As outlined previously, Santa Monica had been a goldmine for Airbnb generating $9.3 million a year in revenue; making it one of the top 10 revenue generators for greater Los Angeles. Short term rentals, however, already were illegal in Santa Monica, but enforcement is rare.
Nonetheless, on May 12, 2015 the City of Santa Monica adopted an ordinance that would reduce the number of listings on Airbnb from 1,700 to just 300 by limiting listings to only owner/lessee occupied spaces. Rental of whole units would be banned.
In July 2016 the city won its first conviction of a rental operator. The city, however, has been pushing Airbnb to take offending listings down, which has triggered a constitutional challenge from Airbnb which contends:
The Ordinance directly conflicts with, and is preempted by, the Communications Decency Act of 1996, 47 U.S.C. § 230 et seq. (the “CDA”). The Ordinance seeks to hold Airbnb liable for content created by third-party users, by punishing Airbnb for listings posted to its platform where those listings do not comply with City law. As such, the Ordinance unquestionably treats online platforms such as Airbnb as the publisher or speaker of third-party content and is completely preempted by the CDA.In addition, the Ordinance violates the First Amendment as an impermissible content-based regulation, and the First Amendment and the Due Process Clause of the Fourteenth Amendment because it imposes strict liability on Hosting Platforms that host non-compliant short-term rental listings, and does so in an impermissibly vague manner.The Ordinance also violates the Stored Communications Act, 18U.S.C. §§ 2701 et seq. (the “SCA”) and the Fourth Amendment by requiring disclosure to the City of certain customer information without any legal process or pre-compliance review.