A federal judge found that a constitutional challenge brought by a 75-year-old Manhattan hotel against a state law passed in 2016 banning the advertisement of short-term rentals in New York City, known as the Airbnb law, may proceed.
The ruling by U.S. District Judge Alvin Hellerstein of the Southern District of New York comes in one of four pending cases challenging laws prohibiting the use and advertisement of short-term rentals, which center around a group of buildings on Manhattan’s Upper West Side that the New York City government says are being used as illegal hotels.
The ban on advertisements is a provision of the New York Multiple Dwelling Law, which prohibits renting out New York City apartments for less than 30 days, effectively outlawing the home-sharing service in the city.
Hellerstein partially denied the city’s motion to dismiss a constitutional challenge by the owner of the the Broadway Hotel & Hostel, a 126-room hotel on Manhattan’s Upper West Side, finding that the law is not vague on its face, but preserving the argument that it is unconstitutional as it applied to the owner of the Broadway Hotel.
According to Hellerstein’s ruling, the city didn’t put up a fight as to whether the law is unconstitutional when applied to the plaintiff.
In a joint statement forwarded through a spokesman, John Gardiner of Skadden, Arps, Slate, Meagher & Flom and Ronald Rosenberg of Rosenberg Calica & Birney, co-lead counsels for the property owner, said they are pleased with the ruling.
“We look forward to discovery proceeding quickly and establishing on summary judgment or at trial that the city’s Airbnb law as applied is unconstitutional,” the attorneys said.
Assistant Corporation Counsel Emily Stitelman of the city’s Law Department appeared for the city in the case.
“The court upheld the validity of the advertising ban, and found illegal short-term rental advertisements are not constitutionally protected speech,” said Law Department spokesman Nicholas Paolucci in an email. “The city will continue to defend the remaining claims.”
For its part, Airbnb, which has just been hit with a new local law requiring it to hand over the names and addresses of its hosts to the Mayor’s Office of Special Enforcement, is not a party to the constitutional challenge.
After Gov. Andrew Cuomo signed the listing ban into law, Airbnb brought its own constitutional challenge against it in the Southern District.
But Airbnb dropped the suit several months later as part of a settlement agreement in which the city agreed not to impose $7,500 per-listing fines on the company.
Meantime, the Broadway Hotel, as well as two other hotels in the area, the Marrakech and the Royal Park, were swept up in the Airbnb crackdown.
According to the suit filed in the Southern District by Helms Realty, which owns the Broadway Hotel and the other Upper West Side properties and which is controlled by hotelier Hank Freid, the buildings were converted in the 1940s to “old-law tenement, single-room occupancy.”
But the city, which has hit Freid with steep fines over the past several years for using the buildings as hotels, argues that the buildings fall under the class A single-room occupancy category and thus cannot be used for transient stays.
The Broadway Hotel, the subject of the federal litigation before Hellerstein, is challenging the constitutionality of the listing law.
As for other litigation concerning Freid’s properties, the hotelier is also challenging the constitutionality of the Multiple Dwellings Law in a suit filed in Manhattan Supreme Court. In a second suit, the city has gone on the offensive against Freid, filing in the same court for a preliminary injunction against the hotelier and seeking civil penalties and punitive damages.
In the third suit, a hearing officer found that the buildings weren’t being used illegally, which the city appealed to the ECB. The ECB affirmed the officer, and the property owner wants the ECB decision to be the law of the land for all city agencies.
Manhattan Supreme Court Justice James D’Auguste presides over all three state court cases.
The clash between the city and Freid may have wide-ranging effects for housing in New York City, which has long struggled with the provision of available affordable housing.
Manhattan Borough President Gale Brewer, State Sen. Liz Krueger and State Assemblyman Richard Gottfried have teamed up with Mobilization for Justice, a legal service provider for low-income New Yorkers, on an amicus brief in one of the cases, calling on D’Auguste to grant the city’s injunction against Freid, and arguing that using class A dwellings as illegal hotels have eroded the quality of life for New York City tenants and chipped away at the city’s affordable housing stock.