Unreported / Non-Citable
Background
Clark County, Nevada, enacted a local ordinance requiring licenses to operate short-term rental properties. The Greater Las Vegas Short-Term Rental Association and a group of individual short-term rental operators sued the County, challenging the ordinance on constitutional grounds. The district court, presided over by Judge Miranda M. Du in the District of Nevada, granted a preliminary injunction in favor of the plaintiffs, enjoining Clark County from enforcing portions of the licensing ordinance.
The County's licensing portal for short-term rentals had opened for only a single window between 2022 and 2023. After that window closed, the County did not accept any new applications and did not finish processing the applications it had already received. Despite the nonfunctional licensing system, the County continued to enforce the license requirement, imposing steep fines and authorizing priority liens against properties operating without licenses.
Clark County appealed the preliminary injunction to the Ninth Circuit. The case was argued and submitted on September 14, 2026, in Pasadena, California, before a panel consisting of Circuit Judges R. Nelson and Desai, and District Judge Karen E. Schreier of the District of South Dakota, sitting by designation.
The Court’s Holding
The Ninth Circuit, reviewing for abuse of discretion, affirmed the district court's holding that the plaintiffs are entitled to a preliminary injunction under the Winter standard. The court found that plaintiffs are likely to succeed on the merits of their procedural due process claim because they demonstrated a protected property interest in leasing their residences on a short-term basis. Citing the Nevada Supreme Court's recognition of property owners' right to possess, use, and enjoy their property, as well as the Ninth Circuit's own precedent holding that the right of an owner to devote land to any legitimate use falls within constitutional protection, the court concluded that Clark County likely interfered with those interests without adequate procedural protections by failing to implement a functioning licensing system.
The court also agreed that plaintiffs would suffer irreparable harm absent an injunction and that an injunction serves the public interest. Violations of constitutional rights, including those protecting property interests, constitute irreparable harm. The ordinance's steep fines and authorization of priority liens could permanently damage plaintiffs' interests in their residential properties. The district court therefore did not abuse its discretion in granting preliminary injunctive relief.
However, the court held that the injunction's terms were unnecessarily broad. The injunction effectively authorized anyone in the County to operate unlicensed short-term rentals, including nonparties and those who had never applied for a license, which went beyond maintaining the status quo. The court remanded with instructions to narrow the injunction so that it provides plaintiffs with a meaningful opportunity to apply for licenses and have their applications processed in a reasonable time. The court suggested the district court could order the County to reopen the application portal, specify a processing timeframe, or enjoin enforcement against residents with pending applications, and noted the County's representation that it is now willing to reopen its portal and process applications if a narrower injunction is ordered.
Key Takeaways
- The Ninth Circuit affirmed that short-term rental operators have a constitutionally protected property interest in leasing their residences on a short-term basis, drawing on both Nevada state law and federal precedent.
- A municipality that requires licenses but fails to maintain a functioning system for obtaining those licenses likely violates procedural due process when it continues to enforce the licensing requirement.
- Preliminary injunctions must be tailored to maintain the status quo rather than provide relief broader than necessary, and an injunction that effectively authorizes unlicensed activity by nonparties exceeds that boundary.
- An appropriate remedy for a nonfunctional licensing system is an injunction requiring the government to provide a meaningful opportunity to apply and have applications processed, not an injunction that eliminates regulation entirely.
- If a government entity fails to comply with a narrower injunction requiring a functional licensing process, affected parties may seek contempt or other enforcement remedies.
Why It Matters
This decision reinforces that procedural due process protections apply to municipal licensing regimes for short-term rentals, a rapidly growing area of local regulation. Local governments that impose licensing requirements must ensure that application processes are actually functional and accessible; enforcing a licensing mandate while refusing to accept or process applications is constitutionally suspect.
The ruling also illustrates the Ninth Circuit's approach to tailoring preliminary injunctions in regulatory challenges. Even where plaintiffs demonstrate a strong likelihood of success on constitutional grounds, the scope of relief must be calibrated to the specific harm identified. Courts should aim to restore the position plaintiffs would have occupied had the government acted lawfully, rather than granting sweeping exemptions from regulation.