Month: May 2025

(Reuters) Sebastian Mejia died in the shower of an Airbnb rental in Brazil in 2022, the alleged victim of carbon monoxide poisoning from a faulty water heater. A Fulbright scholar, the 24-year-old Florida native was studying the country’s indigenous communities.

That same year, an American woman staying at an Airbnb in Croatia allegedly shared his fate, as did a trio of American tourists at an Airbnb in Mexico City, a man on a work trip to San Luis Potosí, Mexico, and a Loyola Marymount graduate student at an Airbnb in Guadalajara in late 2021, court records show.

None of the properties was equipped with detectors that would have alerted occupants to the odorless, colorless gas, the victims’ families’ allege in a series of wrongful death lawsuits against Airbnb.

As the cases make their way through the courts, they raise questions about the reach of Airbnb’s arbitration agreement and whether the short-term rental platform has a duty to protect its users from harm caused by third parties at properties it says it “does not own, have a right to access, or control.”

To find otherwise, Airbnb argues in court papers, would “radically expand tort liability.”

A spokesperson for the publicly traded San Francisco-based company, which reported more than $11 billion in revenue last year, said in a statement that there “have been over 2 billion guest arrivals on Airbnb, and incidents are exceptionally rare.” The spokesperson added that Airbnb has given away more than 280,000 free combined smoke and carbon monoxide detectors to hosts.

On Thursday, Airbnb lawyers from O’Melveny & Myers will face off at a hearing in San Francisco Superior Court against counsel for the widow of José Peñaloza Herrera to argue that the claims fail as a matter of law and should be dismissed. Herrera, a Mexican citizen, had been on a work trip to install machinery at an automotive plant when he died of carbon monoxide poisoning while sleeping in a room that contained a gas-powered water heater and other appliances, according to the complaint.

Pedro Echarte, a partner at the Florida-based Haggard Law Firm who represents plaintiff Yessica Garcia Cardenas, argued in court papers that there have been at least 19 deaths due to carbon monoxide poisoning at Airbnb rentals abroad since 2013. Airbnb did not respond to my requests to confirm that number, which Echarte told me is based on news reports of the deaths.

By the time Herrera died in December 2022, the company should have known it was a “systemic problem,” Echarte said, especially at properties in Central and South America, where fuel-burning water heaters that can emit carbon monoxide are more common.

Airbnb was “on notice of repeated incidents of its guests dying” from the gas, he argued, but “inadequately responded to the danger.”

To be clear, carbon monoxide poisoning doesn’t just happen at Airbnbs. For example, the teenage son of former New York Yankees outfielder Brett Gardner died of carbon monoxide poisoning in March while staying at a five-star hotel in Costa Rica, authorities determined last month.

Assigning liability, however, can be far murkier when travelers rent from a third-party host. The big question: What duty – if any – does Airbnb owe its customers to keep them safe?

After a carbon monoxide death of a Canadian tourist in Taiwan, plaintiffs alleged that Airbnb in a 2014 blog post (available here on the internet archive the Way Back Machine) stated it would “require all Airbnb hosts to confirm that they have (carbon monoxide detection) devices installed in their listing.”

That apparently didn’t happen, given the subsequent lawsuits. When I asked Airbnb why, the spokesperson didn’t provide an explanation. However, if a guest now books a listing where the host doesn’t report having a carbon monoxide detector, Airbnb flags it in the booking confirmation, along with a recommendation to bring a portable detector. (You can buy one starting around $25.)

Plaintiffs lawyers argue Airbnb should have reasonably foreseen there would be subsequent deaths by carbon monoxide poisoning at properties without the alarms — and should be held liable for negligence and premises liability as a result.

“The tragedy is that these deaths were so easily avoidable,” said James Ferraro, who along with partner Jose Becerra represents Rosa Martinez, whose son Sebastian Mejia died in Brazil.

In suing Airbnb, Martinez alleges not just wrongful death — the only cause of action in Echarte’s case — but also asserts broader claims including fraud, negligence and breach of fiduciary duty. She also seeks injunctive relief to force Airbnb to remove all active listings without carbon monoxide alarms.

Airbnb initially asserted the entire case was subject to arbitration based on its terms of service. On appeal, it eventually withdrew its argument that the wrongful death claims were within the scope of the agreement.

In March, the First Appellate District Court in San Francisco split the case, sending the portion seeking survivor benefits — relief for claims such as fraud that would have belonged to Mejia and passed to his successors in interest — to arbitration. However, the court ruled the wrongful death claims could be tried in court, as could the claim for public injunctive relief.

Left unanswered: What if there are inconsistent rulings in the two forums?

