building located at 156 West 15th Street in Manhattan (the “Apartment Building”). Compl. ¶¶ 39-40.
Prior to September 30, 2014, Baldeo was the owner of the Apartment Building. Compl. ¶ 40.
Plaintiff 156 West 15th Street Chelsea LLC is a New York State corporation that owns the Apartment Building. Id. ¶ 39. Defendant Airbnb, Inc. (“Airbnb”) offers real-estate and legal services through its website, www.airbnb.com, to “Airbnb Hosts” for purposes of advertising, leasing, or subleasing apartments or other units for occupancy by “Airbnb Guests.” Id. ¶¶ 44-45.
“Airbnb Guests” use Airbnb's website to lease or sublease apartments or other units for occupancy offered by “Airbnb Hosts.” Id. ¶ 45.
The relationship between Airbnb and its “Members” is governed by Airbnb's Terms of Service. See id. ¶¶ 5, 7-8, 57, 79, 84, 93, 97, 105, 109-10. The Complaint alleges that Airbnb's Terms of Service misleadingly deny that Airbnb acts as an agent for its members. See Compl. ¶ 7; see also id. ¶¶ 57, 77, 93.
Although Plaintiffs have not attached Airbnb's Terms of Service to the Complaint, Plaintiffs rely heavily on the document to support their claims. See, e.g., Compl. ¶ 7 (stating that Airbnb's Terms of Service deny that it acts as an agent for its members). “Where a plaintiff has ‘relied on the terms and effect of a document in drafting the complaint,' and that document is thus integral to the complaint, we may consider its contents even if it is not formally incorporated by reference.” Essilor Int'l SAS v. J.P. Morgan Chase Bank, N.A., No. 22-CV-3361 (LJL), 2023 WL 35176, at *5 (S.D.N.Y. Jan. 4, 2023) (quoting Broder v. Cablevision Sys. Corp., 418 F.3d 187, 196 (2d Cir. 2005)) (internal quotation marks and alterations omitted). Airbnb states that the provisions of its Terms of Service, pertinent to this dispute, have existed “in substantially identical form since [the] claims [at issue] accrued back in 2014.” Def.'s Br. at 3 n.3. Plaintiffs do not contest this. Airbnb's current Terms of Service are available at https://www.airbnb.com/terms [https://perma.cc/5Z6Y-ZTMS].
With “deliberate assistance” from Airbnb, Plaintiffs' tenants leased apartments at 156 West 15th Street, so that they could sublease them to “Airbnb Guests” using Airbnb's platform. Id. ¶¶ 14, 149. At least seven separate “Airbnb Hosts” used their Airbnb accounts to sublease apartments within the Apartment Building to “Airbnb Guests,” between 2014 and 2017. Id. ¶ 15; see also id. ¶¶ 55-56. Airbnb “helped to accomplish these subleases by using its website and services to advertise, market and sublease” the units in the Apartment Building, “without ever obtaining or even seeking Plaintiffs' consent.” Id. ¶ 16. Airbnb, which is an “unlicensed real estate broker,” fails to disclose, in its advertising, website, or Terms of Service, the “illegal and unethical acts” it commits “with each and every NYC rental transaction,” because it acts as an “escrow agent, real estate broker, and lawyer,” and also fails to disclose the “many potential, serious legal risks” created by using Airbnb's platform. Id. ¶¶ 2, 24-29, 53, 57, 93.
Airbnb's “unlawful rental conduct” attracted attention from the City of New York (the “City”), and subsequently the Office of Special Enforcement (the “OSE”) raided the Apartment Building on four separate occasions between August 28, 2014, and September 22, 2017. Id. ¶¶ 17, 133. “[E]ven after learning about” these raids, Airbnb “continued renting out Plaintiff's apartments without legal right or consent.” Id. ¶ 19. After each raid, the City issued a summons to Plaintiffs, which were prosecuted successfully by the Environmental Control Board (“ECB”). Id. ¶¶ 18, 135. The first fine was imposed by ECB for $8,000 and was issued on August 29, 2014. Id. ¶ 135. Another fine was issued on October 15, 2014, for $2,400. Id. A third fine of $57,000 was issued on March 7, 2017. Id. The last fine was issued on September 22, 2017, for $20,200. Id. The fines issued on March 7, 2017, and September 22, 2017 (and the violations underlying those fines) were affirmed following an administrative appeal. Id.
After OSE and the City raided the Apartment Building for the fourth time, Plaintiffs removed all occupants from the Apartment Building, and have “elected to keep” the Apartment Building vacant “rather than risk further civil and/or criminal prosecutions from further Airbnb rental conduct.” Id. ¶¶ 20, 137. On January 22, 2018, the City commenced a public nuisance action against Plaintiffs, which remains pending. Id. ¶¶ 134-35; see also City of New York v. Baldeo, No. 450126/2018, 2019 WL 993135, at *1 (N.Y. Cnty. Sup. Ct. Mar. 1, 2019). As a “proximate and direct cause of Airbnb's unlawful conduct,” the City “imposed and recorded a lis pendens upon the [Apartment] Building,” preventing Plaintiffs from selling, mortgaging, or renting the property, causing Plaintiffs “substantial financial losses and damages.” Id. ¶ 136.
Plaintiffs allege that “Airbnb commits fraud and deceptive trade practices” vis-a-vis landlords, like Plaintiff, “who entered into long-term leases with Airbnb's Hosts under false pretenses.” Id. ¶ 127. For instance, Airbnb “fraudulently conceals” from landlords, like Plaintiffs, information about the City's law enforcement practices that threaten harm “when renting out NYC apartments for less than 30 days.” Id. ¶¶ 129-31. Plaintiffs “justifiably relied upon Airbnb's false representations, including omissions of material facts, when leasing its apartment units to tenants who failed to disclose and affirmatively concealed that they were actually Airbnb Hosts who planned to use such apartments for Airbnb rentals.” Id. ¶ 149. Plaintiffs now seek redress from Airbnb for the “substantial financial losses and damages” proximately caused by Airbnb's “unlawful conduct.” Id. ¶¶ 134, 136-38.
B. Procedural Background
On September 21, 2020, Plaintiffs filed a Complaint against Airbnb asserting three statelaw causes of action, for negligence, fraud, and violation of the New York General Business Law § 349. See Compl. ¶¶ 139-52. On January 11, 2021, Airbnb filed a pre-motion letter regarding an anticipated motion to dismiss for failure to state a claim. See ECF No. 12. Plaintiffs did not file a response, and on January 20, 2021, the Court set a briefing schedule for Airbnb's motion. See ECF Nos. 13-14. That same day, Plaintiffs asked the Court to reconsider its decision to enter a briefing schedule. See ECF No. 15. Plaintiffs' application was denied and the parties moved forward with briefing on Airbnb's motion to dismiss. See ECF Nos. 17, 19, 24, 22. On June 1, 2023, Plaintiffs submitted a letter, requesting leave to file an amended complaint. See ECF No. 25. The Court denied the request on June 13, 2023. See ECF No. 27. That same day, Airbnb's motion to dismiss was referred to the undersigned for a Report and Recommendation. See ECF No. 28.
