Santa Monica Ordinance Threatens Future of Online Platforms, NetChoice ‘Friend of the Court’ Brief To 9th Circuit Says

Fines and Jail Time for Website Employees

if Users Fail to Register with City

Washington, DC, April 25, 2018 – A Santa Monica ordinance, which forces online platforms to independently investigate and ensure every person with a listing on its website complies with the city’s licensing requirements, could be a death blow to web-based home sharing, ridesharing and a host of other online platforms, NetChoice and former Congressman Chris Cox (R-CA) argued in a in a joint “friend of the court” brief filed today in the case of HomeAway and Airbnb v. City of Santa Monica.

Cox, author of a federal law that makes such ordinances illegal, and NetChoice urged the U.S. Court of Appeals for the Ninth Circuit to invalidate the ordinance.

HomeAway and Airbnb require all persons listing a rental on their websites to acknowledge they are following all local laws. However, Santa Monica would hold the online platforms liable even if they were misled by property owners. The penalty?  Employees at Airbnb and HomeAway could face fines and jail time.

The Cox-NetChoice brief explains how Santa Monica Ordinance 2535CCS violates federal law — Section 230 of the Communications Decency Act (1998).

“The Santa Monica ordinance effectively transfers each homeowner’s legal responsibility to the internet platform. This clearly violates Section 230,” said Chris Cox, author of Section 230 of the Communications Decency Act. “Sites such as Airbnb and HomeAway are matchmakers, bringing together homeowners and visitors.  Their service is national in scope.  When a family in Ohio plans a vacation in California or Florida or Maine, they expect Internet listings in these venues and more.  And that is what the Internet delivers:  it has allowed millions of homeowners across the country to list on these sites while millions of potential visitors have gained immediate, free access to those listings.

“Requiring the websites to review each of these listings one at a time,” Cox added, “will eliminate the very benefits consumers expect from the Internet.  It is the homeowners’ responsibility to ensure they comply with all local rules and ordinances.  Making the Internet intermediary liable for the website users’ legal responsibilities is what Section 230 rightly prohibits,” Cox concluded.

Section 230 protects online platforms from legal liability for user-generated content. Often termed “the most important internet law you’ve never heard of,” it is the law behind “Internet 2.0”. Without it, websites like Yelp, eBay, Facebook, and YouTube would not have gotten off the ground.

The impact of the Santa Monica ordinance could be widespread, setting a legal precedent that would undermine ecommerce.

“This is the slipperiest of slopes that Santa Monica is climbing. Do we hold clothing retailers responsible for manufacturers who may lie to them about child labor practices or mislead them about their fabrics?” said Steve DelBianco, president and CEO of NetChoice. “If Santa Monica wins, online platforms will face new costs and liability risks endangering an industry that has enabled millions of Americans to earn extra income from their homes.”

“The City seems to want to Make Bulletin Boards Great Again, by saddling marketplaces with new criminal liability,” DelBianco added.

Below are two excerpts from the brief:

  • “The Ordinance requires Airbnb and HomeAway to review each individual posting on its website and check it against “a Registry of licensed home-sharing operators in the City.” Defendant’s Opp. to Preliminary Injunction at 14-15.  This is exactly what Section 230 prohibits.” p.12
  • “If further proof were needed that the Ordinance requires a one-at-a-time review of every online listing, it may be found in the criminal sanctions for noncompliance. Not only are they harsh ― the penalties for an Airbnb or HomeAway employee include half a year in jail ― but they are specifically imposed on a per-violation basis. §6.20.100(a).  Each rental by an unlicensed website user constitutes a separate violation.” P.14
1 reply
  1. Dale Carlson
    Dale Carlson says:

    Wrong, wrong, wrong. Under Santa Monica’s ordinance, Airbnb, HomeAway and any other platform can list and rent whatever they want. They just can’t collect booking fees on illegal rentals. Are you really defending their “right” to profit from aiding and abetting illegal activity??

    Reply

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