The Ninth Circuit Court of Appeals ruled that the City of Santa Monica is permitted to regulate hosting platforms, which it found “had negatively impacted the quality and character of its neighborhoods by bringing commercial activity and removing residential housing stock from the market at a time when California is already suffering from severe housing shortages”.
Santa Monica’s ordinance allowed licensed “home-sharing” but prohibited all other short-term rentals of 30 days or fewer. It requires platforms to (1) collect and remit “Transient Occupancy Taxes”, (2) disclose certain listing and booking information regularly, (3) refrain from completing any booking transaction for properties not licensed and listed on the City’s registry, and (4) refrain from collecting or receiving a fee for facilitating or providing services ancillary to a vacation rental or unregistered home-share. Platforms who comply receive safe harbor. (A similar safe harbor provision in San Francisco’s short-term rental ordinance led to settlement of a similar lawsuit in the Northern District of California. Here, the district court granted Santa Monica’s motion to dismiss, for failure to state a cause of action under federal law, including the Communications Decency Act of 1996 and the First Amendment.
The CDA provides internet companies with immunity from certain claims in furtherance of its stated policy to promote the continued development of the Internet and other interactive computer services, providing immunity to cases where “(1) a provider or user of an interactive computer service (2) whom a plaintiff seeks to treat, under a state law cause of action, as a publisher or speaker (3) of information provided by another information content provider”. The hosting platforms argued that the ordinance required them to monitor and remove third party content, in violate of the CDA. The Ninth Circuit, however, found that the ordinance did not try to treat them as publishers. It merely prohibits processing transactions for unregistered properties.
The hosting platforms also argued that they were protected by the First Amendment: even if the plain language of the Ordinance only reaches “conduct” (the booking of unlicensed properties), it effectively imposes a “content-based financial burden” on commercial speech and is thus subject to First Amendment scrutiny. The district court, however, found that the regulation affected conduct that lacked a “significant expressive element”, and the Ninth Circuit agreed.
The Wall Street Journal reports that Apartment Investment & Management Co. (AIMCO) is suing Airbnb, alleging that Airbnb is helping their tenants breach their leases.
According to AIMCO, “It is not acceptable to us that Airbnb actively promotes and profits from deliberate breaches of our leases, and does so in utter disregard of the disrespectful and unsafe situations created for our full-time residents and their families”.
Airbnb’s response, utterly devoid of histrionics, championed the voice of their subjugated “hosts”, speaking truth to power, despite no ascertainable pecuniary interest in sticking its neck out, humbly urging that, “This attack on the middle class by powerful interests is wholly without merit”.
Airbnb has filed a lawsuit against San Francisco in Federal District Court, seeking to invalidate the recent expansion of enforcement tools to regulate short-term residential rental listings. Ordinance 104-16 now requires hosting platforms to verify that a residential unit is on the City registry prior to listing and to requires them to respond to requests for information from the City. Violations can lead to civil penalties of $1,000 per day, as well as certain criminal penalties.
Airbnb alleges that the new ordinance violates its rights under the Communications Decency Act, which “expressly preempts state and local laws that treat a website ‘as the publisher or speaker of any information provided by another information content provider’,” urging that, “instead of targeting speech, the City instead could simply enforce its existing short-term rental law directly against hosts who violate it”.
However, Airbnb also alleges that the new law violates its rights under the First Amendment, insisting that it is “a content-based restriction on advertising rental listings, which is speech”. Whether or not the new ordinance will survive judicial review as a constitutional economic regulation, it does seem inconsistent to advance a First Amendment argument while also disclaiming that listings are speech. And, in any event, simply verifying that a host has complied with the “Airbnb law” and obtained a listing number does not quite make the list of onerous restraints on speech. The Federal District Court also recently upheld the City’s buyout legislation, requiring a landlord to disclose certain rights to tenants concerning “buyout agreements” (offering money for the vacating of a rental unit) prior to having the discussion, against a constitutional challenge for restrictions on speech.
San Francisco will now require hosting platforms to verify that a residential unit is on the City registry prior to listing and to require them to respond to requests for information from the City.
Ordinance 104-16 represents another effort in the City’s ongoing “project” of striking a balance that allows short term listings without allowing abusive practices that siphon long-term residential housing stock. The Board of Supervisors specifically states that the intent of the ordinance is not to punish short-term rental hosts who are trying to lawfully comply with San Francisco’s short term rental laws, but rather to bring more short term rentals into compliance. It goes on to self-consciously note that the registration process has been difficult to navigate, directing the Office of Short-Term Rentals to make recommendations on how the City can improve the process. Perhaps the law will need to be revised again in the future, but that’s some customer service in the meantime.
You can read the full text of Ordinance 104-16 here.
After spending $8 million dollars to defeat of San Francisco’s Proposition F, with some anticipating it will spend as much as $100 million next year to fight similar ballot measures, Airbnb is already in the process of organizing “grassroots lobbyists”, mobilizing its own users to work as advocates. Airbnb is planning on funding these “city-based guilds”, as well as providing them with Airbnb staff support, in an effort to fight similar legislation in other cities.
Meanwhile, the website InsideAirbnb.com has been “adding data to the debate”, by providing information, not only on the number of listings in a particular city, but also on whether the listing is for a single room or an entire rental unit. And this distinction is important where Airbnb and other hosting platforms have diverted a significant portion of housing units, compared to what has been made available to renters in recent years.