A federal appeals court dealt Airbnb and HomeAway a major blow in their extended battle with Santa Monica over the city’s restrictive home-sharing rules.
The decision by the 9th Circuit Court allows Santa Monica to continue to hold home-sharing platforms liable for listings that violate its ordinance, according to the Los Angeles Times. The ordinance has caused a sharp drop in Airbnb listings in the popular seaside city. Santa Monica’s ordinance requires hosts to hold a city-issued license, and bars them from renting out their homes when they are not present. Hosts who violate the ordinance are subject to $500 fines per violation.
Airbnb did not say what its plans are moving forward, but it could ask the U.S. Supreme Court to review the decision.
The decision comes a few months after Los Angeles officials finally approved long-proposed home-sharing rules. The new rules could tamper activity in the city, which makes up the bulk of Airbnb’s biggest California market.
Airbnb and Expedia home-sharing sued Santa Monica in 2016 over its ordinance, claiming it violated the U.S. Communications Decency Act of 1996, and the parties have been in court since.
That federal law protects online platforms from being held liable for the activities of their users. It is a key statute Airbnb has used against cities and companies that want to hold it responsible for illegal listings. The appeals court ruled that Santa Monica’s ordinance does not violate that statute.