On November 8, 2016, in Airbnb, Inc. v. City and County of San Francisco, Airbnb was denied a preliminary injunction against a San Francisco ordinance that would criminalize collecting fees for providing booking services for unregistered short-term rental units. However, the district court temporarily blocked enforcement of the ordinance until December 1, 2016 while it reviews the city's ability to efficiently verify the registration status of rental units. (.)

From 1986 to 2014, San Francisco banned short-term rentals concerned that they would significantly reduce the city's affordable housing stock. In 2015, Ordinance 218-14 repealed this ban and imposed certain conditions on short-term rentals by permanent residents. One condition requires a permanent resident renting its property to first register with the city.

Registration requires proof of:

Another law, Ordinance 130-15, created the Office of Short-Term Residential Rental Administration and Enforcement to administer and enforce the regulations.

On August 11, 2016, the city of San Francisco passed Ordinance 178-16, making it a misdemeanor to collect a fee for providing booking services for the rental of a unit not registered with the city. The misdemeanor is punishable by a fine of up to $1,000 per day per listing and potentially carries criminal penalties.

Airbnb filed for a preliminary injunction against the ordinance, arguing that it would essentially require the company to monitor and verify information provided by third-party hosts. It claimed the ordinance was unenforceable because it:

The court held that the CDA was not applicable because the ordinance did not obligate Airbnb to perform the typical duties of a "publisher" such as monitoring, editing, withdrawing, or blocking content submitted by third-party hosts. The court noted that Airbnb had no evidence that the ordinance would require them to monitor, remove, or edit the content that hosts post.

The court distinguished that the ordinance allows Airbnb to publish any listing and collect a fee for doing so even if the unit is unregistered without penalty or prosecution. However, the ordinance imposes liability for Airbnb's conduct in providing and collecting a fee for booking services involving an unregistered unit. Thus, the CDA is not in question because the ordinance does not consider who publishes an unregistered listing.

Addressing Airbnb's First Amendment argument, the court stated that the ordinance regulates commerce, not speech, because the conduct in question does not involve a significant expressive element.

This decision could make Airbnb susceptible to regulatory violations in pending litigation in other jurisdictions where Airbnb has made similar arguments to those that failed in this case. After the San Francisco decision, Airbnb settled its lawsuit against New York state on November 22, 2016 (see Legal Update, New York Imposes Stiff Fines on Short Term Rental Operators).

Another outcome of this decision is that Airbnb agreed to help San Francisco develop measures to verify the registration status of short-term rentals. This type of process would be helpful in several other cities that impose registration requirements on short-term rental hosts.

For more information on regulations affecting the short-term rentals and shared housing, see: