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Airbnb, Inc. v. City of Boston

United States District Court, D. Massachusetts

May 3, 2019

AIRBNB, INC., Plaintiff,
v.
CITY OF BOSTON, Defendant.

          ORDER ON MOTION FOR PRELIMINARY INJUNCTION (DOC. NO. 3)

          Leo T. Sorokin, United States District Judge.

         Airbnb, Inc. seeks a preliminary injunction barring the enforcement of certain provisions in a City of Boston ordinance aimed at regulating short-term residential rentals in Boston. In particular, Airbnb claims three sections of the ordinance are preempted by or violate the Communications Decency Act, the Stored Communications Act, and/or the First, Fourth, and Fourteenth Amendments to the United States Constitution. After careful consideration, Airbnb's motion is ALLOWED in part and DENIED in part.

         I. BACKGROUND

         Based in San Francisco, Airbnb is a company that operates an “online marketplace for people to list, explore, and book both short-term and long-term housing accommodations.” Doc. No. 1 at 5.[1] Its platform connects “hosts” and “guests, ” facilitates their communication with one another to reserve and book short- or long-term rental accommodations, and “provides payment processing services” at the time of booking. Id. at 5-6. Airbnb charges no fees when a host lists a property on the platform, nor does it own or operate any of the properties. Id. at 6. Rather, it makes money by collecting “a service fee from both the guest and the host, ” “determined as a percentage of the accommodation fee set solely by the host, ” which compensates Airbnb for “its publishing, listing, and booking services.” Id. The fee is collected “instantaneously” at the time of booking. Doc. No. 5 at 2. Airbnb has a subsidiary that exists “solely” to provide payment processing services for transactions occurring on its platform. Doc. No. 34 at 1.

         The bulk of the content in Airbnb listings is provided by the hosts. In particular, hosts provide unit locations and descriptions, set limits on lengths of stay, determine their own prices, and choose whether and how to disclose compliance with applicable state and local registration requirements or other similar regulations. Id. at 2-3; Doc. No. 5 at 4. “As a general matter, Airbnb does not review” a listing before it is published on the platform, nor does it edit the content of listings. Doc. No. 5 at 4-5. It does, however, provide “certain ancillary features” that can generate automated notifications in connection with listings. Doc. No. 34 at 2-3.

         Airbnb's Terms of Service, which all users must accept before posting listings or booking reservations, require users of the platform to identify and comply with applicable “laws, rules and regulations, ” including local registration or licensing requirements. Doc. No. 5 at 3, 5; Doc. No. 5-1 at 3-4. The Terms of Service also require users to indemnify Airbnb and its subsidiaries for any liability arising from a user's breach of the Terms of Service or “any laws [or] regulations.” Doc. No. 5-1 at 28. When signing up for Airbnb, users also must accept a Privacy Policy, Doc. No. 5 at 5, which provides:

Airbnb . . . may disclose your information, including personal information, to . . . governmental authorities . . . if and to the extent we are required or permitted to do so by law or if such disclosure is reasonably necessary . . . to comply with our legal obligations . . . . These disclosures may be necessary to comply with our legal obligations . . . .

Doc. No. 5-1 at 11-12. The Policy further states that Airbnb “may” notify users of requests for such disclosures, but it neither requires nor guarantees such notice. Id. at 12.

         In June 2018, the City enacted “Docket #0764, an Ordinance Allowing Short-Term Residential Rentals in the City of Boston, ” to “provide a framework to allow and regulate short-term rentals in the City through a registration process.” Doc. No. 21-1 at 2. The Ordinance limits the types of properties eligible for use as short-term rentals, restricts how many days per year a property may be used in that manner, requires registration of units that are to be used for that purpose, and specifies penalties for individuals operating short-term rentals in violation of the Ordinance. Id. at 7-16. Besides regulating operators of short-term rental units, the Ordinance also contains provisions applicable to a “Booking Agent, ” which the Ordinance defines as “[a]ny person or entity that facilitates reservations or collects payments for a Short-Term Rental on behalf of or for an Operator.” Id. at 7. The parties agree that Airbnb is a “Booking Agent” within the meaning of the Ordinance.

