Federal Court Tosses Challenge to Santa Monica's Home-Sharing Law

By Jorge Casuso

June 18, 2018 -- A federal district court on Thursday dismissed a lawsuit brought by Airbnb and Homeaway.com challenging Santa Monica's home-sharing law, City officials announced Monday.

The lawsuit sought to invalidate portions of the City's law that "penalize online platforms for booking short-term rentals of unlicensed properties," City oficials said.

Judge Otis D. Wright II, U.S. District Judge for the Central District of California, dismissed the challenge in its entirety.

City Attorney Lane Dilg praised the decision, which she said protects housing in Santa Monica.

"Today's decision affirms that cities can take reasonable steps to
preserve precious housing supply," Dilg said in a statement.

The ruling, she said, comes "in the face of an ever-expanding vacation rental industry that threatens to convert homes, and particularly affordable rental units, into de facto hotels."

Approved by the City Council in 2015, Santa Monica's homesharing law allows residents to rent to visitors for less than 31 days, as long as the resident and visitor are both present in the home.

Un-hosted short-term rentals, known as "vacation rentals," remain illegal.

The ruling came three months after a federal court denied a motion by the plaintiffs for a preliminary injunction ("Efforts to Temporarily Halt Santa Monica's Home-Sharing Law Fails," March 14, 2018).

In the ruling, the court found Santa Monica's law does not penalize publishing activities in violation of the Communications Decency Act, but instead prevents unlawful business transactions on their websites.

The Court also ruled that Santa Monica's law does not violate the First Amendment because it regulates conduct and not speech.

"In dismissing the platforms' challenge to the Home-Sharing Ordinance, Judge Wright agreed with the City and a prior federal court ruling," Dilg said.

Wright also dismissed claims brought under the Fourteenth Amendment, the Stored Communications Act and the California Coastal Act, City officials said.

"We are pleased that the Court found the City's Home-Sharing Ordinance to be fully consistent with all applicable laws," said Chief Deputy City Attorney Yibin Shen.

"We agree with the Court that the Ordinance is a constitutional exercise of the City's legislative authority to protect the health, safety, and welfare of residential neighborhoods."