Airbnb, NYC Agree To Settle Customer Data Suit

By: 
Law360
Published on:
June 12, 2020
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The government of New York City agreed to revise an ordinance that requires the public collection of short-term rental company customer data in a settlement agreement announced Friday with Airbnb that would drop the company's suit against the local law.

Airbnb Inc. agreed to drop its challenge to the ordinance once the city government passes a change in a law that would require short-term rental platforms to report booking and property information on a frequent basis, but wouldn't require them to disclose customer data. The city agreed to not enforce the current ordinance and will have 120 days to pass the change in law before the agreement expires.

New York City Mayor Bill de Blasio said the agreement would help provide information to the government that can preserve affordable housing in the city, according to a statement.

Christopher Lehane, Airbnb's senior vice president for global public policy and communications, said the agreement achieves an "effective regulatory framework" to share company information with the city.

The short-term rental company will need to report quarterly on qualified hosts' property and personal information, the number of days their properties were rented and the payments they received, according to the proposed city law. The legislation would take effect 180 days after it's passed, and companies wouldn't be required to report any information until the law is enacted. Those hosts who only rent out their properties for an aggregate of four days or fewer in a quarter, or to only one or two people, would not need to report the information to the city, according to the proposed law.

Airbnb also agreed not to challenge the validity of the new law once it has passed, but the company did reserve the right to advocate for stricter privacy protections through public comments. The city also agreed to offer stronger customer protections to Airbnb if the government were to reach another agreement with a different short-term rental platform, according to the agreement.

A federal court granted a temporary stay in the case in February so that the company and city government could continue their work on the settlement.

In the suit, Airbnb and HomeAway, another short-term rental company, sought to strike down what they called an unconstitutional New York City ordinance requiring short-term rental platforms to give the city their customers' personal information. The ordinance requires all online short-term rental platforms to provide monthly reports detailing information about their customers, including names, addresses, phone numbers, details about each transaction and, in some cases, bank account and payment information. The purpose is to crack down on what the city says are illegal hotels that create housing shortages and drive up rent prices for local residents.

De Blasio signed it into law in 2018. Airbnb and HomeAway claimed the ordinance was unlawful under the Fourth Amendment, which protects the right "to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures." The platforms said that same tenet is also held by Article 1, Section 12 of the New York Constitution.

The platforms also said the ordinance violates the Stored Communications Act and the First Amendment by compelling them to inform platform users of a message — the ordinance — that they do not want to relay.

The court issued a preliminary injunction in early 2019 preventing the ordinance from taking effect. The ordinance runs contrary to both the Fourth Amendment and the corresponding section in the New York Constitution by requiring the companies to turn over the user information, the judge ruled.

In an email to Airbnb hosts, the company's Chief Strategy Officer Nathan Blecharczyk said that the proposed law in the agreement reflects much stronger confidentiality provisions than in the current city ordinance and will help safeguard infrequent hosts' information. The agreement is also a positive step toward securing further regulatory reform of short-term housing rentals in New York statewide, Blecharczyk said.

Representatives for the city didn't immediately respond to requests for further comment.

Airbnb is represented by Roberta A. Kaplan, John C. Quinn and Matthew J. Craig of Kaplan Hecker & Fink LLP and by Sharon L. Nelles and John McCarthy of Sullivan & Cromwell LLP.

HomeAway is represented by Kristin A. Linsley, Joshua D. Dick and Mylan L. Denerstein of Gibson Dunn & Crutcher LLP.

New York City is represented in-house by Karen Selvin and Carlos Alvarez.

The consolidated cases are Airbnb v. City of New York and HomeAway.com Inc. v. City of New York, case numbers 1:18-cv-07712 and 1:18-cv-07742, in the U.S. District Court for the Southern District of New York.

Read this article at Law360 here.

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