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Federal Appeals Court Upholds Santa Monica's Home Sharing Law

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By Jorge Casuso

October 3, 2019 -- A Federal Appeals Court on Thursday rejected a potential class-action lawsuit against the City that claimed its home sharing law, which bans leasing residential property short term unless the owner is present, is unconstitutional.

The unanimous decision by the U.S. 9th Circuit Court of Appeals was the federal court's second major decision this year upholding the City's pioneering 2015 home sharing law.

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The suit filed in July 2016 by retired school teacher Arlene Rosenblatt claimed Santa Monica's ordinance unreasonably restricts the use of private property ("Lawsuit Claims Santa Monica’s Short-Term Rental Ban Unconstitutional," July 12, 2016).

The suit also claimed Santa Monica's law "substantially burdens" interstate commerce and discriminates in favor of Santa Monica businesses such as hotels.

“A New York resident who owns property in Santa Monica would never be permitted to utilize his property for short-term rentals because as a New York resident he would never qualify for the home sharing exception,” her complaint stated.

In rejecting Rosenblatt's contention, the Federal Appeals Court ruled that the ordinance “does not discriminate against persons outside of Santa Monica, who stand on equal footing with Santa Monica residents in their ability to purchase Santa Monica property and reside there.”

In her 2016 lawsuit, Rosenblatt, a retired LAUSD school teacher who was 81 at the time, said she and her husband had been renting their two-bedroom home for $350 per night while they were on vacation because they needed the money.

Rosenblatt told various media outlets when the law was passed that the couple needed the money because their retirement income earned through her pension and his social security did not amount to much.

The real reason for the ban, the lawsuit claimed, was “to steer travelers back to more expensive Santa Monica hotels and to prevent interstate competition from negatively impacting hotel revenue and the revenue the City receives" from transient occupancy taxes.

By making an overnight stay in Santa Monica more expensive, the ordinance reduced tourism and other interstate activities within the city, the lawsuit alleged.

In Thursday's ruling, the appeals court rejected the argument, noting that the city offered reasonable alternatives to vacation rentals.

All federal claims in Rosenblatt's class action lawsuit were dismissed the year after it was filed in California Federal Court.

The U.S. District judge also rejected the lawsuit's claim that the California Coastal Act overrode the City's ban on short-term vacation rentals ("Federal Judge Dismisses Suit Against Santa Monica Short-Term Rental Ban," May 30, 2017).

Thursday's ruling marked the second major victory the 9th Circuit Court has handed Santa Monica this year.

In March the federal appeals court rejected a challenge of Santa Monica's law by Airbnb and ("Appeals Court Affirms Santa Monica's Right to Regulate Online Homesharing Platforms," March 13, 2019).

In its ruling, the three-judge panel affirmed the City's right to penalize online platforms for booking short-term rentals of properties not licensed under the home-sharing law.

The ruling upheld a U.S. District Court ruling last summer dismissing the lawsuit filed by Airbnb and

In a statement emailed to the Lookout, City Attorney Lane Dilg said she is "pleased" with the two recent court victories.

“The Ninth Circuit has now twice upheld the City’s Home-Sharing Ordinance -- first in the face of a challenge brought by online platforms Airbnb and and now in rejecting Ms. Rosenblatt’s claims," Dilg said.

"The City’s Home-Sharing Ordinance is a lawful exercise of local government power and a key tool in our multi-pronged strategy to produce and preserve affordable housing in Santa Monica.”

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