Antitrust Law Daily Wrap Up, ADVERTISING—4th Cir.: Suit challenging ordinance over digital billboards dismissed, (Jun 24, 2024)

By Brian Craig, J.D.

The case belongs in state court and not federal court.

In a clash between an outdoor billboard company and a county in South Carolina over an ordinance that prohibits proposed electronic billboards with LED lights, the federal appeals court has affirmed the decision by the federal court in South Carolina to dismiss the lawsuit. The U.S. Court of Appeals for the Fourth Circuit held that the case belongs in South Carolina state court rather than federal court because the billboards are plainly related to the historic state interest in land-use planning and development. The Fourth Circuit generally agreed with the district court’s analysis but held that the jurisdictional dismissals should be without prejudice, meaning that the billboard company can still sue in state court (Adams Outdoor Advertising Ltd. Partnership v. Beaufort County, No. 23-1242 (4th Cir. June 21, 2024)).

Adams Outdoor Advertising is a company that constructs, manages, designs, and repairs billboards. The billboard company was issued a criminal citation from Beaufort County in South Carolina for performing structural repairs on two old billboards without seeking authorization. The billboard company then filed applications requesting permits to construct new commercial billboards with digital displays, each of which was denied. In response, the billboard company filed suit in federal district court challenging the ordinance regulating billboards.

The district court in South Carolina dismissed all the claims with prejudice. The district court held that the claims related to the criminal citation were dismissed under the Younger abstention doctrine, and those related to the permit denials were dismissed for lack of jurisdiction. The billboard company appealed. The Fourth Circuit generally agreed with the district court’s analysis but held that the jurisdictional dismissals should be without prejudice rather than with prejudice, which means that the billboard can sue in state court.

Abstention. The appeals court held that the claims related to the criminal citation were properly dismissed under the Younger abstention doctrine. This case belongs in South Carolina state court rather than federal court. The Younger abstention doctrine counsels that federal courts should abstain from adjudicating a case if doing so would interfere in a pending state criminal proceeding in which the complaining litigant could adequately press their cause. Here, the billboards are plainly related to the historic state interest in land-use planning and development. Furthermore, the state courts themselves are wrestling with many of the state and federal questions here.

Mootness. The Fourth Circuit agreed with the district court that certain challenges under an older ordinance are moot. The panel found the billboard company was trying to challenge provisions that no longer exist and that were never used against it. Thus, the district court properly dismissed those challenges that are moot based on lack of jurisdiction.

Standing. The appeals court also agreed that the billboard company lacks standing over certain challenges of the sign provisions and thus the federal court lacks jurisdiction. The billboard company sought to challenge as overbroad sign provisions that do not affect its business. Even overbreadth challenges do not stretch standing to encompass those who have suffered no injury at all. Here, the billboard company has not suffered any injury. Therefore, the panel affirmed the district court’s dismissal for lack of jurisdiction.

Dismissal without prejudice. While the Fourth Circuit generally agreed with the district court’s analysis, the panel ruled that the claims challenging the ordinance based on lack of federal court jurisdiction should be without prejudice rather than with prejudice. The appeals court remanded the case to the district court with instructions that the district court make clear that its jurisdictional dismissals are dismissals without prejudice. The appeals court ruled that the case belongs in South Carolina state court rather than federal court.

Other Adams Outdoor litigation. In another recent litigation, Adams Outdoor brought suit against the Town of Mount Pleasant, South Carolina to challenge its ordinance against digital billboards. The federal district court in that case ruled in July 2023 that the South Carolina constitution did not provide any additional protection to the billboard company. There, the court held that: (1) the billboard lacked standing for certain claims; (2) intermediate scrutiny was appropriate in assessing the constitutionality of the ordinance; and (3) the as-applied challenge failed because the ordinance was applied evenly and was proper under intermediate scrutiny,

The Case is No. 23-1242.

Judge: Wilkinson, J.

Attorneys: Jeffrey Scott Tibbals (Bybee & Tibbals, LLC) for Adams Outdoor Advertising Ltd. Partnership. Scott Dean Bergthold (Law Office of Scott D. Bergthold, PLLC) for Beaufort County, Eric Greenway and Hillary Austin.

Companies: Adams Outdoor Advertising Ltd. Partnership

Cases: Advertising MarylandNews NorthCarolinaNews SouthCarolinaNews VirginiaNews WestVirginiaNews