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Airbnb’s Conflict With New York State Attorney General Isn’t Over

@jasonclampet

May 14, 2014 10:00 am

Skift Take

Airbnb will need to come up with new arguments if it wants to prevent a second subpoena from being successful.

— Jason Clampet

Free Report: The Changing Business of Extended-Stay Hotels


Yesterday New York State Judge Gerald W. Connolly handed short-term rental site Airbnb a victory over the New York State Attorney General. But the Attorney General states that this win is just short-term.

“The judge rejected all of Airbnb’s arguments except for a narrow technical issue, and we will reissue the subpoena to address it,” said Matt Mittenthal, spokesperson for Attorney General Schneiderman. ”

Judge Connolly ruled that the subpoena New York Attorney General Eric Schneiderman served to Airbnb in October was too broad because it requested information about the website’s users both outside of New York City and those who weren’t renting their entire home or apartment, meaning they were not in violation of the state’s short-term housing law.

At the end of the 12-page ruling the judge wrote “The Court grants petitioner’s instant application to quash the subpoena as overbroad and denies respondent’s cross-motion to compel.”

Airbnb’s Motion

That was the best piece of news inside of an otherwise challenging response to the arguments Airbnb presented in a court hearing in April. During the hearing, Airbnb argued four main points:

  • There is no reasonable, articulable basis to warrant such investigation and the subpoena constitutes an unfounded “fishing expedition”
  • Any investigation is based upon laws that are unconstitutionally vague
  • The subpoena is overbroad and burdensome
  • The subpoena seeks confidential, private information from petitioner’s users

Judge Connolly agreed with half of one argument, that the subpoena was “overbroad.” He did not agree that it was “burdonsome.”

The Attorney General’s office was quick to point out that the judge struck down Airbnb’s other arguments.

To address the first argument, the judge ruled out the fishing expedition claim, and said that the Attorney General was within his rights to make a request of Airbnb: “Not only that probable cause was not required, but also that the required level does not need to constitute a ‘strong and probative basis for the investigation.'”

The judge did not find the short-term housing law vague, either. He wrote, “Based upon the facts as alleged in the record before the Court, petitioner’s assertions that a factual predicate has not been established are without merit as there is evidence that a substantial number of Hosts may be in violation of the Multiple Dwelling Law and/or New York State and/or New York City tax provisions.”

On the privacy claim, the judge also saw no issue with the Attorney General’s request for user information, writing: “Initially, petitioner has failed to demonstrate that the requested information is confidential, particularly where petitioner’s privacy policy provides that petitioner will disclose any information in its sole discretion that it believes is necessary to respond to, inter alia, subpoenas.”

It likely did not help the privacy argument that Airbnb offered to turn over information on a large set of users prior to talks breaking down in August of last year.

What’s Next

The Attorney General’s office stated that it will refile the subpoena this week.

If it does indeed file, Airbnb will be forced to come up with additional arguments for why the subpoena should be quashed. One approach that it’s likely to take in the coming weeks is focusing on the thousands of listings it removed in the two days prior to its April court hearing.

At that time, Airbnb said it removed some 2,000 listings from the site, but the total number was likely higher, as nearly 4,000 listings were controlled by users with more than one available unit in the city.

The Attorney General will focus on those bad actors, as well as taxes, and state that Airbnb can’t be trusted to self-police. “The judge’s decision specifically found evidence that a ‘substantial’ number of Airbnb hosts may be violating the tax laws and the law that prohibits illegal hotels,” said Mittenthal. “This comes as no surprise, given that Airbnb itself removed some 2,000 New York-based listings from its site.”

Airbnb has yet to confirm how it will approach a new subpoena, but David Hantman, Airbnb’s Head of Global Public Policy, left the door open to negotiation when he wrote on his blog last night“Our hope is that we can continue working with the Attorney General’s office to try to address his legitimate concerns about large property groups abusing our platform without the need to turn over vast swaths of data on New Yorkers just trying to make ends meet.”

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