Outdoor Media Group, Inc. v. City of Beaumont, 05-56620.

• Decision Date: 01 November 2007
• Docket Number: No. 05-56620.,05-56620.
• Citation: 506 F.3d 895
• Parties: OUTDOOR MEDIA GROUP, INC., a California Corporation, Plaintiff-Appellant, v. CITY OF BEAUMONT, a California Charter City, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

506 F.3d 895

OUTDOOR MEDIA GROUP, INC., a California Corporation, Plaintiff-Appellant, v. CITY OF BEAUMONT, a California Charter City, Defendant-Appellee.

No. 05-56620.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 6, 2007.

Filed November 1, 2007.

Jeffrey A. Tidus and Henry H. Gonzalez, Baute & Tidus, Los Angeles, CA, for the appellant.

Randal R. Morrison, Sabine and Morrison, San Diego, CA, for the appellee.

Appeal from the United States District Court for the Central District of California; Robert J. Timlin, Senior Judge, Presiding. D.C. No. CV-03-01461-RT.

Before: CYNTHIA HOLCOMB HALL and CONSUELO M. CALLAHAN, Circuit Judges, and LYLE E. STROM,^* District Judge.

Opinion by Judge HALL; Partial Concurrence and Partial Dissent by Judge CALLAHAN.

HALL, Senior Circuit Judge:

Outdoor Media Group appeals the district court's dismissal of its 42 U.S.C. § 1983 complaint under Federal Rule of Civil Procedure 12(b)(6). Outdoor Media asserts that the City of Beaumont's billboard ordinance violates the First and Fourteenth Amendments. Beaumont repealed the challenged ordinance and replaced it with a new ordinance that specifically bans new billboard construction. The district court then dismissed Outdoor Media's claims for injunctive and declarative relief as moot, and dismissed its damages claim on the merits. The district court had jurisdiction under 28 U.S.C. § 1331. This court has jurisdiction over the appeal under 28 U.S.C. § 1291. We reverse in part and remand for consideration of whether the old ordinance created an unconstitutional preference for commercial over noncommercial speech or impermissibly distinguished among categories of noncommercial speech, and whether this alleged infirmity gives rise to Outdoor Media's damages claim.

I. Background

On May 22, 2003, Outdoor Media filed a conditional use permit application with the Planning Commission of the city of Beaumont to erect four billboards at the junction of Interstate 10 and State Route 60. On July 8, the City's Director of Planning recommended that the Planning Commission deny the application, because the signs "would result in excessive, undue and adverse visual intrusion in the character of the subject Interstate 10 and State Highway 60 commercial corridors, by adding unrelated advertising to a future new commercial facility." It also found the proposed billboards would "have a detrimental effect on the general public, health, safety and welfare by adversely affecting existing views of open space and visual relief and future views of new commercial development." The Planning Commission accepted this recommendation and rejected Outdoor Media's permit application. Outdoor Media appealed to the City Council, which affirmed the denial.

Outdoor Media filed this suit on December 12, 2003, alleging that the city deprived it of its First and Fourteenth Amendment rights. Specifically, Outdoor Media alleges that (1) the ordinance violates the First Amendment because it regulates signs on the basis of content, regulates commercial speech without a substantial government interest, allows the city standardless discretion in the permitting process, and is overbroad; (2) the city violated Outdoor Media's procedural due process rights because its denial was unreasonable, arbitrary, and capricious; and (3) the ordinance violates the Equal Protection Clause by regulating on the basis of arbitrary and unreasonable classifications. Outdoor Media sought damages for deprivation of its constitutional rights, a declaration that the sign ordinance is unconstitutional on its face and as applied to Outdoor Media, and injunctive relief prohibiting the city from interfering with Outdoor Media's efforts to erect otherwise-conforming signs within the city.

On February 3, 2004, the City Council repealed the challenged sign ordinance and replaced it with a new ordinance that specifically bans new billboards. The city sought judicial notice of the old and new sign ordinances, and filed a motion to dismiss the complaint. Outdoor Media opposed the motion to dismiss and sought judicial notice of the Director of Planning's recommendation to reject the company's permits. On June 30, 2005, the district court granted both motions for judicial notice and the motion to dismiss. Outdoor Media timely appealed.

II. Standard of Review

We review de novo the district court's grant of a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005). When ruling on a motion to dismiss, we may "generally consider only allegations contained in the pleadings, exhibits attached to the complaint, and matters properly subject to judicial notice." Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir.2007). We accept all factual allegations in the complaint as true and construe the pleadings in the light most favorable to the nonmoving party. Knievel, 393 F.3d at 1072.

