Rosenblatt v. City of Santa Monica, No. 17-55879 (9th Cir. 2019)
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The Ninth Circuit affirmed the district court's dismissal of a putative class action against the city and city council, alleging that the city's short-term vacation rental ordinance violates the dormant Commerce Clause. The ordinance prohibits property rentals of 30 days or less with an exception for rentals where a primary resident remains in the dwelling.
The panel held that the complaint failed to allege a per se violation of the dormant Commerce Clause, because the ordinance did not directly regulate interstate commerce; the ordinance did not discriminate against interstate commerce; and the complaint did not plausibly allege that the ordinance unduly burdens interstate commerce through its incidental effects. Therefore, plaintiff failed to plausibly allege that the ordinance directly or indirectly discriminated against or burdened interstate commerce.
Court Description: Civil Rights. The panel affirmed the district court’s dismissal of a putative class action against the City of Santa Monica and Santa Monica City Council alleging that the City’s short- term vacation rental ordinance violates the dormant Commerce Clause. Santa Monica’s ordinance prohibits property rentals of 30 days or less with an exception for rentals where a primary resident remains in the dwelling. Plaintiff is a Santa Monica resident and homeowner who, prior to the passage of the ordinance, rented out her house on Airbnb. The panel first held that the ordinance is not a per se violation of the dormant Commerce Clause because it does not directly regulate interstate commerce. At most, the ordinance has an interstate effect because it makes travel lodging to Santa Monica less accessible, available and affordable. Moreover, the ordinance penalizes only conduct in Santa Monica, regardless of whether the visitors are in- state or out-of-state. The panel rejected plaintiff’s argument that the ordinance violates the dormant Commerce Clause by directly regulating booking and payment transactions that may occur entirely out-of-state. The panel held that the ordinance applies evenhandedly and does not directly restrain interstate commerce although it may regulate transactions with an interstate component. The panel further held that nothing in the ordinance suggested that its ROSENBLATT V. CITY OF SANTA MONICA 3 advertising ban was intended to have extraterritorial application. The panel held that the ordinance does not discriminate against interstate commerce by favoring in-state over out-of- state interests. The panel determined that Santa Monica’s ban on vacation rentals applies in the same manner to persons nationwide, including Santa Monica residents who may be interested in renting a vacation home from another resident. The panel further noted that the ordinance applies equally to renters and property owners from outside California, California residents outside of Santa Monica, and Santa Monica residents. The panel held that the complaint did not adequately allege that the ordinance increases the relative market share of local businesses or that it has a net negative effect on commerce outside of California. Finally, the panel held that the complaint failed to plausibly allege that the home-sharing exception obviously advantages Santa Monica residents at the expense of out-of-state homeowners. The panel held that the complaint failed to plausibly allege that the ordinance unduly burdens interstate commerce through its incidental effects. Because plaintiff failed to show a high burden on interstate commerce – and, at most, suggested some negligible burden on the local economy of Santa Monica – the complaint could not meet the standard established in Pike v. Bruce Church, Inc., 397 U.S. 137 (1970). Thus, the complaint’s allegations did not adequately demonstrate how the alleged burden on interstate commerce would clearly exceed the stated benefits of the ordinance. 4 ROSENBLATT V. CITY OF SANTA MONICA
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