Short-Term Rentals Ordinance Challenge May Host New Parties
A challenge to Chicago’s
short-term rental regulations could continue after the Seventh Circuit held the
plaintiffs may need new parties to establish standing.
In 2016, the City of Chicago
passed a “Shared Housing Ordinance” in June 2016 to regulate short-term housing
arrangements like those offered through sites such as Airbnb. The Ordinance
requires interested hosts to register with the City and acquire a business
license before listing units for rent online.
Six individuals and “Keep Chicago
Livable,” an Illinois non-profit with the goal of educating Chicago hosts about
local home-sharing laws, challenged the constitutionality of the ordinance. The
case made its way to the Seventh Circuit, which vacated the rulings.
The Seventh
Circuit sent the case back to the district court
because there was no clear indication that any of the named plaintiffs have standing to challenge the Ordinance.
In order to establish standing, a plaintiff must demonstrate (1) an injury
in-fact; (2) that is fairly traceable to the defendant’s action; and (3)
capable of being redressed by a favorable decision from the court.
The Seventh Circuit concluded
that under this three-pronged test, it is unable to say with confidence that
any of the named individual plaintiffs have standing due to changes
in circumstances for each of the six individual plaintiffs. From the time of
the filing of their most recent complaint to the case on appeal, each of the
plaintiffs had either sold their property in Chicago or stopped using home
sharing sites like Airbnb to rent out their properties. As a result, the Court
found that since plaintiffs either no longer own property in the City, no
longer use home-sharing sites, or allege how out-of-town renters are inhibited
from visiting Chicago, none of the plaintiffs currently have standing to sue the City and challenge the Ordinance.
Similarly, the Seventh Circuit
found that Keep Chicago Livable had not alleged a sufficient injury to the organization itself that could be addressed by the Court. The Court further concluded that even if Keep Chicago
Livable brought suit on behalf of its members in a representative capacity, the
organization had not identified an individual plaintiff with standing to bring
any claim.
The Seventh Circuit indicated
that the lower court has substantial discretion to move forward with the proceedings,
including allowing new parties to sue that might have standing and
by allowing those plaintiffs to file an amended complaint. Finally, the Seventh Circuit
observed that if the district court determines a plaintiff does have
standing, the court should allow the plaintiff the opportunity to move forward with the case and a request that the Court issue a
preliminary injunction against the City's enforcement of the Ordinance. As a result, this challenge to Chicago’s short-term
rental regulations might continue with the addition of
new parties.
The Seventh Circuit’s opinion in Keep Chicago Livable v. City of Chicago
is available here.
Post authored by John Reding and
Daniel J. Bolin
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