Lamar Co. v. Miss. Transp. Comm'n

• Citation: 976 F.3d 524
• Decision Date: 22 September 2020
• Docket Number: No. 20-60072,20-60072
• Parties: THE LAMAR COMPANY, L.L.C., Plaintiff—Appellant, v. The MISSISSIPPI TRANSPORTATION COMMISSION, Defendant—Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

976 F.3d 524

THE LAMAR COMPANY, L.L.C., Plaintiff—Appellant,

v.The MISSISSIPPI TRANSPORTATION COMMISSION, Defendant—Appellee.

No. 20-60072

United States Court of Appeals, Fifth Circuit.

FILED September 22, 2020

REVISED September 24, 2020

Mark D. Herbert, Esq., Ginny Y. Deliman, Hannah Katherine Herrin, Esq., Taylor, Wellons, Politz & Duhe, A.P.L.C., Madison, MS, for Plaintiff - Appellant.

Candice Leigh Rucker, Daniel B Smith, Mississippi Attorney General's Office, Rodney Maurice Love, Attorney, Mississippi Department of Transportation, Jackson, MS, for Defendant - Appellee.

Before King, Stewart, and Southwick, Circuit Judges.

Leslie H. Southwick, Circuit Judge:

The argument on this appeal, until recently, centered on a Mississippi statute governing the height of roadside billboards. An interstate sign company has insisted the district court erred in holding that the state statute was unambiguous. Belatedly, the state argued that the needed diversity jurisdiction does not exist because the defendant agency is the alter ego of the state and, under established doctrine, cannot be a citizen for diversity purposes. The state is correct, even if late. We VACATE the district court's judgment, REMAND for proceedings regarding attorneys’ fees and costs, and also order that the case be REMANDED to state court.

FACTUAL AND PROCEDURAL BACKGROUND

The relevant Mississippi state statute regulates the height of billboards. MISS. CODE ANN. § 49-23-9(2)(b). The supposed ambiguity is whether the statute excepts from its height restrictions those roadside signs that predated a statutory change.

Until July 1, 2003, the statute governed only billboard size, not height. Effective on that date were several revisions adopted by the Mississippi Legislature, including this sentence: "The height of any sign structure shall not exceed forty (40) feet." 2002 Miss. Laws Ch. 518, § 1. Then in 2008, in what the plaintiff has sought to persuade was a minor error that can be judicially overcome, the legislature revised in a confusing manner. It left the unqualified height limit from the 2002 legislation but added language that signs erected after a certain date were limited to that height:

The height of any sign structure shall not exceed forty (40) feet. The height of sign structures erected on or after April 15, 2008, shall not exceed forty (40) feet above the level of the road grade unless the grade of the land adjacent to the road is higher than the level of the road grade, then the height of the sign structure ... shall not exceed forty (40) feet above the grade of the site where the sign is placed.

2008 Miss. Laws ch. 517, § 4 (codified at MISS. CODE ANN. § 49-23-9(2)(b) ). Is the first, unqualified height limitation the ignorable remnant of the previous statute or is it a command that overwhelms the prospective force of the second limitation?

Shedding light on the reason for the 2008 legislation is an affidavit executed by the current mayor of Gulfport, Billy Hewes, which Lamar introduced in district court. At the time of the adoption of the 2008 amendment, Hewes was president pro tempore of the state senate. The 2008 amendment was based on a bill he sponsored. Mayor Hewes indicated that the legislative purpose was to "grandfather" older signs by making prospective the height limit imposed in 2003.¹ There is no reason to doubt the former senator's explanation of the purpose he had for introducing this legislation in 2008. Of some importance, though, the state supreme court has held that legislators’ post hoc explanations of what a statute was intended to mean, no matter how persuasive, are simply irrelevant. See Mississippi Gaming Comm'n v. Imperial Palace of Miss ., 751 So. 2d 1025, 1028–29 (Miss. 1999) (rejecting testimony from two legislators).

The background for this litigation is as follows. The Lamar Company, L.L.C., is an outdoor advertiser with billboards and related structures across the country. It sought to change the height of a sign located in Gulfport, Mississippi, erected in 1986. Lamar sent its proposal to the Mississippi Transportation Commission ("MTC") in May 2015. The MTC notified Lamar that it disapproved of this modification because the sign already exceeded the limits on height and would continue to do so after the modification. Lamar, though, insisted that this older sign was exempt from the height limits.

