Another Collision of Housing Regulations and Online Innovation–SF Housing Rights Committee v. HomeAway

This is another lawsuit over short-term housing rentals in San Francisco. You’ve been watching the litigation over the San Francisco regulation (Section 41A.5(g)) requiring “hosts” (short-term landlords) to register with the city, limiting the number of days that a unit can be offered, and compelling Airbnb and its competitors (including HomeAway) to help enforce those rules. Airbnb’s challenge to the SF regulation failed in court and then Airbnb settled. That settlement left the district court opinion, and most likely SF”s regulation, in place indefinitely.

Today I’n blogging about a different lawsuit. The Housing Rights Council of SF sued HomeAway for violating other parts of SF’s regulations, plus some common law claims. This lawsuit failed. While that’s good news for HomeAway, Airbnb and others, it may be relatively inconsequential due to the persistence of the newer SF regulation. Still, it’s an interesting opinion–especially because the court rules for HomeAway without mentioning Section 230 once…!

Several of the asserted regulations only apply to a person who owns or has posessory interest in the property and thus has the right to rent the unit. HomeAway doesn’t have this right (presumably it provides “booking services” to people who have such rights, though the phrase “booking services” also doesn’t appear in the opinion). The plaintiff alleged that HomeAway had the requisite possessory interest because it handled the cleaning services for its hosts’ units, including key management for the cleaners. The court responds that having access to the premises isn’t the same as having the right to rent the premises. The court continues:

if that type of nonpossessory, tangential involvement could be construed as the act of renting or offering to rent units, the net of entanglement would cover those providing the cleaning services, financial institutions processing rent payments, and utility companies. Indeed, HRC’s logic would also extend to newspapers, periodicals and Web sites such as Craigslist that might “facilitate” short term rentals in San Francisco through publishing advertisements, among other service providers.

Undeterred, the plaintiff alleged that HomeAway “aided and abetted” regulatory violations by the hosts. The court rejects the attempt to graft a common law doctrine onto municipal regulations, and it again cites the overexpansive implications of the argument.

Other claims failed too. HomeAway didn’t create a breach of the implied covenant of quiet enjoyment (in favor of other tenants) because the covenant only applies to landlords, not third parties. A public nuisance claim failed in part because HomeAway didn’t cause any of the complained-about behavior (the hosts’ customers did); nor is a duty to avoid creating nuisances implied to HomeAway because HomeAway doesn’t have any property interest.

This case reminded me of the Fair Housing Councils v. litigation, another example of a housing advocacy group trying to extend civil rights to an innovative new online service for housing. On the one hand, civil rights principles cut across all technologies and business models; on the other hand, overexpannsive applications of those principles can suppress innovation by locking in business practices and exposing innovators to ruinous lawsuits. Both this and the lawsuits may be examples of the latter.

Case citation: Housing Rights Committee of San Francisco v. HomeAway, Inc., 2017 WL 2730028 (Cal. App. Ct. June 26, 2017)