Clear Channel Outdoor Inc., a Delaware Corporation Viacom Outdoor Inc., a Delaware Corporation National Advertising Company, a Delaware Corporation v. City of Los Angeles Angeles Department of Building & Safety David R. Keim, in His Official Capacity as Chief of the Code Enforcement Bureau of the Los Angeles Department of Building & Safety
Docket: 02-56947
Court: Court of Appeals for the Ninth Circuit; August 15, 2003; Federal Appellate Court
The City of Los Angeles, along with its Department of Building and Safety and the Chief of the Code Enforcement Bureau, is appealing a district court order that granted a preliminary injunction to Clear Channel Outdoor, Inc., Viacom Outdoor, Inc., and National Advertising Company. The injunction prevents the City from enforcing ordinances that require inspections of off-site billboards and the payment of fees for these inspections. The district court had jurisdiction under 28 U.S.C. § 1331, and the appellate court has jurisdiction under 28 U.S.C. § 1292(a)(1). The appellate court found that it is unlikely the advertising companies will succeed on their First Amendment claims, thus deciding to vacate the preliminary injunction.
The Los Angeles Municipal Code distinguishes between 'Off-Site Signs,' which advertise businesses or services located elsewhere, and 'On-Site Signs.' Ordinance No. 174442, passed on February 8, 2002, established a program requiring regular inspections of off-site signs and mandated an annual inspection fee, initially set at $314, under Ordinance No. 174736, passed on July 23, 2002. An inventory of inspected signs would be maintained, and penalties were set for non-payment.
On September 27, 2002, the advertising companies filed a lawsuit claiming that the City's ordinances imposed a content-based fee on speech, violating their First and Fourteenth Amendment rights. They sought both declaratory and injunctive relief and moved for a preliminary injunction on October 7, 2002. After a hearing on October 28, the district court granted the injunction, finding that the companies had presented a viable First Amendment claim due to the ordinances favoring commercial speech, improperly distinguishing between types of speech, and being unconstitutionally vague.
The appeal was filed in a timely manner, and the court's analysis focuses on the standard of review for preliminary injunctions, which is based on whether the district court abused its discretion. An abuse occurs if the court uses an erroneous legal standard or makes clearly erroneous factual findings. The criteria for granting a preliminary injunction require the plaintiff to show either a likelihood of success on the merits with potential for irreparable injury or that serious questions exist regarding the merits with a significant imbalance of hardships favoring the plaintiff. Notably, cases involving First Amendment issues tend to indicate a potential for irreparable harm, tipping the balance of hardships in favor of the party alleging such injury.
The district court deemed the new ordinance's inspection provisions to be content-based, as determining a sign's classification (on-site vs. off-site) requires examining its message. It concluded that noncommercial signs are likely categorized as off-site, thereby imposing an impermissible burden on noncommercial speech. However, the appellate discussion identifies three shortcomings in this analysis: it fails to recognize established precedent supporting the on-site/off-site distinction, misinterprets its application, and overlooks amendments to the ordinance that address potential issues regarding noncommercial speech.
The City argues that the on-site/off-site distinction is constitutionally valid, supported by numerous court decisions, including a Supreme Court case that upheld this distinction for commercial signs while rejecting a broad ban on noncommercial signs. The City asserts that there is no constitutional basis to claim that the on-site/off-site distinction inherently burdens noncommercial speech.
Metromedia's reliance on sign ordinances that differentiate between on-site and off-site signs is upheld, provided these ordinances do not hinder the erection of noncommercial on-site signs. The case of Outdoor Systems, Inc. v. City of Mesa is pivotal, where the court found that sign ordinances from two Arizona cities were content-neutral toward noncommercial speech due to a 'substitution clause' allowing noncommercial messages on any properly erected sign. The court dismissed claims that restrictions on off-site signs would preferentially impact noncommercial speech, labeling such assertions as speculative, emphasizing that any effects stemmed from individual sign owners' decisions.
The key aspect of sign ordinances is their neutrality towards noncommercial messages, maintained through the substitution clause. Appellees' argument misinterprets the application of fees, which apply to off-site sign structures, regardless of the message displayed. The process for designating a sign as on-site or off-site depends on the permit applicant’s intent rather than government classification. The distinction serves to differentiate between signs with limited local purposes versus those allowing broader messaging.
Recent amendments to the ordinance, which removed references to noncommercial messages in the definition of "Off-Site Sign," further alleviate concerns of content-based discrimination. This change ensures that noncommercial signs cannot be classified as off-site for inspection purposes, effectively exempting them from such designations and confirming that the inspection program does not favor commercial over noncommercial speech.
The validity of government restrictions on commercial speech is evaluated using a four-part test established in Central Hudson Gas & Electric Corp. v. Public Service Commission of New York. This test examines whether the speech is lawful and not misleading, whether the restriction serves a substantial governmental interest, whether it directly advances that interest, and whether it is not overly broad. The district court recognized traffic safety and city aesthetics as substantial interests but questioned the effectiveness of the inspection ordinances, noting that off-site signs constitute only 2.5% of all signs in the city.
The court's analysis is deemed flawed for applying a stricter standard than the reasonable fit test from Outdoor Systems. Targeting a subset of signs, such as off-site signs, can still align with the city's goals of safety and aesthetics. The distinction between on-site and off-site advertising is permissible, as the city may prioritize one type of commercial speech over another based on its perceived impact on safety and aesthetics.
The city could constitutionally ban all off-site signs, making the argument against an inspection program for these signs less tenable. The city asserts that on-site signs, often associated with active businesses, are less likely to pose dangers, yet no substantial evidence has been presented comparing compliance rates between on-site and off-site signs. Ultimately, the city only needs to demonstrate that its aim to improve compliance among off-site signs is legitimate, as established in Metromedia.
The district court found the ordinance unconstitutionally vague, particularly regarding the classification of signs as on-site or off-site. However, this classification is not determined by the City during inspections; it occurs at the permitting stage, reflecting the intent of the sign permit applicant. The doctrine of unconstitutional vagueness aims to provide clear notice and limit discretionary power in inspections. Appellees, who have previously applied for off-site sign permits, have adequate notice regarding their signs' regulation. The distinctions between commercial and noncommercial, as well as on-site and off-site signs, are well-defined in case law, which undermines claims of vagueness based on hypothetical scenarios.
Appellees are unlikely to succeed in their First Amendment challenge related to the on-site/off-site distinction, as there is no evidence showing this distinction is unworkable. A broad challenge to the constitutionality of the inspection program would exceed the scope of this action and conflict with Supreme Court and Ninth Circuit precedents. Furthermore, Appellees failed to demonstrate that the inspection fee poses an unconstitutional burden on their speech; it is essentially an increase in permit fees for off-site signs. Consequently, the district court's preliminary injunction is vacated. Notes clarify the removal of certain language from the ordinance, the focus of the injunction on First Amendment issues, agreement among the Court on the on-site/off-site distinction, and the nature of Appellees' advertising business. The inspection program may reveal illegally erected signs, but the permitting process is not the focus of this case. Political messages can still be placed on on-site signs without imposing undue burdens on roadside billboards.
