Airbnb's web site for rooms to rent in New York City.
Airbnb’s web site for rooms to rent in New York City. ()

ALBANY – A judge on Tuesday quashed a subpoena from state Attorney General Eric Schneiderman in an investigation of the Airbnb lodging website for possible tax evasion and other violations in arranging short-term home rentals.

Acting Albany Supreme Court Justice Gerald Connolly (See Profile) ruled that the subpoena was overbroad.

The judge said the attorney general’s office conceded that there were limited circumstances in which Airbnb hosts could break the law—by renting their units more than three times in one year, for instance—but ruled that the subpoena made no attempt to limit its reach only to unlawful hosts.

“While petitioner bears the burden of demonstrating that the subpoena is overbroad, as petitioner argues, a plain reading of the subpoena in light of Multiple Dwelling Law §4 and the tax provisions and materials at issue meet such burden,” Connolly wrote in Airbnb v. Schneiderman, 5393-13. “The subpoena at issue, as drafted, seeks materials that are irrelevant to the inquiry at hand and accordingly, must be quashed.”

Connolly cited as precedent for his finding D’Alimonte v. Kuriansky, 144 AD2d 737 (1988), in which an Appellate Division, Third Department, panel said it could not “countenance a subpoena which seeks materials that clearly are irrelevant to the matter at hand.”

In most other respects, however, Connolly found the attorney general’s subpoena acceptable. He said Airbnb had failed to show that the subpoena would seek “confidential” or “private” information from its hosts or that complying would be an undue burden for Airbnb.

Connolly also found that Schneiderman’s office had met the factual predicate for issuing a subpoena by demonstrating that a “substantial number” of Airbnb hosts may be violating tax or multiple dwelling laws.

Schneiderman’s office issued the subpoena in October 2013 while investigating possible non-payment of New York City hotel occupancy taxes and of state and New York City taxes.

The attorney general’s office also expressed concern that Airbnb’s rental arrangements could be violating Multiple Dwelling Law provisions that prohibit the renting out of apartments in New York City for more than 30 days unless the owner also occupies the unit.

The Multiple Dwelling Law imposes other restrictions on the rental of non-owner-occupied dwellings.

Airbnb challenged the subpoena.

The San Francisco-based company argued that since the units it helps renters find and book through its Internet platform are owned by private individuals who make their own arrangements, it is not subject to New York City hotel room occupancy tax nor city or state sales taxes.

Connolly had said during arguments last month over the motion to quash that what concerned him was that the subpoenas would generate information that went well beyond what the attorney general needed to show Airbnb dwelling providers were violating state or city laws (NYLJ, April 23).

Roberta Kaplan and Maria Vulla, partners at Paul, Weiss, Rifkind, Wharton & Garrison represented Airbnb. Karla Sanchez, executive deputy attorney general, argued for Schneiderman’s office. Kaplan declined to comment.