A Los Angeles Superior Court judge has refused to let Airbnb off the hook in a high-profile lawsuit accusing the company of letting short-term rental prices skyrocket after the January 2025 wildfires, leaving thousands of displaced Angelenos paying top dollar when they were scrambling for a place to sleep. The ruling keeps the city’s civil case alive and forces the platform to confront those price gouging allegations in court instead of getting the lawsuit tossed before it really starts.
Judge Robert Broadbelt III rejected Airbnb’s attempt to dismiss the complaint at the outset, meaning claims tied to the company’s pricing tools and verification systems will move forward, according to Bloomberg Law. In a tentative order, the judge found the city had laid out enough specific facts to justify moving into discovery rather than granting an early exit.
What the city says
The lawsuit, filed by City Attorney Hydee Feldstein Soto in July 2025, alleges Airbnb allowed unlawful price spikes on at least 2,000 and potentially more than 3,000 listings in Pacific Palisades, Altadena and surrounding neighborhoods in the wake of the fires, according to the City Attorney’s office. Citing California’s Anti-Gouging Law (Penal Code §396), the city is asking for a permanent injunction, restitution for renters and civil penalties of up to $2,500 per alleged violation in case No. 25STCV21244.
Airbnb pushes back
Airbnb has denied the accusations and is pointing instead to its emergency relief work and public commitments to clamp down on opportunistic pricing. As reported by the Los Angeles Times, the company and its nonprofit arm say they funneled nearly $30 million into recovery efforts and handed out thousands of free housing vouchers to people displaced by the fires.
How pricing tools factor in
The city’s complaint zeroes in on Airbnb’s “Smart Pricing” feature, arguing that the algorithm-driven tool helped push nightly rates past the legal limit. Bloomberg Law reports that Airbnb shut off the feature days after state officials raised concerns. The company’s attorneys say hosts ultimately choose their own prices and insist that optional tools on the platform cannot be treated as Airbnb setting prices itself.
Enforcement in context
The Airbnb fight is one piece of a wider post-fire enforcement campaign. The city recently secured a $1.2 million settlement with furnished-rental company Blueground, and county officials say they received thousands of consumer complaints about abrupt rate hikes after the blaze, according to local reporting on a $1.2 million price gouging payout and county records. Taken together, the actions signal that prosecutors are treating disaster-related pricing as a top priority while fire survivors hunt for stable housing.
What happens next
With the judge declining to dismiss the case, the lawsuit now heads into discovery, where both sides will trade documents, emails and witness testimony before any trial date is set. Reuters summarized that next phase in its coverage of the City Attorney’s announcement, noting that what comes out in discovery could shape how courts treat platform liability tied to algorithmic pricing when states of emergency are in effect.
Legal implications
If the city ultimately wins, Airbnb could be hit with an injunction, restitution to affected renters and civil penalties calculated per listing under state law. The complaint also leans on California’s Unfair Competition Law and asks the court to block the platform from enabling illegal price increases in future emergencies, according to the City Attorney’s office. Any criminal penalties would be handled separately by other prosecutors under a different standard of proof.
