Airbnb Sues Boston for Short-Term Rental Ban

Last November, with the case still pending as of February 2019, Airbnb sued the City of Boston in federal court for the city’s June 2018 ban on most short-term rentals. Airbnb has taken a needed action, as the ban considered none of the serious and credible objections raised by owners and a minority of city councilors. Regrettably, the Airbnb argument is politically dead on arrival.

For more legal perspective, see the WGBH Story from January:

The Boston Airbnb ban, like similar bans in Cambridge, Salem, and Lynnfield, permits Airbnb and other rentals of 28 days duration or less to be offered only by non-professional, owner occupy novices. All businesses built around the service have been banned. Professional managers with professional cleaning staff, security, and business processes are not allowed to operate as of January 1, 2019.

MassLandlords staff discussed the matter internally over the summer. Several members came forward citing that they would be completely out of business once the ban took effect. One in a different municipality had constructed a property specifically designed for Airbnb, fully to code, and was willing to pay whatever tax or registration their city required. Others in Boston believed to be in the same boat were afraid to come forward. Without any consideration of these types of owners, Boston put them all out of business.

Boston proponents of the ban said it would keep short-term rentals to code, reduce nuisance, and lower the cost of rent for long-term renters.

The Airbnb Argument

Boston has asked Airbnb not to permit owners to list unlawful Airbnb’s. Airbnb is arguing that Boston’s ban affects primarily Airbnb’s first amendment rights. Airbnb has cited the 1996 Communications Decency Act, which protects online publishers from unlawful commentary posted by its subscribers.

There is a significant difference between unlawful comments and unlawful goods and services. Ross Ulbricht, founder and operator of the Silk Road marketplace, is now serving life in prison without parole for his website’s role in facilitating illegal transactions of drugs. No first amendment argument could have saved him from the fact that selling drugs is illegal, and that he turned a blind eye to it (or worse, facilitated it) on his site. So too will it be for Airbnb, if they can’t demonstrate that short-term rentals in fact ought to be lawful.

“Airbnb is a realization of Congress’s goals. It is a classic intermediary:  Airbnb operates an online platform that allows hosts and guests to find each other and arrange their own transactions for overnight accommodation. Hosts control the relevant content of their listings and publish them; hosts and guests alone, not Airbnb, decide whether and on what terms to enter into transactions. This brings Airbnb squarely within the protections of the [Communications Decency Act],” the company’s lawyers wrote in the complaint.

Their argument is the equivalent of the character Michael Scott in the television show “The Office” saying, “You wouldn’t arrest a guy who was just delivering drugs from one guy to another.” Actually yes, yes you would. The only thing Airbnb has going for it is that the ban on short-term rentals is a civil, not a criminal, matter. This means they won’t go to jail when they lose.

A Better Argument

MassLandlords would have argued that this ban was beyond the proper exercise of police power, and that in enacting complete bans on all short-term rentals, without regard to the specific problems the city was trying to avoid, the ban amounted to an unlawful seizure of private property for a public purpose.

The public purpose was clearly stated in multiple public records: a desire to keep rents low for long-term renters by adding housing back on the market, a desire to eliminate noise and nuisance complaints, and a desire for code enforcement. These purposes can easily be dealt with.

First, a major national study shows Airbnb has a minimal impact on long-term rents. That is enough to deal with the matter legally, but for good measure, we would cite many years of studies that show Massachusetts is not creating enough housing supply to meet demand. Airbnb is a scapegoat with respect to rent levels, not a cause.

Second, appropriate inspections, registration fees, and nuisance fines would address all remaining public policy goals more specifically and more effectively than an outright ban, using mechanisms already in place for longer term rentals. An outright ban creates a short-term rental “black market” in which no rentals are inspected or regulated at all. An outright ban both fails to meet policy goals and oversteps appropriate authority already granted for the purpose of policing rentals.

We know this argument is closer to the one that can prevail here. As Massachusetts landlords, we know that economic diminishment (e.g., being less profitable, having a renter live in your unit for free) gets you no points in court.

Airbnb wrote, “[the ban will] require Airbnb to expend significant financial and technical resources.” You can almost imagine the judge saying, “Oh, boo hoo” and gaveling the case dismissed.

Unlike Airbnb, which can still operate profitably, our plaintiffs would have had actual standing. A few member LLC’s who built for Airbnb may soon be bankrupted entirely, with assets purpose built unsuitable for any other use. The takings argument coming from actual Massachusetts residents would have been far stronger than what little we know of the Airbnb argument. We wish we had the resources to make a parallel case on our own.

In August, MassLandlords reached out to Airbnb for help making our case. After email introductions, no call was ever scheduled.

We wish them well in this important matter, and depending on the nature of their eventual appeal, we may assist Airbnb with an amicus briefing if requested.

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