Coastal Prot. Alliance Inc. v. Airbnb, Inc.

• Docket Number: B317485
• Decision Date: 05 September 2023
• Citation: 95 Cal.App.5th 207,313 Cal.Rptr.3d 262
• Parties: COASTAL PROTECTION ALLIANCE INC., Plaintiff and Appellant, v. AIRBNB, INC., et al., Defendants and Respondents.
• Court: California Court of Appeals

95 Cal.App.5th 207

313 Cal.Rptr.3d 262

COASTAL PROTECTION ALLIANCE INC., Plaintiff and Appellant,

v.AIRBNB, INC., et al., Defendants and Respondents.

B317485

Court of Appeal, Second District, Division 3, California.

Filed September 5, 2023

Tucker Ellis, Michael C. Zellers, Los Angeles, Peter L. Choate, Los Angeles, Amanda Villalobos, Los Angeles, and Benjamin C. Sasse for Plaintiff and Appellant.

McDermott Will & Emery, Russell Hayman, Los Angeles, Jon S. Dean, Los Angeles, Jason D. Strabo, Los Angeles, and Sarah P. Hogarth for Defendants and Respondents.

HEIDEL, J.^*

INTRODUCTION

Airbnb, Inc. and Airbnb Payments, Inc.(collectively Airbnb) is an online marketplace that connects owners of short-term rentals (STRs) with renters seeking accommodations for 30 days or less.Among Airbnb's many rental listings are properties within California's coastal zone.The Coastal Protection Alliance (CPA) brought this action against Airbnb for violations of the Coastal Act, alleging that STRs in the coastal zone are "developments" that require a coastal development permit (CDP), and that Airbnb was directly and vicariously liable for allowing STR owners to list and rent unpermitted STRs on its website.

CPA appeals from a judgment following an order granting Airbnb's demurrer without leave to amend.We hold that STRs are not per se developments under the Coastal Act, and accordingly affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

I.Facts¹

CPA is a nonprofit corporation based in San Bernardino, California, that states its mission is to protect and preserve the California coast.

Airbnb owns and operates an online marketplace for STRs.The site works by connecting property owners, known as Member Hosts, with prospective guests seeking accommodations.Airbnb monetizes its service by charging the Member Hosts and their guests a fee based on a percentage of the cost of the STR.It also collects applicable taxes and manages remittances to local governments.

As relevant to this case, the Coastal Act defines a development as a "change in the density or intensity of use of land" and a "change in the intensity of use of water, or of access thereto."( Pub. Resources Code, § 30106.)²The gravamen of CPA's complaint is that STRs in the coastal zone, including those offered for rent on Airbnb's site, are developments under the Coastal Act that require a CDP.CPA alleges that "STRs increase the density and intensity of use of land in the Coastal Zone by increasing access to homes and residential investment properties by the guests who rent them and by increasing access to the coastline by such guests."CPA further alleges that "STRs ... increase the intensity of use of water and access thereto in the Coastal Zone because guests use water when they stay in STRs and have increased access to the coastline."

Thousands of STRs offered on the Airbnb marketplace are located within the coastal zone.Airbnb has neither applied for a CDP for any STR located in the coastal zone nor advised its Member Hosts of an obligation to do so.Airbnb also does not ensure that Member Hosts have procured a CDP prior to listing their property on the Airbnb website.CPA alleges that Airbnb "knows or should know that it and its Member Hosts are not complying with the CDP requirement under the Coastal Act and that any STR for which a CDP has not been obtained is illegal."CPA further alleges that by facilitating rentals of these STRs, Airbnb is engaging in development that requires a CDP.It also alleges that Airbnb, through its conduct and policies, has conspired with the Member Hosts to violate the Coastal Act, and has also formed a joint venture and agency relationship with the various Member Hosts.

CPA alleges these Coastal Act violations entitle it to declaratory and injunctive relief and render Airbnb liable for civil penalties.

II.Airbnb's Demurrer and Request for Judicial Notice

Airbnb demurred to the complaint, asserting that STRs are not per se developments, Airbnb did not engage in development by listing STRs in the coastal zone, and that even if STRs were developments it would not be vicariously liable for the Member Hosts’ failure to obtain CDPs.It also argued that the court should decline jurisdiction under the doctrine of primary jurisdiction.The trial court issued a tentative ruling indicating it would overrule the demurrer, held an initial hearing, and then continued the matter for further hearing.In the interim, Airbnb moved to file supplemental briefing and requested judicial notice of Coastal Commission materials.These materials included staff reports, later formally adopted by the Coastal Commission, which addressed proposed amendments to local coastal programs in the City of Trinidad and the City of Eureka(the Trinidad and Eureka Reports).In both instances the Coastal Commission adopted staff findings that determined that STRs were not developments that required a CDP.