The Complaint references the New York City Administrative Code § 20-700 in two paragraphs and the header of the GBL § 349 claim. See Compl. ¶¶ 1, 151. The Administrative Code § 20-700 contains “no private right of action,” and “GBL § 349 claims cannot be predicated on alleged violations of a city regulation.” Wood v. Mut. Redevelopment Houses, Inc., No. 14 Civ. 07535, 2016 WL 11720460, at *15 n.22 (S.D.N.Y. Mar. 31, 2016).
Pursuant to Judge Gardephe's Individual Rules, both Airbnb's motion to dismiss and its reply brief in further support of the motion were filed on March 12, 2021 (see ECF Nos. 19, 22), and Plaintiffs' opposition brief was filed on March 19, 2021 (see ECF No. 24).
DISCUSSION
In Count I, Plaintiffs assert a common-law negligence claim, alleging that Airbnb “negligently engaged” in “unlawful rental conduct,” the “foreseeable” result of which was the imposition by the City of fines on Plaintiffs. Compl. ¶¶ 140-42. In Count II, Plaintiffs assert a claim under New York's General Business Law (“GBL”) § 349, alleging that Plaintiffs are “consumers” and Airbnb has made “false, misleading and deceptive statements and/or omissions” concerning its “legal status” with regards to its “unlawful rental” of apartments. Id. ¶¶ 143-46. Lastly, in Count III, Plaintiffs assert a common-law fraud claim, alleging that Plaintiffs “justifiably relied upon Airbnb's false representations” and omissions “when leasing its apartment units to tenants who failed to disclose and affirmatively concealed that they were actually Airbnb Hosts who planned to use such apartments for Airbnb rentals.” Id. ¶ 149. Plaintiffs allege that Airbnb made no effort to notify, inform, or obtain the consent of Plaintiffs before Airbnb subleased their apartments “without a broker's license.” Id. ¶ 150.
Airbnb argues that all of Plaintiffs' claims are barred by the statute of limitations. See ECF No. 20 (“Def.'s Br.”) at 7-8. Airbnb also argues that Plaintiffs' negligence and fraud claims suffer from fundamental pleading deficiencies. Id. at 8-19. Specifically, Defendants aver that Plaintiffs have not satisfied the heightened pleading requirements of Federal Rule of Civil Procedure 9(b); they have failed to allege the existence of any relationship that would establish a duty on the part of Airbnb; Plaintiffs have not adequately alleged a breach of a duty or any conduct by Airbnb that proximately caused Plaintiffs' injuries; and Plaintiffs have failed to allege that Airbnb acted with fraudulent intent. See id. As to Plaintiffs' GBL § 349 claim, Airbnb contends that Plaintiffs are not consumers and thus have not alleged a consumer injury or harm to the public interest. See id. at 19-22. Airbnb asks for dismissal of the Complaint with prejudice. See id. at 24.
For the reasons explained below, Plaintiffs' fraud and GBL § 349 claims are barred by the statute of limitations. Additionally, any negligence claim premised on fines imposed prior to September 21, 2017 is untimely. The only timely negligence claim Plaintiffs might have would be premised on a fine of $20,200 imposed on September 22, 2017. However, Plaintiffs' negligence claims should be dismissed because Plaintiffs have failed to allege the existence of a duty owed to it by Airbnb. Moreover, even if Plaintiffs' fraud and GBL § 349 claims were timely, dismissal would still be appropriate. As it pertains to the fraud claim, Plaintiffs have failed to plead their allegations with the particularity required of Rule 9(b), and Plaintiffs have also failed to plead a strong inference of fraudulent intent. Further, Plaintiff's GBL § 349 claim should be dismissed because Plaintiffs have failed to allege that any conduct by Airbnb directed at Plaintiffs caused Plaintiffs' alleged injuries here. Lastly, I recommend that dismissal be with prejudice because granting leave to amend would be futile.
I. Motion to Dismiss
Rule 8 of the Federal Rules of Civil Procedure provides that a complaint seeking relief “must contain . . . a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). “This Rule does not countenance pleadings that are conclusory; it requires factual allegations that are sufficient to ‘give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.'” Anderson News, L.L.C. v. Am. Media, Inc., 680 F.3d 162, 182 (2d Cir. 2012) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Where the well-pleaded facts in a complaint “do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]'-that ‘the pleader is entitled to relief.'” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (quoting Fed.R.Civ.P. 8(a)(2)) (alteration in original).
To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a complaint must plead “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. A claim has “facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678.
In considering a motion to dismiss, a district court must “accept[ ] all factual claims in the complaint as true, and draw[ ] all reasonable inferences in the plaintiff's favor.” Lotes Co. v. Hon Hai Precision Indus. Co., 753 F.3d 395, 403 (2d Cir. 2014) (quoting Famous Horse Inc. v. 5th Ave. Photo Inc., 624 F.3d 106, 108 (2d Cir. 2010)) (internal quotation marks omitted). However, “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Iqbal, 556 U.S. at 678. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. “[R]ather, the complaint's factual allegations must be enough to raise a right to relief above the speculative level, i.e., enough to make the claim plausible.” Arista Records, LLC v. Doe 3, 604 F.3d 110, 120 (2d Cir. 2010) (quoting Twombly, 550 U.S. at 555, 570) (internal quotation marks, alteration, and citation omitted).
II. Plaintiffs' claims are barred by the statute of limitations.
Beginning with Plaintiffs' negligence claim, the statute of limitations for negligence claims in New York is three years. See N.Y. C.P.L.R. § 214(5); Ritchie Cap. Mgmt, L.L.C. v. Gen. Elec. Cap. Corp., 121 F.Supp.3d 321, 331-32 (S.D.N.Y. 2015) (citations omitted). Claims for negligence accrue when the injury is first sustained. See Ruso v. Morrison, 695 F.Supp.2d 33, 44 (S.D.N.Y. 2010) (citing Atl. Ballroom & Novelty Corp. v. Am. Motorists Ins. Co., 62 A.D.3d 920, 922 (2d Dep't 2009)). The Complaint alleges that Airbnb negligently engaged in rental conduct that led to Plaintiffs being fined and prosecuted by the City. See Compl. ¶¶ 14041. The Complaint was filed on September 21, 2020. See ECF No. 2. As such, any negligence claim that accrued prior to September 21, 2017, more than three years before the Complaint was filed, is time barred.
