Clear Channel Outdoor Inc. v. City of Los Angeles

• Citation: 340 F.3d 810
• Decision Date: 15 August 2003
• Docket Number: No. 02-56947.,02-56947.
• Parties: Clear Channel Outdoor Inc., a Delaware corporation; Viacom Outdoor Inc., a Delaware corporation; National Advertising Company, a Delaware corporation, Plaintiffs-Appellees, 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, Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 810

340 F.3d 810

Clear Channel Outdoor Inc., a Delaware corporation; Viacom Outdoor Inc., a Delaware corporation; National Advertising Company, a Delaware corporation, Plaintiffs-Appellees, 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, Defendants-Appellants.

No. 02-56947.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted July 7, 2003.

Filed August 15, 2003.

Michael L. Klekner, Esq., Los Angeles, California, for the defendants-appellants.

Richard B. Kendall, Esq., Los Angeles, California, for the plaintiffs-appellees.

Appeal from the United States District Court for the Central District of California; Stephen V. Wilson, District Judge, Presiding. D.C. No. CV-02-07586-SVW.

Before: Barry G. Silverman, W. Fletcher, and Johnnie B. Rawlinson, Circuit Judges.

OPINION

SILVERMAN, Circuit Judge.

The City of Los Angeles, its Department of Building and Safety, and the Chief of the Department's Code Enforcement Bureau appeal the district court's order granting the motion of Clear Channel Outdoor, Inc., Viacom Outdoor, Inc., and National Advertising Company for a preliminary injunction enjoining the City from implementing ordinances that provide for the inspection of off-site billboards and the assessment of a fee to cover the cost of that inspection. The district court had jurisdiction under 28 U.S.C. § 1331, and this Court has jurisdiction under 28 U.S.C. § 1292(a)(1). Because we find it unlikely that the advertising companies will prevail on their First Amendment claims, we vacate the preliminary injunction.

I. Factual and Procedural Background

The Los Angeles Municipal Code regulates exterior signs in the City. See L.A.M.C. § 91.6201 et seq. In so doing, the Code differentiates between "Off-Site Signs" and "On-Site Signs." An "Off-Site Sign" is defined as "a sign which displays any message directing attention to a business, product, service, profession, commodity, activity, event, person, institution or any other commercial [or non-commercial] message, which is generally conducted, sold, manufactured, produced, offered or occurs elsewhere than on the premises where such sign is located." L.A.M.C. § 91.6203.¹ An "On-Site Sign" is "[a] sign that is other than an off-site sign." Id.

On February 8, 2002, the Los Angeles City Council passed Ordinance No. 174442, which established the "Off-Site Sign Periodic Inspection Program." Ordinance No. 174442 subjects all off-site sign structures to regular inspection and requires the person in control of an off-site sign structure to pay an annual fee for inspection. After inspection, each off-site sign structure will be issued an inspection permit, and the Department of Building and Safety will create and maintain an inventory of all inspected off-site sign structures. Ordinance No. 174736, passed on July 23, 2002, created a trust fund into which the annual inspection fees would be paid, set the first year's fee at $314, and set monetary penalties for failure to pay the fee.

On September 27, 2002, three outdoor advertising companies filed the instant action against Appellants, alleging that the City had "imposed a new, content-based fee on certain speech," and thereby abridged their right to free expression and equal protection of the laws under the First and Fourteenth Amendments.² The complaint sought declaratory and injunctive relief, and the advertising companies filed a motion for a preliminary injunction on October 7, 2002.

On October 28, 2002, the district court conducted a hearing on the application for a preliminary injunction, and two days later granted the injunction. The district court concluded that the outdoor advertising companies had stated a colorable First Amendment claim because the inspection ordinances (1) favored commercial speech over noncommercial speech; (2) impermissibly differentiated between types of noncommercial speech; (3) impermissibly differentiated between types of commercial speech; and (4) were unconstitutionally vague.

This appeal timely followed.

II. Analysis

A. Standard of Review

This court generally reviews a district court's decision to issue a preliminary injunction for abuse of discretion. Walczak v. EPL Prolong, Inc., 198 F.3d 725, 730 (9th Cir.1999). In issuing a preliminary injunction, a district court abuses its discretion "by basing its decision on either an erroneous legal standard or clearly erroneous factual findings." Id. (citation omitted). A district court's decision is based on an erroneous legal standard if: "(1) the court did not employ the appropriate legal standards that govern the issuance of a preliminary injunction; or (2) in applying the appropriate standards, the court misapprehended the law with respect to the underlying issues in the litigation." Id. (citing Sports Form, Inc. v. United Press Int'l, Inc., 686 F.2d 750, 752 (9th Cir.1982)).