III. Analysis

A. Jurisdiction

Before we examine the merits of Outdoor Media's appeal, we must address Beaumont's claim, raised for the first time at oral argument, that we lack jurisdiction to consider this case because Outdoor Media has failed to exhaust its state law remedies. Generally, the federal courts deem waived any arguments that are not raised and presented in the parties' opening briefs. See, e.g., Holland America Line Inc. v. Wartsila North America, Inc., 485 F.3d 450, 459 n. 6 (9th Cir.2007). By failing to present the issue properly, Beaumont has deprived its opponent of a fair opportunity to respond comprehensively to its claim, and has deprived this court of the benefit of a robust debate informed by zealous advocacy. However, the waiver rule does not apply when the issue goes to the district court's jurisdiction. See Conforte v. United States, 979 F.2d 1375, 1377 (9th Cir.1992). Therefore, we address Beaumont's belated argument.

Beaumont's jurisdictional argument flows from two premises: (1) a plaintiff must exhaust its state law remedies before pursuing a federal claim, and (2) a writ of administrative mandamus is the exclusive state law remedy for an allegedly improperly denied conditional use permit. We need not address the second premise because the first is fatally flawed. The Supreme Court has explained that "exhaustion of state administrative remedies is not a prerequisite to an action under § 1983." Patsy v. Bd. of Regents, 457 U.S. 496, 507, 102 S.Ct. 2557, 73 L.Ed.2d 172 (1982); see also Knight v. Kenai Peninsula Borough Sch. Dist., 131 F.3d 807, 816 (9th Cir.1997) ("Congress imposed only a limited exhaustion requirement on actions brought under 42 U.S.C. § 1983, as this case was. The statute requires exhaustion only when brought by prisoners. Thus, mandating exhaustion in this case would not be consistent with congressional intent."). Beaumont's reliance upon our Fifth Amendment regulatory takings cases is misplaced. We require exhaustion of administrative remedies in the takings context as a matter of ripeness: Because the Takings Clause only prohibits the taking of property without just compensation, a takings claim is not ripe until the claimant has pursued and been denied just compensation under the applicable state compensatory procedures. Here, the alleged deprivation of Outdoor Media's constitutional rights was completed when Beaumont denied its permit applications. Because exhaustion is not required to pursue a Section 1983 complaint, we find that Outdoor Media's failure to seek a writ of administrative mandamus did not deprive the district court of jurisdiction over this case.

B. Mootness of Claims for Declaratory and Injunctive Relief

Outdoor Media asserts that the district court erred in finding that the repeal of the ordinance mooted its requests for a declaration that the ordinance is unconstitutional and for an injunction prohibiting its enforcement. "A claim is moot when the issues presented are no longer live or the parties lack a legally cognizable interest in the outcome. The basic question is whether there exists a present controversy as to which effective relief can be granted." Vill. of Gambell v. Babbitt, 999 F.2d 403, 406 (9th Cir.1993) (internal quotation marks and citations omitted). "Generally, a case should not be considered moot if the defendant voluntarily ceases the allegedly improper behavior in response to a suit, but is free to return to it at any time." Native Vill. of Noatak v. Blatchford, 38 F.3d 1505, 1510 (9th Cir. 1994). "A statutory change, however, is usually enough to render a case moot, even if the legislature possesses the power to reenact the statute after the lawsuit is dismissed." Id.¹

Here, the district court correctly determined that the city's repeal of the sign ordinance moots Outdoor Media's claims for declaratory and injunctive relief. Because there is no longer any risk that Outdoor Media will be subject to the challenged ordinance, there exists no live issue upon which the court could issue prospective relief. Noatak, 38 F.3d at 1510. Outdoor Media attempts to distinguish Noatak on the ground that Beaumont repealed the statute only after Outdoor Media filed suit, suggesting that the repeal is strategic and that the city will re-enact the statute upon resolution of the case. The company relies upon City of Mesquite v. Aladdin's Castle, 455 U.S. 283, 289, 102 S.Ct. 1070, 71 L.Ed.2d 152 (1982), but as the district court recognized, Outdoor Media's broad reading of that case does not square with this circuit's precedent. Noatak limited Mesquite to the "rare" situation "where it is virtually certain that the repealed law would be reenacted." Noatak, 38 F.3d at 1510 (emphasis added); see also Cammermeyer v. Perry, 97 F.3d 1235, 1238 (9th Cir.1996).² The fact that the lawsuit may have prompted the city's action does not alone show the city's intent to later re-enact the challenged ordinance. Cf. Smith v. University of Washington Law School, 233 F.3d 1188, 1194 (9th Cir.20...