Int'l Outdoor, Inc. v. City of Troy

• Decision Date: 04 September 2020
• Docket Number: Nos. 19-1151/1399,s. 19-1151/1399
• Citation: 974 F.3d 690
• Parties: INTERNATIONAL OUTDOOR, INC., Plaintiff-Appellant, v. CITY OF TROY, MICHIGAN, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

974 F.3d 690

INTERNATIONAL OUTDOOR, INC., Plaintiff-Appellant,

v.CITY OF TROY, MICHIGAN, Defendant-Appellee.

Nos. 19-1151/1399

United States Court of Appeals, Sixth Circuit.

Argued: October 16, 2019

Decided and Filed: September 4, 2020

BOGGS, Circuit Judge.

International Outdoor, Inc. ("International Outdoor") sought to erect billboards in the City of Troy, Michigan. After the City of Troy denied International Outdoor's application for a permit and then for a variance from the limitations imposed by the City's sign ordinance, International Outdoor brought suit challenging the constitutionality of the City's ordinance under 42 U.S.C. § 1983 and alleging that the sign ordinance violated International Outdoor's First Amendment rights.

For the reasons stated below, we affirm the district court's grant of the City of Troy's motion for summary judgment on International Outdoor's claim that the City's sign ordinance constitutes an unconstitutional prior restraint. However, we vacate the district court's grant of the City of Troy's motion to dismiss International Outdoor's claim that the City's sign ordinance imposes content-based restrictions without a compelling government interest, and we remand for reconsideration under the Reed standard. We also vacate and remand the district court's denial of International Outdoor's motion for attorney's fees, pending reconsideration of the City of Troy's motion to dismiss.

I

International Outdoor is an outdoor advertising company that erects billboards throughout Southeast Michigan on properties it either leases or owns. It earns revenue by charging advertisers for displaying their messages on its billboards. In September 2015, International Outdoor sought to erect two digital billboards in two separate locations within the City of Troy. The billboards came under the definition of a "ground sign" pursuant to Section 85.01.03 of the City of Troy Sign Ordinance.

Under Section 85.02.05.C.5 of the Sign Ordinance, each property was allowed one ground sign not exceeding 12 feet in height with a maximum area of 100 square feet, if set back at least 10 feet from the right of way, and one additional ground sign subject to the following requirements:

1. The sign is set back a minimum of 200 feet from any street right of way.

2. The sign is located at least 1,000 feet from any sign exceeding 100 square feet.

3. The sign does not exceed 300 square feet.

4. The sign does not exceed 25 feet in height.

International Outdoor sought to erect in two locations a two-sided billboard that would be 14 feet by 48 feet (672 square feet per side for a total of 1,344 square feet area) and 70 feet in height when mounted. Both locations were less than 200 feet from a right of way and less than 1,000 feet from other signs exceeding 100 square feet. Because the proposed billboards exceeded the Sign Ordinance's size and height limitations as well as its setback requirements based on the zoning classification of the properties, the City denied International Outdoor's application for a permit. International Outdoor applied for variances. The variance application was presented to the City's Building Code Board of Appeals on November 4, 2015 and was considered at a special meeting and public hearing on November 18, 2015. The Board denied the application on November 20, 2015 for failure to meet the criteria set forth in Section 85.01.08.B.1 of the Sign Ordinance, which were a necessary but not a sufficient condition for grant of a variance:

a. The variance would not be contrary to the public interest or general purpose and intent of this Chapter; and

b. The variance does not adversely affect properties in the immediate vicinity of the proposed sign; and

c. The petitioner has a hardship or practical difficulty resulting from the unusual characteristics of the property that precludes reasonable use of the property.

International Outdoor filed an appeal of the Board's decision in the Oakland County Circuit Court, but on July 11, 2016 the appeal was dismissed as abandoned due to appellant's failure to file a brief. On February 2, 2017 International Outdoor filed a complaint in the Eastern District of Michigan under 42 U.S.C. § 1983, seeking declaratory and injunctive relief as well as damages and alleging that the City of Troy Sign Ordinance violated its First Amendment rights. Count I alleged that the Ordinance constituted an unconstitutional prior restraint because it lacked narrow, objective, and definite standards to guide the decision of the City of Troy's Building Code Board of Appeals in issuing variances and thus granted the Board unfettered discretion. Count II alleged that the Ordinance contained unconstitutional content-based restrictions as it exempted from permit requirements certain categories of signs, such as flags and "temporary signs," which "include but are not limited to" various real estate signs, "garage, estate or yard sale" signs, "non-commercial signs[,]" "[p]olitical signs[,]" "holiday or other seasonal signs[,]" and "construction[s] signs...." The City of Troy moved to dismiss the complaint under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6).

