In 2015, the City of Santa Monica adopted an ordinance that prohibited rentals of residential property for thirty (30) days or less unless the owner had a business license and remained on the property during the rental. The Ordinance also prohibited “Housing Platforms” like Airbnb and HomeAway from “advertis[ing]” or “facilitat[ing]” rentals that violated the City’s short-term rental laws.
In November 2016, a federal court in Northern California upheld a San Francisco ordinance that permitted platforms to provide and collect commissions on short-term rentals so long as the units are lawfully registered with the city. Airbnb, Inc. v. City and County of San Francisco, No. 3:16-cv-03615-JD (N.D. Cal. Nov. 8, 2016).
The City of Santa Monica promptly amended its ordinance to mimic the San Francisco language. The new ordinance states that
[h]osting platforms shall not complete any booking transaction for any residential property or unit unless it is listed on the City’s registry [of licensed home-sharing hosts] at the time the hosting platform receives a fee for the booking transaction.
Airbnb and HomeAway challenged the statute and Judge Otis Wright upheld the ordinance. The platforms argued that imposing liability for rental advertisements on their platforms violated Section 230 of the Communications Decency Act. The court followed the San Francisco case and explained:
[T]he CDA is limited to protection from liability related only to publishing activities. Numerous courts have recognized that liability based on nonpublishing conduct is not entitled to CDA protection. See, e.g., Doe v. Internet Brands, Inc., 824 F.3d 846, 851 (finding that failure-to-warn claim was not barred by CDA because plaintiff did not seek to hold defendant liable as a “publisher or speaker”); City of Chicago, Ill. V. Stubhub!, Inc., 624 F.3d 363, 366 (7th Cir. 2010) (fining that city’s authority to tax resale of tickets by defendant was not superseded by CDA because the tax did not depend on who publishes” the information or is a “speaker”).
. . . . Like the San Francisco ordinance, the City’s Ordinance does not penalize plaintiffs’ publishing activities; rather, it seeks to keep them from facilitating business transactions on their sites that violate the law. This type of regulation falls outside the scope of the CDA protections.
Judge Wright also rejected their First Amendment argument.
The Ordinance, however, regulates conduct, not speech. “[T]he First Amendment does not prevent restrictions directed at commerce or conduct from imposing incidental burdens on speech.” Sorrell v. IMS Health Inc., 564 U.S. 552, 567 (2001) . . . . The Ordinance does not limit Plaintiffs’ ability to publish advertisements for rentals that may violate the Ordinance. Instead, the Ordinance prohibits hosts from renting a unit that is not approved for transient occupancy on a short-term basis and Plaintiffs from completing a booking transaction and receiving a fee for doing so.
Finally, Judge Wright rejected the argument that the statute was somehow preempted by the California Coastal Act.
The original Santa Monica Ordinance was discussed on CLBR #183 (second segment) starting at 32:25.