Lamar Advantage GP Co. v. City of Cincinnati
| Decision Date | 18 June 2020 |
| Docket Number | NO. C-180675,C-180675 |
| Citation | 2020 Ohio 3377,155 N.E.3d 245 |
| Parties | LAMAR ADVANTAGE GP COMPANY, LLC, d.b.a. Lamar Advertising of Cincinnati, OH, and Norton Outdoor Advertising, Inc., Plaintiffs-Appellees, v. CITY OF CINCINNATI, Ohio, Nicole Lee, Treasurer of the City of Cincinnati, Ohio, Art Dahlberg, Director of the Department of Buildings and Inspections for the City of Cincinnati, Ohio, and Reginald Zeno, Finance Director for the City of Cincinnati, Ohio, Defendants-Appellants. |
| Court | Ohio Court of Appeals |
Strauss Troy Co., LPA, R. Guy Taft and Stephen E. Schilling, Cincinnati, for Plaintiff-Appellee Lamar Advantage GP Company, LLC, d.b.a. Lamar Advertising of Cincinnati, OH,
Robbins, Kelly, Patterson & Tucker, LPA, Michael A. Galasso and Esther M. Norton, Cincinnati, for Plaintiff-Appellee Norton Outdoor Advertising, Inc.,
Paula Boggs Muething, City Solicitor, Marion E. Haynes, III, and Kevin M. Tidd, Assistant City Solicitors, for Defendants-Appellants.
{¶1} This appeal addresses the constitutionality of an excise tax placed on off-premises outdoor advertising signs, or billboards, within the city of Cincinnati. Two advertising companies, plaintiffs-appellees Lamar Advantage GP Company, LLC, d.b.a. Lamar Advertising of Cincinnati, OH, ("Lamar") and Norton Outdoor Advertising, Inc., ("Norton") filed suit against defendants-appellants the city of Cincinnati, Ohio, Nicole Lee, treasurer of the city of Cincinnati, Art Dahlberg, director of the department of buildings and inspections for the city of Cincinnati, and Reginald Zeno, finance director for the city of Cincinnati (collectively "the city"). Lamar and Norton challenged the constitutionality of the billboard tax and sought to preclude the city from enforcing the tax.
{¶2} The trial court held that the city's excise tax on billboards was unconstitutional and violated the First Amendment to the United States Constitution, and the trial court granted a permanent injunction barring the city from enforcing the tax. The city appeals the trial court's decision. For the reasons that follow, we affirm that portion of the trial court's decision holding that the city's prohibition on communications between outdoor advertising hosts and their customers regarding the tax is unconstitutional. We reverse the remainder of the trial court's decision holding the excise tax unconstitutional, and we remand for further proceedings.
{¶3} In June 2018, Cincinnati City Council enacted Ordinance No. 167-2018, which created an excise tax on billboards. The ordinance is embodied in Chapter 313 of the Cincinnati Municipal Code ("CMC"). The billboard tax provides that an "advertising host," who owns or controls an outdoor advertising sign in the city, must pay a tax that is the greater of either (1) seven percent of the gross receipts generated by any sign, or (2) an annual minimum tax calculated based upon the type, location, and square footage of the sign. CMC 313-3.
{¶4} In addition to imposing an excise tax, the ordinance also prohibits an advertising host from issuing a statement to an advertiser in which the tax is reflected. CMC 313-7(a). The ordinance also prohibits a host from indicating that an advertiser will absorb the cost of the tax. CMC 313-7(b).
{¶5} Soon after the passage of the billboard tax, Lamar and Norton filed separate complaints against the city challenging the constitutionality of CMC Chapter 313. In addition to challenging the billboard tax, Lamar and Norton also challenged another city ordinance, Ordinance 163, which raised the cost of permit fees for the construction and renewal of billboards ("the permit-fee ordinance"). The city has since repealed the permit-fee ordinance; however, the companies seek damages related to the permit fees. Lamar's and Norton's actions were consolidated by the trial court.
{¶6} In their complaints, Lamar and Norton alleged that CMC Chapter 313 was unconstitutional under the First Amendment, the Equal-Protection Clause, and the Commerce Clause. Lamar and Norton also alleged that the city's actions constituted an unlawful taking of their private property for which an appropriation proceeding should issue, as well as claims under 42 U.S.C. 1983 and 42 U.S.C. 1988. Lamar and Norton requested damages, including a refund of any taxes, fees, and assessments collected by the city, and also requested declaratory and injunctive relief.
