When prohibiting or reducing “harmful” economic conduct proves either politically unpalatable or otherwise unachievable, governmental regulators often target speech about the conduct as a convenient alternative. Rather than ban the sale of tobacco or sugary drinks, for instance, federal, state, and local governments have imposed restrictions on advertising and other promotional speech. Unable to generate support for a second Prohibition, temperance proponents have attempted to chill alcohol consumption through speech limits, such as proscribing disclosure of alcohol-by-volume percentage on beer labels and even censoring ads for happy hours. In 2016, the so-called sharing economy became the government’s latest target regulating conduct by proxy. Thankfully, online short-term rental platforms like Airbnb are fighting back with First Amendment challenges.
Airbnb, with a market cap of approximately $30 billion, is the nation’s most successful facilitator of short-term rentals. Rather than offering such rentals itself, Airbnb maintains an online platform through which “hosts” and “guests” connect, an integral part of which is the advertising of available rental property. The company collects a service fee from successful rental agreements. It explicitly urges hosts and guests to comply with all local laws regarding rentals. Airbnb does not screen or review each listing, though it does remove listings that propose illegal transactions if alerted to their existence.
Some states and municipalities, including New York and San Francisco, limit individuals’ ability to offer their residences for short-term rentals. In 2010, New York adopted a law which, with some exemptions, prohibits the rental of “multiple dwellings” for less than 30 days. San Francisco, which had banned all “tourist or transient” short-term rentals in 1981, passed an ordinance in 2014 liberalizing such rentals on the condition that residence-owning renters register with the city.
New York and San Francisco have struggled with enforcement of their short-term rental laws. This year, both governments have turned their regulatory attention to Airbnb and other rental facilitators, adopting amendments to their laws which criminalize the publication of non-compliant listings. These amendments coercively deputize Airbnb to enforce state and city law, treading on the First Amendment rights of Airbnb and their consumers. The restrictions target published listings based on their content, an approach that is presumptively unconstitutional. Airbnb might be forced to reject or remove lawful listings if the company cannot definitively determine they are fully compliant, and such review could also deter hosts from posting future rentals. The laws’ chilling effect on speech strikes at the heart of Airbnb’s business.
Airbnb included a First Amendment claim in its preliminary injunction motion filed October 26 in the Southern District of New York. The company argues that the listing ban affects more speech than is necessary to directly advance New York’s purported interest in protecting affordable housing. Rather than targeting Airbnb’s commercial speech, New York could have put more effort into enforcing its rental ban against the property renters. As the Supreme Court wrote in Thompson v. Western States Medical Center case, speech limits must be “a necessary as opposed to merely convenient means of achieving [the government’s] interests.”
Airbnb filed its motion for preliminary injunction against San Francisco in the Northern District of California on June 27 that also claimed a First Amendment violation. Rather than oppose the motion, San Francisco’s Board of Supervisors asked for and received a stay so it could alter the challenged ordinance. The August 2 amendment shifted the focus of the ordinance from published listings to Airbnb’s acceptance of payment for “providing booking services for the rental of an unregistered unit.” The city asserted in its opposition to the injunction motion that Airbnb’s First Amendment arguments were no longer applicable, because the ordinance as amended regulates the conduct of collecting a fee.
Despite Airbnb’s well-reasoned demand that it look past San Francisco’s legislative “gamesmanship,” the court bought into the city’s switcheroo, ruling that the amended ordinance did not implicate the First Amendment. The court’s analysis on this point is deeply flawed. It assessed whether the ordinance targeted “conduct with a ‘significant expressive element'” and concluded its provisions were “directed at specific business transactions and ‘not to any message.'” The court also argued that the ordinance’s impact on speech was at most “purely incidental” and that the city “was not motivated by a desire to suppress speech.”
The Board of Supervisors unquestionably intended to suppress speech with its initial ordinance. The ordinance targeted Airbnb and its publication of unregistered rental listings because the city had little success in pursuing non-compliant renters directly. Faced with a constitutional challenge, the board shifted the ordinance’s focus to the booking-service fee. In order to generate the payment of that fee, however, the board surely understood that Airbnb first needed to publish a rental listing. The desire to suppress speech thus arguably remained the board’s true motivation. The speech aspect of the listing process was far from “purely incidental;” it was essential. The published listing was the very “significant expressive element” the court required in order to judge the ordinance under the First Amendment.
New York and San Francisco won’t be the only First Amendment battles Airbnb and other sharing-economy entities will have to fight. States and municipalities with ambitious regulatory agendas but limited budgets will always prefer offloading enforcement responsibility to private entities. The targeting of speech that facilitates the regulated conduct—a vital aspect of a sharing-type business—will always be one of the most convenient, cost-effective option. But as noted above, the Constitution dictates that speech limits be the absolute last option when government wishes to achieve a policy goal. Airbnb is to be applauded for investing financial resources in these ongoing constitutional challenges. Perhaps it will achieve enough victories so that other new businesses with less capital won’t have to make the choice between grudging compliance or a legal challenge.
Also published by Forbes.com on WLF’s contributor site.