Lamar Advantage GP Co. v. City of Cincinnati
| Decision Date | 16 September 2021 |
| Docket Number | 2020-0931 |
| Parties | LAMAR ADVANTAGE GP COMPANY, L.L.C., d.b.a. Lamar Advertising of Cincinnati, OH, et al., Appellants, v. The City of CINCINNATI et al., Appellees. |
| Court | Ohio Supreme Court |
Strauss Troy Co., L.P.A., R. Guy Taft, and Stephen E. Schilling, Cincinnati, for appellant Lamar Advantage GP Company, L.L.C., d.b.a. Lamar Advertising of Cincinnati, OH.
Robbins, Kelly, Patterson & Tucker, L.P.A., Michael A. Galasso, and Esther M. Norton, Cincinnati, for appellant Norton Outdoor Advertising, Inc.
Andrew W. Garth, Cincinnati City Solicitor, Marion E. Haynes III, Chief Counsel, and Kevin M. Tidd, Assistant City Solicitor, for appellees.
Sidley Austin, L.L.P., Virginia A. Seitz, Washington, and Christopher S. Ross, urging reversal for amicus curiae Outdoor Advertising Association of America, Inc.
Graydon, Head & Ritchey, L.L.P., and John C. Greiner, Cincinnati, urging reversal for amici curiae Outdoor Advertising Association of Ohio, Ohio Association of Broadcasters, Ohio News Media Association, The E.W. Scripps Company, and Block Communications, Inc.
Kennedy, J. {¶ 1} This appeal from a judgment of the First District Court of Appeals presents a single question: Is a tax imposed solely upon a small number of billboard operators a discriminatory tax that violates the rights to freedom of speech and a free press protected by the First Amendment to the United States Constitution?
{¶ 2} The First Amendment, as applied to the states through the Fourteenth Amendment, protects the rights to free speech and a free press from infringement by federal, state, and local government. Among the protections that it affords to the people of this country is the prohibition against selective taxation—taxes that target only a small group of speakers or that single out the press. Whether a censorial intent is manifest or absent, a selective tax creates the intolerable potential for self-censorship by the press and abuse by governmental actors aimed to suppress, compel, or punish speech. For these reasons, a selective tax imposed on activities protected by the First Amendment, unlike a generally applicable tax, is subject to strict scrutiny and may survive only if the government justifies the tax by proving that it furthers a compelling governmental interest and is narrowly tailored to achieve that interest.
{¶ 3} Appellee the city of Cincinnati imposes a tax on outdoor advertising signs. But through definitions and exemptions within the city's municipal code, the tax burdens fall predominantly on only two billboard operators. As speakers and publishers of speech, those billboard operators may not be singled out or targeted for engaging in expression protected by the First Amendment. Although the city has an interest in raising money to support local government, the fact that there are alternative sources of revenue means that the tax cannot survive strict scrutiny. We therefore reverse the contrary judgment of the First District Court of Appeals and reinstate the trial court's order permanently enjoining the enforcement of the city's billboard tax, Cincinnati Municipal Code Chapter 313.
Facts and Procedural History
{¶ 4} Faced with a budget shortfall of approximately $2,500,000, the Cincinnati City Council in June 2018 passed Ordinance No. 167-2018, which enacted Cincinnati Municipal Code (hereinafter "CMC") Chapter 313 and "lev[ied] an excise tax on the privilege of installing, placing, and maintaining outdoor advertising signs in the City of Cincinnati." The city estimated that the tax would raise $709,000 to help balance the city's budget. The money raised by the billboard tax was not intended to regulate or mitigate the effects of billboards but instead was meant to fund special projects designated by city council relating to human services and public health and to restore funding to city council, the mayor, and the city clerk.
{¶ 5} As enacted, former CMC 313-1-O defined the term "outdoor advertising sign" by incorporating the definition of the term "off-site sign." CMC 1427-03-O, in turn, defines an "off-site sign" as a commercial sign that "proposes or promotes a commercial transaction to be conducted on a premises other than the premises on which the sign is located" or that "directs attention to a good, product, commodity, business, service, event, or other object that serves as the basis of a commercial transaction that is not conducted" on the premises on which the sign is located. Former CMC 313-1-O also provided that an "outdoor advertising sign" includes "an outdoor advertising sign used from time-to-time as a noncommercial sign or an on-site commercial sign."
