SAN FRANCISCO (CN) — A federal judge shot down Airbnb's legal challenge to a San Francisco ordinance that makes it a crime to collect fees from unregistered rentals in the city.
Airbnb, an online short-term rental marketplace, sued San Francisco earlier this year after the city enacted an ordinance that would have required the company to monitor and verify all third-party rental listings. HomeAway joined with Airbnb to block enforcement of the law.
The case was put on hold while the city considered changes to the ordinance, which it then amended in August.
Under the amended ordinance, restrictions on postings was abandoned but it remains illegal for Airbnb to collect fees from the rental of any property not registered with the city. The ordinance imposes a $1,000 fine per day for every unregistered booking, and Airbnb and similar sites could also face misdemeanor charges under the law.
San Francisco Supervisor David Campos, who pushed for the ordinance, called the decision an important victory in the effort to protect the city's dwindling housing supply by regulating short-term rentals.
"The truth is, while no one in San Francisco's city government wants to see a homegrown company like Airbnb go out of business, it's our job to protect the housing stock of our citizens. And while San Franciscans appreciate tech and innovation, they also appreciate not being evicted from their homes so landlords can Airbnb," Campos said.
Airbnb challenged the ordinance under Section 230 of the Communications Decency Act, a provision of the 1996 law that protects those who republish or provide an online platform for information or speech.
Airbnb contends that it acts as merely the publisher of online content supplied by third parties, and that the threat of criminal penalties requires the company to police every listing on its site.
U.S. District Judge James Donato rejected that argument Tuesday, saying the law does not prohibit Airbnb from publishing the listings — only collecting fees from unregistered rental bookings.
"As the text and plain meaning of the ordinance demonstrate, it in no way treats plaintiffs as the publishers or speakers of the rental listings provided by hosts. It does not regulate what can or cannot be said or posted in the listings. It creates no obligation on plaintiffs' part to monitor, edit, withdraw or block the content supplied by hosts," Donato wrote. "The ordinance holds plaintiffs liable only for their own conduct, namely for providing, and collecting a fee for, booking services in connection with an unregistered unit."
He added, "Plaintiffs' problem is that they have failed to submit evidence showing that the ordinance will in fact inevitably or perforce require them to monitor, remove or do anything at all to the content that hosts post."
He said Airbnb may choose to screen its listings, as it already does for other reasons, but the ordinance doesn't force it do so.
Airbnb also could not show that the law unconstitutionally restricts free speech, Donato said.
"As plaintiffs expressly agree, it is illegal in San Francisco to rent a unit that is not lawfully registered," he wrote. "They cannot seek, then, to set aside on First Amendment grounds an ordinance that they contend would restrict their ability to communicate offers to rent unregistered units."
Donato asked for further briefing on how the law will be enforced, noting that the city's newly created Office of Short-Term Residential Rental Administration and Enforcement currently has no registration verification plan in place.
He set a case management conference for Nov. 17 to discuss the issue.
City Attorney spokesman John Cote said in a statement that the city will hold off enforcing the law for now.
"San Francisco has voluntarily agreed to not enforce the law pending Donato's ruling, and will continue to do so as the final mechanisms for enforcement are ironed out," he said.
Airbnb spokesman Nick Papas said in an email that the company disagrees with the ruling, but appreciates Donato's consideration of its enforcement concerns.
"While we appreciate that the judge has acknowledged our concerns about the inadequacy of the screening obligations in the new law and has continued to postpone enforcement of these rules as a result, we respectfully disagree with the remainder of his ruling," Papas said. "No matter what happens in this case, we want to work with the city to fix the broken system long before the legal process runs its course."
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