A federal appeals court has refused to step in, for now, into the dispute over whether the city of Chicago has trampled the rights of homeowners and others wishing to share their homes with guests through Airbnb and similar platforms, denying the request to slap a hold on a city ordinance designed to regulate such short-term rental activity in Chicago.

On April 27, a three-justice panel of the U.S. Seventh Circuit Court of Appeals denied the request by plaintiffs group, Keep Chicago Livable, to slap an injunction on the city, to block City Hall from enforcing the new rules.

The appeals panel did not post an explanation of the denial, which effectively upheld the ruling of U.S. District Judge Sara Ellis, who in March had similarly swatted aside the request from Keep Chicago Livable to enjoin the city ordinance.

Keep Chicago Livable had filed its challenge to the city ordinance in late 2016, asserting the city’s rules violated the constitutional rights of those seeking to rent homes, condominiums, apartments or rooms through Airbnb and similar web platforms.

Plaintiffs asserted they had already been harassed by neighbors, police, city employees, condo associations and landlords, among others, and feared their plight would grow worse, should they be required under city rules to publicly identify themselves and register the properties.

They also alleged the ordinance’s requirements would violate their private property rights and their freedoms of speech, association and due process.

Supporters of the city rules, which were approved in the summer of 2016, said they were needed to enable the city to better police short-term rentals in the city’s neighborhoods and high rises, particularly in response to a rising tide of complaints from neighbors, who claimed short-term tenants disrupted their neighborhoods and buildings, and threatened public safety.

City hotel operators had also complained, claiming Airbnb and similar sites allowed building owners to essentially run small hotel operations, and sidestep city hotel regulations.

Shortly before Ellis’ ruling, the city altered the ordinance in response to the litigation, particularly removing a provision which had asserted the power to force home-sharers to grant city officials access to records, including guests’ personal information, without a warrant.

In her ruling, Ellis had noted throughout her opinion her doubts concerning the plaintiffs’ ability to either demonstrate how the ordinance trespasses their constitutional rights, or how they would suffer irreparable harm, should the city rules be allowed to take effect. At that time, the judge said she believed the “balance of harms” leaned in favor of the city, which, she said, had a legitimate interest in “putting into place a more orderly system for the home sharing industry.”

The judge, in her March ruling, likened the city home-sharing and short-term rental rules to those placed on street vendors.

“The City may lawfully subject home sharing to regulation without implicating the First Amendment because the (ordinance) regulates conduct … instead of speech,” Judge Ellis wrote in her March 13 opinion.

Keep Chicago Livable responded to the judge’s ruling in a motion filed with the Seventh Circuit on April 13.

In asking the Seventh Circuit to slap an injunction on the city ordinance, the plaintiffs said they believed Judge Ellis had erred in failing to consider the impacts of various elements of the city rules. They pointed particularly to the city’s publication of a “Prohibited Buildings List,” which bars short-term rentals in certain buildings, and which plaintiffs asserted would infringe their “freedom of intimate and expression association” and their rights to equal protection.

“Plaintiffs – including five new plaintiffs some of whose claims did not become known or ripe until after the original complaint was filed and/or until after the City published the Prohibited Buildings List and amended the Shared Housing Ordinance – have sought to enjoin the Shared Housing Ordinance on grounds that have never been briefed or argued before the District Court,” the plaintiffs wrote.

Further, plaintiffs again asserted the ordinance would violate their First Amendment rights, by restricting their ability to even list their homes or rooms available for short-term rental or sharing.

“If a website can be deemed to be nonspeech simply because the website contains a button that a guest can click or interact with in order to effect a consumer transaction, then no advertisement on the internet would be protected under the First Amendment,” Keep Chicago Livable wrote in its motion to the Seventh Circuit.

“It is one thing to regulate a street vendor’s sales activities at the point of sale; it is entirely different to prohibit that same street vendor from maintaining a website or a Yelp review page discussing or promoting the street vendor’s business, under the guise of merely regulating business.”

Named plaintiffs in the action include Benjamin Thomas Wolf, Susan Maller, Danielle McCarron, Antoinette Wonsey and Monica Wolf, as well as a plaintiff identified only as John Doe.

Keep Chicago Livable is represented in the action by attorney Shorge Sato, of Shoken Legal, of Chicago.

   

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Organizations in this Story

Shoken Legal Ltd.
125 South Clark Street
Chicago, IL 60603

Airbnb
888 Brannan St
San Francisco, CA 94103

City of Chicago

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U.S. District Court for the Northern District of Illinois
219 S Dearborn St
Chicago, IL 60604

U.S. Court of Appeals for the Seventh Circuit
219 S Dearborn St
Chicago, IL 60604

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