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No Suit for You, Says Judge in NYC Airbnb Case

15 May, 2019

By: Mary Helen Sprecher

No suit for you! Planners recommending that individuals and teams use Airbnb and other sharing economy platforms when attending or participating in sports events in New York City can breathe easier, now that a judge has tossed a suit brought against the home-sharing site by a real estate brokerage trying to prove illegal competition.

A proposed class action lawsuit brought by a Manhattan real estate broker was rejected by a New York state judge. The suit, the second to be brought by brokerage Parker Madison Partners (the first came in 2017), alleged the home-sharing site illegally and deceptively competed in the city’s rental market.

And just as with the first case, the judge was having none of it.

In the first case, the judge ruled the suit had no grounds because it could not show actual injury being done to the plaintiff. (The suit alleged Airbnb was operating real estate brokerage services in New York without the licenses mandated by the New York Real Property Law.)

And the second case obviously went no better for the brokerage, with Parker Madison Partners’ allegations being blocked by the principle of “collateral estoppel,” which bars parties from relitigating issues that have already been decided in another proceeding, New York Supreme Court Judge Saliann Scarpulla said, tossing the suit.

Legalese aside, it’s yet another victory this year for Airbnb in hotel-heavy Manhattan. According to Vox, on January 3, a federal judge blocked a New York law that would have expanded the city’s ability to crack down on Airbnb and other short-term listing sites. The Wall Street Journal reported that the law, which the City Council passed unanimously in July and would have gone into effect in February, required Airbnb and similar websites to provide city officials with information on every short-term listing in the city, including hosts’ addresses and identities, in order to crack down on those that violate New York’s short-term rental laws.

Airbnb and another listing site, Homeaway, challenged the law, claiming in a joint lawsuit against the city that it violated hosts’ Fourth Amendment right against illegal searches. Judge Paul Engelmayer of the US District Court in Manhattan agreed — and his ruling is a decisive victory for Airbnb.

At the heart of the issue behind the two lawsuits is the ongoing question of whether, by using the so-called ‘sharing economy,’ Airbnb hosts are simply using their own space to make ends meet – or whether they are bona fide rental agents.

City officials claim the city’s Airbnb listings are dominated by landlords who convert apartments into illegal hotels and, in the process, contribute to the city’s ongoing housing shortage. Airbnb, meanwhile, contends that the city is partnering with the hotel industry to unfairly target regular New Yorkers.

The challenges continue, however. A week after the information disclosure court case was blocked, New York City brought another suit, this one alleging that a group of real estate brokers were renting out apartments in 35 local buildings, claiming them as private residences and therefore eligible to be Airbnb properties.

The sharing economy’s permeating into the sports business industry has been undeniable. In 2016, Airbnb kicked the door down when it officially made its U.S. debut in the sports event planning world, as the title sponsor of the 2015 Airbnb Brooklyn Half Marathon. And unsurprisingly, the website for the event not only listed information on registration but on hosting runners and finding accommodations, as well as on a full complement of Airbnb-sponsored events leading up to the race. Even before that, at the 2014 FIFA World Cup, Airbnb generated $40 million for local residents when more than 120,000 people stayed in more than 18,000 Airbnb homes in Rio de Janeiro alone. And while the platform is seen as a disruptor, Airbnb has noted its willingness to work with planners, as well as CVBs and sports commissions.

Many event owns have also noted that while they are able to provide information on local hotels, their clientele often seeks out the sharing economy when traditional rooms become unavailable. In fact, the Minto U.S. OPEN Pickleball Championships Powered by Margaritaville organizers have noted that platforms such as Vacation Rentals By Owner (VRBO) is a popular source of lodging in Naples, Florida, the site of the event.

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