Last fall, a federal judge in San Francisco faced a similar dilemma in a lawsuit involving Monique Woods, the Airbnb guest who died in Croatia. U.S. District Judge Maxine Chesney sent the successor-in-interest claims to arbitration and stayed the wrongful death claims. Chesney also noted that plaintiff Cindy Woods, the victim’s mother, created an Airbnb account in 2013 and agreed to arbitrate all disputes.

To conserve judicial resources and ensure consistency, the judge put the arbitration first.

“Here, the outcome of the wrongful death claims will depend upon the arbitrator’s decision as to the viability of the survival claims,” she wrote. That’s because the arbitrator will make findings on the same primary issues, such as what duties Airbnb owes its customers and whether the breach of any such duty was a proximate cause of injury.

Of course, that also means the arbitrator is empowered to decide if the wrongful death claims can move forward, even if the claims themselves won’t be arbitrated.

Global stock markets surged on Monday after the U.S. and China agreed to slash steep tariffs for at least 90 days, tapping the brakes on a trade war between the world’s two biggest economies that had fed fears of a global recession.

But the temporary pause did little to address the underlying schisms that led to the dispute, including the U.S. trade deficit with China and U.S. President Donald Trump’s demand for more action from Beijing to combat the U.S. fentanyl crisis.

While investors cheered the move, businesses were seeking more clarity.

Under the temporary truce, the U.S. will cut extra tariffs it imposed on Chinese imports last month from 145% to 30% for the next three months, the two sides said, while Chinese duties on U.S. imports will fall to 10% from 125%.

Financial markets cheered the reprieve in a conflict that had brought nearly $600 billion in two-way trade to a standstill, disrupting supply chains and triggering layoffs.

Wall Street stocks finished sharply higher, with the S&P 500 closing at its highest level since March 3 and the tech-heavy Nasdaq Composite recording its highest close since February 28.

The dollar rose, while safe-haven gold prices fell as the news eased – but did not erase – concerns that Trump’s trade war could crater the global economy.

Trump and his allies hailed the agreement as proof his aggressive tariff strategy was paying dividends, after the U.S. struck preliminary pacts with Britain and now China. It was not yet clear whether the deep trade imbalances that have hollowed out U.S. manufacturing will be addressed.

Even U.S. Treasury Secretary Scott Bessent, who hammered out Monday’s agreement with Chinese counterparts in weekend talks in Geneva, has acknowledged it will take years to reset Washington’s trade relationship with Beijing.

China’s state media said Beijing held firm to its principles while opening a path to more cooperation with the U.S., breaking from its tone of defiance a week earlier.

“Economic and trade cooperation between China and the U.S. has a deep foundation, great potential and broad space,” government-run broadcaster CCTV said in a commentary.

Trump campaigned in the 2024 election on addressing unfair trade practices and resurrecting U.S. manufacturing capacity. He won votes from blue-collar workers in states like Michigan and Pennsylvania that have lost manufacturing jobs for decades.

But Trump’s tariff policy also drew fire from a range of groups. Small businesses and truckers were girding for major repercussions from the China tariffs, while American consumers worried about rising costs.

Scott Kennedy, a China business and economics expert at the Washington-based Center for Strategic and International Studies, said the administration needed to pull back or risk severe damage to the U.S. economy.

“This is 100% a retreat by the U.S., not a Chinese cave,” Kennedy said. “The U.S. was the one that launched the trade war and escalated it. The Chinese retaliated and they’ve only withdrawn their retaliatory measures.”

But Kelly Ann Shaw, an attorney with Akin Gump Strauss Hauer & Feld who worked as a key trade adviser during Trump’s 2017-2021 term, said Trump was simply fulfilling his campaign promises.

“The president is doing what he said he would. This is absolutely about resolving disparities in the trading relationship,” she said.

She acknowledged that 90 days was not much time to address major U.S. concerns over non-tariff barriers such as subsidies for capital and labor.

“They’ve got their work cut out for them.”

ON-AND-OFF APPROACH

Seeking to reduce the U.S. trade deficit, Trump targeted countries worldwide with an array of tariffs and especially aggressive levies on China, which he blames for exacerbating the U.S. fentanyl crisis.

Markets shuddered in response, and last month Trump quickly paused most of his “reciprocal” tariffs on dozens of countries, except China.

Trump’s on-and-off approach has rattled investors and weakened his approval ratings among U.S. voters worried tariffs will lift prices on everything from toys to cars.

The remaining U.S. tariffs on Chinese imports are still stacked atop prior duties. Even before Trump took office in January, China was saddled with 25% U.S. tariffs he had imposed on many industrial goods during his first term, with lower rates on some consumer goods.

The agreement leaves these duties unchanged, along with tariffs of 100% on electric vehicles and 50% on solar products imposed by former Democratic President Joe Biden.

Retailers may take a wait-and-see approach to 30% tariffs that would drive up prices for shoppers, said Gene Seroka, executive director of the Port of Los Angeles, the nation’s busiest and the No. 1 ocean entry point for imports from China.

