City Retains Ability to Reject Short-Term Rentals

In Homeaway.com, Inc. v. City of Santa Monica, the Ninth Circuit Court of Appeals affirmed the dismissal of plaintiff’s complaint that Santa Monica improperly restricted short-term home rentals.  In Homeaway, the City of Santa Monica passed an ordinance regulating short-term vacation rentals by authorizing short-term “home sharing” rentals, where owners could remain at the property with guests, but prohibited all other home rentals of 30 consecutive days or less.  Homeaway.com and Air B&B filed suit, alleging that the City ordinance was preempted by the Communications Decency Act of 1996 (“CDA”) and the First Amendment.  The District Court denied a preliminary injunction and dismissed the complaints.  The Ninth Circuit affirmed. 

The Court held that the CDA provides internet companies with immunity from certain claims under a policy, “to promote the continued development of the internet and other related computer services.”  The CDA immunizes the computer service from liability, if the information was provided by another content provider.  The Court held that the City’s ordinance does not require Homeaway or Air B&B to review the content provided by the hosts of the listings.  Instead, it prohibits processing of bookings under certain conditions.  Therefore, the Court held that the CDA does not apply to this case.  The Court also held that the First Amendment does not apply, since it does not have “significant expressive elements.” 

Many cities and counties are restricting short-term rentals to protect home values and prevent nuisances.  These restrictions currently appear to be legal.

Shannon B. Jones, Partner sbj@sbj-law.com