Federal Appellate Panel In Pasadena Upholds Santa Monica's Short-Term Rental Law

Published : Thursday, March 14, 2019 | 5:08 PM

The Ninth Circuit Court of Appeals in Pasadena has affirmed a lower court finding the City of Santa Monica did not violate federal law with an ordinance imposing obligations on companies that host online platforms for short-term vacation rentals.

The ordinance at issue required online platforms HomeAway and Airbnb to monitor and remove third-party content on their websites.

The appellate panel said the ordinance prohibits processing transactions for unregistered properties and does not require the platforms to review the content provided by the hosts of listings on their websites.

Rather, the only monitoring that appeared necessary in order to comply with the ordinance, “related to incoming requests to complete a booking transaction – content that, while resulting from the third-party listings, was distinct, internal, and nonpublic,” the panel noted.

Santa Monica’s city council passed Ordinance 2535 in May 2015, and amended it in 2017, to regulate the short-term vacation rental market and to authorize licensed “home-sharing,” or rentals where residents remain on-site with guests.

The ordinance also prohibited all other short-term home rentals of 30 consecutive days or less.

Santa Monica’s concern was that short-term rentals had negatively impacted the quality and character of the city’s neighborhoods by, “bringing commercial activity and removing residential housing stock from the market,” according to court documents.

Filing a complaint in June 2015, the HomeAway.com and Airbnb argued that the ordinance interfered with the federal Communications Decency Act of 1996 and the First Amendment, protecting internet companies from liability for posting third-party content.

The Ninth Circuit appeals panel affirmed the U.S. District Court for the Central District of California’s denial of preliminary injunctive relief and its dismissal of the platforms’ complaints “for failure to state a claim under the Communications Decency Act and the First Amendment.”

In their March 13 ruling, the panel said the ordinance is plainly a housing and rental regulation.

“The Ordinance itself makes clear,” the ruling stated, “that the City’s ‘central and significant goal… is preservation of its housing stock and preserving the quality and nature of residential neighborhoods.’ As such, with respect to the platforms, the only inevitable effect, and the stated purpose, of the ordinance is to prohibit them from completing booking transactions for unlawful rentals,” the panel wrote.

“We look forward to collaborating and cooperating with technology companies to advance the community’s best interests, but the platforms’ broad assertions of immunity in this case simply go too far,” Santa Monica City Attorney Lane Dilg said in a statement sent to the Tahoe Daily Tribune.

The Tribune also carried a statement by Airbnb saying they had been trying to work with Santa Monica “on a solution that ensures working and middle-class families who want to visit the coast can find an affordable place to stay.

“Despite our efforts, the city insisted on an approach that was out of step with progress across the country,” the Airbnb statement said.







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