Given the allegations in the Complaint, Plaintiffs' alleged injury first occurred on August 29, 2014, the date of the first fine from the City. Compl. ¶ 135. And each time Plaintiffs were fined thereafter (on October 15, 2014, March 7, 2017, and September 22, 2017), they would have sustained another injury. But any negligence claim based on fines imposed prior to September 21, 2017, would be time barred. The final inspection by the City, according to the Complaint, was conducted on September 22, 2017, resulting in a fine of $20,200. Compl. ¶¶ 133, 135. Because that fine falls within the three-year limitations period, a negligence claim based on that fine is timely.
Plaintiffs contend that they should be entitled to recover for damages incurred outside the limitation period because Airbnb “engaged in a continuing tort.” Pl.'s Br. at 33. Under the “continuing violation” doctrine, “where there is a series of continuing wrongs,” the statute of limitations may be tolled “to the date of the commission of the last wrongful act.” Ramiro Aviles v. S & P Glob., Inc., 380 F.Supp.3d 221, 289 (S.D.N.Y. 2019) (quoting Henry v. Bank of Am., 147 A.D.3d 599, 601 (1st Dep't 2017)) (internal quotation marks omitted). In other words, “where violations occurring outside the limitation period are so closely related to other, non-time barred violations, as to be viewed as part of a single continuing wrong,” a plaintiff may recover for all violations, including those falling outside of the limitations period. Cupersmith v. Piaker & Lyons P.C., No. 14-CV-01303 (TJM) (DEP), 2016 WL 5394712, at *11 (N.D.N.Y. Sept. 27, 2016), affd, 748 Fed.Appx. 368 (2d Cir. 2018). This doctrine does not apply where a plaintiffs' injury is based on a “discrete act,” because such injury “accrues at the moment of the discrete act.” Cupersmith, 2016 WL 5394712, at *11 (citation omitted); see also Gonzalez v. Hasty, 802 F.3d 212, 220 (2d Cir. 2015) (explaining that the continuing violation doctrine “applies to claims composed of a series of separate acts that collectively constitute one unlawful [] practice”) (internal quotation marks and citations omitted); Repicci v. Jarvis, No. 17-CV-132S, 2020 WL 13200595, at *10 (W.D.N.Y. Jan. 24, 2020) (continuing wrong doctrine not applicable where plaintiffs alleged “single incidents of negligence”).
The continuing violation doctrine does not apply to Plaintiffs' negligence claim here. First, as Plaintiffs even concede, each Airbnb listing and each subsequent fine imposed by the City concerned “distinct facts involving different Airbnb Members, separate Airbnb rental agreements, and distinct Summons.” Pls.' Br. at 32-33. Thus, each fine-which stemmed from separate and distinct listings on Airbnb's website and different inspections by the City- constitutes a discrete injury. See, e.g., Royal Daycare Ctr., LLC v. PB 2180 Pitkin Ave, LLC, 180 A.D.3d 1097, 1099 (2d Dep't 2020) (reasoning that alleged negligent issuance of permits in 2015 constituted a discrete act and renewal of permit in 2017 did not toll statute of limitations under continuing wrong doctrine).
Further, to the extent Plaintiffs point to other possible injuries suffered as a result of the City's fines, such as lost rental income, the Complaint does so only fleetingly, without any factual allegations in support. See Compl. ¶¶ 132-38. Such conclusory allegations need not be credited. See Amidax Trading Group v. S.W.I.F.T. SCRL, 671 F.3d 140, 146 (2d Cir. 2011) (“It is well established that we need not ‘credit a complaint's conclusory statements without reference to its factual context.'”) (quoting Iqbal, 556 U.S. at 665). Regardless, Plaintiffs may not rely on these other “injuries” to argue that the continuing violation doctrine applies. “[T]he continuing violation doctrine ‘may only be predicated on continuing unlawful acts by the tortfeasor and not on the continuing effects of earlier unlawful conduct.'” S.W. ex rel. Marquis-Abrams v. City of N.Y., 46 F.Supp.3d 176, 191 (E.D.N.Y. 2014) (citing Selkirk v. State, 249 A.D.2d 818, 819 (3d Dep't 1998)); see also Henry, 147 A.D.3d at 601; Massey-Hughes v. Massey, 200 A.D.3d 1684, 1688 (4th Dep't 2021) (“[W]here a plaintiff asserts a single breach- with damages increasing as the breach continued-the continuing wrong theory does not apply.”) (citations omitted). The “injuries” to which Plaintiffs point, in a conclusory fashion, are merely the continued effects of the alleged wrongful conduct which Plaintiffs did not remedy. See, e.g., DuBuisson v. Nat'l Union Fire Ins. of Pittsburgh, P.A., No. 15-CV-2259 (PGG), 2021 WL 3141672, at *8-9 (S.D.N.Y. July 26, 2021) (where alleged deceptive and false advertisement took place at the time Plaintiffs purchased an insurance policy, Plaintiffs' subsequent monthly premium payments did not suffice to invoke the continuing wrong doctrine).
In short, the only timely negligence claim alleged in the Complaint would be premised on the inspection of the Apartment Building that occurred on September 22, 2017, resulting in a fine of $20,200.
Next, claims brought under GBL § 349 are likewise subject to a three-year statute of limitations. See N.Y. C.P.L.R. § 214(2); Wai Chu v. Samsung Elecs. Am., Inc., No. 18-CV-11742 (GHW), 2020 WL 1330662, at *9 (S.D.N.Y. Mar. 23, 2020). And such claims accrue when the injury is first sustained. See Okocha v. HSBC Bank USA, N.A., 700 F.Supp.2d 369, 375 (S.D.N.Y. 2010).
Plaintiff's GBL § 349 claim appears to be premised on Airbnb having failed to disclose in its Terms of Service its status as a real-estate broker, attorney, and agent, thereby allowing Airbnb to operate an “unlawful brokerage business” when it subleased Plaintiffs' apartments. Compl. ¶¶ 144-46. Given the allegations in the Complaint, this claim would have begun to run at the time Plaintiffs' tenants listed their apartments on Airbnb, because Plaintiffs' tenants would have presumably received and reviewed the Terms of Service then, and it is upon those Terms of Service that Plaintiffs premise their claim of misleading statements by Airbnb. See Gould v. Helen of Troy Ltd., No. 16 CIV. 2033 (GBD), 2017 WL 1319810, at *3 (S.D.N.Y. Mar. 30, 2017) (GBL § 349 claim accrued at the time the product was purchased); Bristol Vill., Inc. v. Louisiana-Pac. Corp., 170 F.Supp.3d 488, 499 (W.D.N.Y. 2016) (claim under GBL § 349 accrued when product was “purchased, delivered, and installed,” rather than when the defect was discovered); cf. Gaidon v. Guardian Life Ins. Co. of Am., 96 N.Y.2d 201, 211 (2001) (plaintiff's injuries occurred not at the time of purchase and delivery of life insurance policies, but when they were first called upon to pay additional premiums because their GBL§ 349 claim was not premised on allegations of a false guarantee contained in the policies themselves).
