Antitrust Law Daily Wrap Up, ADVERTISING—C.D. Cal.: Permit ban for off-site commercial billboards did not violate free speech, equal protection rights, (Nov 20, 2015)

By Michael Menzhuber, J.D., LL.M.

The City of Los Angeles’ restrictions on off-site commercial billboards did not violate the California and U.S. constitutional free speech and equal protection rights of applicants who were denied billboard permits, according to the federal district court in Los Angeles (California Outdoor Equity Partners, LLC v. City of Los Angeles, November 16, 2015, Snyder, C.).

Background. California Outdoor Equity Partners, LLC, AMG Outdoor Advertising, and J. Keith Stephens were licensed by the state of California to lease “off-premise” and “on-premise” outdoor advertising signs to the public. A Los Angeles municipal ordinance imposed a ban on permits for off-site commercial billboards.

The plaintiffs filed an action against the City which alleged that: (1) the ordinance violated their free speech rights under the First Amendment and the California Constitution; and (2) the City’s preferential treatment of others, with respect to granting permits, violated their right to equal protection under both the U.S. and California Constitutions. Specifically, the plaintiffs asserted that, although other entities were permitted to operate off-site commercial and non-commercial signs, their permit applications and requests for relocation agreements were denied. The City filed a motion to dismiss.

Free speech claims. In support of their claim that the ordinance unconstitutional violated their free speech rights, the plaintiffs challenged: (1) the distinction between “off-site” and “on-site” content; (2) the distinction between certain speakers (those who have “grandfathered” rights and those that do not) and the distinction between certain types of signs; and (3) the allowance for many exceptions to the ordinance’s ban. The City argued that the plaintiffs’ free speech claims failed as a matter of law because they merely recycled the same challenges that the Ninth Circuit had already considered and rejected in three recent decisions.

The court agreed with the City in finding that binding Supreme Court and Ninth Circuit precedent required dismissal of the plaintiffs’ claims. The court noted the Ninth Circuit’s application of the Hudson test, in Metro Lights vs. City of Los Angeles, 551 F.3d 898 (2009), in assessing the constitutionality of the City’s ordinance’s restriction on commercial speech. The holding in Metro that the City’s exception for thousands of Los Angeles off-site commercial signs did not denigrate its substantial interest in traffic safety and Beauty.

The court also noted that, in World Wide Rush v. City of Los Angeles, 606 F.3d 676 (2010), the ordinance was not rendered unconstitutionally underinclusive under the Hudson test by exceptions that were made. The Ninth Circuit reached this finding because the exceptions were made for the express purposes of advancing the City’s interest in aesthetics and safety by removing blight, improving traffic flow and safety, and reducing the number of billboards in the City.

Furthermore, in Vanguard Outdoor, LLC v. City of Los Angeles, 648 F.3d 737 (2011), the Ninth Circuit, in rejecting a billboard company’s additional challenge to the City’s ban on supergraphic and off-site signs, gleaned several points from Metro Lights and Vanguard: (1) the City’s sign ban can withstand application of a Hudson test so long as it is not “so pierced by exceptions and inconsistencies” as to undermine the City’s interests in traffic and safety; (2) a Hudson test challenge focuses on whether the City’s ban advances it interests in its general application, not specifically with respect to a particular speaker; and (3) the court must defer to the reasonable legislative judgment of the City on how to best advance its own interests in aesthetics and traffic safety.

The court also determined that the plaintiffs’ allegations regarding the City’s “unfettered discretion” in granting these exceptions also failed because the plaintiffs did not demonstrate that the exceptions granted by the City broke the link between the ordinance’s offsite ban and the City’s objectives in traffic safety and aesthetics.

Equal protection claims. Finally, the plaintiffs failed to state a claim under the equal protection clauses of the California Constitution and U.S. Constitution because their allegations and arguments offered in support thereof, were considered and rejected in Vanguard. The court noted that: (1) the plaintiffs’ equal protection claim was subject to a rational basis review because they were not members of a suspect class; and (2) the City, in World Wide Rush, had already articulated a rational basis for its ordinance and its many exceptions.

The case is No. 2:15-cv-04374.

Attorneys: Raymond N. Haynes, Jr. (Law Offices of Raymond Haynes) for California Outdoor Equity Partners, LLC and AMG Outdoor Advertising, Inc. Jennifer Kathleen Tobkin, Office of Los Angeles City Attorney, for City of Los Angeles.

Companies: California Outdoor Equity Partners, LLC; AMG Outdoor Advertising, Inc.

Cases: Advertising CaliforniaNews