Monday’s accord also does not include the “de minimis” exemptions for low-value e-commerce shipments from China and Hong Kong, which the Trump administration terminated on May 2.

However, the tariffs were cut by more than many analysts had anticipated. Last week, Trump floated a much higher rate of 80%.

Shipping industry representatives said the temporary cuts may prompt many companies to restart loadings of goods while tariffs remain low, but uncertainty around any eventual deal may leave businesses wary of ramping up orders dramatically.

Mike Abt, co-president of family-owned Abt Electronics in Chicago, said the company is working down inventories squirreled away before tariffs went live.

“Everyone wants consistency, and that’s been the hard part of this whole thing,” he said. “It’s so fluid. It’s like a game of Risk, you really don’t know what the right answer is.”

Within the administration, the truce marked a victory for Bessent, a former hedge fund executive who had advocated for the earlier 90-day pause in the global reciprocal tariffs to allow time for negotiation.

“The consensus from both delegations this weekend is neither side wants a decoupling,” Bessent said after the talks in Geneva. “We want more balanced trade, and I think that both sides are committed to achieving that.”

Bessent told U.S. media that the next meeting had not yet been set but that the sides were ready to continue negotiating.

(Westlaw) On March 25, 2025, Delaware passed its controversial Senate Bill 21 (SB 21), which amended the Delaware General Corporation Law (DGCL). The bill changes previous case law specifically where it amends DGCL Section 144, which deals with corporate transactions involving financially interested directors, officers, and/or controlling stockholders.

Among other things, the new bill clarifies details regarding a safe harbor for these types of transactions if the transaction includes certain “cleansing mechanisms.” (See legis.delaware.gov/BillDetail/141857).

The amendments lay out the circumstances under which a conflicted transaction cannot be the subject of equitable relief or give rise to an award of damages or other sanction against directors, officers, or controlling stockholders by reason of a breach of fiduciary duty.

When evaluating a controlling stockholder transaction, for example, Delaware courts use either the “business judgment” standard or the more stringent “entire fairness” standard. The business judgment standard protects business decisions made by corporate executives if they are found to have acted in good faith, performed a duty of care, and performed a duty of loyalty.

However, if a plaintiff can show that the decision-making process was not independent or that an executive breached their fiduciary duty, courts will apply the more burdensome entire fairness standard, which requires executives to prove that the transaction was fair to the corporation and its shareholders regarding price, timing, negotiations, etc.

In 2014, the precedential Delaware ruling in Kahn v. M&F Worldwide (“MFW”) established that, in a transaction involving a controlling stockholder with a conflict of interest, the transaction can employ two procedural mechanisms in order to be subject to the less onerous business judgment standard. These mechanisms include:

(1) the transaction is conditioned upon the approval by an informed committee of the board of directors that is made up of independent, disinterested directors, AND

(2) the transaction is conditioned upon approval by a majority of informed, minority stockholders (Kahn v. M&F Worldwide Corp., 88 A.3d 635 (Del. 2014)).

Ten years later, in In re Match Group, Inc. Derivative Litigation, the Delaware Supreme Court reasserted the Kahn v M&F Worldwide ruling, emphasizing that it applies to all controlling stockholder transactions where the controlling stockholder receives a non-ratable benefit. Match Group also highlighted that the committee designated to approve the transaction must be wholly independent, i.e., made up entirely of independent directors, not just a majority of independent directors. (In re Match Group, Inc. Derivative Litigation, 315 A.3d 446, 462-71 (Del. 2024)).

SB 21 walks back several of the elements laid out in MFW and Match Group. In a controlling stockholder transaction (that is not a going-private transaction), the transaction now only has to employ one of the two “cleansing mechanisms” in order to be subject to the business judgment rule. Additionally, the amendments stipulate that the committee designated to approve the transaction need not be wholly independent — it must only be made up of a majority of disinterested directors.

The passing of SB 21 has been hotly contested. Proponents of the bill, which included bipartisan support in the Senate, argue that these changes help to better balance the interests of plaintiff shareholders with those of officers, directors, and controlling stockholders, without being tilted in favor of the former.

A press release issued by Delaware Governor Matt Meyer’s office on March 26 stated that the bill would help to “reinforce Delaware’s reputation for equitable, predictable, and efficient corporate oversight” for the 2.2 million entities registered there. (See news.delaware.gov (March 26, 2025)).

Delaware has long been the domicile of choice for incorporation because of the state’s consistency regarding its well-established corporate law and judicial decisions. Companies incorporated in Delaware have historically enjoyed the predictability of a well-established body of precedential case law, predominantly established by the Delaware Court of Chancery, which has been in existence since 1792.