The Complaint provides no dates for when the units in the Apartment Building were listed on Airbnb, but those listings necessarily must have occurred prior to the date of the City's inspections and fines. Consequently, any GBL § 349 claim stemming from apartments listed prior to the fines imposed on August 28, 2014, October 15, 2014, and March 7, 2017, is untimely. Additionally, even a claim premised on apartments listed before the final City inspection, that occurred on September 22, 2017, would be untimely. Those apartments had to have been listed at least one day prior to September 22, and therefore the claim would have accrued more than three years from the date the Complaint was filed. There thus is no timely GBL § 349 claim alleged in the Complaint.
Lastly, addressing Plaintiffs' fraud claim, the limitations period for such claims in New York is six years, or two years from the date of discovery, whichever is later. See N.Y. C.P.L.R. § 213(8); Sutton v. Marie, No. 21-CV-06787 (MKV), 2022 WL 3904100, at *4 (S.D.N.Y. Aug. 30, 2022). “[A] claim for fraud accrues at the time the plaintiff ‘possesses knowledge of facts from which the fraud could have been discovered with reasonable diligence.'” Ruso, 695 F.Supp.2d at 49 (quoting Oggioni v. Oggioni, 46 A.D.3d 646, 648 (2d Dep't 2007)).
Plaintiffs allege that, at the time they leased apartment units to tenants, Plaintiffs relied on Airbnb's failure to disclose that the tenants were Airbnb Hosts who intended to list the apartments on Airbnb. Compl. ¶ 149. As pled in the Complaint, any injury to Plaintiffs occurred at the time they executed a lease with a tenant for an apartment. Stated differently, the fraud claim necessarily accrued before the City issued any of its various fines, the last of which was imposed on September 22, 2017. Id. ¶ 135. Moreover, after the City issued its first fine, on August 29, 2014, Plaintiffs would have been on notice that at least some tenants were listing their apartments on Airbnb in ways that ran afoul of applicable laws and without having informed Plaintiffs of such conduct.
Plaintiffs commenced this action on September 21, 2020, more than six years after the first fine from the City, on August 29, 2014. Moreover, based on Plaintiffs' allegation that the fraud occurred when they entered into leases with their tenants, Plaintiffs would have been on notice of the alleged fraudulent conduct (at the latest) by September 22, 2017, the date of the last fine. Plaintiffs, however, did not commence this suit within two years of that discovery. Plaintiffs' fraud claim is also time barred.
In sum, Plaintiffs' GBL § 349 and fraud claims are untimely. Although Plaintiffs may have a timely negligence claim based on the fine incurred on September 22, 2017, the continuing violation doctrine does not apply to save Plaintiffs' negligence claim premised on earlier fines. Further, Plaintiffs' lone timely negligence claim, based on a fine amount of $20,200, fails to satisfy the amount in controversy required for federal jurisdiction. See 28 U.S.C. § 1332(a). Therefore, I recommend that all of Plaintiffs' claims be dismissed. Nevertheless, even if all of Plaintiffs' claims were timely, dismissal would still be appropriate because, as discussed below, each claim suffers from fundamental pleading deficiencies.
III. Plaintiffs fail to state a claim for negligence.
Airbnb argues that because Plaintiffs “seek to hold [Airbnb] liable in negligence for an allegedly false statement or omission,” their claim is a negligent misrepresentation claim. See Def.'s Br. at 8. Plaintiffs counter that their negligence claim does not depend on a false statement or omission. See Pls.' Br. at 12-14. A negligent misrepresentation claim requires that Plaintiffs have pled their allegations of fraud with particularity. See Lin v. Canada Goose US, Inc., 640 F.Supp.3d 349, 361 (S.D.N.Y. 2022) (“Negligent misrepresentation claims are subject to the heightened pleading standard under Rule 9(b).”) (citing Aetna Cas. & Sur. Co. v. Aniero Concrete Co., 404 F.3d 566, 583 (2d Cir. 2005)). I need not determine, however, whether Plaintiffs' negligence claim is in fact a negligent misrepresentation claim, because both claims require factual allegations supporting the existence of a duty. U.S. Bank Nat'l Assoc. v. BFPRU I, LLC, 230 F.Supp.3d 253, 270 n.8 (S.D.N.Y. 2017). As discussed below, Plaintiffs lack any factual allegations supporting a plausible inference that Airbnb owed a duty to Plaintiff.
“[T]o establish a prima facie case of negligence under New York law, a plaintiff must show ‘(1) the existence of a duty on defendant's part as to plaintiff; (2) a breach of this duty, and (3) injury to the plaintiff as a result thereof.'” In re World Trade Ctr. Lower Manhattan Disaster Site Litig., 758 F.3d 202, 210 (2d Cir. 2014) (quoting Caronia v. Philip Morris USA, Inc., 715 F.3d 417, 428 (2d Cir. 2013)). A plaintiff must also show “a reasonably close causal connection between the breach and the resulting injury.” Speidel v. Sodexho, Inc., No. 03-CV-3100 (LTS) (HBP), 2005 WL 1572093, at *2 (S.D.N.Y. July 6, 2005) (citing Febesh v. Elcejay Inn Corp., 157 A.D.2d 102 (1st Dep't 1990)).
A claim for negligence under New York law “requires, first, that a plaintiff allege ‘the defendant owed the plaintiff a cognizable duty of care as a matter of law.”' Essilor Int'l SAS v. J.P. Morgan Chase Bank, N.A., No. 22-CV-3361 (LJL), 2023 WL 35176, at *16 (S.D.N.Y. Jan. 4, 2023) (quoting Curley v. AMR Corp., 153 F.3d 5, 13 (2d Cir. 1998)). ‘“While [a] legislature can create a duty by statute, in most cases duty is defined by the courts, as a matter of policy.'” Buchanan for Buchanan v. Hesse, 521 F.Supp.3d 348, 356 (S.D.N.Y. 2021) (quoting Lauer v. City of N.Y., 95 N.Y.2d 95, 100 (2000)). A duty will be found “where a ‘special relationship' exists directly between the plaintiff and defendant . . . like privity of contract, or a relationship sufficiently approaching privity.” Sparago v. Beaver Mountain Log Homes, Inc., No. 20-CV-276 (KMK), 2021 WL 965448, at *6 (S.D.N.Y. Mar. 15, 2021).
“A duty may also be imposed based on the defendant's relationship to a third-person tortfeasor.” Stutts v. De Dietrich Grp., No. 03-CV-4058 (ILG), 2006 WL 1867060, at *16 (E.D.N.Y. June 30, 2006). Although generally a defendant “‘has no duty to control the conduct of third persons so as to prevent them from harming others,”' a duty may arise where the relationship between the defendant and the third-person tortfeasor includes “‘defendant's actual control of the third person's actions.'” Id. (quoting D'Amico v. Christie, 71 N.Y.2d 76, 88 (1987) and Hamilton v. Beretta U.S.A. Corp., 96 N.Y.2d 222, 232 (2001)). For example, “an employer may be liable for the acts of its employees in the course and scope of employment.” D'Amico, 71 N.Y.2d at 88 (citations omitted). “In finding such a duty, it is crucial ‘that the defendant's relationship with [the tortfeasor] places defendant in the best position to protect against the risk of harm.”' Stutts, 2006 WL 1867060, at *16 (quoting Hamilton, 96 N.Y.2d at 233).
