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Judge rejects Airbnb bid to block SF ordinance

Short-term rental companies dealt another blow for disruption

Hours into Tuesday’s presidential election, a very different bitter contest took a big turn as a U.S. district judge steamrolled Airbnb’s arguments in its lawsuit against San Francisco.

The noted short-term rental company (along with its competitor, Homeaway) sued the city earlier this year to block a new law that would levy potentially stunning fees against the site for illegal, unregistered home listings (up to $1,000/day per outlaw ad).

Alas, Airbnb’s argument did not impress the court. On Tuesday afternoon, Judge James Donato told the companies, via an 18-page ruling, that they don’t have a proverbial leg on which to stand.

The two companies argued that the new law improperly treats them as publishers of ads (rather than neutral host platforms) and violates their civil rights with an undue burden to police their content.

“This argument does not impress,” writes Donato. “[The ordinance] creates no obligation to monitor, edit, withdraw, or block content. Plaintiffs are free to publish any listing they get from a host and to collect fees from doing it.”

Companies are only on the hook for “their own conduct,” Donato writes. That is to say, they’re free to host whatever ads they want; the fact that some listings could cost them shocking amounts of money if they go ahead with them is pretty much their problem.

(This is essentially the city attorney office’s own opinion of the law as well.)

However, this is not the end of the matter. There’s a hearing about enforcement scheduled for November 17, and it’s possible the court will still bow to Airbnb’s request for an injunction on enforcement of the new law.

It doesn’t seem likely, though, given how “not impressed” the judge was with their case. This means that STRs could start running up fees by the end of the year, even as the inevitable appeal moves forward.

Since some 85 percent of STR ads in the city are presently listed illegally, that cost could run somewhere in the neighborhood of more than $1.5 million/week for a company like Airbnb.

Of course, it’s not as if the city will be sending Airbnb a bill for seven figures every week that the company then has to pay. Leveling fees comes with plenty of red tape of its own, and it’s very unlikely anyone will get stuck with the maximum penalty for every ad.

Still, this was a tough break for the company and its peers in the San Francisco market. Airbnb says it can you feel at home in almost any city in the world, but it’s not feeling much welcome in its own home anymore.