Airbnb Turns to Lawyers to Challenge Local Housing Laws

On Sept. 2, Airbnb and HomeAway filed lawsuits against the Southern California beach town of Santa Monica, Calif., and on Sept. 6, Airbnb threatened to do the same in New York, should Governor Cuomo sign a new short-term rental advertising bill into law.

Their complaint? That Santa Monica’s strict short-term rental regulations, which went into effect in June 2015, violate the First and Fourth Amendments of the U.S. Constitution, as well as the Federal Communications Decency Act (CDA). Section 230 of the CDA protects free speech online by removing liability for an online publisher for content that is posted on their sites by third-party users in most cases.

Constance Farrell, public information coordinator for the city of Santa Monica said, “The City of Santa Monica cannot comment at this time on the complaint recently filed by Airbnb, as we have not yet even been formally served with the complaint.” She added, “However, the city stands by our Home-Sharing Ordinance. It is an expression of the city’s commitment to maintaining our housing stock for long-term residents and to preserving the character and quality of life in our neighborhoods.”

Santa Monica’s Home-Sharing Ordinance

Santa Monica’s short-term rental regulations are among the toughest in the U.S., banning entire home or apartment listings for short-term rentals of less than 30 days. The city also requires hosts to comply with a number of regulations, including applying for a business license, paying lodging taxes, and informing the city of all online advertisement URLs.

Santa Monica’s law also requires platforms like Airbnb and its peers to deliver quarterly information reports about who is using those sites to advertise listings, including names, addresses, how many nights occupied, and how much money collected by hosts. It also says that if the platform collects money for the rental (as Airbnb does), both the site and the host have a legal responsibility to collect and pay transient occupancy taxes to the city on a monthly basis.

In an email, Airbnb spokesperson Alison Schumer said, “Santa Monica’s clumsily-written law punishes hosts who depend on home sharing to make ends meet and travelers looking for low-cost accommodations near the beach. It does not make the important distinction between individual hosts who share the home in which they live and unwelcome commercial activity.”

Since Santa Monica’s law went into effect last year, Airbnb has paid more than $20,000 in fines to the city, although in its suit, the company says it did so “under protest.”

The city of Santa Monica also successfully convicted one Airbnb host, Scott Shatford, who plead no contest to violating the short-term rental laws by operating five different rentals in July. Shatford had to pay $3,500 in fines and was placed on 24 months of probation.

So why is Airbnb planning to sue Santa Monica now? And why did Airbnb wait a year to do so?

Schumer said, “We responded to the city’s notices while continuing to evaluate our options and tried to have a dialogue with city officials. The city is unwilling to make necessary improvements to its draconian law, so while this isn’t a step we wanted to take, it’s the best way to protect our community of hosts and guests.”

This isn’t the first time Airbnb has sued a city for similar legislation. Earlier this year, it sued the city of San Francisco for wanting to fine Airbnb and its peers for advertising listings that violate local short-term rental regulations. It also sued the city of Anaheim, Calif., but dropped its suit when the city said it would omit part of its new laws that would hold the online platforms responsible for advertisements of illegal listings.

Airbnb and HomeAway have a case against cities like San Francisco and Santa Monica, especially when examined through the lens of the CDA as well as the Federal Stored Communications Act (SCA). The SCA prohibits state and local governments from demanding access to or copies of people’s communications via email, Internet, etc. without due legal process. Santa Monica’s law requires Airbnb and HomeAway to submit that information to the city government without a subpoena.

What About New York?

But what about New York? On Sept. 6, Airbnb sent a letter to New York Governor Andrew Cuomo and other state assembly members, urging the governor not to sign a bill that would heavily fine hosts on Airbnb and its peers, who post listings that violate the state’s laws on short-term rentals.

In the letter, Airbnb General Counsel Rob Chesnut argues that the law is unconstitutional because it violates the CDA, First Amendment, the Due Process clause of the Fourteenth Amendment, and Dormant Commerce Clause. Chesnut also wrote that if the bill is signed into law, Airbnb would have no other option but to “immediately file suit” against the state.

However, as Skift has noted before, the New York advertising bill, while somewhat similar to the legislative regulations in Santa Monica, Anaheim, and San Francisco, does not hold the platforms legally responsible and it does not fine them for any violations of local short-term rental laws. The fines are limited only to the people who use Airbnb and other sites to advertise short-term rentals that are in direct violation of the current state law. The bill also does not require Airbnb or its peers to divulge information about its users.

Eric Goldman, a professor at Santa Clara University School of Law and an expert on legal issues relating to websites, spoke with Skift earlier about the proposed bill in New York. He said that as long as the law makes a clear distinction between the advertisers (hosts) and the publishers (Airbnb, HomeAway, and their peers) it would likely be enforceable. However, he said, “If the law is interpreted to apply to publishers, in addition to the advertiser, it runs into several legal doctrines which limit is scope. I couldn’t see any language that holds the publishers liable.”

Skift also spoke to New York State Assembly Member Linda Rosenthal (D-Manhattan) who sponsored the bill. When asked if she was at all concerned that a lawsuit from Airbnb would dismantle the bill, she said, “I’m not worried. Clearly, they [Airbnb] are.”

In addition to sending the governor a letter urging him to veto the bill, Airbnb is also reportedly spending nearly $1 million on a multimedia ad campaign to convince the governor to veto the bill.

Rosenthal also said she and the bill’s writers were careful not to include any language that places liability on Airbnb or other home-sharing platforms.

“We can’t,” she explained. “That’s why we took that route. I would have loved to lay it at the door of Airbnb, but we didn’t because of the Communications Decency Act.” She added, “If they [Airbnb] are so worried about their hosts they can take a step back and disallow those who are renting out their entire units for less than 30 days to use their site. Then there would be no problem.”

Cuomo, who has not issued any public statements about the proposed law, has until January to make a decision about the bill.

Note: Skift reached out to HomeAway and Governor Cuomo’s office but they did not offer any comments for this story.