         This action focuses on three sections of the Ordinance pertaining to Booking Agents. The first is subsection 9-14.9(a), which specifies “Penalties” for “Offering an Ineligible Unit as a Short-Term Rental” (“the Penalties provision”): “[A]ny Booking Agent who accepts a fee for booking a unit as a Short-Term Rental, where such unit is not an eligible Residential Unit, shall be fined three hundred dollars ($300) per violation per day.”[2] Id. at 14. The second is subsection 9-14.10(b), which provides for “Enforcement [of the Ordinance] by [a] Booking Agent” (“the Enforcement provision”):

The Commissioner shall enter into agreements with Booking Agents for assistance in enforcing the provisions of this section, including but not limited to an agreement whereby the Booking Agent agrees to remove a listing from its platform for exceeding the maximum number of days a Residential Unit may be offered as a Short-Term Rental, whereby the Booking Agent agrees to remove a listing from its platform that is deemed ineligible for use as a Short-Term Rental under the provisions of this Ordinance, and whereby the Booking Agent agrees to prohibit a host from listing any listing without a valid registration number from the City.
Any Booking Agent that fails to enter into such agreements to actively prevent, remove or de-list any ineligible listings shall be prohibited from conducting business in the City.

Id. at 15. The final challenged provision is section 9-14.11, which relates to “Data Sharing” (“the Data provision”):

A Booking Agent shall provide to the City, on a monthly basis, an electronic report, in a format determined by the City, . . . of the listings maintained, authorized, facilitated or advertised by the Booking Agent within the City of Boston for the applicable reporting period. The report shall include a breakdown of where the listings are located, whether the listing is for a room or a whole unit, and shall include the number of nights each unit was reported as occupied during the applicable reporting period.

Id. at 15-16. The Ordinance took effect on January 1, 2019.

         Airbnb sued the City on November 13, 2018, seeking declarations that the challenged provisions of the Ordinance violate section 230 of the Communications Decency Act (“CDA”), 47 U.S.C. § 230; the Stored Communications Act (“SCA”), 18 U.S.C. § 2701 et seq.; and the Supremacy Clause and the First, Fourth, and Fourteenth Amendments to the United States Constitution (along with parallel provisions in the Massachusetts Declaration of Rights). Doc. No. 1. Airbnb also sought to preliminarily, then permanently, enjoin enforcement of the Ordinance against Booking Agents like itself. Doc. Nos. 1, 3.

         The City agreed not to enforce the Ordinance against Booking Agents pending resolution of this lawsuit. Doc. No. 31-4 at 3. Thereafter, it answered the complaint and opposed the motion for a preliminary injunction. Doc. No. 31. Airbnb replied, Doc. No. 32, [3] and both parties notified the Court of supplemental authorities they deemed relevant, Doc. Nos. 22, 36, 37. The Court heard argument on the motion on April 8, 2019 and took the matter under advisement.

         II. LEGAL STANDARDS

         The familiar standard governs Airbnb's motion for a preliminary injunction. A court assessing such a request “must consider: (i) the movant's likelihood of success on the merits of its claims; (ii) whether and to what extent the movant will suffer irreparable harm if the injunction is withheld; (iii) the balance of hardships as between the parties; and (iv) the effect, if any, that an injunction (or the withholding of one) may have on the public interest.” Corp. Techs., Inc. v. Harnett, 731 F.3d 6, 9 (1st Cir. 2013). Airbnb “bears the burden of establishing that these four factors weigh in its favor.” Esso Standard Oil Co. (P.R.) v. Monroig-Zayas, 445 F.3d 13, 18 (1st Cir. 2006). A “preliminary injunction is an extraordinary remedy never awarded as of right.” Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 24 (2008).

         Resolution of the most seriously contested portion of the pending motion turns on whether Airbnb is likely to succeed in its challenge to the Penalties provision under the CDA. Section 230 of the CDA is titled “Protection for private blocking and screening of offensive material.” The statute itself identifies five policies underlying it, including preserving a “vibrant and competitive free market” online “unfettered by Federal or State regulation, ” while removing “disincentives” for online companies to develop and implement tools to block and filter “objectionable or inappropriate online material.” § 230(b). In a subsection headed “Protection for ‘Good Samaritan' blocking and screening of offensive material, ” § 230 stipulates that “[n]o provider . . . of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” 47 U.S.C. § 230(c)(1). States are explicitly permitted to enforce their own laws which are “consistent with” § 230, but “[n]o cause of action may be brought and no liability may be imposed under any State or local law that is inconsistent with” it. § 230(e)(3).

         The First Circuit has explained that, in enacting § 230, “Congress sought to encourage websites to make efforts to screen content without fear of liability, ” and “to permit the continued development of the internet with minimal regulatory interference.” Jane Doe No. 1 v. Backpage.com, LLC, 817 F.3d 12, 19 (1st Cir. 2016); accord § 230(b). To these ends, § 230 “broadly” immunizes an entity like Airbnb from claims or theories of liability that “would treat [it] as the publisher or speaker of . . . information” provided by a third party. Universal Commc'n Sys., Inc. v. Lycos, Inc., 478 F.3d ...


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