Airbnb Invokes CDA Defense Against New York Law That Concerns Some

How a court will view Airbnb's argument that the Communications Decency Act protects it from a New York law that could hold the online property rental company liable for users who place ads for short-term rentals is difficult to foresee and might have significant consequences for the sharing economy industry, some experts said in interviews this week. Two weeks ago, the home-sharing company filed a complaint in U.S. District Court for the Southern District of New York against the state and New York City invoking Section 230 of the 20-year-old CDA. That law was designed to shield website operators from lawsuits arising out of third-party content so it would allow freedom of expression and innovation to flourish on the internet.

“It’s a serious argument but it’s hard to predict how the court’s going to react,” Santa Clara University School of Law professor Eric Goldman said. “A lot will depend on whether the court views Airbnb as the retailer who happens to outsource fulfillment to third-party vendors. Or the court views Airbnb as a marketplace that simply enables buyers and sellers to find each other.” While he thinks Airbnb is a marketplace, Goldman said it can also own property and the company provides a variety of services in the market such as advertising and promotion, payment and a trust and safety mechanism in case something goes wrong -- what a retailer does.

New York Gov. Andrew Cuomo (D) signed a law Oct. 21 that would fine residents who advertise apartment rentals for 30 days or less. Airbnb sued that day, claiming the CDA pre-empts the law, which it claimed also violated the First Amendment rights of New Yorkers. (The New York law does allow people to rent out apartments or rooms as long as residents also are staying there.) When the company filed the lawsuit, Attorney General Eric Schneiderman (D) said in a statement that the law would “help prevent the continued proliferation of illegal, unregulated hotels.” He said the company "can’t have it both ways: it must either police illegal activity on its own site -- or government will act to protect New Yorkers, as the State just did."

The New York law is "ambiguous" because it “does not expressly state whether websites and other intermediaries, such as online platforms like Airbnb that host third-party listings, ‘advertise’ within the meaning of the law and thus are subject to liability,” said the company's complaint. Airbnb said it expected the state to say the law applies to such hosting platforms and argued that CDA “expressly preempts state and local laws that treat a website ‘as the publisher or speaker of any information provided by another information content provider.'” Center for Democracy & Technology Freedom, Security and Technology Project Deputy Director Gabe Rottman said the issue is "to what extent the law either creates legal exposure for Airbnb, or requires it to affirmatively screen content." That such laws are becoming a trend is a concern, he said.

"Section 230 isn’t there to provide a commercial advantage for Airbnb," Rottman said, in defending the company's use. "Section 230 is about drawing clear lines around when a website can be responsible for content posted by a third party. That means that websites can remove offensive content, for instance, without fear that they’ll be sued, and vice versa -- they can’t be sued for offensive content posted by a third party. That’s the fundamental issue with laws targeting Airbnb, or any other gig economy company or startup." CDT wrote a September blog post explaining an amicus brief it filed with others in Airbnb's challenge to a San Francisco ordinance. Airbnb is also fighting a law in Santa Monica, California.

Ross Schulman, senior policy counsel with New America's Open Technology Institute, said Section 230 enables an "amazing online creative space." For example, he said there's no way YouTube could hire enough people to look through for defamatory content or liability the "phenomenal number" of videos uploaded every minute. The section shields the company from such liabilities. He said the Airbnb case is interesting because people find some aspects of housing rentals important and worth protecting when it comes to discrimination. But "we've always tried to protect publishers from any sort of user-generated content because the overall effect is a net good," said Schulman, who didn't know the details in the New York case. Airbnb isn't quite a purely creative platform, so there's "some disconnect there that the court will have to look at," he said.

Goldman said Section 230 doesn't create "a lawless, no man's land" as some judges have said because internet companies are subject to state income taxes and wage and hour laws "and no one has ever questioned that." When government tells companies how they can handle third-party information, then it becomes a real problem, he said.

"Airbnb's battles with the cities is the tip of the iceberg for a tsunami of state, county, city and other local regulation of internet actors," Goldman said. "We’re seeing just the front edge of a whole bunch of efforts on the part of every regulator in the country thinking they should tell the internet how it should operate." In the first 20 years of CDA's existence, he said, there was little activity, but since sharing economy companies are engaged in fairly local activity like lodging and transportation, regulators are paying closer attention than before. He said it's possible more lawsuits may follow.