HomeAway.com, Inc. v. City of Santa Monica

Issue: Whether Santa Monica's short-term rental ordinance — which prohibited hosting platforms from processing booking transactions for unregistered properties — was preempted by § 230(e)(3) or violated the First Amendment.

Santa Monica enacted Ordinance 2535 to regulate the short-term vacation rental market, which had proliferated rapidly through platforms like HomeAway.com and Airbnb. The city, covering only about eight square miles with 90,000 residents but as many as 500,000 weekend visitors, found that the explosion of short-term rentals was removing residential housing stock from the market and disrupting its neighborhoods. The ordinance imposed four obligations on hosting platforms directly: (1) collecting and remitting Transient Occupancy Taxes; (2) regularly disclosing listing and booking information to the city; (3) refraining from processing any booking transaction for a property not registered on the city's short-term rental registry; and (4) refraining from collecting fees for ancillary services prohibited by the ordinance. HomeAway and Airbnb filed suit, arguing the ordinance was preempted by § 230(e)(3) because it required them to monitor third-party content and treat them as publishers of user-generated listings. The Ninth Circuit affirmed dismissal in an opinion by Judge Nguyen. The court held that the ordinance did not treat the platforms as publishers of third-party content. The key obligation — refraining from processing booking transactions for unregistered properties — regulated the platforms' own transactional conduct, not their editorial decisions about user-generated listing content. The only monitoring required related to incoming transaction requests, not to the content of listings visible to the public. The ordinance regulated conduct, not speech, and therefore was not preempted by § 230.

An important § 230(e)(3) preemption decision establishing that state and local laws imposing transactional or conduct-based obligations on platforms are not preempted by § 230, even if compliance requires the platform to check information related to user listings. Demonstrates the limits of § 230 preemption as a blanket shield against generally applicable regulatory obligations — the statute preempts liability for publishing third-party content, but not regulation of a platform's own commercial conduct.