Airbnb Dismisses Lawsuit Against New York State, Continues Fight Against City

In the ongoing saga being carried out between New York lawmakers and Airbnb, the San Francisco-based short-term rental platform, some sort of resolution seems to be nearing.

Today, Airbnb settled its lawsuit against the state of New York, saying the state was not responsible for enforcing a new short-term rental advertising law which heavily fines people who advertise listings on platforms like Airbnb and HomeAway that violate the state’s current Multiple Dwelling Law.

The law at the heart of this lawsuit was signed by New York Governor Andrew Cuomo on Oct. 21 and it represents some of the most punitive regulations in the U.S. regarding the illegal use of short-term rentals. Immediately following the governor’s approval of the law, Airbnb filed a lawsuit against the state’s attorney general (representing New York state), the city of New York, and New York City mayor Bill De Blasio.

Both Airbnb and New York State Attorney General Eric Schneiderman filed papers in Manhattan federal court today and those papers (see below) say both parties agree the law is to be enforced by the New York City Mayor’s Office of Special Enforcement, which has been carrying out enforcement of the state’s Multiple Dwelling Law even prior to the passing of this new law.

Airbnb spokesperson Peter Schottenfels said in a statement, “”We have long sought to work with leaders in New York on clear, fair rules for home sharing and we’re continuing to do all we can to protect the thousands of middle class families who depend on home sharing to earn a little extra money.”

Last Friday, November 18, a lawyer representing New York City and the Mayor wrote to U.S. District Judge Katherine Forrest informing her that both Airbnb and the city “are continuing to discuss the course of this litigation,” and asked the court to postpone scheduling another conference until Dec. 2.

A Changing Tide in How Airbnb Works With Cities?

Whatever is decided in this current lawsuit could have major implications for similar legislation to be passed in other U.S. cities seeking to regulate short-term rentals. Airbnb claims that this particular law is a direct violation of the Federal Communications Decency Act (CDA), as well as the First and Fourteenth Amendments of the Constitution.

However, because this particular law was crafted to specifically fine Airbnb hosts, and not the platform itself, there’s a possibility that it could be upheld and a judge may rule that it does not violate the CDA.

Airbnb, as of late, however, has made statements that point to the company’s changing stance on how it works with cities like New York and San Francisco, another city with whom the company is currently engaged in a lawsuit.

On Nov. 13, Airbnb global head of public policy and public affairs Chris Lehane penned an op-ed for the San Francisco Chronicle, pledging Airbnb wants to work with the city to enforce short-term rental regulations. This would be accomplished, Lehane proposed, with the creation of a “simplified, mandatory registration system” for Airbnb hosts and the sharing of data with the city, including “addresses, number of nights booked, and relevant contact information.”

Airbnb has worked with the city of Chicago to implement a similar system of self-regulation but those efforts are currently being met with lawsuits being filed by hosts who claim that the sharing of data with local governments is a violation of their privacy.

The company’s appeals to Chicago and San Francisco demonstrate a marked difference from Airbnb’s earlier stances against sharing data, or enacting self-regulation. It wouldn’t be too far off the mark to assume the conversations currently taking place between New York City and Airbnb may include similar compromises.

New York City is a particularly valuable market for Airbnb, second only to Paris in the number of listings that it has, and some suspect that, should Airbnb’s relations with New York City sour even further, the potential loss of business in the city could seriously hurt its profits, especially at a pivotal time in the company’s history: Just last week, the company, valued at an estimated $30 billion, announced its foray into tours and activities, debuting Trips.

In 2014, Schneiderman’s office released the results of a four-year-long investigation of Airbnb which found that 72 percent of units listed on Airbnb for the city were illegal, and that 36 percent of those listings were being operated by commercial operators running, essentially, illegal hotels. If this advertising law accomplishes what it intends to do, which is crackdown on illegal short-term rental activity on Airbnb and other platforms like HomeAway or FlipKey, it has the potential to negatively impact Airbnb’s business in the city.

You can read the full filing below.

Download (PDF, 79KB)