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Tuesday, August 20, 2019

Vacation rental company HomeAway.com alleges Chicago ordinance gives Airbnb advantage

By Elizabeth Alt | Jun 6, 2017

CHICAGO (Legal Newsline) – HomeAway.com Inc., an online vacation rentals company, has filed suit against the Chicago Department of Business Affairs and Consumer Protection over an ordinance it claims gives preference to competitor Airbnb and violates the First and 14th amendments.

HomeAway is part of the Expedia Inc. family and was established in 2005 as an online marketplace for people to list, search and book short-term and vacation housing accommodations. HomeAway filed the suit on May 22 in the U.S District Court for Northern Illinois, Eastern Division claiming that the "deeply flawed law" threatens fines that are based on categories "that cannot meaningfully be distinguished from one another," after months of attempting to engage the department to find a resolution.

The city’s 58-page ordinance went into effect March 14 and seeks to impose more regulations on home-sharing sites. Among those regulations are both websites and consumers choosing the correct category, providing the city with reports and operating with proper licenses. If these are not met, they could be fined up to $3,000 per listing, per day.

Those wishing to rent or list a property must choose from the categories “vacation rentals” or “shared housing units," which are functionally identical in the language of the ordinance, making it difficult for a homeowner to decide to proceed with the compliance method for one versus the other.

HomeAway alleges that the ordinance also gives preferential treatment to competitor Airbnb, founded in 2008. The city announced that it considered Airbnb to be an “intermediary,” as that term is defined in the ordinance, and HomeAway to be an “advertising platform." 

HomeAway claims this was done without providing explanation or guidance for these classifications, and that nothing in the ordinance itself makes a distinction between them. Yet, the ordinance seeks to impose different restrictions and requirements on websites based on that distinction, thus allowing Airbnb to gain a significant and unjustified competitive advantage, which could be potentially devastating for HomeAway, it alleges.

In addition to allegedly limiting free speech by imposing regulations on the websites’ speech, HomeAway claims the language violates both parties’ Fourth Amendment rights by attempting to force HomeAway to disclose private consumer information. Airbnb worked with Chicago to implement a system in place that automatically tracks and sends information to the government.

HomeAway is represented by Gibson, Dunn & Crutcher LLP in San Francisco and by MartinSirott LLC in Chicago.

District Court for the Northern District of Illinois Eastern Division case number 1:17-cv-03784

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Eastern Division of the Northern District of Illinois