‘“Without a duty running directly to the injured person there can be no liability in damages, however careless the conduct or foreseeable the harm.'” Crews v. Cnty. of Nassau, 612 F.Supp.2d 199, 205 (E.D.N.Y. 2009) (quoting Lauer, 95 N.Y.2d at 100); see also Ahmed v. Nat'l Bank of Pak., 572 F.Supp. 550, 554 (S.D.N.Y. 1983) (“It is beyond peradventure that ‘[w]ithout duty, there can be no breach of duty and without a breach of duty there can be no liability.”') (quoting Williams v. New York, 308 N.Y. 548, 557 (1955)). “Whether a defendant owes a duty of care to a plaintiff is a question of law that the Court may properly determine on a motion to dismiss.'” Essilor Int'l SAS, 2023 WL 35176, at *16 (quoting Qube Films Ltd. v. Padell, 2014 WL 3952931, at *7 (S.D.N.Y. Aug. 12, 2014)) (internal quotation marks omitted).
Here, Plaintiffs do not allege that they were in privity of contract with Airbnb or that Airbnb was acting in its capacity as a fiduciary to Plaintiffs. Nor do Plaintiffs allege the existence of any other type of special relationship that would give rise to a duty. Further, the Complaint contains no allegations from which to plausibly infer that Airbnb had “actual control” over the Airbnb Hosts, such that they would be responsible for their conduct. And, Plaintiffs concede that the Complaint “does not . . . allege that Airbnb has some duty to protect Plaintiffs' from [an Airbnb Member's] actions.” Pls.' Br. at 14.
Plaintiffs argue “that Airbnb has the duty to control its own conduct within the bounds of the civil and criminal laws and not to commit torts or crimes.” Pl.'s Br. at 14 (emphasis omitted). But Plaintiffs' argument points to a generalized duty to follow the law or refrain from committing a tort, which is not itself sufficient to plead a claim for negligence. To plead a claim for negligence, “[a] plaintiff must establish not only that the defendant owed a general duty of care to society as a whole, but also that the defendant owed a specific duty to the particular plaintiff.” Vega v. Fox, 457 F.Supp.2d 172, 183 (S.D.N.Y. 2006) (citations omitted and emphasis added). In other words, Plaintiffs must identify a duty “flowing from [Airbnb] to [them].” MCI Worldcom Networks Servs., Inc. v. Clearwater Drilling, Inc., No. 01-CV-9961 (HB), 2002 WL 31444940, at *1 (S.D.N.Y. Nov. 1, 2002) (citing Febesh, 157 A.D.2d at 104) (internal quotation marks omitted and emphasis added). Plaintiffs have not done so here.
In sum, Plaintiffs have failed to allege any facts from which to plausibly infer the existence of a duty owed by Airbnb to Plaintiffs, a necessary element of a negligence claim. Thus, even if Plaintiffs had a timely negligence claim, dismissal would nonetheless be required for failure to plead the existence of a duty. See, e.g., SUEZ Water N.Y. Inc. v. EI du Pont de Nemours and Co., 578 F.Supp.3d 511, 554 (S.D.N.Y. 2022) (dismissing negligence claim where the plaintiff failed to allege the existence of a duty).
Airbnb also argues that Plaintiffs have failed to plausibly allege that any injury was proximately caused by Airbnb's actions or inactions, because Plaintiffs' own conduct and that of its tenants would have broken the causal chain. Def.'s Br. at 14-16. Typically, the question of whether a particular act of negligence is a substantial cause of the plaintiff's injuries is one to be made by the factfinder, as such a determination turns upon questions of foreseeability and “‘what is foreseeable and what is normal may be the subject of varying inferences.'” Hain v. Jamison, 28 N.Y.3d 524, 529 (2016). “In the context of the intervention of a third-party between defendant's conduct and plaintiff's injury, ‘liability turns upon whether the intervening act is a normal or foreseeable consequence of the situation created by the defendant's negligence.”' Bindler v. Lenox Hill Neighborhood House, Inc., 217 A.D.3d 440, 442 (1st Dep't 2023) (quoting Derdiarian v. Felix Contr. Corp., 51 N.Y.2d 308, 315, (1980)). Plaintiffs' failure to act to cure the violations, following the City's issuance of the first fine, may well suffice to constitute an intervening act that severs the chain of causation, as to Plaintiffs' subsequent injuries. See Nat'l Commc'ns Ass'n, Inc. v. Am. Tel. & Tel. Co., No. 93-CV-3707 (LAP), 2001 WL 99856, at *6 (S.D.N.Y. Feb. 5, 2001) (“A plaintiff who fails to take reasonable steps to avoid the alleged loss has broken the chain of causation, and loss resulting to him thereafter is suffered through his own act....”) (citation, internal quotation marks, and alteration omitted). But Plaintiffs failure to plead the existence of a duty is fatal to its negligence claim, and therefore I do not address whether they have also adequately pled that Airbnb's actions were the proximate cause of their injuries. See In re Sept. 11 Prop. Damage & Bus. Loss Litig., 468 F.Supp.2d 508, 525 (S.D.N.Y. 2006), affd, 737 F.3d 166 (2d Cir. 2013) (declining to address “the issues of proximate, foreseeable, intervening and independent causes” on a motion to dismiss because they “are fact-laden, requiring a fully developed factual record”).
III. Plaintiffs fail to state a claim for common-law fraud.
‘“The elements of fraud under New York law are: (1) a misrepresentation or a material omission of fact which was false and known to be false by defendant, (2) made for the purpose of inducing the other party to rely upon it, (3) justifiable reliance of the other party on the misrepresentation or material omission, and (4) injury.”' Bourbia v. S.C. Johnson & Son, Inc., 375 F.Supp.3d 454, 466 (S.D.N.Y. 2019) (quoting Premium Mortg. Corp. v. Equifax Info. Servs., LLC, 583 F.3d 103, 108 (2d Cir. 2009)). A claim of fraudulent omission, like Plaintiffs' claim here (see Compl. ¶¶ 148-50), must also allege a “failure to discharge a duty to disclose.” Bayne v. Target Corp., 630 F.Supp.3d 544, 553 (S.D.N.Y. 2022) (quoting TVT Records v. Island Def Jam Music Grp., 412 F.3d 82, 90-91 (2d Cir. 2005); see also City of N.Y. v. Smokes-Spirits.com, Inc., 541 F.3d 425, 454 (2d Cir. 2008) (‘“[A] fraud cause of action may be predicated on acts of concealment where the defendant had a duty to disclose material information.”') (quoting Kaufman v. Cohen, 307 A.D.2d 113, 119-20 (1st Dep't 2003)). “A duty to disclose arises ‘where the parties enjoy a fiduciary relationship' or ‘where one party possesses superior knowledge, not readily available to the other, and knows that the other is acting on the basis of mistaken knowledge.'” Bayne, 630 F.Supp.3d at 553 (quoting Lerner v. Fleet Bank, N.A., 459 F.3d 273, 292 (2d Cir. 2006)).
