Airbnb Sues Its Hometown, San Francisco

SAN FRANCISCO (CN) - Airbnb is suing the city in which it is headquartered in federal court, claiming the San Francisco Board of Supervisors passed new rules relating to short-term rentals that are both illegal and overly burdensome to the company.

The online lodging rental marketplace said the city's passage of an ordinance that holds Airbnb liable for hosting short-term rental providers who are not registered with the city violates The Communications Decency Act of 1996 (CDA), the Stored Communications Act and the First Amendment.

One provision in the CDA absolves websites from liability for material posted by their users. The Stored Communications Act limits outsiders' access to personal information stored by website providers.

"The Ordinance fundamentally and impermissibly alters San Francisco's regulatory scheme for short-term rentals by holding hosting platforms criminally and civilly liable for their users' posting of listings without valid registration numbers," Airbnb says in the complaint, which was filed in the Northern District of California on Monday.

The San Francisco Board of Supervisors, frustrated with unscrupulous renters who had not registered with the city, passed an amendment on June 24 that said Airbnb was responsible for verifying that all of its providers were registered with the city. If not, the city could be fined up to $1,000 per day for hosting unregistered properties.

"This legislation strengthens enforcement by making the hosting platform accountable, along with the host," said Supervisor Dave Campos in a statement. "The weakness of the current law is the fact that corporate accountability was not built in the law, a symptom of the fact that Airbnb helped draft it."

Campos, who drafted the disputed ordinance amendments, also said that nearly 75 percent of the 7,000 San Francisco-related listings on the Airbnb site were unregistered, necessitating regulations that made compliance more likely.

After the supervisors passed the enforcement provision last week, Mayor Ed Lee declined to sign it based on his doubts about its legality.

Airbnb maintains the CDA preempts the newly enacted ordinance and is asking a federal judge to strike the law.

"Instead of punishing Airbnb for publishing unlawful listings, the city could enforce its short-term rental law directly against hosts who violate it, as provided under the Ordinance," Airbnb says in the complaint.

San Francisco, like many cities in the Bay Area, is grappling with a housing crisis. Low inventory and soaring rents have created an environment that makes it difficult for many low- and moderate-income individuals and families to find housing.

While some blame companies like Airbnb and VORB for exacerbating that problem, Airbnb contends that its business has little to no effect on the long-term rental market.

Airbnb further argues the regulatory imposition on Airbnb would disrupt its business significantly enough to affect the goodwill of both hosts and guests.

"The ordinance also creates the perception that Airbnb's activities are unlawful," the complaint says. "This perception will lead to the sort of reputational injury and loss of goodwill that irreparably harms a business."

In a statement posted to its website, the San Francisco-based company acknowledged the irony of filing a suit against the city where it got started.

"San Francisco is our hometown," the company said. "Airbnb employs over 1,000 people here, and we've spent years working with City officials and other advocates to develop sensible rules."

The company further acknowledges the city does have a problem with individuals converting affordable housing units into illegal hotels, but said it was willing to work with city officials to find reasonable solutions that did not involve violations of federal law.

Airbnb has removed more than 200 listings from its site in response to complaints, it said.

The city of San Francisco did not respond to an email seeking comment.

Airbnb is represented by Jonathan Blavin of Munger Tolles & Olson out of San Francisco.

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