The PLAN Act Proposes to Amend Section 230 to “Protect”…Landlords and Hotel Chains?

This is my third time in 2019 blogging proposed Section 230 amendments. The other two bills, from Sen. Hawley and Rep. Gosar, propose structural reforms to Section 230–to mandate political neutrality and ban any content moderation not required by law, respectively. In contrast, Rep. Case’s Protecting Local Authority and Neighborhoods Act (the PLAN Act, HR 4232), like FOSTA, proposes a new victim-specific exception to Section 230. We expected victims’ advocacy groups would request Section 230 exceptions in FOSTA’s wake, but the identity of the “victims” here is startling. FOSTA sought to benefit sex trafficking victims (though FOSTA almost certainly didn’t do that). With the PLAN Act, the victims seeking Section 230(c)(1) relief are…landlords and hotel chains???

What the Bill Does

The bill has two main parts.

Part 1 proposes that Section 230(c)(1) would not apply to civil claims based on state law (but apparently not federal law…?) when the defendant: (1) “facilitated the lease or rental of real property in a circumstance in which a law or contractual agreement restricts such lease or rental,” and (2) fails to cure the violation within 30 days of written notice.

Part 2 proposes that Section 230(c)(1) would not “prevent any State or unit of local government from enforcing a law that restricts any provider of an interactive computer service from facilitating the lease or rental of real property.”

With respect to both parts, Section 230(c)(2)(A) would remain available to Internet services. However, as I explain here, that’s probably irrelevant.

Implications

The bill packs a lot of complexity into a small number of words. Some of its implications:

Squelching Unauthorized Subleases. The PLAN Act would overturn the La Park La Brea v. Airbnb ruling, which held that Airbnb wasn’t liable if tenants violate their lease agreements by “subleasing” their premises on Airbnb. In its place, Internet services facilitating real estate leases could preserve Section 230(c)(1) immunity only by following a notice-and-takedown scheme. Thus, if a landlord claimed that an Airbnb listing violated its lease, Airbnb would have to remove the listing in 30 days or lose Section 230(c)(1) immunity.

Although the bill targets Airbnb and VRBO, it reaches far beyond them. It applies to leases of any length, not just short-term leases; and it applies to any Internet service that “facilitates” real estate leases. The bill doesn’t define the term “facilitate”–another problem it shares with FOSTA–and I don’t think “facilitate” means only booking transactions. “Facilitate” likely includes any advertising of real estate leases. If so, the bill applies to all Internet services that run ads for real estate leases, including Craigslist, Facebook, online newspapers, and many more. Those services would need to follow a notice-and-takedown scheme for complaints by landlords (and entities like homeowners’ associations), rather than enjoy Section 230(c)(1)’s current categorical immunity.

All notice-based liability schemes predictably will be gamed, and this bill doesn’t address those risks.

For example, unlike 17 USC 512(c)(3), the bill does not define what constitutes a “notice.” Landlords might need to submit notices on a listing-by-listing basis, or perhaps landlords can send a single opt-out notice with permanent effect (i.e., notice-and-staydown). For example, a big landlord like La Park La Brea might send Airbnb a blanket notice that all future listings of the landlord’s property are restricted. I can’t tell if the bill drafters would view that outcome as a feature or a bug.

Furthermore, the bill doesn’t contain any deterrents against bogus or overreaching notices. Anyone (a rival vendor on Airbnb, a vigilante, a prankster) could send bogus removal notices without any direct consequences under the bill.

Extending HomeAway v. Santa Monica. Part 2 would codify and extend the Ninth Circuit’s ruling in HomeAway v. Santa Monica (and echoed by Airbnb v. Boston). HomeAway held that Section 230(c)(1) does not apply to local regulations on booked transactions. The bill’s “facilitate” language would further allow local regulations of pre-booking promotions and advertising (which HomeAway says are protected by Section 230(c)(1)). Removing Section 230(c)(1)’s protection for pre-booking promotions may not matter much to Airbnb; if a local government can regulate the transaction, it functionally regulates the listings that precede the transaction (my main objection to the HomeAway ruling). However, this distinction matters a lot for Craigslist and all other advertising platforms that would potentially face local regulation without Section 230(c)(1)’s protection for the first time. (There would still be First Amendment and other constitutional limits, but those aren’t the same).

