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By Jorge Casuso
March 13, 2019 -- In a ruling City officials called "a big win," a California Appeals Court on Wednesday affirmed Santa Monica's right to penalize online platforms for booking short-term rentals of properties not licensed under the city's strict home-sharing law.
The ruling by the Ninth Circuit Court of Appeals upheld a U.S. District Court ruling last summer dismissing the lawsuit filed by Airbnb and HomeAway.com.
The plaintiffs argued that the local ordinance is upending their business model by forcing them to remove illegal listings and poses an economic threat to the growing industry if other cities follow suit ("Challenge to Santa Monica's Home-Sharing Law Reaches Court of Appeals," October 15, 2018).
In its ruling Wednesday the panel of three judges affirmed the lower court's ruling that the City's 2015 Home-Sharing Ordinance is a lawful housing and rental regulation.
“Even assuming that the ordinance would lead the platforms to voluntarily remove some advertisements for lawful rentals, there would not be a ‘severe limitation on the public’s access’ to lawful advertisements, especially considering the existence of alternative channels like Craigslist,” the judges wrote.
The decision also affirmed the District Court's dismissal of the plaintiffs' claims that Santa Monica's law penalizes publishing activities in violation of the Communications Decency Act, which shields online platforms from liability for content posted on their sites.
The plaintiffs argued that Santa Monica's law illegally required them to police their sites, but the judge found that, instead, it prevented unlawful business transactions on their websites and did not violate the plaintiffs' First Amendment Rights.
Mayor Gleam Davis called Wednesday's ruling a "big win" for Santa Monica.
"We are thrilled to have confirmation from the Ninth Circuit that our balanced approach to home sharing is working at a time when housing and affordability continue to challenge the region," Davis said.
In approving the ordinance, City officials argued that Santa Monica's housing crunch was exacerbated by landlords removing regular rental units -- even entire apartment complexes -- from the market to make way for more profitable short-term rentals for tourists.
Santa Monica's law -- considered the strictest in the nation -- outlawed the rental of an entire unit for less than 30 days, made hosts legally accountable for nuisance violations and required them to list their units on a City registry and pay a hotel tax.
In September 2017, Airbnb filed a lawsuit alleging the local ordinance was "clumsily-written" and included multiple violations of federal law ("Santa Monica Sued by Airbnb," September 7, 2016).
In a statement issued after the ruling, Airbnb said the Santa Monica case is not indicative of its successful work with local governments worldwide.
“Airbnb has made great strides around the world, working with dozens of cities to develop more than 500 partnerships including fair, reasonable regulations, tax-collection agreements, and data sharing that balance the needs of communities, allow hosts to share their homes in order to pay the bills and provides guests the opportunity to affordably visit places like the California Coast,” the company said.
According to AP, Airbnb said that it had tried for two years to work with Santa Monica “on a solution that ensures working and middle-class families who want to visit the coast can find an affordable place to stay.”
“Despite our efforts, the city insisted on an approach that was out of step with progress across the country,” Airbnb said.
In a statement Wednesday, City Attorney Lane Dilg said the City Attorneys office, which litigated the case, is "pleased" with the Appeals Court Ruling.
"We look forward to collaborating and cooperating with technology companies to advance the community's best interests, but the platforms' broad assertions of immunity in this case simply go too far," Dilg said.
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