Vugo, Inc. v. City of Chi.

• Decision Date: 09 August 2017
• Docket Number: No. 17 C 864,17 C 864
• Parties: VUGO, INC., Donald Deans, Denise Jones, Glouster Brooks, and Patricia Page, Plaintiffs, v. CITY OF CHICAGO, an Illinois Municipal Corporation, Defendant.
• Court: U.S. District Court — Northern District of Illinois

273 F.Supp.3d 910

VUGO, INC., Donald Deans, Denise Jones, Glouster Brooks, and Patricia Page, Plaintiffs,

v.CITY OF CHICAGO, an Illinois Municipal Corporation, Defendant.

No. 17 C 864

United States District Court, N.D. Illinois, Eastern Division.

Signed August 9, 2017

Jeffrey M. Schwab, Mauck & Baker, LLC, James Joseph McQuaid, American International Group, Inc., Jacob H. Huebert, Chicago, IL, for Plaintiffs.

Andrew W. Worseck, David Michael Baron, Tara D. Kennedy, City of Chicago, Department of Law, Chicago, IL, for Defendant.

Memorandum Opinion and Order

Elaine E. Bucklo, United States District Judge

In this action, plaintiffs and plaintiff-intervenor (to whom I collectively refer as "plaintiffs" unless otherwise specified)¹ challenge the constitutionality of a City of Chicago ordinance prohibiting commercial advertising on the interior or exterior of "transportation network vehicles," i.e., vehicles driven by independent contractors for companies such as Uber and Lyft. Before me is the City's motion to dismiss both complaints—which in all ways relevant to the instant motion assert identical claims—for lack of subject matter jurisdiction and failure to state an actionable claim. For the reasons that follow, I deny the motion.

I.

The complaints allege the following facts, which I take as true for present purposes. In May of 2014, the City passed an ordinance regulating "transportation network providers," "transportation network vehicles," and "transportation network drivers." (These are the entities, vehicles, and providers of a service commonly known as "ridesharing," the best-known of which, as noted above, are operated by the companies Uber and Lyft. See Ill. Transp. Trade Ass'n v. City of Chicago , 839 F.3d 594, 595 (7th Cir. 2016) ). The ordinance provides that "[c]ommercial advertisements shall not be displayed on the exterior or in the interior of a transportation network vehicle." Chi. Mun. Code § 9–115–130. Plaintiffs allege that this restriction violates their rights under the First and Fourteenth Amendments of the federal constitution and equivalent provisions of the Illinois constitution.

Vugo is a technology company that "operates a software-only mobile media network that allows ridesharing drivers to display advertising and other media (such as news and entertainment) in their vehicles." Am. Cmplt. at ¶ 16. To use Vugo, rideshare drivers download the Vugo "app" onto their personal tablets, then mount the tablets on a headrest of their front seats, facing the rear passengers. Id. at ¶ 20. Passengers can interact with the Vugo app during their ride, and the app displays ads based on route-specific and other individualized data. Id. at ¶¶ 22–23. Vugo earns advertising revenue for displaying the ads, a portion of which it pays to its drivers who use the app. Id. at ¶ 24.

Vugo alleges that the ordinance prevents it from operating its platform in Chicago, and the driver plaintiffs allege that it prevents them from displaying revenue-generating commercial advertisements on or in their vehicles. One driver—plaintiff, Patricia Page, alleges that after the ordinance took effect, she was ticketed for violating the commercial advertising ban because the vehicle she used as a transportation network vehicle displayed exterior advertising for her face-painting business. Am. Cmplt. at ¶ 40. All plaintiffs complain that the advertising ban violates their right to free speech and violates equal protection guarantees because drivers of taxis and ordinary passenger vehicles are not prohibited from displaying commercial advertisements.

II.

A. Plaintiffs' Free Speech Claims

The City asserts two bases for dismissing plaintiffs' claims under the First Amendment and Section 4 of the Illinois Constitution. First, it argues that none of the plaintiffs has standing to challenge the ordinance's ban on interior advertising, and that only plaintiff Page has standing to challenge the exterior ad ban. Second, it argues that plaintiffs have not stated an actionable constitutional claim under either the First or the Fourteenth Amendment.