The district court denied the City of Troy's motion as to Count I, holding that International Outdoor had stated a cognizable claim that the City's variance process was an unconstitutional prior restraint. The district court also rejected the City's argument of severability because the Sign Ordinance on the record did not contain a severability clause and the district court found that the variance procedure could not be severed under state law. The district court dismissed Count II because it determined that the speech at issue was commercial speech and therefore its regulation was not subject to strict scrutiny. Applying Central Hudson Gas & Electric Corp. v. Public Service Commission , 447 U.S. 557, 563, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980), the district court found that the ordinance provisions satisfied an intermediate level of scrutiny.

The City of Troy moved for reconsideration of the district court's order denying its motion to dismiss as to Count I. That motion was denied.

At the conclusion of discovery, on September 20, 2018, International Outdoor moved for summary judgment. Four days later, on September 24, 2018, the City of Troy amended its Sign Ordinance ("Amended Ordinance"), with changes effective as of October 4, 2018. The Amended Ordinance rendered the challenges to the variance provisions stated in Count I inapplicable by removing content-based restrictions, clarifying the standards for issuance of a variance, and making issuance of a variance mandatory if specific criteria are met. The Amended Ordinance also prohibited off-premise signs carrying commercial messages, limited ground signs to 100 square feet in size and 20 feet in height, and provided that no variance would be granted for signs exceeding the size and height limitations by more than twenty-five percent.

Then, on October 22, 2018, the City of Troy submitted a response to International Outdoor's motion for summary judgment and, on October 31, 2018, filed a cross-motion for summary judgment, arguing in part that its amendment of the Sign Ordinance rendered International Outdoor's remaining claims moot. The City of Troy alleged that both the Sign Ordinance and the Amended Ordinance contained a severability provision, and that International Outdoor attached to its complaint a version of the Sign Ordinance that was posted on the City's website, while the official version of the ordinance—the one that contained severability and other unposted provisions—was available from the City of Troy's Clerk upon request. The City of Troy explained its decision not to post a complete version of the ordinance online as an effort to avoid "confusion and an unwieldly document" with "hundreds of these recitations."

On January 18, 2019, the district court denied International Outdoor's motion for summary judgment and granted the City of Troy's cross-motion for summary judgment on the only remaining count, Count I, prior restraint. The district court found that under the Amended Ordinance, International Outdoor's large off-premises advertising signs would neither qualify for a permit nor for a variance, thus rendering moot its injunctive and declaratory relief claims, but not its damage claim, which apparently would be only for damages until October 4, 2018, the effective date of the amendment. However, the district court found that the severability of the variance provisions precluded Plaintiff's damage claim for past injury, and it granted summary judgment for the City of Troy.

International Outdoor then filed a motion for attorney's fees as a prevailing party under 42 U.S.C. § 1988, claiming that it had established that the City of Troy's variance process was an unconstitutional prior restraint. The district court ruled that International Outdoor was not a prevailing party as it had failed to obtain court-ordered relief, and it denied the motion. Subsequently, International Outdoor appealed the dismissal of Count II, the summary judgment as to Count I, and the denial of attorney's fees. These appeals were consolidated.

II

International Outdoor now appeals the district court's grant of the City of Troy's motion for summary judgment on a claim that the City of Troy's sign ordinance imposes an unconstitutional prior restraint.

The court reviews de novo the district court's grant of summary judgment, applying the same standards as the district court. F.T.C. v. E.M.A. Nationwide, Inc ., 767 F.3d 611, 629 (6th Cir. 2014). Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). In deciding whether summary judgment is appropriate, the court views the "evidence in the light most favorable to the nonmoving party." Himmel v. Ford Motor Co. , 342 F.3d 593, 598 (6th Cir. 2003) (...