A common-law fraud claim under New York law brought in federal court, must also “satisfy [Federal Rule of Civil Procedure] 9(b)'s heightened pleading standard.” Duran v. Henkel of America, Inc., 450 F.Supp.3d 337, 353 (S.D.N.Y. 2020) (citing Matana v. Merkin, 957 F.Supp.2d 473, 484 (S.D.N.Y. 2013)). “To meet this standard, the complaint must allege (1) what the omissions were; (2) the person responsible for the failure to disclose; (3) the context of the omissions and the manner in which they misled the plaintiff; and (4) what the defendant obtained through the fraud.” DirecTV Latin Am., LLC v. Park 610, LLC, 691 F.Supp.2d 405, 436 (S.D.N.Y. 2010) (citation and internal quotation marks omitted).
A. The Complaint does not meet Rule 9(b)'s pleading requirements.
Federal Rule of Civil Procedure 9(b) requires that a plaintiff alleging fraud “must state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). “Rule 9(b) applies to claims involving fraudulent omissions just as it applies to claims involving fraudulent misstatements.” United States ex rel. Miller v. Citigroup Inc., No. 19-CV-10970 (DLC), 2022 WL 3030707, at *3 (S.D.N.Y. Aug. 1, 2022) (citation omitted).
To plead fraud with particularity, as required by Rule 9(b), a plaintiff must ‘“(1) detail the statements (or omissions) that the plaintiff contends are fraudulent, (2) identify the speaker, (3) state where and when the statements (or omissions) were made, and (4) explain why the statements (or omissions) are fraudulent.”' Eternity Glob. Master Fund Ltd. v. Morgan Guar. Trust Co. of N.Y., 375 F.3d 168, 187 (2d Cir. 2004) (quoting Harsco Corp. v. Segui, 91 F.3d 337, 347 (2d Cir. 1996)). Pleadings that include specific descriptions of the alleged false and misleading statements, allegations that the defendant made the statements with knowledge of their falsehood, and an assertion that plaintiff relied on and was induced by the false statements are considered sufficient under Rule 9(b). See Bourbia, 375 F.Supp.3d at 466; see also Lewis v. Rosenfeld, 138 F.Supp.2d 466, 478 (S.D.N.Y. 2001) (a complaint that provided ten examples of oral misrepresentations of material fact by defendants and identified the speaker of each misrepresentation, when each representation was made, and why each statement was fraudulent satisfied Rule 9(b)).
Plaintiffs summarily allege that their tenants “failed to disclose and affirmatively concealed that they were actually Airbnb Hosts who planned to use such apartments for Airbnb rentals.” Compl. ¶ 149. As an initial matter, Plaintiffs do not specify when these alleged omissions or misstatements occurred, and they do not identify specific individuals whom they claim failed to disclose or misrepresent their intent to act as Airbnb Hosts. Moreover, Plaintiffs fraud claim is asserted against only Airbnb and this allegation does not point to any alleged omission or fraudulent statement by Airbnb to Plaintiffs. The allegation instead concerns an alleged concealment or misstatement by Plaintiffs' tenants (the Airbnb Hosts). To support a fraud claim against Airbnb, the allegedly false statement must have been made by Airbnb to Plaintiffs. Emps.' Ret. Sys. of Gov't of V.I. v. Morgan Stanley & Co., 814 F.Supp.2d 344, 353 (S.D.N.Y. 2011) (“To be liable for fraud under New York Law, the defendant must actually make a materially false statement to the plaintiff.”) (citations omitted); see also Eurycleia Partners, LP v. Seward & Kissel, LLP, 46 A.D.3d 400, 401 (1st Dep't 2007) (plaintiffs failed to state a claim for common-law fraud because they did “not allege [the defendants] made any representation, fraudulent or otherwise, to them”) (citation omitted).
Plaintiffs also point to Airbnb's Terms of Service, alleging that while the terms “deny that [Airbnb] acts as an agent for its Members . . . its conduct satisfies the definition of a real estate broker, escrow agent and legal agent.” Compl. ¶¶ 7, 93, 110. Plaintiffs assert that Airbnb “Members who rented out Plaintiffs' units . . . were not aware of Airbnb's actual status.” Pl.'s Br. at 18. But even these alleged false statements and omissions, by Plaintiffs own recounting, were made by Airbnb to individuals other than Plaintiffs. There are no allegations in the Complaint that Plaintiffs themselves were Airbnb Hosts or even used Airbnb's website.
In sum, Plaintiffs have failed to point to any alleged false statements or omissions made by Airbnb to Plaintiffs. Plaintiffs have also failed to allege with specificity the circumstances constituting the alleged misstatement or omission. Further, as already discussed with regards to Plaintiffs' negligence claim, Plaintiffs have no plausible allegations suggesting the existence of a duty owed by Airbnb to Plaintiffs. To the extent Plaintiffs' fraud claim is based on an alleged omission, Plaintiffs were required to have alleged the existence of a duty to disclose. See Bayne, 630 F.Supp.3d at 553.
B. The Complaint fails to plead that Airbnb acted with fraudulent intent.
For a fraud claim to survive a motion to dismiss, a plaintiff “must state facts sufficient to give rise to a strong inference of fraudulent intent.” Loreley Fin. (Jersey) No. 3 Ltd. v. Wells Fargo Sec., LLC, 797 F.3d 160, 176 (2d Cir. 2015) (citation and internal quotation marks omitted). “An inference is ‘strong' if it is ‘cogent and at least as compelling as any opposing inference one could draw from the facts alleged.”' Id. at 176-77 (quoting Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 324 (2007)). Fraudulent intent “may be established ‘either (a) by alleging facts to show that defendants had both motive and opportunity to commit fraud, or (b) by alleging facts that constitute strong circumstantial evidence of conscious misbehavior or recklessness.”' Eternity Global, 375 F.3d at 187 (quoting Acito v. IMCERA Group, Inc., 47 F.3d 47, 52 (2d Cir. 1995)).