The parties continued discussions from 2015 to 2017, but no resolution occurred. The MTC asserts that Lamar and the MTC joined forces to get a legislative revision. Bills failed in both the 2016 and 2017 sessions to make the height limit prospective only. In April 2017, abandoning pursuit of a solution in the legislative branch, Lamar turned to the judicial by filing suit in the Chancery Court of Harrison County. The MTC removed the case to federal court based on federal-question jurisdiction. After removal, the district court required briefing on jurisdiction and particularly on the MTC's assertion of federal-question jurisdiction. The MTC's brief argued that the complaint presented a tacit but unavoidable federal question, or, alternatively, the parties were diverse and the requisite amount in controversy was satisfied.

Lamar's supplemental brief took the position that no federal question existed at the time of removal. The district court indicated diversity jurisdiction was a possibility by ordering additional briefing to determine the citizenship of each member of the Lamar limited liability company.

Without identifying applicable jurisdiction, the district court dismissed the suit because of Lamar's failure to exhaust administrative remedies. This court reversed "because no adequate administrative remedy existed." Lamar Co., L.L.C. v. Miss. Transp. Comm'n , 786 F. App'x 457, 461 (5th Cir. 2019). On remand, the district court granted partial summary judgment, holding that Section 49-23-9(2)(b) was unambiguous in its restriction of all billboards to forty feet.² The parties then agreed to dismiss Lamar's remaining claims with prejudice, and the district court entered final judgment.

On appeal, the first time a party questioned the court's jurisdiction was eleven days before oral arguments when the MTC moved to remand to state court. The MTC argued that it is an alter ego of the state and cannot be considered a citizen for purposes of diversity jurisdiction. Lamar responded by arguing, first, that the MTC waived its objection to subject-matter jurisdiction when it removed the case, and second, that the MTC is not an alter ego of the state. If we find subject-matter jurisdiction is lacking, Lamar requests costs, fees, and expenses.

The timing of the appearance of this jurisdictional issue is inopportune but not unique in our experience. Further, the MTC had been successful so far in this litigation. Since most district court judgments are affirmed, the odds favored the MTC's success here — though there was no guarantee. Thus, for the MTC to suggest the need to start over, though tardy and unfortunate if correct, is commendable. For Lamar to be annoyed, in a professional manner, by this late issue would be understandable.

DISCUSSION

I. Subject-matter jurisdiction

Subject-matter jurisdiction is essential for the federal judiciary to hear a case. It "can never be waived or forfeited." Gonzalez v. Thaler , 565 U.S. 134, 141, 132 S.Ct. 641, 181 L.Ed.2d 619 (2012). Every federal court should, on its own, ensure that subject-matter jurisdiction is present. See id. We examine both possibilities, federal question under 28 U.S.C. § 1331 and diversity under 28 U.S.C. § 1332.

A. Federal-question jurisdiction

The MTC's basis for removal was the presence of a federal question. Generally, a federal question has to appear on the face of a complaint; it is not enough, for example, that a defense based on federal law exists. Elam v. Kan. City S. Ry. Co ., 635 F.3d 796, 803 (5th Cir. 2011). There are a few circumstances in which federal-question jurisdiction has been recognized despite the silence of the complaint. See, e.g. , id. (Holding complete preemption converts a state-law claim into one under federal law). We will explain the MTC's jurisdictional argument in a moment, but it started with the fact that Lamar made claims under the Mississippi constitution's takings clause. MISS. CONST. art. 3, § 17. If the MTC's arguments were correct, then the takings claim could be considered under the district court's original jurisdiction; that court then would have discretion to consider the state-law claims on the basis of supplemental jurisdiction if the other claims were sufficiently related to the federal issue. See Carlsbad Tech., Inc. v. HIF Bio, Inc. , 556 U.S. 635, 639, 129 S.Ct. 1862, 173 L.Ed.2d 843 (2009) (citing 28 U.S.C. §§ 1367(a), (c) ).

Eventually, the takings claim was withdrawn. Nonetheless, the existence of federal-question jurisdiction at the time the suit was removed would allow the case to proceed on the state-law claims under the court's discretionary supplemental-jurisdiction authority. See id. at 639–40, 129 S.Ct. 1862. It is true that the "general rule is that a court should decline to exercise jurisdiction over remaining state-law claims when all federal-law claims are eliminated before trial, but this rule is neither mandatory nor absolute." Brookshire Bros. Holding, Inc. v. Dayco Prods., Inc ., 554 F.3d 595, 602 (5th Cir. 2009). Here, there would be significant reasons for the district court to exercise its discretion and thereby sustain its actions in this suit if it became clear, only at the end of the litigation, that was the only jurisdictional option. The district court never had that question presented to it. In light of what we will explain as to the absence of diversity jurisdiction, we will assume supplemental jurisdiction would have been invoked. Therefore, we analyze whether there was a federal question at the time the suit was removed.

The well-pleaded-complaint rule generally controls whether there is a...