In an opinion today, Judge Engelmayer prelminarily enjoined New York City’s new ordinance requiring homesharing platforms to share data about hosts and guests to the Mayor’s Office of Special Enforcement (OSE), adopted to help enforce a law prohibiting short term rentals in certain “multiple dwelling” buildings. (See our prior coverage here.)
He concluded that the Fourth Amendment applied to the compelled production of the data, and that the ordinance was overly broad:
By all appearances . . . the Ordinance is devoid of any tailoring. On the contrary, it appears to be the functional equivalent of a legislative edict mandating that OSE issue an identical subpoena to every covered booking service operating in New York City, every month starting in February 2019 and extending into perpetuity, calling for production of the prescribed data as to all New York City users. In contrast to a tailored subpoena, the Ordinance applies across-the-board to all short-term listings in New York City. It does so regardless whether there is any factual basis whatsoever to suspect that any particular listing, or user, or building, or complex, at issue is in violation of the Multiple Dwelling Laws
Judge Engelmayer also emphasized that an “attempt by a municipality in an era before electronic data storage to compel an entire industry monthly to copy and produce its records as to all local customers would have been unthinkable under the Fourth Amendment,” and would have further problematic implications today:
A ruling upholding the Ordinance as reasonable would invite municipalities to make similar demands on e-commerce companies, whether by legislation or subpoena, for the routinized production to investigative agencies of broad-ranging records as to all users or customers. It would invite such productions so as to permit regulators to troll these records for potential violations of law, even as to customers as to which there had been no basis theretofore to suspect any violation of law.
Existing Fourth Amendment law does not afford a charter for such a wholesale regulatory appropriation of a company’s user database. And the implications of upholding the Ordinance give pause, as just a few hypotheticals illustrate. By the City’s logic, a City Council presumably could also compel (1) all online auction services monthly to produce all records of sales by New York City residents, on the premise that such records could assist in finding sellers who evaded capital gain taxes on sales of collectibles; (2) all medical providers monthly to produce all patient records for care rendered in New York City, on the premise that such records could assist in finding instances in which users engaged in up-coding and other health-care fraud; and (3) all credit card companies monthly to produce all records of expenditures in New York restaurants, on the premise that such records could assist in identifying instances in which commercial income was not reported to tax authorities.