Governor Meyer had asked for SB 21 to be drafted after several companies decided to leave or threatened to leave Delaware and reincorporate elsewhere — presumably in response to recent Delaware decisions favoring plaintiffs. Major companies such as Tesla, Dropbox, Meta, Pershing Square Capital, and Walmart were reportedly part of this wave, deemed “DExit” by some news outlets. Facing competition from other states like Nevada and Texas, Delaware’s DGCL overhaul was likely a gambit to retain and attract corporations.

However, many critics have lamented the method and speed with which the bill came to fruition as it bypassed the typical procedure for DGCL amendments, which typically involves receiving approval from the Council of the Corporation Law Section of the Delaware State Bar Association. Instead, the bill was whisked through the Legislature and signed in a mere 36 days.

Others have criticized the content of the bill, arguing that it is overly friendly towards directors, officers, and controlling stockholders and lowers guardrails that are meant to protect shareholders from the potential biases of controlling members.

The Council of Institutional Investors (CII), a nonprofit that seeks to promote policies that benefit institutional asset owners, published an open letter to the Governor opposing the passing of the bill. The Council cites concerns related to Section 144 (d)(2), another part of the amendments that changes the definition of a “disinterested director”:

“Among our substantive concerns with the provisions of SB 21 is the proposed presumption that a director deemed independent under stock exchange rules would be presumed disinterested unless strong, particularized evidence proves otherwise … We observe that stock exchange independence standards are generally based on voluntary disclosure in director questionnaires, and as a result independence determinations can fail to account for undisclosed conflicts.” (See “CII letter to Delaware Governor regarding SB 21.” March 6, 2025. cii.org/correspondence).

The letter also points to the damage that the CII believes occurs when the state undercuts previous judicial decisions (such as Match Group) by legislating over them. They argue that this tactic undermines the predictability and power of the Delaware judiciary and could have the long-term effect of deterring companies from incorporating in the state.

At least one suit has already been filed challenging SB 21’s constitutionality. The Plumbers & Fitters Local 295 Pension Fund filed a suit against Dropbox, Inc. (which recently reincorporated in Nevada) which alleged, among other things, that the DGCL amendments restrict the Delaware Court’s power to provide equitable relief and are “divesting the Court of Chancery of its historical role of adjudicating breach of fiduciary duty claims.” (See Plumbers & Fitters Local 295 Pension Fund v. Dropbox, Inc., C.A. 2025-0354-KSJM (Filed April 8, 2025)).

Besides the matter of its constitutionality, two major questions regarding SB 21 remain. The first is which, if any, other previous Delaware cases could be effectively nullified by the amendments. The letter from the CII estimates, at the extreme end of the spectrum, that 34 Delaware Court decisions made over the last 40 years could potentially be overturned by the changes.

The other question that remains to be answered is, if the amendments stand, whether they will ultimately entice companies to remain incorporated in Delaware — thus stymying the DExit fears — or if they will ultimately push companies away to other states.

Roger E. Barton is a regular contributing columnist on securities regulation and litigation for Reuters Legal News and Westlaw Today.

(Reuters) – A federal judge narrowed but stopped short of dismissing a lawsuit by investors seeking to hold celebrities like sports stars Tom Brady, Stephen Curry and Shohei Ohtani liable for promoting the collapsed cryptocurrency exchange FTX.

The investors said the defendants ignored “red flags” and hid millions of dollars of payments to promote FTX as “brand ambassadors,” as part of a civil conspiracy with Sam Bankman-Fried’s exchange to defraud them into becoming customers.

In a 49-page decision on Wednesday, U.S. District Judge K. Michael Moore in Miami dismissed 12 of the 14 claims, saying the investors did not prove the celebrities knew FTX was a fraud, and merely receiving payments did not establish a conspiracy.

He said the investors could try to prove the defendants violated Florida law by helping FTX sell unregistered securities, finding it plausible that FTX “needed influencers” to sell its products. A claim under Oklahoma law also survived.

Other defendants include sports stars David Ortiz and Naomi Osaka, supermodel Gisele Bundchen, comedian Larry David, businessman and TV personality Kevin O’Leary, and the Golden State Warriors basketball team.

Lawyers for the defendants did not immediately respond to requests for comment on Thursday.

Adam Moskowitz, a lawyer for the investors, called the decision a victory because Florida law allows strict liability, meaning the defendants did not have to know FTX was a fraud.

He said he plans to file an amended complaint with additional defendants, including Major League Baseball and Formula 1 Racing. The sports stars Shaquille O’Neal and Trevor Lawrence previously settled.

FTX filed for bankruptcy protection in November 2022. Bankman-Fried is appealing his fraud conviction and 25-year prison sentence.

Last October, FTX won court approval for its bankruptcy plan, which would allow it to fully repay customers.

The case is In re FTX Cryptocurrency Exchange Collapse Litigation, U.S. District Court, Southern District of Florida, No. 23-md-03076.