Strict Enforcement of Rule 72(b) Waiver and the No-Reliance/No-Duty Triad: Second Circuit Affirms Dismissal of Landlords’ Claims Against Airbnb

Case: Baldeo v. Airbnb, No. 24-1238-cv (2d Cir. Nov. 12, 2025) — Summary Order

Panel: Circuit Judges Denny Chin, Eunice C. Lee, and Beth Robinson

Disposition: Judgment of the Southern District of New York affirmed

Note on precedential status: This is a Second Circuit Summary Order. It is citable under Federal Rule of Appellate Procedure 32.1 and Local Rule 32.1.1 but does not have precedential effect.

Introduction

This appeal arises from an effort by a New York City landlord and its affiliated LLC to hold Airbnb liable for tenant-hosted short-term rentals alleged to violate New York City law. Dr. Philip Baldeo and 156 West 15th Street Chelsea LLC (collectively, Plaintiffs) own a Chelsea apartment building where tenants used Airbnb to sublease their apartments for periods under thirty days. The City investigated the building four times between 2014 and 2017 and fined Plaintiffs more than $100,000 under New York City Administrative Code § 27-2004(a)(8), which prohibits certain short-term rentals.

Nearly three years after the final City inspection, Plaintiffs sued Airbnb for negligence, common-law fraud, and violations of New York General Business Law § 349 (deceptive business practices), alleging Airbnb unlawfully facilitated rentals and misrepresented its services to Plaintiffs and their tenants.

After a magistrate judge issued a report and recommendation (R&R) to dismiss all claims, Plaintiffs failed to file objections within the 14-day deadline under Federal Rule of Civil Procedure 72(b)(2). The district court adopted the R&R, dismissed on both waiver and merits grounds, and denied leave to amend. The Second Circuit affirmed on both the procedural waiver and the merits.

Key issues:

Whether untimely objections to an R&R waive appellate review absent plain error.
Whether a landlord can plead fraud based on misrepresentations allegedly made by a platform to tenants rather than to the landlord.
Whether a platform owes a specific duty of care to a non-user landlord to support a negligence claim grounded in alleged statutory noncompliance.
Whether alleged deceptive practices by a platform caused a landlord’s injury for purposes of GBL § 349.
Whether amendment would be futile where defects include lack of duty, lack of reliance, and lack of causation.

Summary of the Opinion

Procedural Waiver: Plaintiffs missed Rule 72(b)(2)’s 14-day deadline to object to the magistrate judge’s R&R. The court agreed with the district court that waiver applied and that no “plain error” justified excusing the default under Spence v. Superintendent, Great Meadow Corr. Facility.
Fraud: Dismissal affirmed. Plaintiffs failed to allege misrepresentations made for the purpose of inducing their reliance, and New York law does not permit fraud claims based on third-party reliance. The tenants—not Plaintiffs—were the targets of Airbnb’s alleged statements.
Negligence: Dismissal affirmed. Plaintiffs did not plausibly allege a “specific duty” owed by Airbnb to them. A general obligation to comply with municipal law or to “control one’s own conduct” is not a tort duty owed to these Plaintiffs.
GBL § 349: Dismissal affirmed. Even assuming consumer orientation and material deception, Plaintiffs failed to allege that Airbnb’s acts caused their injury “as a result,” as required by Stutman v. Chemical Bank. The leases predated the tenants’ Airbnb hosting activities.
Leave to Amend: Denial affirmed as futile. The core defects—no duty, no direct inducement or reliance, and no causation—could not be cured on the record presented.

