Airbnb, HomeAway Win Federal Injunction Against NYC Reporting Ordinance
The short-term rental providers sued the city over the passage of a law aimed at further regulating the services in residential buildings.
January 03, 2019 at 12:40 PM
4 minute read
Home renting services Airbnb and HomeAway won a preliminary injunction in federal court Thursday against a New York City law set to go into effect in February that aimed to regulate the growth of short-term rentals across the city.
U.S. District Judge Paul Engelmayer of the Southern District of New York issued the preliminary injunction ahead of the deadline, indicating an expeditious move to discovery to, as the court put it, “rule on the platforms' application for permanent relief” and indicated a favorable reading for the service providers under the Fourth Amendment.
The home rental services sought the preliminary injunction earlier this year in the wake of the passage of Local Law 146. Passed by the New York City council and signed by Mayor Bill de Blasio, the law sought to regulate what the city saw as adverse effects of short-term rentals in residential buildings.
Under the law, booking services such as Airbnb and HomeAway would be required to file what the court termed a voluminous report with city officials for each short-term rental listed on their online platforms. The reports would include, among a number of items, details of the location rental, the details of the rental itself, fees received by the services, and contact information on the rental host.
The hosting services sued to halt the law, claiming it violated the First and Fourth amendments, as well as the federal Stored Communications Act.
Noting the “novel” application of the Fourth Amendment to the electronic data requirements under the city ordinance, Engelmayer agreed that the ordinance was a form of search or seizure under the Constitution. Specifically, the U.S. Supreme Court's 2015 decision in City of Los Angeles v. Patel laid the foundation for the judge's decision. As here, the case dealt with a city ordinance that required companies—in that case, hotels—to make available information about guests to city officials, namely police officers.
As Engelmayer noted, the Supreme Court held the ordinance facially invalid under the Fourth Amendment because it lacked a mechanism for precompliance review.
“Like a hotel, a home-sharing platform has at least two very good reasons to keep host and guest information private, whether as to these users' identities, contact information, usage patterns, and payment practices,” Engelmayer wrote. “One is competitive: Keeping such data confidential keeps such information from rivals (whether competing platforms or hotels) who might exploit it. The other involves customer relations: Keeping such data private assuredly promotes better relations with, and retention of, a platform's users.”
Focusing on the reasonableness Fourth Amendment element, Engelmayer found the city's demand for information from the service providers “breathtaking,” appearing to capture “virtually all monthly information the service receives from each user.” The requirements, he added, dwarf those required under the defeated ordinance in Patel.
“The universality of the Ordinance's monthly production demand (covering all short-term rentals in New York City), the sheer volume of guest records implicated, and the Ordinance's infinite time horizon all disfavor the Ordinance when evaluated for reasonableness under the Fourth Amendment,” Engelmayer stated. “Indeed, the Ordinance is the antithesis of a targeted administrative subpoena for business records.”
Counsel for Airbnb, Kaplan Hecker & Fink name attorney Roberta Kaplan, praised Engelmayer's approach to the case.
“Today's decision by the court to grant a preliminary injunction demonstrates what Airbnb has long been saying—all Americans (including businesses) have a right to privacy in their records,” Kaplan said. “No government can force a company to simply turn over its entire hard drive every month without any form of precompliance review. Judge Engelmayer's cogent and comprehensive opinion takes old world concepts which inspired the founders to enact the Fourth Amendment in the first place and applies them to today's modern, high-tech world.”
Airbnb is also represented by co-counsel, Sullivan & Cromwell partner Sharon Nelles, in the suit.
A spokesman for the city's Law Department defended the city ordinance.
“This information is critical to ensuring that Airbnb and similar entities comply with laws that preserve affordable housing and protect our communities,” the spokesman said. “We will appeal and explore all other legal options.”
Related:
Airbnb Turns to Kaplan in Bid to Overturn NYC Law Demanding Host Info
Judge Preserves Portion of Hotelier's Constitutional Challenge to NY Short-Term Rental Listing Law
As NYC Council Sets Vote on Regulating Ridehails, Lawyers Eye Options to Fight Back
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