{¶7} Norton and Lamar filed motions for preliminary injunctions seeking to enjoin the city from enforcing CMC Chapter 313. The trial court held a lengthy evidentiary hearing over several days on the requests for a preliminary injunction. At the conclusion of the injunction hearing, the trial court entered an order requesting objections as to whether a permanent injunction should issue. The trial court ultimately granted in part Lamar's and Norton's motions for a preliminary injunction, and entered an order declaring the billboard tax unconstitutional under the First Amendment. The trial court then entered an order sua sponte consolidating the preliminary-injunction hearing with the issue of whether a permanent injunction should issue in accordance with Civ.R. 65. The city objected to any finding by the trial court as to whether CMC Chapter 313 was unconstitutional, but it did not object generally to the consolidation of the litigation.
{¶8} The trial court later entered a lengthy decision explaining its reasoning that CMC Chapter 313 violated the First Amendment. The trial court entered an order granting in part Lamar's and Norton's requests for a permanent injunction and enjoined the city from enforcing CMC Chapter 313. The trial court included Civ.R. 54(B) language, finding that there was "no just reason for delay." It is from the issuance of the permanent injunction that the city now appeals.
{¶9} After the parties filed their merit briefs, this court ordered the parties to file supplemental briefing on the issue of whether this court had jurisdiction over the city's appeal.
{¶10} Appellate court jurisdiction is limited to the review of final orders. See Ohio Constitution, Article IV, Section 3 (B)(2). An order is final and appealable only if it meets the requirements of R.C. 2505.02 and Civ.R. 54(B), if applicable. Chef Italiano Corp. v. Kent State Univ. , 44 Ohio St.3d 86, 88, 541 N.E.2d 64 (1989).
{¶11} R.C. 2505.02 defines final orders. In relevant part, R.C. 2505.02(B) provides "[a]n order is a final order that may be reviewed, affirmed, modified, or reversed, with or without retrial, when it is one of the following: * * * (2) An order that affects a substantial right made in a special proceeding or upon a summary application in an action after judgment[.]" A substantial right is "a right that the United States Constitution, the Ohio Constitution, a statute, the common law, or a rule of procedure entitles a person to enforce or protect." See R.C. 2505.02(A)(1). R.C. 2505.02(A)(2) defines "special proceeding" as "an action or proceeding that is specially created by statute and that prior to 1853 was not denoted as an action at law or a suit in equity."
{¶12} Here, the trial court declared the city's excise tax unconstitutional and permanently enjoined the city from further collection of the tax. An order that declares a legislative enactment unconstitutional affects a substantial right of the government. Riverside v. State , 190 Ohio App.3d 765, 2010-Ohio-5868, 944 N.E.2d 281 (10th Dist.). The trial court's determination that CMC Chapter 313 was unconstitutional and could not be enforced affected a substantial right of the city.
{¶13} As to whether an order has been entered in a special proceeding, the character of the order on appeal is not determinative. Walters v. Enrichment Ctr. of Wishing Well, Inc. , 78 Ohio St.3d 118, 676 N.E.2d 890 (1997). Instead, courts must examine the character of the underlying action to determine whether a special proceeding exists. Id. Although the order from which the city appeals enters a permanent injunction, the character of the underlying proceeding brought by Norton and Lamar ultimately sought a declaration that CMC Chapter 313 was unconstitutional. An action seeking a declaratory judgment is a "special proceeding." Riverside at ¶ 12 ; Whitley v. Progressive Cas. Ins. Co. , 1st Dist. Hamilton No. C-110157, 2012-Ohio-329, 2012 WL 315048, ¶ 7. Thus, the trial court's injunction order was made in a special proceeding. Because the trial court's order affected the city's substantial rights, and it was made in a special proceeding, the order is final under R.C. 2505.02(B)(2).
{¶14} Even if an order is final under R.C. 2505.02, the order is only appealable if it satisfies Civ.R. 54(B), if applicable. Chef Italiano Corp. , 44 Ohio St.3d 86, 541 N.E.2d 64. Civ.R. 54(B) allows a court to enter "final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay." When a trial court makes the determination under Civ.R. 54(B) that an interlocutory appeal "is consistent with the interests of sound judicial administration" and that "no just reason for delay exists," the trial judge has made a factual determination, which is entitled to deference. Wisintainer v. Elcen Power Strut Co. , 67 Ohio St.3d 352, 617 N.E.2d 1136 (1993), paragraphs one and two of the syllabus. Use of Civ.R. 54(B) language in an order, however, is not a "mystical incantation which transforms a nonfinal order into a final appealable order." Id. at 354, 617 N.E.2d 1136.
{¶15} At the time the trial court entered its permanent injunction and declared CMC Chapter 313 unconstitutional, Lamar and Norton had multiple claims either still pending or that the trial court had failed to specifically dismiss. Norton and Lamar requested monetary damages and attorney's fees as part of their claims alleging that the...
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