Court: District Court, D. Massachusetts; July 27, 2017; Federal District Court
Peter Hiam and Brooke Hutchens, the Plaintiffs, filed a lawsuit against HomeAway.com, Inc. under Massachusetts and Colorado consumer protection laws and common law aiding and abetting fraud, related to vacation rentals listed on HomeAway's site. HomeAway sought summary judgment, claiming immunity under the Communications Decency Act (CDA). The court granted HomeAway’s motion for summary judgment.
The procedural history began with Hiam’s initial lawsuit filed on February 19, 2016, followed by two amendments and the addition of Hutchens on December 14, 2016. HomeAway responded by asserting that the CDA protects it from the Plaintiffs' claims. After filing various briefs and holding an oral hearing, the court reviewed the case.
HomeAway, a Delaware corporation, operates the website VRBO.com, which facilitates property listings for vacation rentals. The site includes terms regarding a Basic Rental Guarantee that offers reimbursement up to $1,000 for losses due to internet fraud, defined as payments made for fictitious or fraudulent property listings. Specific eligibility criteria for reimbursement include timely submission of a request and denial of reimbursement by the property owner or payment provider. Notably, the Guarantee does not cover payments made via instant wire transfer services.
HomeAway does not pre-screen or monitor rental postings, but offers a Guarantee intended to protect against Internet fraud. This Guarantee outlines the obligations of travelers to provide necessary information for reimbursement requests. HomeAway’s Terms and Conditions explicitly state that the company bears no responsibility for verifying users' identities or the accuracy of property listings. Travelers are strongly encouraged to communicate directly with property owners and take reasonable precautions to confirm identities and details of bookings. Although HomeAway takes measures to assist users in avoiding fraud, it assumes no liability for such actions. The Terms and Conditions clarify that all content on the site is the sole responsibility of the members and that HomeAway disclaims any warranties regarding the accuracy of listings.
HomeAway's Privacy Policy specifies conditions under which personal data may be disclosed, primarily for policy enforcement. In a specific case involving the "Jewels of Belize Estate," Hiam and Hutchens attempted to rent the property, communicating directly with an individual via the associated email. They both wired substantial deposits, but after making their payments, they received no further communication from the property manager. When Hiam contacted VRBO's customer support prior to his reservation, he was informed that the owner had a history of successful bookings, which did not qualify as fraud under HomeAway’s definitions.
Hiam sought the identity of the Jewels of Belize property owner but was denied due to privacy concerns. After wiring a second payment, Hiam received no further communication, while Hutchens was contacted by a representative named Dayva on October 19, 2014, who indicated alternative accommodations due to the estate's unavailability. Later, Hutchens learned that checks from Jewels of Belize for hotel reservations had bounced, forcing her to pay out-of-pocket, although she was later reimbursed by Jewels of Belize. Upon returning, Hutchens reported these issues to VRBO, which provided vague information regarding property images. Hiam and Hutchens initiated legal action under Massachusetts and Colorado consumer protection statutes, alleging unfair trade practices, fraud, misrepresentation, and unjust enrichment. Hiam's claims include violations of Massachusetts laws and a concert of action claim, while Hutchens cites Colorado's deceptive trade practices. They also seek declaratory relief related to a forum-selection clause and claims limitation period in HomeAway’s Terms and Conditions.
The analysis section outlines the standard for summary judgment, noting it is appropriate when there are no genuine issues of material fact. The court must view the evidence in favor of the non-moving party, and summary judgment is inappropriate if the moving party has the burden of proof without binding admissions from the opposing party. Additionally, Section 230 of the Communications Decency Act provides broad immunity to internet service providers from liability related to third-party content, stating that such entities cannot be treated as publishers of information from other content providers.
