HomeAway goes to court over San Francisco’s ‘Airbnb law’
An old adage in the legal profession suggests: “When the facts are on your side, pound the facts. When the law is on your side, pound the law. When neither is on your side, pound the table.”
This week, HomeAway, a vacation-home rental site, filed a complaint in federal court alleging the city and county of San Francisco are in violation of the Commerce Clause of the U.S. Constitution because of a recently passed ordinance, slated to go into effect in February, which regulates short-term rentals of residential property.
HomeAway is vigorously pounding the table.
By invoking the Commerce Clause, HomeAway clings to a theory that San Francisco is discriminating against out-of-state interests by limiting the ability to list properties for sharing purposes to local residents. Even a cursory review of relevant legal precedent reveals that local land use decisions, particularly about zoning, are left almost entirely to the judgment of local authorities. Since economic rights receive a low level of constitutional deference, and because the nature of the regulation here is so modest, were the U.S. District Court of Northern California to find for HomeAway, it would be ploughing fresh constitutional soil.
The grist of HomeAway’s concern is actually totally unrelated to the Commerce Clause. Instead, it is that the new San Francisco law will have a deleterious impact on their business, while having a relatively minor impact on Airbnb’s business. Further, HomeAway maintains that the San Francisco legislation was crafted specifically with Airbnb in mind.
But even if it was, so long as political decision-making does not run afoul of the law – which, in this case, it clearly does not – it’s hard to see the basis for a legal complaint. If anything, HomeAway’s complaint ultimately is that the Board of Supervisors came to an ill-conceived policy conclusion.
This suit is a business decision wrapped in a legal delaying action. HomeAway was unable to exert the political influence necessary to shape public policy in such a way that its business model could be accommodated. Thus, instead of seeking to amend the legislation through the democratic process, HomeAway has opted to inflict pain through the litigation process.
Politically, the lawsuit’s optics may be favorable. HomeAway’s complaint details Airbnb’s political activity during the ordinance’s drafting process. While nothing that Airbnb did was illegal, the suit – which news outlets are seemingly compelled to take seriously – has created a wave of negative press. HomeAway, no doubt, hopes to create a critical mass of negative attention that it can focus and wield to attain its political objective.
Lost in the suit, and in the contest between HomeAway and Airbnb, is the ultimate policy goal that players in the sharing economy should keep in mind. Greater personal freedom, circumscribed where necessary by limited regulation, will encourage markets and foster the creation of wealth. Where opportunity is created and residents are left better off, policy makers will be more willing to listen.
Instead of banging the table in a jurisdiction interested in other priorities, HomeAway should build a case for its model that San Francisco will want to embrace.