On July 13, 2021, the court held a hearing, informed the parties that it was intending to invoke the primary jurisdiction doctrine and asked them to submit proposed questions to the Coastal Commission.On August 4, 2021, after it received the parties’ respective proposed questions, the court found that STRs are not developments and entered an order sustaining Airbnb's demurrer.The court also granted Airbnb's motion for judicial notice of the Trinidad and Eureka Reports, invoked the primary jurisdiction doctrine, and stayed the action pending referral to the Coastal Commission.

CPA moved to clarify the "purpose and scope" of the court's referral to the Coastal Commission in light of the court's conclusion STRs are not developments under the Coastal Act.After a hearing on the motion, the court withdrew its referral to the Coastal Commission and sustained the demurrer without leave to amend.CPA timely appealed.

DISCUSSION

I.Standard of Review

We review an order sustaining a demurrer de novo.( Centinela Freeman Emergency Medical Associates v. Health Net of California, Inc . (2016)1 Cal.5th 994, 1010, 209 Cal.Rptr.3d 280, 382 P.3d 1116.)"[W]e accept the truth of material facts properly pleaded in the operative complaint, but not contentions, deductions, or conclusions of fact or law.We may also consider matters subject to judicial notice.[Citation.]"( Yvanova v. New Century Mortgage Corp.(2016)62 Cal.4th 919, 924, 199 Cal.Rptr.3d 66, 365 P.3d 845.)When the trial court sustains a demurrer"without leave to amend, we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discretion and we affirm.[Citations.]The burden of proving such reasonable possibility is squarely on the plaintiff."( Blank v. Kirwan(1985)39 Cal.3d 311, 318, 216 Cal.Rptr. 718, 703 P.2d 58.)

II.The Coastal Act

"The Coastal Act of 1976 ... was enacted by the Legislature as a comprehensive scheme to govern land use planning for the entire coastal zone of California."( Yost v . Thomas(1984)36 Cal.3d 561, 565, 205 Cal.Rptr. 801, 685 P.2d 1152( Yost ).)In doing so, the Legislature found that " ‘ "the California coastal zone is a distinct and valuable natural resource of vital and enduring interest to all the people;" that "the permanent protection of the state's natural and scenic resources is a paramount concern;" that "it is necessary to protect the ecological balance of the coastal zone" and that "existing developed uses, and future developments that are carefully planned and developed consistent with the policies of this division, are essential to the economic and social well-being of the people of this state ...." ’ "( Pacific Palisades Bowl Mobile Estates, LLC v. City of Los Angeles(2012)55 Cal.4th 783, 793–794, 149 Cal.Rptr.3d 383, 288 P.3d 717( Pacific Palisades ).)The Coastal Act identifies its "basic goals" to include protecting the coast and maximizing public access to it.(§ 30001.5.)"We liberally construe the Act to achieve these ends."( Keen v. City of Manhattan Beach(2022)77 Cal.App.5th 142, 145, 292 Cal.Rptr.3d 366( Keen );§ 30009.)

Local Coastal Programs(LCPs )

"The Coastal Act expressly recognizes the need to ‘rely heavily’ on local government ‘[t]o achieve maximum responsiveness to local conditions, accountability, and public accessibility ....’ "( Pacific Palisades , supra , 55 Cal.4th at p. 794, 149 Cal.Rptr.3d 383, 288 P.3d 717;§ 30004, subd. (a).)As relevant here, it requires local governments to develop LCPs, which include "(a) land use plans, (b) zoning ordinances, [and](c) zoning district maps, ... which, when taken together, meet the requirements of, and implement the provisions and policies of, [the Coastal Act] at the local level."(§ 30108.6.)"If it conforms to the Act's policies, the Commission certifies the program.[Citations.]"( Keen , supra , 77 Cal.App.5th at p. 145, 292 Cal.Rptr.3d 366;see alsoYost , supra , 36 Cal.3d at p. 566, 205 Cal.Rptr. 801, 685 P.2d 1152.)"Once the California Coastal Commission certifies a local government's program, and all implementing actions become effective, the commission delegates authority over coastal development permits to the local government.[Citations.]"( Pacific Palisades , supra , 55 Cal.4th at p. 794, 149 Cal.Rptr.3d 383, 288 P.3d 717.)

Coastal Act's Definition of "Development"

Subject to narrow exceptions, any person "wishing to perform or undertake any development in the coastal zone ... shall obtain a coastal development permit" in addition to obtaining any other permit required by law.(§ 30600, subd. (a).)The Coastal Act defines " ‘[d]evelopment’ " to mean "on land, in or under water, the placement or erection of any solid material or structure; discharge or disposal of any dredged material or of any gaseous, liquid, solid, or thermal waste; grading, removing, dredging, mining, or extraction of any materials; change in the density or intensity of use of...