There are no allegations in the Complaint from which to plausibly infer that Airbnb acted with fraudulent intent. As just discussed, there are no allegations that Airbnb made a fraudulent statement or omission to Plaintiffs, and nor are there allegations supporting a plausible inference that Airbnb knew of the misstatements or omissions made by Plaintiffs' tenants (the Airbnb Hosts). There also are no allegations from which to plausibly infer that, at the time Plaintiffs leased the apartments to the tenants, Airbnb knew that those tenants were planning to list their apartments on Airbnb at some future time. Nor are there any non-conclusory allegations suggesting that Airbnb assisted the tenants in listing their apartments on Airbnb's platform with the intent to deceive Plaintiffs about Airbnb's role. While Plaintiffs allege that their tenants “act[ed] with the knowing and deliberate assistance of [] Airbnb . . . so that they could sublease [their apartments on Airbnb's platform],” Compl. ¶ 14, the allegation is conclusory and provides no factual support for the claim that Airbnb knowingly assisted in these listings with an intent to defraud Plaintiffs.
Plaintiffs also point to paragraphs 1-10 of the Complaint, which allege that Airbnb misrepresented its status in its Terms of Service, arguing that “[s]uch allegations reasonably suggest or indicate that Airbnb knowingly acted as an unlicensed real estate broker, lawyer and rental agent when renting out Plaintiffs apartments unlawfully.” Pl.'s Br. at 18-19. However, because the Complaint does not allege that Plaintiffs were ever in any sort of relationship with Airbnb that was governed by its Terms of Service, these allegations say nothing about Airbnb's supposed intent to defraud Plaintiffs. Simply put, Plaintiffs have failed to plead a strong inference of fraudulent intent on the part of Airbnb.
In sum, Plaintiffs have failed to plausibly allege that Airbnb acted with fraudulent intent. Plaintiffs have also failed to plead their allegations of fraud with particularity, as required by Rule 9(b). Finally, as discussed with regards to Plaintiffs' negligence claim, Plaintiffs have failed to allege the existence of a duty to disclose, on the part of Airbnb. I thus recommend that Plaintiffs' fraud claim, even if deemed timely, be dismissed for failure to plead various elements of the claim.
IV. Plaintiffs fail to state a claim under GBL Section 349.
Section 349 of New York's General Business Law makes unlawful “[d]eceptive acts or practices in the conduct of any business, trade, or commerce or in the furnishing of any service.” N.Y. GBL § 349. “In contrast to common-law fraud, GBL § 349 ‘is a creature of statute based on broad consumer-protection concerns.'” Violet Realty, Inc. v. Affiliated FM Ins. Co., 267 F.Supp.3d 384, 390 (W.D.N.Y. 2017) (quoting Gaidon, 96 N.Y.2d at 209). “To state a claim under GBL § 349, a plaintiff must allege that ‘(1) the defendant's deceptive acts were directed at consumers, (2) the acts are misleading in a material way, and (3) the plaintiff has been injured as a result.”' Duran, 450 F.Supp.3d at 346 (quoting Maurizio v. Goldsmith, 230 F.3d 518, 521 (2d Cir. 2000) (per curiam)). Claims under GBL § 349 need not meet the heightened pleading standard of Federal Rule of Civil Procedure 9(b). Id. (citation omitted). The statute “does not grant a private remedy for every improper or illegal business practice, but only for conduct that tends to deceive consumers.” Schlessinger v. Valspar Corp., 21 N.Y.3d 166, 172 (2013) (citation omitted).
For the purposes of GBL § 349, consumer-oriented conduct is activity that causes any “‘consumer injury or harm to the public interest.'” Anderson v. Unilever United States, Inc., 607 F.Supp.3d 441, 451 (S.D.N.Y. 2022) (quoting New York v. Feldman, 210 F.Supp.2d 294, 301 (S.D.N.Y. 2022)). This requirement is broadly construed and “may be satisfied by showing that the conduct at issue ‘potentially affect[s] similarly situated consumers.'” Id. (quoting Wilson v. Nw. Mut. Ins. Co., 625 F.3d 54, 64 (2d Cir. 2010)) (internal quotation marks omitted); see also Sheth v. N.Y. Life Ins. Co., 273 A.D.2d 72, 73 (1st Dep't 2000) (explaining that consumer-oriented element of § 349 claim may be met with “showing that the practice has a broader impact on the consumer at large”) (citations omitted). For example, a defendant that manufactures, distributes, markets, and sells a product to consumers from online and retail stores nationwide satisfies the consumer-oriented element of a GBL § 349 claim. See Anderson, 607 F.Supp.3d at 451 (citation omitted); Cooper v. Anheuser-Busch, LLC, 553 F.Supp.3d 83, 94 (S.D.N.Y. 2021). Stated otherwise, there is no claim under GBL § 349 where the private transaction does not have “ramifications for the public at large.” Canario v. Gunn, 300 A.D.2d 332, 333 (2d Dep't 2002) (affirming dismissal of GBL § 349 claim where “misrepresentation had the potential to affect only a single real estate transaction involving a single unique piece of property,” and where the “only parties truly affected by the alleged misrepresentation” were the parties in this case) (internal quotation marks omitted).
“New York courts have [] suggested that a consumer for § 349 purposes, is one ‘who purchases goods and services for personal, family or household use.'” Exxonmobil Inter-Am., Inc. v. Advanced Info. Eng'g Servs., Inc., 328 F.Supp.2d 443, 448 (S.D.N.Y. 2004) (quoting Sheth, 273 A.D.2d at 73) (internal alterations omitted). “A business is not a consumer for the purpose of GBL § 349.” Spread Enters., Inc. v. First Data Merch. Servs. Corp., No. 11-CV-4743 (ADS) (ETB), 2012 WL 3679319, at *7 (E.D.N.Y. Aug. 22, 2012) (citations omitted); see also Sheth, 273 A.D.2d at 73 (holding that the challenged practices were not consumer-oriented under § 349 because they were directed only at prospective insurance agents). As such, “business-to-business transactions” have generally not given rise to a claim under GBL § 349. Exxonmobil, 328 F.Supp.2d at 448 (citing cases).
Although GBL § 349 is “directed at wrongs against the consuming public,” Oswego Laborers' Local 214 Pension Fend v. Marine Midland Bank, N.A., 85 N.Y.2d 20, 24 (1995), “a business may bring a GBL § 349 action where it is harmed by conduct also directed at consumers,” Spread Enters., 2012 WL 3679319, at *7. See also Dollar Phone Corp. v. Dun & Bradstreet Corp., No. 09-CV-3645 (ILG) (SMG), 2010 WL 5313737, at *3 (E.D.N.Y. Sept. 2, 2010) (“Although the scope of the Act is generally limited to claims by consumers, a business may bring a § 349 claim if it is harmed by consumer-oriented conduct.”) (internal quotation marks and citations omitted).
