Airbnb Threatens to Sue New York If Gov. Signs New Home-Sharing Bill

September 7, 2016, 10:54 PM UTC
Berlin will from Sunday, May 1, 2016, restrict private property rentals through Airbnb and similar online platforms, threatening hefty fines in a controversial move meant to keep housing affordable for locals. / AFP / John MACDOUGALL (Photo credit should read JOHN MACDOUGALL/AFP/Getty Images)
Photograph by JOHN MACDOUGALL AFP/Getty Images

Home-sharing company Airbnb isn’t happy about a potential New York law and is prepared to take it the courts.

This week, the company sent a letter to New York Gov. Andrew Cuomo notifying him that if he signs a recently passed bill into law, it will sue the state. The bill in question, passed by both the New York Assembly and Senate earlier this summer, would impose steep fines on people advertising short-term rentals that violate New York City’s rules that prohibit rentals for less than 30 days without the host present.

“The Bill would subject parties to draconian fines that would lead to financial duress for the Airbnb New York host community,” says Airbnb general counsel Rob Chesnut in the letter. “The proposed amendments are not only unwise, they violate both federal law and the United States Constitution.”

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Airbnb makes a few arguments against the bill, according to Chesnut’s letter. First, it believes that the bill’s language doesn’t distinguish between the hosts and the service on which they list their short-term rentals. In turn, this means it would be in violation of Section 230 of the Communications Decency Act, which prohibits legislators from sanctioning websites for content posted by its users. The city of Anaheim, Calif., against which Airbnb filed a lawsuit, recently reversed course and said it would not enforce sanctions against home-sharing sites like Airbnb and HomeAway, conceding that it would go against the Communications Decency Act.

Airbnb also argues that the proposed New York bill also violates the First Amendment’s freedom of speech, though this may not be so simple in the case of commercial speech about an illegal activity (illegal listings in New York City). Moreover, Airbnb says that the proposed bill violates the Fourteenth Amendment’s Due Process Clause, as it would trigger penalties against hosts and listing services without the parties knowing that a listing was not compliant with short-term rental laws.

Proponents of the bill, however, view it as merely enforcing existing laws. “The bill says: You can’t advertise an illegal activity,'” Assemblywoman Deborah Glick, a Manhattan Democrat who supported the bill, told the Wall Street Journal in June. “I don’t know what the big confusion is.”

Airbnb Is Still Trying to Resolve Its Legal Issues in New York and San Francisco

Last month, a group including big names like actor and investor Ashton Kutcher, PayPal co-founder and investor Peter Thiel, and Facebook co-founder Chris Hughes, sent a letter to Gov. Cuomo urging him to veto the bill.

In June, Airbnb filed a lawsuit against its hometown, San Francisco, after the city’s Board of Supervisors approved new rules that would impose steep fines on services like Airbnb if they list rentals that don’t follow short-term regulations. Airbnb made similar arguments, citing the Communications Decency Act and the First Amendment’s freedom of speech protection.

Speaking at Fortune‘s Brainstorm Tech conference in Aspen, Colo. in July, Airbnb CEO Brian Chesky downplayed the significance of the company’s regulatory battles in San Francisco and New York, noting they’re only a tiny part of Airbnb’s revenue. However, he admitted the two cities are very dear to the company’s community of hosts and guests, which is why Airbnb is spending so much time and energy there.

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