HomeAway Lawsuit Alleges Chicago's Home-Sharing Law is Unconstitutional

The ordinance threatens the long-standing community of hosts and travelers in Chicago, as well as the platforms that serve them, according to a HomeAway spokesman.

by Ally Marotti, Chicago Tribune / May 24, 2017

(TNS) -- Home-sharing platform HomeAway.com is joining the fight against Chicago's shared-housing ordinance with a federal lawsuit seeking to overturn the regulations.

The ordinance, passed last summer, seeks to impose stricter rules on home-sharing sites such as Airbnb, HomeAway and its subsidiary VRBO.com. This marks the third lawsuit seeking to delay the rollout of the rules or have them declared unconstitutional. But this is the first from one of the regulated platforms.

The first two suits, filed on behalf of homeowners, were partially successful, delaying the imposition of the rules by about three months and leading to tweaks from City Hall. But in March, a judge denied a motion seeking to temporarily block the regulations, and they went fully into effect.

HomeAway's suit, filed Monday in U.S. District Court for the Northern District of Illinois, alleges that the "deeply flawed law" threatens fines that are based on categories "that cannot meaningfully be distinguished from one another" and violates the First, Fourth and 14th amendments.

"The flaws in the ordinance make it impossible for a person of ordinary intelligence, or any reasonable person who might be subject to the ordinance, to discern what is required of that person and what is prohibited, despite the threat of potentially crippling fees," according to the lawsuit.

The ordinance implements an extra tax on home-sharing hosts and a limit on the number of units in a building that can be rented out on home-sharing sites, among other regulations. It was originally set to go into effect in mid-December.

The ordinance threatens the long-standing community of hosts and travelers in Chicago as well as the platforms that serve them, said Philip Minardi, a spokesman for Austin, Texas-based HomeAway, which was bought by Expedia in 2015.

"Despite months of discussions with the city to reach a workable solution that would allow HomeAway to comply with the ordinance, we were unable to reach a resolution, leaving HomeAway no choice but to file this action," Minardi wrote in an email.

Cities around the world are drafting or amending home-sharing policies as online platforms such as Airbnb become more prominent. In many cases, Airbnb works with the governments on the rules, as it did in Chicago.

The San Francisco-based company developed a registration system in coordination with the city that enables hosts to register directly through its platform and provides secure data to authorities. New Orleans implemented the same system, and San Francisco is expected to put it in place by January, according to Airbnb.

Bill McCaffrey, a spokesman for the city's Law Department, said the ordinance "is among the strongest in the country and enables the city to monitor rental activity and take action against hosts who commit violations."

"The city has already successfully defended legal challenges to this ordinance, and we will respond to this lawsuit as appropriate," McCaffrey said.

The 37-page lawsuit alleges 10 counts against the defendants, including unreasonable searches and seizures and prior restraint of speech. It asks that the court declare the law unconstitutional.

Other cities rolling out new or amended rules have faced similar court battles.

Airbnb filed a lawsuit last year challenging San Francisco's ordinance that would fine short-term rental platforms for users who rented properties without registering with the city. The federal lawsuit was settled early this month when the city reached an agreement with Airbnb and HomeAway, resulting in the plan to implement Airbnb's registration system.

A trial court judge ruled last year that a Nashville, Tenn., ordinance regulating short-term rental properties was unconstitutionally vague. Like the two previous cases in Chicago, the Nashville case was filed by a think tank acting on behalf of homeowners.

©2017 the Chicago Tribune Distributed by Tribune Content Agency, LLC.

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