Plaintiffs allege that Airbnb's Terms of Service contains false representations concerning Airbnb's status as a real-estate broker, agent, and attorney. See, e.g., Compl. ¶¶ 24, 57, 144. Plaintiffs-a company that owns a building in Manhattan and its sole owner and managing member, Compl. ¶¶ 39-40-are not consumers of Airbnb's services. In other words, Plaintiffs themselves did not use Airbnb's services to list apartment units. If Plaintiffs were individuals who had used Airbnb's website to list an apartment, necessarily agreeing to be bound by the Terms of Service used by Airbnb for all individuals posting on its site, then the consumer-oriented element of a GBL § 349 claim would be satisfied. See Exxonmobil, 328 F.Supp.2d at 449 (explaining that liability under GBL § 349 “attaches primarily where a party's misrepresentations are boilerplate and have the potential to be repeated in order to deceive numerous similarly situated buyers”) (citations omitted).
However, there is no allegation in the Complaint that Plaintiffs ever had any direct relationship or contact with Airbnb. As discussed, Plaintiffs do not allege that they used Airbnb's website or services. And even where courts have permitted a business to proceed with a GBL § 349 claim against a defendant, the plaintiff had alleged that the defendant's complained-of deceptive act was directed at it, as well as at consumers more broadly. For instance, in Oswego Laborers' Local 214 Pension Fund, the Court of Appeals allowed plaintiffs, two union pension funds, to proceed with a GBL § 349 claim against a bank, based on a claim that the bank had misrepresented its savings-account policies to the pension funds when those funds opened accounts with the bank. See 85 N.Y.2d at 23-24. Although the pension funds were not typical consumers, the court reasoned that the defendant bank had dealt with the pension funds “as any customer entering the bank to open a savings account, furnishing the Funds with standard documents presented to customers upon the opening of accounts.” Id. at 26-27. Consequently, the court concluded that the “consumer-oriented” element of a GBL § 349 claim was satisfied, because the complained-of acts, upon which the pension-fund plaintiffs grounded their claim of injury, also potentially affected similarly situated consumers. Id. at 26-27.
Here, unlike in Oswego, Plaintiffs do not allege that they engaged in any transaction or conduct directly with Airbnb. Plaintiffs instead are attempting to piggy-back on conduct their own allegations make clear was directed at “Members,” the Airbnb Hosts who listed their apartments on Airbnb, and not Plaintiffs. See Compl. ¶¶ 4, 6, 15, 24-25, 57, 59, 79, 111. Thus, even if Airbnb's conduct were consumer-oriented, the Complaint fails to allege that the conduct was directed at Plaintiffs, because, for instance, Plaintiffs used Airbnb's services to list apartments. Stated otherwise, the Complaint fails to plausibly allege that Plaintiffs suffered an injury as a result of conduct directed at it by Airbnb. See Tears v. Boston Scientific Corp., 344 F.Supp.3d 500, 516 (S.D.N.Y. 2018) (dismissing GBL § 349 claim where misrepresentations were in defendant's brochure and website and plaintiff “failed to allege facts connecting his alleged injury with statements made on those platforms,” because Plaintiff did not allege that misleading statements “led to his decision” to buy defendant's product). I therefore recommend that, even if timely, the GBL § 349 claim be dismissed for failure to state a claim.
V. Plaintiffs should not be given leave to amend.
Plaintiffs ask that they be granted leave to amend their Complaint to resuscitate any dismissed claim. See Pls.' Br. at 33-34. Airbnb opposes the request. ECF No. 22 (“Def.'s Reply”) at 10. “The court should freely give leave [to amend] when justice so requires.” Gutkowski v. Steinbrenner, 680 F.Supp.2d 602, 608 (S.D.N.Y. 2010) (citing Fed.R.Civ.P. 15(a)(2)) (internal quotation marks and alterations omitted). “In the absence of any apparent or declared reason-such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc.-the leave sought should, as the rules require, be freely given.” Id. (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)). “District courts have discretion to grant or deny plaintiffs leave to amend their complaints, but there must be good reason to deny the motion.” Anhui Konka Green Lighting Co. v. Green Logic LED Elec. Supply, Inc., No. 18-CV-12255 (PAE), 2019 WL 6498094, at *12 (S.D.N.Y. Dec. 3, 2019) (citation and internal quotation marks omitted). “Where it appears that granting leave to amend is unlikely to be productive, however, it is not an abuse of discretion to deny leave to amend.” Gutkowski, 680 F.Supp.2d at 609 (quoting Ruffolo v. Oppenheimer & Co., 987 F.2d 129, 131 (2d Cir. 1993)).
As discussed, Plaintiffs' fraud and GBL § 349 claims are untimely. See supra at 11-13. I therefore recommend that Plaintiffs be denied leave to amend as to those time-barred claims, because any amendment would be futile. See Vargas v. Ciarletta, No. 09-CV-8981 (SAS) (TH), 2010 WL 4447636, at *1 (S.D.N.Y. Nov. 4, 2010) (“If the claims the plaintiff seeks to add would be barred by the applicable statute of limitations, amendment would be futile and leave to amend should be denied.”).
As it concerns Plaintiffs' negligence claim, any claim premised on fines that were imposed prior to September 21, 2017, is untimely. See supra at 8-11. Moreover, although a negligence claim based on the fine of $20,200 imposed on September 22, 2017, may be timely, the claim fails to meet the amount in controversy requirement necessary for diversity jurisdiction, as Plaintiffs' Complaint alleges that the fine was $20,200. Even if leave to amend were granted so that Plaintiffs could bolster their allegations of economic injury, Plaintiffs will be unable to plausibly allege the existence of a duty owed to it by Airbnb that would give rise to a viable negligence claim. I thus recommend that leave to amend be denied for this claim as well.
See In re Agape Litig., 681 F.Supp.2d 352, 370 (E.D.N.Y. 2010) (leave to amend negligence claim “would be futile” where the Court determined that defendants “owed no duty to the Plaintiffs that could possibly give rise to a viable negligence claim”); see also Cuoco v. Moritsugu, 222 F.3d 99, 112 (2d Cir. 2000) (“The problem with [the plaintiff's] causes of action is substantive; better pleading will not cure it. Repleading would thus be futile. Such a futile request to replead should be denied.”).
CONCLUSION
For the foregoing reasons, I respectfully recommend that Airbnb's Motion to Dismiss be GRANTED and that Plaintiffs' Complaint be dismissed with prejudice.
PROCEDURE FOR FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties have fourteen (14) days (including weekends and holidays) from service of this Report and Recommendation to file any objections. See also Fed. R. Civ. P. 6(a), 6(b), 6(d). A party may respond to any objections within 14 days after being served. Any objections and responses shall be filed with the Clerk of the Court. Any request for an extension of time to file objections or responses must be directed to the Honorable Paul G. Gardephe. If a party fails to file timely objections, that party will not be permitted to raise any objections to this Report and Recommendation on appeal. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72; Fed.R.Civ.P. 6(a), 6(b), 6(d); Thomas v. Arn, 474 U.S. 140 (1985); Wagner & Wagner, LLP v. Atkinson, Haskins, Nellis, Brittingham, Gladd & Carwile, P.C., 596 F.3d 84, 92 (2d Cir. 2010).