Analysis

Precedents Cited and Their Influence

Spence v. Superintendent, Great Meadow Corr. Facility, 219 F.3d 162 (2d Cir. 2000): Articulates the waiver rule for untimely objections to a magistrate’s R&R and the narrow “plain error” exception. The Second Circuit relied on Spence to hold the Plaintiffs waived appellate review by filing objections 10 days late and to conclude no plain error warranted relief.
Mazzei v. The Money Store, 62 F.4th 88 (2d Cir. 2023): Confirms de novo review of Rule 12(b)(6) dismissals and the requirement to draw reasonable inferences in the plaintiff’s favor. Applied to the merits review.
Mirkin v. XOOM Energy, LLC, 931 F.3d 173 (2d Cir. 2019): Restates the plausibility standard to survive a motion to dismiss. Framed the sufficiency inquiry for Plaintiffs’ claims.
Premium Mortgage Corp. v. Equifax, Inc., 583 F.3d 103 (2d Cir. 2009): Provides elements of New York common-law fraud. Guided the court’s analysis of misrepresentation, intent to induce, justifiable reliance, and injury.
Pasternack v. Laboratory Corp. of America Holdings, 27 N.Y.3d 817 (2016): Clarifies that in New York, fraud requires the plaintiff’s own reliance; reliance by third parties is insufficient. This was dispositive of Plaintiffs’ fraud theory predicated on statements allegedly made to tenants.
In re World Trade Center Lower Manhattan Disaster Site Litigation, 758 F.3d 202 (2d Cir. 2014): Recites the elements of negligence (duty, breach, causation). Provided the basic tort framework.
Hamilton v. Beretta U.S.A. Corp., 96 N.Y.2d 222 (2001): Emphasizes that negligence demands a “specific duty” owed to the plaintiff, not merely a general societal duty. The court used Hamilton to reject Plaintiffs’ theory that Airbnb’s general statutory compliance obligations created a duty owed to them.
Spagnola v. Chubb Corp., 574 F.3d 64 (2d Cir. 2009): Recites the elements of GBL § 349: consumer orientation, material deception, and injury. Framed the threshold for deceptive practices claims.
Stutman v. Chemical Bank, 95 N.Y.2d 24 (2000): Requires that the deceptive act cause the injury for § 349. The court held Plaintiffs failed this causation requirement.
Lucente v. International Business Machines Corp., 310 F.3d 243 (2d Cir. 2002): Authorizes denial of leave to amend where amendment would be futile. Supported the district court’s denial of leave to amend.
Balintulo v. Ford Motor Co., 796 F.3d 160 (2d Cir. 2015): Provides de novo review where denial of leave is based on futility. Guided the appellate standard of review.
Thyroff v. Nationwide Mutual Insurance Co., 460 F.3d 400 (2d Cir. 2006): Allows affirmance on any ground supported by the record. The panel affirmed on waiver and, independently, on the merits.

Legal Reasoning

1) Procedural Waiver Under Rule 72(b)(2)

Rule 72(b)(2) permits 14 days to object to an R&R. The magistrate judge issued the R&R on September 29, 2023, warning that failure to object within fourteen days would forfeit appellate review. The deadline expired October 13, 2023. Plaintiffs filed on October 23, asserting “well-founded objections” and seeking an extension due to a conflict with counsel. The district court held an ex parte hearing and found Plaintiffs had not adequately explained how any conflict prevented timely objections. The Second Circuit found no abuse of discretion in denying an extension and, under Spence, held that Plaintiffs waived appellate review absent plain error. It agreed that the magistrate judge did not commit plain error in recommending dismissal.

This procedural ruling underscores that litigants must treat R&R deadlines as firm and that conclusory assertions of attorney-client conflict will not, without more, reset Rule 72(b) clocks.

2) Fraud

To plead fraud under New York law, a plaintiff must allege a false misrepresentation or material omission, knowledge of falsity, an intent to induce the plaintiff’s reliance, justifiable reliance by the plaintiff, and injury. Plaintiffs relied on alleged statements in Airbnb’s Terms of Service that it was not a real-estate broker, escrow agent, or lawyer, coupled with assertions that Airbnb in practice acted in those roles. But those statements, if misleading, were made to tenants to induce tenants’ reliance. Plaintiffs had no dealings with Airbnb and were not parties to the Terms of Service. There was no allegation that Plaintiffs knew of, much less relied on, those statements in making leasing decisions. Under Pasternack, third-party reliance cannot sustain a fraud claim. The court therefore affirmed dismissal of the fraud claim.

3) Negligence

Negligence requires a duty, breach, and injury, with the duty being a “specific duty” owed to the plaintiff. Plaintiffs contended that Airbnb negligently brokered hundreds of illegal rental transactions, in contravention of city regulations. The court held these assertions failed at the duty element: citing Hamilton, it rejected reliance on a general “statutory duty” to comply with municipal law or an abstract duty to “control one’s own conduct.” Such generalized obligations do not create a tort duty owed specifically to these Plaintiffs. Without a specific duty, the negligence claim could not proceed.

