American v. Municipality San Juan

• Decision Date: 10 December 2018
• Docket Number: CIVIL NO. 18-1017 (PAD)
• Parties: PAN AMERICAN, ET AL., Plaintiffs, v. MUNICIPALITY OF SAN JUAN, PUERTO RICO, ET AL., Defendants.
• Court: U.S. District Court — District of Puerto Rico

PAN AMERICAN, ET AL., Plaintiffs, v. MUNICIPALITY OF SAN JUAN, PUERTO RICO, ET AL., Defendants.

CIVIL NO. 18-1017 (PAD)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

December 10, 2018

OPINION AND ORDER

Delgado-Hernández, District Judge.

Pan American Properties Corp. ("PAPC") sued the Municipality of San Juan and others¹ under 42 U.S.C. § 1983, challenging the constitutionally of Sections 9, 14, 18, 19, and 22 of Municipal Ordinance No. 12, 2017-2018 Series (the "Ordinance") in connection with the 2018 San Sebastian Street Festivities (the "Festivities")(Docket No. 1). It amended the complaint shortly after initiating the action to add Pan American Manufacturing Co., Inc. and Pan American Grain Company as plaintiffs in the case (Docket No. 6-1).

The challenges revolved upon the validity of restrictions on commercial speech and the extent of the Municipality's authority to regulate the use of drones over its air space. After considering the parties' arguments in light of the testimonial and documentary evidence presented at the preliminary injunction hearing held on January 16, 2018 and January 17, 2018, the court GRANTED IN PART AND DENIED IN PART plaintiffs' request for a preliminary injunction. Asanticipated when the ruling was announced in open court, this Opinion and Order serves to elaborate on the decision's findings and conclusions.²

I. INTRODUCTION

At 7:27 p.m. on Friday, January 12, 2018, PAPC initiated the action (Docket No. 1). On Sunday, January 14, 2018 at 3:34 p.m., the case was electronically assigned to the undersigned (Docket No. 2). On their face, Sections 9, 14, 18 and 19 burdened commercial speech, raising serious underinclusiveness, and unbridled discretion issues under the First Amendment, whereas Section 22 ran up to a preemption question involving the scope of the Municipality's authority to regulate the use of drones over the Municipality's airspace. As a result, the court: (1) issued a Temporary Restraining Order at 5:52 p.m. on the same day the case was assigned; (2) required PAPC to notify and serve defendants within 24 hours and to post a $5,000 bond or certified check to cover damages not later than noontime on January 16, 2018; (3) set a deadline for defendants to respond; and (4) scheduled a preliminary/permanent injunction hearing for January 16, 2018 at 3:00 p.m. (Docket No. 3). On January 15, 2018, PAPC informed the court of having provided defendants' counsel with copy of the pleadings and of the court's order (Docket No. 8).³

On January 15, 2018, Ms. Cruz, Mr. Jaume and the Municipality were served with process (Docket Nos. 9-11). On January 16, 2018, Mr. Rigau and Mr. Gallisá were served (Docket Nos. 21-22), and defendants presented their opposition to plaintiffs' injunction request (Docket No. 25). Prior to the hearing, the court met with counsel in chambers; discussed with them at length their factual and legal theories; and agreed to the parties' request to separate the preliminary and permanentinjunction stages of the case (Docket No. 39). The hearing took place in the afternoon and evening of January 16, 2018 and on the morning, afternoon and evening of January 17, 2018 (Dockets No. 39 and 40). At the conclusion of the evidentiary phase of the hearing on January 17th, the court heard arguments from the parties, and the same day issued a ruling from the bench granting in part and denying in part the request for preliminary injunction (Docket No. 40).

II. FACTUAL FINDINGS

A. Background

The Festivities are a multi-day event with commercial, cultural and artistic elements promoting Puerto Rican culture (Docket No. 6-1, § IV(1)).⁴ Held in Old San Juan on the second or third week of January, they are a highly attractive celebration for residents of Puerto Rico as well as for tourists. Id. at § IV(2). About twelve cruise ships were scheduled to arrive in San Juan for this year's event, set to begin on January 17, 2018 and to end on January 21, 2018. Id. at §§ IV(2), IV (6). By some estimates, more than one million people were expected to attend (Transcript Day One, p. 25).⁵ The enormous concentration of local, national and international consumers during the Festivities provided merchants with a unique opportunity to promote and sell their products. Id. at § IV(3).

