Airbnb fired back at Anaheim less than a month after the City Council voted to ban short-term rental and threatened to fine the home-sharing websites for illegal listings. Anaheim’s City Council gave the 363 permitted short-term rental operators in the city 18 months to stop operating.

Airbnb’s lawsuit says the Anaheim’s ban violates the Communications Decency Act and the First Amendment. The action is the latest legal salvo for the company, which filed a lawsuit against San Francisco earlier this year for similar reasons. The lawsuit targets Anaheim’s stricter regulations that aim to limit the impacts of short-term rentals which are set to take effect very soon. In mid-August, Anaheim’s regulations will require Airbnb, VRBO and HomeAway to remove unpermitted listings or face fines. The fines for unpermitted short-term rentals will start $500 for each individual violation with a cap of $2,000.

Airbnb’s lawyers say that federal law prohibits states or local governments from imposing this kind of requirements, according to a letter sent to local operators on Thursday explaining why the company is suing the city.

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Specifically, Airbnb cites the 1996 Communications Decency Act which prohibits state and local governments from holding websites liable for content and actions of their users. According to Airbnb, the ordinance also violates the First Amendment because it imposes a content-based restriction on rental listings, which is a form of free speech according to Airbnb’s arguments.

An Airbnb spokesperson said that Anaheim’s ban violates federal law and stifles the economic benefits that short-term rentals bring. The company says that a lawsuit is not the best step to take, but it has no choice. A spokesperson for the city of Anaheim did not comment on the regulations or Airbnb’s pending lawsuit.

Anaheim is just the most recent city to try to put the brakes on short-term rental sites, their operators and residents, which critics say is driving up the price of rent and is disrupting neighborhood. But Anaheim’s regulatory push could have unintended consequences.

Anaheim hosts 20 million visitors each year, many of whom travel to Disneyland, and Airbnb is a popular alternative to expensive hotels among the throngs of visitors. But local residents have complained loudly to City Council that the short-term renters are disturbing once-quiet neighborhoods. Residents report loud all-night parties, trash on the streets and not enough parking spaces to house them all.

Airbnb’s lawsuit filed in the US District Court in Santa Ana asks the court to overturn the proposed regulations and penalties and to get the city to pay the company’s legal fees. Airbnb’s not opposed to regulation: the company is practically begging to be taxed in Massachusetts, New Jersey and other jurisdictions in order to legitimize its business. But Anaheim’s outright ban could be a step too far, and marks the start of a messy legal battle between short-term rental sites, their operators and the city.

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