{¶ 6} By excluding on-site signs, the city exempted numerous—potentially thousands—of advertising signs from the tax. In addition, the ordinance excluded some signs displayed in the public right-of-way (including marquees, projecting signs, and signs relating to sponsorships), CMC 895-2(a), 723, 723-1-A2, and 723-17, signs approved by the city for special events, CMC 895-2(c), and signs erected or displayed on city-owned property, including public-transit stops and streetcar stations, CMC 895-2(d), 723-6(b), and 723-13.
{¶ 7} The ordinance requires an "advertising host," that is, one who owns or controls an outdoor advertising sign in the city, to pay a tax that is the greater of the following: (1) 7 percent of the gross receipts generated by the outdoor advertising sign or (2) an annual minimum amount that is calculated based upon the type, location, and square footage of the sign. CMC 313-3. In addition to imposing a tax, the 2018 ordinance also prohibited an advertising host from issuing a statement to an advertiser reflecting the tax, former CMC 313-7(a), and it prohibited a host from indicating that an advertiser would absorb the cost of the tax, former CMC 313-7(b).
{¶ 8} Appellants, Lamar Advantage GP Company, L.L.C., d.b.a. Lamar Advertising of Cincinnati, OH, and Norton Outdoor Advertising, Inc., are "advertising hosts" as that term is defined by CMC 313-1-A1 and engage in the business of leasing billboard space for the dissemination of commercial and noncommercial speech. Owning approximately 450 and 415 billboards respectively, Lamar and Norton control most of the market for billboard advertising in Cincinnati. However, because the billboard tax would make their less profitable billboards unsustainable, Lamar and Norton have estimated that the tax might cause them to remove a total of 70 to 80 billboards. Further, due to competition with other advertising mediums, neither Lamar nor Norton would be able to pass on to their customers the cost of a 7 percent tax on gross revenues without losing business.
{¶ 9} The messages on Lamar and Norton's billboards are approximately 70 to 75 percent paid advertisements, and the remaining 25 to 30 percent of the advertising space is donated for public-service announcements or consists of Lamar and Norton's own speech (such as tributes to notable public figures and veterans). The paid advertisements are not only for commercial speech, however, but also include political advertisements for candidates for local office, including judges and members of city council, as well as the noncommercial speech of nonprofit organizations, religious groups, advocacy groups, and charities. Lamar and Norton also donate advertising space to display the noncommercial speech of charities and nonprofit organizations, public-service announcements, AMBER alerts, and public-health-and-safety messages.
{¶ 10} Members of city council have contacted both Lamar and Norton to request the donation of billboard space or to press for the removal of messages with which they disagree. For example, Norton ran a paid political message from an organization stating, "Voter Fraud Is a Felony," a message that Norton did not perceive to be incorrect or inflammatory. Norton, however, "receive[d] backlash from local lawmakers." Concerned that city council members held Norton's "fate in their hands," it removed the displays. A council member also approached Lamar, expressing the belief that billboards saying, "Voter Fraud Is a Felony," amounted to voter intimidation. Lamar agreed to donate space for the counter-message that voting is a right, not a crime, and it brought that message to the public as its own political speech.
{¶ 11} As those examples show, Lamar and Norton exercise editorial control over the messages displayed on their billboards. They edit advertisements to ensure effective marketing but also review them to be sure that the information conveyed is accurate and meets community and the companies’ standards. Norton, for instance, will not post advertisements that are anti-religious or proabortion, and it once agreed to post an advertisement for a plastic-surgery group only after the proposed picture was made "less revealing." Nonetheless, as Lamar's vice president, Thomas Vincent Fahey, put it, Lamar is "very apprehensive to do anything that would be critical of the city," expressing concern that city council might increase taxes in retaliation if it were not "happy with whatever message [Lamar] may have delivered on [its] displays."
{¶ 12} Lamar and Norton brought separate actions in the Hamilton County Court of Common Pleas against the city and its treasurer, appellee Nicole Lee, its director of the Department of Buildings and Inspections, appellee Art Dahlberg, and its finance director, appellee Reginald Zeno, seeking among other things a declaration that the tax violated Lamar's and Norton's constitutional rights to free speech and a free press and requesting an injunction against the tax's enforcement. The trial court consolidated the cases, and after it granted a temporary restraining order and a preliminary injunction, the court permanently enjoined the city from enforcing the billboard tax, along with its provisions precluding billboard operators from telling their...
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