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Airbnb Sues San Francisco to Block Rental Law

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Company says potential $25 million per week fines violate First Amendment, other statutes

If it’s possible for something to be shocking and unsurprising at the same time, then last night’s announcement that Airbnb plans on suing the city of San Francisco over its most recent attempt to regulate short-term rentals fits the bill.

Under a recently passed law, short-term rental sites like Airbnb could be fined up to $1,000 per day per illegal, unregistered listing they host. In the case of Airbnb, that’s as much as $25 million every week, given the thousands of scofflaw listings a recent city audit turned up.

Note that a grand per day is the maximum penalty. The sum of any actual fine that’s leveled would be decided in court. The company apparently decided to skip a step and just go straight to the courts themselves.

Although they never came right out and said that they planned to sue, company spokespersons always intimated that they "doubted the legality" of the city’s crackdown attempts. In Monday's complaint, Airbnb alleges that the new law violates the 1996 Communications Decency Act. The CDA limits a web platform’s responsibility for shady doings its users may get up to, at least ostensibly.

Airbnb says that while the city has a legal right to regulate STR hosts and to go after them if they break the law, the company itself is a protected middleman. In the eyes of Airbnb and its lawyers, the city’s repeated refrain of "holding them accountable" is potentially incriminating.

The company also cites the Stored Communications Act, alleging that the city law "[requires] disclosure of customer information without any legal process." And they complain that this violates the First Amendment, insisting that rental listings are free speech and that hindering their publication without proof of criminality may amount to prior restraint.

The city responds that the suit is stretching the boundaries of federal statutes. "All the CDA says is that you cannot require a platform to edit what a host writes on your site," Carolyn Goossen, aid to Supervisor David Campos, told Curbed SF. "We’re not demanding that Airbnb change or edit anything. We’re just saying that they’re responsible for verifying that listings have registered."

Goossen compares it to car rental companies who have to confirm that customers have a driver’s license. She adds that Airbnb themselves helped write the underlying registration law, and that the company has a financial incentive to allow outlaw listings to remain.

Matt Dorsey, spokesman for the City Attorney’s Office, takes a similar stance. "Nothing in San Francisco's pending ordinance regulates user content at all. It's regulating the business activity of the hosting platform," Dorsey said in an email.

He adds: "The CDA doesn't render all business laws moot simply because a business happens to operate on the internet."

San Francisco-based Airbnb is worth as much as $25 billion and operates in 32,000 cities. In the past, it has insisted that it doesn’t have the resources to police individual users in just one market. The company has requested a preliminary injunction on August 1.