We don’t know yet just how crazy local regulations of online leasing services will get. The HomeAway opinion is too new to gauge its full impact. We do know that, per HomeAway, local governments can require online leasing marketplaces to (1) confirm that its vendors have up-to-date local licenses; (2) collect taxes from vendors; and (3) turn over information about the vendors, including potentially private information about them. What additional regulations of online leasing activity might be coming? Thousands of local governments will conduct their own regulatory experiments, so the mind boggles.

However, not all local governments would want to exercise their new-found discretion. For example, local governments have diverse views about online short-term leasing marketplaces like Airbnb:

• Some local governments would love to ban them outright–which would be OK under the PLAN Act.
• Other local governments want to limit the potential adverse effects of having long-term housing stock converted into short-term housing or the traffic, noise, and safety issues potentially generated by short-term rentals.
• Other local governments don’t care about online short-term leases so long as they can tax it.
• Yet other local governments view such online marketplaces as a net positive because they help bring more tourists to the community, put more money into the hands of local property owners, and give property owners an incentive to invest in their properties to make them more attractive to short-term tenants.

Historically, Section 230(c)(1) has blocked local government regulation of third-party content online, establishing a uniform national standard that fostered the emergence of services like Airbnb and Craigslist. In theory, removing Section 230(c)(1) will allow for local regulatory diversity. In practice, I think the inevitable regulatory thicket of local laws will make it too complex and expensive for any Internet service to accept ads for real estate leasing. In other words, we’ll once again reach a national equilibrium, but the new national standard will be the elimination of the entire ad category online. If so, local communities that were OK with (or wanted more efficient) real estate leasing markets will not get that benefit.

Why do I think a regulatory tsunami is inevitable? Local regulations will be driven by rent-seeking competitors–especially hotel chains wanting to shut down the competitive alternatives created by short-term leases. (Mom-and-pop hotels also favor this, but they lack the financial resources and sophistication to drive regulatory change). By lifting Section 230(c)(1)’s “braking” function on hotel chains’ rent-seeking through local regulation, the HomeAway ruling and the PLAN Act will accelerate the creation of a category-ending regulatory thicket.

Personal Injury Lawsuits. Though the bill isn’t designed to empower personal injury lawsuits against Internet services facilitating real estate leases, Part 1 of the bill doesn’t expressly preclude them. A short- or long-term tenant would need to (1) show the lease was done in violation of a law or contract, (2) send a notice of the violation, and (3) sue only if the defendant doesn’t “cure” (whatever that means). I’m not sure how a victim could sue for a past injury given the notice-and-cure precondition. However, because the bill lifts Section 230(c)(1)’s immunity, plaintiffs surely will consider the possibilities.

Conclusion

I think Section 230 advocates would more vigorously oppose the PLAN Act if the HomeAway ruling weren’t in place. That ruling already jeopardizes online leasing marketplaces and spurs hotel chain rent-seeking, so this bill packs less punch than it otherwise might. (Of course, Section 230 advocates would prefer to reverse HomeAway, but that’s outside the Overton window). Still, the PLAN Act extends HomeAway in at least three ways:

• it reduces Section 230(c)(1) for all online advertising platforms, which should be devastating to that category. For example, I assume Craigslist will close its real estate leasing categories in response to the PLAN Act.
• It gives landlords the ability to force removals of unwanted ads and marketplace listings.
• It might open up new claims for personal injury victims.

Mostly, I can’t figure out why Congress would spend time working on this bill instead of the millions of other social ills it should be prioritizing. Given how the PLAN Act principally benefits hotel chains and landlords, the whole thing feels swampy.