The Communications Decency Act (CDA) restricts state law claims against an interactive computer service provider when three conditions are met: (1) the entity qualifies as a ‘provider or user of an interactive computer service’; (2) the claim is based on information from another information content provider; and (3) the claim treats the entity as the publisher or speaker of that information. Lawsuits holding service providers liable for traditional editorial functions, such as publishing decisions, are barred. The First Circuit expands this to include website operation decisions. However, CDA immunity only applies if the information at issue is provided by another provider; claims based on the service provider’s own content do not qualify for immunity. HomeAway contends it does not create content and that Jewels of Belize is responsible for the listing in question. In response, Plaintiffs argue their claims rely on HomeAway's content and actions, specifically its consumer guarantees related to its listings. While some claims may evade CDA immunity, they are ultimately insufficient due to lack of evidence, failure to create trial-worthy disputes regarding the Privacy Policy, and the existence of alternative legal remedies undermining the unjust enrichment claim. Consequently, the Court grants summary judgment in favor of HomeAway.
Hiam asserts five acts by HomeAway that constitute unfair or deceptive trade practices under Massachusetts General Laws Chapter 93A: (1) misleading representation of its investigatory process for fraud prevention; (2) endorsement of fraudulent content from the Jewels of Belize rental listing through private communications; (3) failure to uphold its Basic Rental Guarantee by not recognizing the fraudulent listing; (4) violation of its Privacy Policy by withholding user information and payment details; and (5) infringement of the Attorney General’s Travel Services regulations, which is inherently a violation of Chapter 93A.
Massachusetts law prohibits unfair or deceptive business practices without providing specific definitions of such acts. Courts assess violations based on established concepts of unfairness, moral integrity, and consumer harm. Count VII, related to the Attorney General’s Travel Services regulations, essentially restates count II regarding unfair practices.
HomeAway's status as a "seller of travel services" under these regulations is contested. The regulations define such sellers as entities that provide or arrange travel services, including lodging. HomeAway functions as a platform for third-party rental postings and explicitly states it does not engage in rental transactions. Although Hiam contends that HomeAway qualifies as a seller of travel services, it does not meet the statutory definition since it merely facilitates listings without providing actual lodging. Even if considered a seller of travel services, the Communications Decency Act (CDA) would preclude the claim.
HomeAway is not considered a "seller of travel services," meaning it cannot be held liable for misleading or inaccurate content in third-party listings due to protections under Section 230 of the Communications Decency Act (CDA). The plaintiffs attempt to bypass CDA immunity by referencing HomeAway’s Basic Rental Guarantee; however, this narrows their claims to the specific language of HomeAway’s content only. Hiam’s claim under the Massachusetts regulations fails on two grounds: first, it improperly suggests that HomeAway is obligated to verify listings, which is not implied by the Guarantee; second, the Guarantee is not materially misleading as it does not address the accuracy of property details. HomeAway’s Terms and Conditions explicitly disclaim such accuracy. Consequently, the Court concludes that HomeAway does not qualify as a seller of travel services, leading to the dismissal of Count VII. Additionally, Hiam’s claims related to the Guarantee and HomeAway’s Privacy Policy do not meet essential legal elements, resulting in summary judgment for HomeAway. The Court further evaluates potential violations of Chapter 93A, noting that the standard for unfair practices requires conduct to approach established unfairness concepts. Despite the plaintiffs’ claims regarding the term "guarantee," the Basic Rental Guarantee aligns with regulatory definitions of a genuine guarantee.
The Guarantee explicitly addresses internet fraud and outlines the requirements for claiming protections, along with conduct that is not covered. HomeAway, identified as the "guarantor," commits to reimbursing qualifying users. Count II relates to HomeAway's obligation to investigate fraud complaints tied to the Guarantee. Hiam alleges that HomeAway's investigations were fabricated; however, evidence shows HomeAway did investigate the complaints of Hiam and Hutchens. Customer support reached out to the property manager and forwarded complaints, which the plaintiffs acknowledge in their own complaint. In response to Hutchens' claims about the property's condition, HomeAway consulted Google Earth but found insufficient evidence to confirm his allegations. An investigation of Hiam's complaint by a Trust and Security Specialist concluded that the owner was legitimate and had a history of successful rentals, thereby not qualifying as internet fraud. The findings were corroborated by checks against the New York Secretary of State’s database. The plaintiffs argue that HomeAway’s investigation was a "sham" and claim a promise to conduct a reasonable investigation, but the Guarantee does not explicitly include such a promise. The term "reasonable" in the context refers to HomeAway's discretion in determining what to investigate, not the thoroughness of the investigation itself. HomeAway is tasked with assessing whether the property exists for rent or if it was falsely advertised, rather than making legal determinations of fraud. The legal precedent cited supports that an organization is not required to justify the thoroughness of its investigation as long as it adheres to its policies.
