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Paul Zimmerman
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UPDATE: Airbnb Sues Anaheim Over Law That Makes Website Liable for Illegal Short Term Rentals

Update (8.23.16):

On Monday, August 22, 2016, Airbnb announced that it has dropped its federal lawsuit against the City of Anaheim, California over a municipal ordinance that, in part, imposes fines on short-term rental websites. The voluntary dismissal came after an Anaheim official sent a letter to Airbnb’s legal counsel informing them that the city would not enforce the ordinance against websites such as Airbnb. The city advised that “no criminal or civil penalties will be issued against hosting platforms under the ordinance.”

While the case has now been dismissed, the issue may not be fully resolved. Of importance, the City Attorney’s one-paragraph letter did not rule out the city’s future passage of an ordinance “that is determined to be consistent with the Communications Decency Act and any other laws deemed to be applicable to hosting platforms.” M&R will stay abreast of this issue, and report on the various ways that municipalities are seeking to regulate and manage the booming short-term rental industry.

Originally Published August 10, 2016:

Airbnb recently filed a federal lawsuit against the City of Anaheim over a new law that penalizes short-term rental sites like Airbnb for hosting listings that violate the City’s rental regulations. The new law, which went into effect on August 11, 2016, provides that short-term rental sites must remove listings of rental units that lack city permits or otherwise violate city law within 10 calendar days. If the sites do not, they could be fined $500 for the first offense, $1,000 for the second offense, and $2,000 for a third or subsequent offense.

Anaheim has been cracking down on short term rentals in recent years. After a period of experimenting with a permit process, the Anaheim City Council voted last month to permanently stop issuing permits for short-term rentals and gave existing permit holders 18 months (beginning August 11, 2016)  to discontinue operations. During that window, permitted rental hosts must abide by significant new restrictions on noise, occupancy numbers, parking, fire safety and access. Now, with the new law, Anaheim has turned its attention to the rental websites themselves.

In the lawsuit, Airbnb alleges that Anaheim’s new law violates Airbnb’s First Amendment right to free speech, as well as the Communications Decency Act (“CDA”). As for the First Amendment, Airbnb alleges that the new law runs afoul of the right to free speech because it is a content-based restriction on speech that is not narrowly tailored. Instead of targeting speech, for example, the City could instead enforce its short-term rental laws directly against the hosts who violate them. In addition, Airbnb alleges that the law would chill free speech because Airbnb would not be able to know which listings are lawful and which are not and, therefore, would have to stop publishing all listings from Anaheim.

Additionally, Airbnb alleges that the law violates the CDA because it treats Airbnb as the publisher/speaker of the listings at issue, which are not provided by Airbnb, but rather by third-party hosts. In that regard, the CDA provides that operators of internet services are not to be treated as publishers and, thus, are not liable for the words of third parties who use their services.

Notably, the lawsuit against the City of Anaheim comes on the heels of a similar lawsuit that Airbnb filed against the City of San Francisco in June. That lawsuit, however, is currently stayed pending proposed amendments by San Francisco’s board of supervisors (which may render the lawsuit moot).

While Airbnb has recently filed suit against two cities, the company has also shown a propensity to work with cities to further a common goal. In Los Angeles, for example, Airbnb recently agreed to start collecting taxes from hosts directly, instead of relying on the City to collect them. This could result in a boon to the City of Los Angeles of millions of dollars per year.

In any event, due to the ever-growing popularity of short-term rentals (and the monies they generate) there will undoubtedly be future conflicts involving both local and state regulations. M&R will continue to monitor and report on the evolving relationship between short term rental websites like Airbnb and the communities they serve. 

This blog post is not offered as, and should not be relied on as, legal advice. You should consult an attorney for advice in specific situations.