Since 2015, San Francisco, California, has attempted to regulate the sharing economy by allowing short-term rentals under certain conditions. These conditions include requirements that the host register the premises with the city, and also that the host demonstrate proof of liability insurance, compliance with local codes, and payment of taxes. The city later revised the ordinance to prohibit listing of short-term rentals on sites such as Airbnb without prior city registration. The latter prohibition would impose potential liability on Airbnb, HomeAway, and other short-term rental websites that post listings without prior city registration.

In June 2016, Airbnb and HomeAway filed a lawsuit against San Francisco. The city responded in August 2016 with a revised ordinance that rescinded the prohibition on publishing a rental listing, but instead made it a misdemeanor to charge fees for booking services with respect to an unregistered short-term rental unit. Last week, the federal district court for Northern California denied the plaintiffs’ motion for preliminary injunction.

While Airbnb’s lawsuit contained other challenges, it included a challenge that the ordinance in question was a content based and unconstitutional restriction on speech. Specifically, Airbnb alleged that the ordinance restricted “advertisements for unlawfully registered rentals,” which amount to content bias. In reviewing Airbnb’s request for a preliminary injunction, the district court found that the ordinance did not restrict expressive activity, single out a specific speaker, or suppress speech. The court found that the restriction only restricted conduct, not speech, and therefore there was no First Amendment violation. According to the court, even if the ordinance was a restriction on speech, the speech was commercial in nature and that the restriction withstood scrutiny under the four-part Central Hudson test because the ordinance restricted unlawful speech.

Airbnb, Inc. v. City and County of San Francisco, No. 3:16-CV-03615-JD, slip op., 2016 WL 6599821 (Nov. 8, 2016).