The Guarantee explicitly commits to investigating only two specified elements, and despite the Plaintiffs' assertions, they lack sufficient evidence to support their claims of inadequate investigation. Discovery is complete, and the record fails to substantiate Hiam’s allegations of no investigation or a sham investigation, thus justifying summary judgment. The language of HomeAway’s Basic Rental Guarantee does not imply a promise to verify third-party listings, as the Plaintiffs suggest. Their interpretation of the term "guarantee," based on Massachusetts consumer protection regulations, overlooks a critical limitation that confines the definition to its use within the regulations. A prior court case established that a “guarantee” serves as an express warranty, which would not imply comprehensive verification of products but rather a promise of refund for failure. Therefore, the Basic Rental Guarantee is interpreted as a promise to refund, not an assurance of the accuracy of rental listings. Under Massachusetts law, the term “guarantee” does not constitute a deceptive act. The Plaintiffs' analogy of a kosher deli’s guarantee illustrates consumer expectations, but the court notes that the Guarantee resembles an insurance policy since it provides for refunds, aligning with what a rational consumer would anticipate from such a policy.
Plaintiffs claim that a disgruntled user labeled HomeAway's Guarantee as a "scam," arguing that the Guarantee implies a promise of pre-screening rental listings. However, the court finds this interpretation flawed, stating that the Guarantee explicitly offers a refund rather than an investigation into fraud, emphasizing that refunds are remedial and contingent on meeting specific eligibility requirements. The court asserts that the language of the Guarantee does not create the promises alleged by the Plaintiffs and suggests that no reasonable customer would interpret it as a guarantee of verification for all listings, especially when read alongside HomeAway's Terms and Conditions, which specify that HomeAway does not pre-screen content and disclaims any express or implied warranties. Moreover, Hiam acknowledged that HomeAway has no obligation to verify postings.
Regarding HomeAway's Privacy Policy, Hiam argues that violations constitute unfair trade practices, but this claim also fails. The Privacy Policy allows for sharing user information under specific circumstances but does not guarantee that HomeAway will disclose such information, leaving the decision to the company's discretion. Consequently, there is insufficient evidence for a rational factfinder to conclude that HomeAway's actions were unfair or deceptive.
HomeAway may be legally required to disclose information regarding user listings to comply with government investigations, but it retains discretion in how to respond to such obligations. Hiam's claims against HomeAway for violating its Privacy Policy are unfounded, as a reasonable fact-finder would not determine a breach occurred. Additionally, Hiam's consumer protection claims as a "seller of travel services" are barred by the Communications Decency Act (CDA). The Guarantee promises to investigate internet fraud complaints, which HomeAway has upheld, but Hiam does not qualify for a refund due to his payment method (wire transfer). The Guarantee does not imply that HomeAway will pre-screen third-party content, nor does the Privacy Policy promise disclosure of user information, making HomeAway's actions compliant and not deceptive. Consequently, Hiam’s claims (Counts II and VII) fail legally.
Regarding Count III, Hiam's concert of action claim against HomeAway attempts to hold it liable for third-party tortious conduct. While concert of action claims can allow for liability without identifying the cause-in-fact, Massachusetts courts typically require at least one identifiable defendant. Relaxing this requirement could impose liability on website operators for third-party content, conflicting with CDA protections. Hiam's assertion that HomeAway concealed fraudster identities and adopted fraudulent content directly ties to third-party actions, which the CDA protects HomeAway from. Section 230 immunity applies even with notice of unlawful content, further reinforcing the dismissal of Hiam's claims.