4) GBL § 349 (Deceptive Business Practices)

To state a § 349 claim, a plaintiff must allege a consumer-oriented practice, material deception, and injury caused “as a result” of that deception. The court assumed, without deciding, that the first two elements could be met. But it held Plaintiffs did not plausibly allege causation: they did not enter leases because of Airbnb’s representations and, in fact, had to have executed the leases before tenants became Airbnb hosts. Thus, the alleged deception did not cause the fines or other injuries Plaintiffs claimed. Under Stutman, that failure of causation was fatal.

5) Denial of Leave to Amend as Futile

Applying Lucente and Balintulo, the court affirmed denial of leave to amend on futility grounds. It emphasized undisputed points: Airbnb made no statements to Plaintiffs to induce reliance; Airbnb was not in privity or any special relationship with Plaintiffs; and Plaintiffs failed to allege a duty, reliance, or causation. Given the nature of these defects, further amendment could not cure the claims’ deficiencies on this record.

Impact and Practical Implications

Although a non-precedential Summary Order, Baldeo v. Airbnb is likely to be persuasive in several respects:

Procedural discipline: The case reinforces strict enforcement of Rule 72(b) deadlines. Counsel and parties should ensure timely objections or risk forfeiting appellate review absent plain error, a narrow and rarely satisfied exception.
Platform liability to non-users: Plaintiffs who are not users of an online platform face significant hurdles in tort and fraud claims premised on the platform’s communications to its users. Without direct statements made to induce the plaintiff’s reliance, a fraud claim will falter under Pasternack.
No tort duty from regulatory schemes alone: Citing Hamilton, the decision underscores that a general obligation to comply with statutes or to conduct one’s business lawfully does not, by itself, create a “specific duty” in tort owed to third parties such as landlords.
GBL § 349 causation rigor: Even assuming consumer orientation and deception, plaintiffs must plausibly allege that the deception caused their injury. Where leases predate user conduct allegedly facilitated by the platform, causation will be difficult to establish.
Pleading strategy for property owners: Landlords seeking to proceed against platforms may need to identify direct communications, contractual privity, a special relationship, or other facts supporting a specific duty and actual reliance or causation. Absent such facts, claims may be dismissed and amendment deemed futile.

Complex Concepts Simplified

Rule 72(b)(2) Objections and Waiver: When a magistrate judge issues a report, parties have 14 days to object. Missing that window usually waives the right to appellate review of those issues, unless there was “plain error”—a clear and obvious mistake that seriously affected fairness.
Summary Order (Second Circuit): A form of disposition that is citable but not precedential. It can be persuasive but does not bind future panels.
Fraud “Third-Party Reliance” Rule: In New York, you must have relied on the false statement yourself. It is not enough that someone else relied on it, even if you were harmed indirectly.
Negligence “Specific Duty” Requirement: A defendant must owe you a specific legal duty. A general duty to obey the law does not automatically create a tort duty to every potentially affected person.
GBL § 349 Causation: The plaintiff must show the deceptive act caused the injury. If the harm would have occurred regardless of the allegedly deceptive conduct, the claim fails.
Futility of Amendment: Courts may deny permission to amend a complaint when new allegations would not fix the legal problems—for example, where no duty or reliance can be credibly alleged on the existing relationships.

Conclusion

Baldeo v. Airbnb delivers two central messages. Procedurally, the Second Circuit strictly enforces the Rule 72(b) objection deadline and will not excuse untimeliness absent a clear showing of plain error. Substantively, the court applied established New York law to hold that landlords cannot recover from a platform based on alleged misstatements to tenants, generalized statutory obligations, or asserted deceptions that did not cause the landlords’ injuries. The triad of deficiencies—no duty, no direct inducement and reliance, and no causation—dooms common-law fraud, negligence, and GBL § 349 claims on the allegations presented. The denial of leave to amend as futile underscores that these are not mere pleading defects but structural shortcomings given the parties’ relationships and the chronology of events. While non-precedential, the decision provides a clear, citable roadmap for similar disputes at the intersection of landlord-tenant law, municipal short-term rental regulations, and platform liability.