Key Takeaways
- A California judge tentatively rejected Airbnb’s motion to dismiss the LA wildfire price gouging lawsuit
- The suit centers on Airbnb’s Smart Pricing tool and whether the platform bears liability for emergency-period price hikes
- A final ruling has not yet been issued
A California court dealt Airbnb a significant setback this week, as a judge tentatively refused to toss out a price gouging lawsuit filed by the City of Los Angeles over rental price hikes during the January 2025 wildfires.
Last week, Judge Robert Broadbelt III tentatively rejected Airbnb’s bid for dismissal, according to Bloomberg Law.
The judge has not yet issued a final ruling after hearing arguments from both sides in Los Angeles County Superior Court.
Inside Los Angeles’ lawsuit against Airbnb
Los Angeles sued on behalf of the “People of California” in July 2025, alleging Airbnb illegally inflated rental prices in the wake of the Palisades and Eaton fires that ripped through Southern California.
The city accused Airbnb of unfair competition and violations of emergency-period pricing regulations that prohibit inflating prices by more than 10% during a declared emergency, affecting at least 2,000 LA properties.
Governor Gavin Newsom declared a state of emergency in Los Angeles on January 7, triggering the state’s anti-gouging law.
The Southern California wildfires killed at least 30 people and damaged more than 16,000 structures.
A significant amount of damage came from the Palisades Fire in Pacific Palisades and the Eaton Fire in Altadena.
Related: San Francisco may extend STR subsidies for homeless families
At the center of the city’s case is Airbnb’s “Smart Pricing” tool, which the company says adjusts nightly listing prices based on demand — a feature Airbnb only disabled days after the fires began following a request from California Attorney General Rob Bonta.
The lawsuit alleged that the delayed response was an acknowledgment that the tool caused the illegal high prices.
Meanwhile, Airbnb argued that its third-party hosts were solely responsible for setting their own prices, insulating the company from liability.
“Hosts are solely responsible for setting prices, and do so independently,” the company’s motion to dismiss said.
The city is requesting that the court prohibit Airbnb from price gouging and engaging in unfair competition, plus potential monetary relief.
Broadbelt’s final ruling will determine whether the case proceeds to full discovery and trial.
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