Federal judge blocks NYC Airbnb disclosure law

Airbnb argued the new law violates the Constitution.

Airbnb supporters and detractors at a City Council hearing in 2015.

Airbnb supporters and detractors at a City Council hearing in 2015. William Alatriste for the New York City Council

Airbnb celebrated a banner 2018 in New York, boasting its role in helping to grow Western New York and rural upstate regions as tourist destinations, and now, in the early days of 2019, the short-term rental company has already seen its first victory of the new year. On Thursday, a federal judge granted a preliminary injunction to Airbnb in its lawsuit against the New York City Council over a law that would have required Airbnb and other short-term rental companies to disclose details about hosts and the units they rent that was set to take effect in February.

The move throws a wrench in city and statewide efforts to curb practices that critics say cut into the availability of affordable housing in New York City. City Councilwoman Carlina Rivera, a sponsor of the bill, said that while some New Yorkers use Airbnb simply to make ends meet, many are landlords taking rent-regulated units off the housing market by renting them at higher prices through Airbnb or its competitors like HomeAway, which also sued the city over the law.

When the City Council passed the disclosure bill unanimously and Mayor Bill de Blasio signed it into law over the summer, proponents considered it a way to add transparency and accountability to Airbnb’s more than 50,000 New York City listings, cracking down on those that don’t comply with state or city law.

But Thursday’s decision suggests that the fight to regulate tech giants like Airbnb will be more contentious than previously thought. The city having access to renters’ names and the addresses of rental units – as the City Council law would require – may not seem like an extraordinary overreach. After all, individuals are required to register similar information with the state when they do something like apply for a driver’s license, and any hotels operating within the city have to provide even more information. But in the U.S. District Court in Manhattan, Judge Paul Engelmayer granted Airbnb’s request for an injunction based on the fact that it would likely violate the Fourth Amendment of the U.S. Constitution. Unlike applying for a driver’s license or registering a hotel, in which individuals disclose their own information, the law would put the burden on Airbnb to turn over troves of data about its hosts.

“The city has not cited any decision suggesting that the governmental appropriation of private business records on such a scale, unsupported by individualized suspicion or any tailored justification, qualifies as a reasonable search and seizure,” Engelmayer wrote in the ruling.

Rivera, the bill’s sponsor, did not immediately respond to a request for comment.

The preliminary injunction gives both Airbnb and city lawyers more time to gather evidence before a final decision is made, but the ruling represents an initial victory for Airbnb and other home-share companies.

“Today’s decision by the court to grant a preliminary injunction demonstrates what Airbnb has long been saying - all Americans (including businesses) have a right to privacy in their records,” Robbie Kaplan, an attorney representing Airbnb in the lawsuit, said in a statement. “No government can force a company to simply turn over its entire hard drive every month without any form of precompliance review. Judge Engelmayer’s cogent and comprehensive opinion takes old world concepts which inspired the founders to enact the Fourth Amendment in the first place and applies them to today’s modern, high-tech world.”

Lawmakers do face a challenge in regulating “today’s modern, high-tech world,” and not just at the city level. Assemblywoman Linda Rosenthal introduced a similar bill to the City Council law which would require Airbnb to disclose hosts’ information, and it was backed by the New York Hotel and Motel Trades Council. And while Rosenthal’s legislation was already facing roadblocks – including a competing Airbnb-backed bill from Assemblyman Joseph Lentol that would focus on regulations like limiting the number of listings renters can have in the city and barring hosts with repeated city or state violations – Thursday’s decision does not bode well for Rosenthal’s bill advancing in the new session.

Still, this doesn’t mean the end of the discussion for Big Tech regulation. For Airbnb, and for tech companies in general, legislation is almost certainly forthcoming. Julie Samuels, executive director of the tech network Tech:NYC, praised Judge Engelmayer’s decision without ignoring the need for regulation. “Today’s ruling creates a welcome pause in the homesharing debate, and proves a point many already knew: that the existing law has flaws, and should be discussed further,” Samuels said in a statement. “Judge Engelmayer’s ruling gives us time to revisit the law, offering stakeholders an opportunity to have a positive conversation about crafting more sensible, 21st century rules.”

In December, Rosenthal told City & State that she intends to continue advancing legislation to hold short-term rental companies to stricter standards in the new session. “Airbnb is basically stealing units of housing that have now become places for tourists to rent rather than permanent New Yorkers,” Rosenthal said at the time. “With Airbnb’s expansion and continued disregard of the law, our efforts and my efforts have just increased because there’s a lot to do to make sure that we keep these units for regular New Yorkers.”

If the fate of the City Council’s Airbnb legislation is any indication, those efforts will be an uphill battle.