LA Confidential: Court Finds Turo (and other marketplaces) Not Protected by Section 230

Poyner Spruill LLP

Poyner Spruill LLP

Turo is an Airbnb service for cars. Technically, it is a peer-to-peer car rental marketplace. It does not control the terms of the car rental. But it does bring owners and renters together.

Cities have viewed Turo as an unregulated car rental service, much as they consider Airbnb a rogue hotel. Boston shut down Turo earlier. Pressed by Los Angeles, Turo filed a declaratory judgment action. It petitioned the court to hold that it was complying with the necessary laws.

Los Angeles counterclaimed. It alleged, among other things, trespass, and violation of the California unlawful and deceptive trade practice law. Turo argued that the Los Angeles counterclaims held Turo liable for publishing user generated content. This violated Section 230. Section 230(c) states that an interactive computer service provider will not be treated as the publisher of any material provided by a user.

Turo framed the Los Angeles counterclaims as trying to impose liability on an interactive computer service provider (itself) for user actions. The users had made their cars available in Los Angeles. It argued Section 230 applied. It was an interactive computer service provider. The material was provided by its users. It could not be held liable under Section 230.

In Turo v. City of Los Angeles, 2020 WL 3422262 (C.D. Cal., June 19, 2020), the court rejected this argument. The court held that Los Angeles was not seeking to publish Turo as a publisher. It was imposing liability on Turo for facilitating unregulated car rentals. For that reason, Section 230 provided no shield.

The court noted that Section 230 liability turned on the defendant’s role, not its identity. And it found, Inc. v. City of Santa Monica, 918 F.3d 676 (9th Cir. 2019) controlled. In HomeAway, the Ninth Circuit held that peer-to-peer home rental platform services were not shielded from a registration ordinance by Section 230.

The same principle applied in Turo. Section 230 immunity was unavailable because Los Angeles did not seek to penalize Turo for content. It was acting against a transaction processor. It noted that other courts had found Section 230 inapplicable to platform services geared exclusively to serving as a digital marketplace.

Moreover, the nature of the car rental business enabled Turo to geofence Los Angeles. The court did not address the problems that could arise when other platforms confront contradictory local regulations. Navigating perpetually evolving regulations would give entrenched major players such as Uber a major advantage.

The larger question is the role of peer-to-peer marketplaces. eBay is the highest profile service. But others such as Etsy have carved a niche for themselves. The Turo decision suggests that the country must make a choice. It must provide statutory protection for peer-to-peer marketplaces. Or it must choose to let them wither. Either way, Section 230 is not the answer.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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