The legal showdown comes after years of tension between Airbnb and its hometown over the rules that govern short-term rentals in a city that’s short of space for long-term residents and visitors alike.
The Communications Decency Act, passed in 1996 to shield companies for liability over content published online, “does not say because you are a website you are free of any potential regulation or liability,” U.S. District Judge James Donato said to attorneys for the two vacation-rental companies at a hearing in San Francisco. As to their First Amendment argument, “I’m struggling with how this ordinance can be described as content-based,” he said.
Airbnb sued the city in June over an update to the vacation-rental law that would make rental platforms like Airbnb liable for steep fines and criminal penalties if they arranged bookings for listings that flouted the city’s registration requirement. Expedia’s HomeAway later joined Airbnb in the suit. San Francisco agreed to suspend enforcement of the new provision until Donato rules on the companies’ request for an injunction halting it. A ruling could come as soon as next week.
In an 80-minute hearing, Donato peppered attorneys for Airbnb and HomeAway with questions about why the ordinance would discriminate against their free speech rights, and noted that it seemed undisputed that the majority of the city’s vacation-rental hosts are skirting the law by failing to register their properties.
Only about 1,700 hosts have registered since the requirement took effect in February 2015, although there are about 8,000 to 10,000 hosts citywide. San Francisco contends that it can’t easily track down the scofflaws, which is why it decided to force vacation-rental platforms to police their sites. After initially passing an update that would have held platforms liable for simply showcasing unregistered listings, the Board of Supervisors re-amended the law to make the liability occur only if platforms arranged bookings of unregistered properties, in a move to undercut Airbnb’s legal arguments.
“You have all this outrage in your briefs; ‘This is outrageous, they’re outsourcing enforcement to Airbnb,’ but they’re not outsourcing, just trying to harvest information from the single entity that knows, which is you,” Donato said to Airbnb’s attorney.
The ordinance would compel Airbnb “to remove thousands of listings, including listings that are potentially lawful,” said its attorney, Jonathan Blavin, a partner in San Francisco firm Munger, Tolles & Olson. “You don’t want a website with a bunch of listings people cannot book; that would make this site unusable.”
But Donato said automated technology could provide a simple solution without requiring Airbnb to infringe on its hosts’ privacy. “The homeowner can give (Airbnb) a registration number; you send that to the city database and it gets checked against the database,” he said.
He later questioned attorneys for San Francisco about how the city could make it easy to check registration numbers.
“What’s the city’s vision to make sure this isn’t an exercise in futility?” he said, asking if San Francisco would have a “transition period” until the needed software was up and running. “If you’re going to criminalize behavior, you have to make sure you play fair. You can’t say you have to check the registration number and then make it impossible for people to check.”
Assistant City Attorney Sara Eisenberg suggested that Airbnb initially could require hosts to upload a copy of their registration certificates, just as Uber requires drivers to upload copies of their driver’s licenses.
Donato said the city needs to make its information “totally transparent to these companies so they don’t get prosecuted” since Airbnb still would be on the hook if a host lied “and comes up with a brilliantly conceived facsimile of a legal registration that’s totally fake.”
Assistant City Attorney Jim Emery said, “We’ll work with (Airbnb and HomeAway) and develop an enforcement plan and it’s going to work.”
“That’s not very comforting,” Donato replied, drawing chuckles.
In a statement after the hearing, Airbnb spokesman Christopher Nulty maintained that the ordinance “violates an important federal law that serves as the backbone of free speech and innovation online. ... Though these cases can drag on for years, we remain ready and willing to work with the city right now on much simpler rules” for hosts “that protect the city’s scarce housing stock.”
Airbnb, founded as temporary crash space in a South of Market bachelor pad, has rocketed to gargantuan success, showcasing some 2.3 million listings worldwide, far more than even the largest hotel chain. Private investors value the company at $30 billion.
But it’s stirred controversy and clashed with regulators in many cities, with activists saying it siphons off permanent housing for more-lucrative tourist rentals and hurts neighborhood ambience.
©2016 the San Francisco Chronicle, Distributed by Tribune Content Agency, LLC.