The City's standing argument focuses on prudential standing—a concept not derived from Article III's case-or-controversy requirement and "similar to the requirement of Federal Rule of Civil Procedure 17 that every action must be prosecuted in the name of the real party in interest." G & S Holdings LLC v. Continental Cas. Co. , 697 F.3d 534, 541 (7th Cir. 2012). Prudential standing principles ensure that litigants assert their own rights, not those of a third party. Id. Although the City frames its argument in jurisdictional terms and seeks dismissal on that basis pursuant to Rule 12(b)(1), prudential standing is not a jurisdictional requirement. See id. at 540 (objections to prudential standing can be waived if not preserved; court may raise lack of prudential standing sua sponte but is not required to do so). See also Sec'y of State of Md. v. Joseph H. Munson Co., Inc. , 467 U.S. 947, 956 n. 5, 104 S.Ct. 2839, 81 L.Ed.2d 786 (1984) ("prudential limitations add to the constitutional minima" required for federal jurisdiction under Article III); Singleton v. Wulff , 428 U.S. 106, 113, 96 S.Ct. 2868, 49 L.Ed.2d 826 (1976) (prudential considerations counsel caution by federal courts "before resolving a controversy, even one within their constitutional power to resolve"). The City does not challenge, nor do I perceive any basis for questioning, plaintiffs' Article III standing. Accordingly, my jurisdiction is secure regardless of whether the City's prudential standing argument has substantive merit. As explained below, it does not.

The City posits that because none of the plaintiffs (except for Page) alleges a desire "to communicate about products or services that they themselves offer for sale," or "creates or seeks to display its own advertising content," none has a protected First Amendment interest in the commercial speech the ordinance prohibits. In the City's view, plaintiffs' interest (again with the exception of Page) is purely an economic one—the desire to earn advertising revenue—that the First Amendment does not protect. Accordingly, the City argues, the only First Amendment interests potentially implicated by the ordinance belong to the advertisers and cannot be vindicated in a suit brought by plaintiffs.

The City relies heavily on The Pitt News v. Fisher , 215 F.3d 354, 366 (3d Cir. 2000), but neither that case nor the City's remaining authorities support its position. In Pitt News , the Third Circuit held that a student newspaper lacked prudential standing to challenge, on behalf of its former advertisers, a state statute imposing criminal sanctions on businesses that advertised alcoholic beverages in school-published media. But the court concluded that the paper's alleged loss of advertising revenue as a result of the statute's enforcement amounted to a sufficient injury-in-fact to trigger Article III standing and proceeded to the merits of the newspaper's own First Amendment claim. So while the Pitt News court's lengthy discussion of prudential standing principles, including its analysis of seminal cases such as Eisenstadt v. Baird , 405 U.S. 438, 92 S.Ct. 1029, 31 L.Ed.2d 349 (1972), Broadrick v. Oklahoma , 413 U.S. 601, 93 S.Ct. 2908, 37 L.Ed.2d 830 (1973), Village of Schaumburg v. Citizens for a Better Environment , 444 U.S. 620, 100 S.Ct. 826, 63 L.Ed.2d 73 (1980), and Sec'y of State of Maryland v. Joseph H. Munson Co., Inc. , 467 U.S. 947, 104 S.Ct. 2839, 81 L.Ed.2d 786 (1984), may provide a compelling rationale for prohibiting plaintiffs from asserting claims properly belonging to their advertisers, nothing in the court's analysis suggests that plaintiffs cannot assert their own First Amendment claims challenging the ordinance. To the contrary, the decision suggests the opposite, as the court held affirmatively that the newspaper had standing to assert its own First Amendment claim based on loss of advertising income.²

At all events, the City cites no authority for the proposition that the First Amendment protects a speaker's right to engage in commercial speech only when the speaker is the original author of the message, or when the message is about the speaker's own product or service. If that were the rule, the plaintiffs' claims in cases such as Metromedia, Inc. v. City of San Diego , 453 U.S. 490, 101 S.Ct. 2882, 69 L.Ed.2d 800 (1981) (upholding billboard owners' First Amendment challenge to restrictions on off-premises signs), Lavey v. City of Two Rivers , 171 F.3d 1110 (7th Cir. 1999) (rejecting on the merits a billboard owner's First Amendment challenge to permit requirements), and AMSAT Cable Ltd. v. Cablevision of Connecticut Ltd. Partnership , 6 F.3d 867, 871 (2nd Cir. 1993) (acknowledging a cable operator's First Amendment right to "disseminate" speech but rejecting its claim on the merits), could all have been resolved on standing grounds.³ So while the City characterizes plaintiffs as mere "conduits" for the protected speech of others, rather than as speakers who are communicating original content, that distinction is not dispositive of whether plaintiffs have enforceable First Amendment rights. See City of Los Angeles v. Preferred Communications, Inc. , 476 U.S. 488, 494, 106 S.Ct. 2034, 90 L.Ed.2d 480 (1986) (cable operator partakes of speech both by communicating original content and by exercising editorial discretion in retransmitting the communications of others). For these reasons, I conclude that plaintiffs have standing to assert their free speech claims.

Clearing the standing hurdle is just a threshold step, however. To survive the City's motion, plaintiffs must also allege plausibly that the ordinance's restriction on commercial advertising in or on transportation network vehicles fails the test established in Central Hudson Gas & Electric Corp. v. Public Service Commission , 447 U.S. 557, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980). Before turning to this question,...