The standard for granting a preliminary injunction balances the plaintiff's likelihood of success against the relative hardship to the parties. To obtain a preliminary injunction, a party must demonstrate

either: (1) a likelihood of success on the merits and the possibility of irreparable injury; or (2) that serious questions going to the merits were raised and the balance of hardships tips sharply in its favor.... These two alternatives represent "extremes of a single continuum," rather than two separate tests ... Thus, the greater the relative hardship to [the party seeking the preliminary injunction,] the less probability of success must be shown.

Id. at 731 (citation omitted).

In addition, "the fact that a case raises serious First Amendment questions compels a finding that there exists'the potential for irreparable injury, or that at the very least the balance of hardships tips sharply in [favor of the party alleging First Amendment injury]'" Sammartano v. First Judicial Dist. Ct., 303 F.3d 959, 973 (9th Cir.2002) (citations omitted).

B. Discussion

1. Impact on Non-Commercial Speech

The district court concluded that the inspection provisions of the new ordinance were content-based because, in order to determine whether a sign is "on-site" or "off-site," one must look at the message on a given sign, and whether it refers to goods or services provided on the premises or somewhere else. The district court reasoned that "a noncommercial sign is more likely to fall within the off-site sign definition[] because such signs are less likely than a commercial sign to relate to the site on which the structure is located." Order at 9. As a result, the inspection ordinances "impermissibly burden certain types of noncommercial speech based on content alone." Id. at 11.

The district court's analysis of the inspection ordinances' effect on noncommercial speech is incomplete in at least three respects. First, the district court's analysis overlooks considerable precedent upholding the viability of the on-site/off-site distinction. Second, that analysis appears to be based on a misunderstanding of how the on-site/off-site distinction arises. Third, to the degree the on-site/off-site distinction might implicate noncommercial speech, the recent amendment to the ordinance removes a potential problem.

As the City correctly argues, there is nothing novel or constitutionally infirm about its use of the on-site/off-site distinction. The Supreme Court, the Ninth Circuit, and many other courts have held that the on-site/off-site distinction is not an impermissible content-based regulation. In the leading Supreme Court case on the regulation of outdoor advertising, the plurality opinion found it permissible to distinguish between on-site and off-site commercial signs, while declaring a San Diego ordinance unconstitutional because of its general ban on noncommercial signs. See Metromedia, Inc. v. City of San Diego, 453 U.S. 490, 511-14, 101 S.Ct. 2882, 69 L.Ed.2d 800 (1981).³ There is no support in Metromedia for the proposition that the on-site/off-site distinction itself places an impermissible content-based burden on noncommercial speech.

We have relied on Metromedia to uphold sign ordinances that distinguish between on-site and off-site signs when that distinction does not also prevent the erection of onsite noncommercial signs. See Ackerley Communications of the Northwest, Inc. v. Krochalis, 108 F.3d 1095 (9th Cir.1997); Outdoor Systems, Inc. v. City of Mesa, 997 F.2d 604 (9th Cir.1993). In Outdoor Systems, we considered the sign ordinances of two Arizona cities, both of which distinguished between on-site and off-site signs, and examined their impact on both commercial and noncommercial speech. We concluded the ordinances were content-neutral with respect to noncommercial speech because both ordinances contained a so-called "substitution clause" that permitted any otherwise properly erected sign to contain noncommercial messages in lieu of any other message. See id. at 612.

In Outdoor Systems, the billboard owners argued, as the advertising companies do here, that greater restrictions on off-site signs would have greater impact on noncommercial messages, but this Court rejected as "speculation" the claim that the ordinance would have "the effect of preferring" commercial speech, noting that whatever effects the ordinance might have "would be the result of decisions made by [the] individual sign owners." Id. Under Outdoor Systems, the key consideration is whether a sign ordinance is neutral with respect to noncommercial messages, and that neutrality is maintained by the substitution clause which allows noncommercial messages on either on-site or off-site signs.

Appellees' arguments to the contrary are based on the mistaken impression that the fee would be imposed on non-commercial messages, whereas in reality the fee is imposed on offsite sign-structures that may or may not carry a non-commercial...