Plaintiffs are affiliated companies (Transcript Day One, pp. 48, 71). In previous years, they engaged in commercial activities throughout the Festivities, distributing promotionalmaterials and displaying advertisements (Docket No. 6-1, § IV(3); Transcript Day One, p. 26). PAPC owns consumer products bearing the Gasolina, Salsa Rico and Space Gang brands (id. at p. 11); Pan American Grain Manufacturing owns the Arroz Rico brand (id.); and Pan American Grain Company owns the Café Mami, Café del Patio and Harina Rico brands. Id. at p. 53.

B. Ordinance

On Saturday, December 23, 2017, the Municipal Assembly approved the Ordinance (Docket No. 1-2, p. 22). On Tuesday, December 26, 2017, the Mayor signed it. Id. at p. 23. The Ordinance was to be in effect ten days "after its publication by the standards established in Act No. 81 [of August 30], of 1991 . . .," P.R. Laws Ann. tit. 21 §§ 4003 et. seq.,⁶ until 12:01 a.m. on January 22, 2018. Id. at pp. 22-23. Its purpose was to look after order and safety during the Festivities (Transcript Day Two - AM, p. 32). There was no evidence as to when the Ordinance was published in order to identify the date of its effectiveness, albeit the parties assumed it was published the day the Mayor signed the Ordinance and became effective on Friday, January 5, 2018.

As in the past, the Ordinance was approved to regulate the security and way businesses operate during the Festivities (Docket No. 46, p. 1). Defendants viewed it as part of legislative measures enacted "to control commercial advertising" in the Festivities in order to prevent a "free for all for commercial purposes" (Docket No. 25, pp. 5-6). From their perspective, the public interest is best served "when there is adequate control of the promotional efforts of businesses, particularly as to marking and consumption of alcoholic beverages." Id. at p. 17.

C. Challenged Provisions

Plaintiffs challenge Sections 9, 14, 18, 19 and 22 of the Ordinance. Section 9 states:

The installation, use, presentation, raising all kinds of promotional inflatables of any item or product in the areas of Puerta de Tierra, Old San Juan, La Puntilla, and La Perla within the Isleta de San Juan is prohibited. Any natural or legal person, company, trade or residence owner who violates the provisions of this Section of this Ordinance shall be subject to payment of an administrative fine of five thousand dollars ($5,000.00) for each occurrence.

This provision applies both to the natural person or legal owner of the inflatable, and the natural or legal owner of the establishment, space and / or residence where the inflatable article is located, as the trading company that promotes, the organizer and/or promoter activity and / or meeting where the inflatable installed; They are all subject to being ticketed separately and independently in the sum of five thousand dollars ($5,000.00) each way for each occurrence. From a second offense, if the trader⁷ insists on violating the provisions of this section, it incurs a concerted act, repeated or systematic failure, the municipal police or inspectors Permit Office will proceed with proceedings before offices, agencies or appropriate for revocation of permits for the establishment and closure of the establishment or kiosk (Docket No. 1-2, p. 9).

Section 14 states:

The distribution of promotional products or samples of commercial products in the area of the islet of San Juan during the Festival of San Sebastian Street without written permission from the Permit Office of the Autonomous Municipality of San Juan authorization is prohibited. This includes the installation of inflatable advertisements in public areas and facades. Understanding that a commercial product is any material that can be susceptible of sale or represents an economic transaction.

Any person who violates the provisions hereof shall be subject to payment of an administrative fine of five thousand dollars ($5,000) per violation.

This provision applies both to the person delivering promotional materials or objects such as the commercial business being promoted, the organizer and/or promoter activity and/or meeting. They are all subject to being ticketed separately and independently in the sum of five thousand dollars ($5,000) above provided. Each violation will be subject to a fine (Docket No. 1-2, p. 11).

Section 18 states:

It is prohibited that the owners of business and/or residences, rent or cede their balconies in order to carry out promotions, or for commercial advertising be deployed for such purposes, and/or display products from these balconies, without the proper permits to be issued by the Office of permits of the Municipality of San Juan.

It is further provided that it is prohibited to throw any promotional material or object from the balconies and /or elevated structures, including temporary platforms. Any person who violates the provisions hereof shall be subject to payment of an administrative fine of five thousand dollars ($5,000.00) per occurrence.

This provision applies both to the person who launches the promotional materials or objects such as commercial business being promoted, the organizer and / or promoter activity and/or meeting, and the owner or owner of the establishment or residence from where the act is done; They are all subject to being ticketed separately and independently in the sum of five thousand dollars ($5,000.00) above provided.

It is also provided that, according to the inspection process conducted by the Municipality of San Juan by the Fire Department of Puerto Rico, and recommendation issued by the latter regarding the balconies of residential and commercial structures in disrepair, it is essential to

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