Bad News and Good News for Billboard Companies: Ninth Circuit Refuses to Recognize Limit on City of Los Angeles Sign Ordinance but Curbs the Power of the City to Classify Commercial and Noncommercial Speech

October 26, 2012

By Matthew Hinks

The Ninth Circuit has issued a new "chapter in 'the story of billboards.'" Billboard companies and advertisers should take note of the court's opinion. Although the opinion refused to extend full First Amendment protection to billboards and advertising related to underlying expressive works, the court -- recognizing its central role in defining the contours of Constitutional liberties -- rejected the trial court's reasoning that a municipality should be afforded deference to define the divide between commercial and noncommercial speech.

Factual Background

Fort Self Storage in the City of Los Angeles leased exterior wall space to Wayne Charles (with Fort Self Storage, the "Appellants") for the display of temporary signs bearing "content related to motion pictures, theatrical productions, television and radio programming, music, books, newspapers, paintings, and other works of art". The first sign Appellants intended to erect was an image composed of the logo for the "E! News" television show. Prior to doing so, Appellants contacted LADBS seeking an informal determination that the sign would be exempt from the City's sign ordinance, which requires a "building permit . . . for a temporary sign . . . other than one that contains a political, ideological or other noncommercial message." LAMC § 14.4.16(A). LADBS responded in a letter indicating that the sign "appear[ed] to be strictly commercial in nature" and was therefore subject to the City's permit requirements.

District Court Proceedings

Appellants sued the City in federal district court seeking a declaratory judgment to the effect that that the proposed "E! News" sign and all other signs with content related to expressive works such as movies, television shows and print media are properly classified as noncommercial speech and are therefore exempt from the City's permitting requirements for temporary commercial signs. Appellants' claims were based upon the contention that the proposed billboard should be considered an adjunct of or incidental to the "E! News" television show itself -- which enjoys full First Amendment protection for noncommercial expression -- and therefore subject to the same protections as the advertised news program itself.

The district court dismissed Appellants' complaint holding that the proposed billboard did not contain "even arguably noncommercial content". The court further held that the City should be and is afforded deference in deciding whether to categorize Appellants' proposed sign as commercial or noncommercial speech. The Ninth Circuit affirmed, but disagreed with the district court's deference reasoning.

Court's Analysis

The court noted that the distinction between commercial and noncommercial speech is guided by the Supreme Court's decision in Bolger v. Youngs Drug Prods. Corp., 463 U.S. 60 (1983). The Bolger Court held that, "Where the facts present a close question, 'strong support' that the speech should be characterized as commercial speech is found where the speech is an advertisement, the speech refers to a particular product, and the speaker has an economic motivation." Appellants had conceded that the proposed sign was an advertisement and that it referred to a particular "cultural product". They argued, however, that the proposed sign went beyond merely proposing a commercial transaction because it also promotes the viewpoint of the underlying work. The court rejected the argument holding that the proposed sign did not present speech containing "intertwined" commercial and noncommercial messages.

The court also rejected a fairly novel argument raised by Appellants. Appellants cited a number of state court cases for the proposition that "truthful advertisements for expressive works are inherently noncommercial speech, because they are accorded the same First Amendment status as the underlying advertised work." The court noted that the proposition cited by Appellants was limited to tort law cases. The court explained, "[d]octrines extending noncommercial status from a protected work to advertising for that work are justified only to the extent necessary to safeguard the ability to truthfully promote protected speech." Thus, those doctrines have generally been limited to tort actions, such as false advertising and right of publicity cases, "so as to prevent tort actions from choking the truthful promotion of protected speech".

Finally, and in the part of the opinion that may be of significant interest to billboard companies, the court rejected the trial court's conclusion that "deference to the City's evaluation of the sign's First Amendment status was appropriate". The district court had reasoned that "the City must be given some space to apply the tests for commercial speech and to reach reasonable judgments as to what is and is not commercial, lest federal courts become the first-line arbiters of hundreds of thousands of billboards to be erected across the country". The court rejected the analysis given the courts' "essential role in safeguarding the First Amendment's guarantees". According to the court: "[a]ny increased burden on the courts occasioned by de novo review is outweighed by our constitutional responsibility; we may not abdicate our obligations in the name of efficiency".

Conclusion

The Court's rejection of the trial court's reasoning affording deference to a municipalities' evaluations as to the constitutional status of particular speech is significant. There is no question that the court's central holding amounts to a further limitation of the First Amendment's protection of billboards and advertising. Nevertheless, the court's refusal to abandon its responsibility of defining the scope of Constitutional protections and cede that role to City officials, will help ensure that -- to the extent such protections remain -- those important Constitutional safeguards will not be subject to the whims of municipal officials and the pressures of local politics.

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Matthew Hinks is a litigator with a wide-ranging practice that focuses primarily on the representation of real estate developers in difficult land use cases. Matt has extensive experience litigating complex mandamus actions and other claims involving signage disputes, governmental takings, CEQA challenges, planning and zoning law, civil rights violations, eminent domain issues, title disputes, lease disputes and community redevelopment and density bonus law. He has extensive experience in both federal and state courts, including trial courts and courts of appeal, as well as in arbitration, mediation and administrative settings. Contact Matt at MHinks@jmbm.com or 310.201.3558.