First Circuit case law bars Hiam’s concert of action claim against HomeAway regarding alleged notice of a fraudulent rental listing, as HomeAway is treated as both a publisher and speaker, which falls under statutory immunity as established by Congress. The court dismisses Hiam’s claims related to violations of HomeAway's Privacy Policy, noting no factual disputes exist regarding the policy or HomeAway’s adherence to it.
In the section on fraud and misrepresentation, the plaintiffs claim HomeAway committed fraud by falsely representing guarantees regarding listings. However, the court finds no false representation, as there is no express guarantee in HomeAway's policies, and communications from customer support did not constitute guarantees. HomeAway’s commitment to investigating fraud complaints is part of its Basic Rental Guarantee, and the court notes that HomeAway did investigate the plaintiffs' complaints, contradicting their assertion that no investigation occurred. Since the plaintiffs cannot prove HomeAway's knowledge of any false representations, HomeAway is entitled to summary judgment on this claim.
Brooke Hutchens, a Colorado resident, alleges deceptive trade practices under the Colorado Consumer Protection Act, claiming HomeAway falsely guarantees third-party rental listings against fraud. To succeed, Hutchens must demonstrate that HomeAway engaged in an unfair or deceptive trade practice.
The court outlines the criteria for establishing a violation of Colorado’s consumer protection statute, which includes: (1) the challenged practice occurring in the defendant’s business, (2) significant impact on the public as consumers, (3) the plaintiff suffering an injury to a protected interest, and (4) a causal link between the practice and the injury. Additionally, the defendant must knowingly make a deceptive or false representation. In the case at hand, HomeAway is found not to have engaged in deceptive trade practices, as it fulfilled its representations and conducted an investigation in response to complaints. Consequently, summary judgment is granted in favor of HomeAway.
Regarding the plaintiffs' unjust enrichment claim, they allege HomeAway retained funds received from the "Jewels of Belize" listing under false pretenses, asserting that these funds were intended for refunds under the Basic Rental Guarantee. HomeAway counters that the plaintiffs did not transfer any funds to them, which undermines the unjust enrichment claim. The plaintiffs clarify that their claim is based in tort, not contract. The determination of the claim's nature is contingent on its essence, and since the plaintiffs entered into a binding agreement with HomeAway through its “clickwrap” agreement, the court must first ascertain whether the plaintiffs have adequate legal remedies before considering the unjust enrichment claim. If adequate remedies exist, a claim for unjust enrichment cannot proceed.
The availability of a Chapter 93A count bars a claim of unjust enrichment, regardless of the outcome of the Chapter 93A claim. The existence of an adequate legal remedy, whether successful or not, precludes equitable claims of unjust enrichment. In this case, Hiam’s Chapter 93A claim and Hutchens’s claim under Colorado’s consumer protection statute prevent recovery for unjust enrichment. Consequently, the court grants HomeAway's motion for summary judgment on all counts of the Plaintiffs’ Second Amended Complaint.
Hiam sought vacation information from his son, who found a listing on VRBO. Both communicated with Jewels of Belize and VRBO customer support regarding a fraud complaint. The court treats Hiam and his son as one party for analysis. HomeAway qualifies for Section 230 immunity as an "interactive computer service" provider, enabling user access to a computer server. The Plaintiffs argue that HomeAway's motion focuses solely on CDA immunity, suggesting that the court should defer addressing whether HomeAway made an implied promise in its Guarantee.
Although HomeAway primarily addresses statutory immunity, this does not limit its motion to partial summary judgment. The court rules that after establishing CDA immunity, it must also assess whether the Guarantee's language carries the weight claimed by the Plaintiffs. The Plaintiffs contend that the nature of a consumer guarantee should only be determined after analyzing CDA immunity, but they provide no supporting case law for this position. The court has chosen to analyze CDA immunity first. Hutchens adopts Hiam’s Chapter 93A allegations verbatim, claiming HomeAway engaged in deceptive trade practices by not adequately disclosing the nature and extent of its guarantees, which could mislead consumers about the products' performance capabilities. The relevant Colorado statute prohibits guarantees that cannot be realistically fulfilled or that mislead consumers regarding the durability or performance of the goods or services.
