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L.A. Billboard Regulatory, Contractual Scheme Upheld

A 7-year-old City of Los Angeles ordinance prohibiting new off-site signs has been upheld by the Ninth U.S. Circuit Court of Appeals, which rejected the argument that the ban combined with a city contract permitting advertising at city-owned bus stops violated the First Amendment.

In overturning a District Court ruling, the Ninth Circuit determined that the Los Angeles ordinance is "essentially indistinguishable" from a San Diego ordinance the U.S. Supreme Court upheld in the pivotal 1980 billboard case Metromedia, Inc. v. City of San Diego, 453 U.S. 490. The fact that Los Angeles signed a contract permitting one company to sell advertising at bus and transit stops does not make the city's off-site billboard prohibition unconstitutional, because the ban still advances the goal of decreasing visual clutter and motorist distractions, the court determined.

The decision is an important one for the assailed Los Angeles law and for a similar regulatory scheme in San Francisco. Still, the Los Angeles law remains unenforceable because of a 2008 federal judge's ruling in a different case that the law's exceptions for certain zoning districts make the law unconstitutional.

Paul Fisher, the attorney for plaintiff Metro Lights, said the Ninth Circuit's ruling ignores the evolution in case law since Metromedia as well as the city's overall scheme of favoring commercial speech that generates municipal revenue. The fact that some signs make the city money is not a "cognizable interest" in a First Amendment case, he said.

"The court has gone back to 1981. It said we're not going to look at bus shelters and news racks, and we'll go back to a case involving only billboards," Fisher said of the court's reliance on Metromedia.

Attorney Laura Brill – counsel for CBS-Decaux, which has the contract for bus stop signs, and the League of California Cities – said the Ninth Circuit decision comports with U.S. Supreme Court precedent. The Ninth Circuit decision "restores the balance" after the district court judge struck down the Los Angeles ordinance, added Brill, who said she was not speaking as a CBS-Decaux representative.

Since 1987, Los Angeles has had agreements that provide private companies exclusive advertising rights on bus shelters in exchange for the installation of shelters and annual payments. After an open bidding process, the city in 2001 signed an agreement with CBS-Decaux (then Viacom Decaux) that covered not only bus shelters, but also public toilets, trash bins, kiosks and news racks. Under the "street furniture agreement" (SFA), CBS installs the facilities, sells advertising on them and makes annual payments to the city, which assumes ownership of the facilities.

Four months after signing the contract with CBS, the city adopted a sign ordinance that prohibits the installation of new off-site signs. The ordinance provides exceptions for signs in the public right-of-way (such as CBS's street furniture advertising), and signs permitted by variance, a specific plan, a supplement use zoning district or a development agreement. Essentially, the city sought to outlaw new billboards except in certain areas, such as around Staples Center at the southern end of downtown.

Billboard companies began suing immediately. Metro Lights did not file suit until December 2003, after the city had issued the company numerous citations for installing new off-site signs. In 2006, District Court Judge Gary Feess ruled for Metro Lights. The city could not prohibit Metro Lights from displaying messages while it allowed CBS to erect off-site signs in the public right-of-way, Feess determined. The city appealed the ruling, while Metro Lights appealed Feess' refusal to award damages.

For a law that regulates commercial speech to be constitutional, it must "directly advance" a legitimate government interest. In Metromedia, the Supreme Court ruled that traffic safety and esthetics are legitimate interests. Metro Lights argued the Metromedia decision was not applicable here because the city's street furniture agreement permits advertising in the public right-of-way that is at least as distracting as billboards on private property. Taken together, the sign ordinance and the street furniture agreement could not directly advance the government's interest in traffic safety and aesthetics, Metro Lights argued. Rather, the city was essentially auctioning off First Amendment rights, the company argued.

But the Ninth Circuit pointed out that the San Diego ordinance in Metromedia also provided an exception for bus stops. More importantly, the Metromedia court's "deference to legislative judgment resounds quite clearly in this case," Judge Diarmuid O'Scannlain wrote for the unanimous three-judge panel. "Los Angeles, just like San Diego, ‘has obviously chosen to value one kind of commercial speech' – controlled offsite advertising on public transit facilities – ‘more than another kind of commercial speech' – uncontrolled offsite advertising spread willy-nilly about the streets."

"Although the SFA permits some advertising," O'Scannlain continued, "a regime that combines the sign ordinance and the SFA still arrests the uncontrolled proliferation of signage and thereby goes a long way toward cleaning up the clutter, which the city believed to be a worthy legislative goal.

O'Scannlain called the auctioning First Amendment rights argument "little more than a canard." He continued, "[E]ven if there were no SFA but only the sign ordinance, the city would still exercise proprietary control over who gets to advertise on its transit facilities."

Metro Lights attorney Fisher said he will ask a full panel of Ninth Circuit judges to re-hear the case. Meanwhile, at least half a dozen lawsuits over the sign ordinance are pending somewhere in the legal system. One of those cases is World Wide Rush, LLC v. City of Los Angeles, No. 08-56062, in which the city has asked the Ninth Circuit to overturn a district court judge's order blocking enforcement of the sign ordinance.

The city has settled other lawsuits. For instance, the city settled one suit by permitting CBS Outdoor and Clear Channel Outdoor to convert 840 billboards from standard signs to digital format. Although the agreement ended litigation, it has been sharply criticized by some neighborhood groups and residents who live near converted signs, which flash brightly lit messages 24 hours a day.

The Case:
Metro Lights, LLC, v. City of Los Angeles, No. 07-55179, 09 C.D.O.S. 113, 2009 DJDAR 205. Filed January 6, 2009.
The Lawyers:
For Metro Lights: Paul Fisher, (949) 675-5619.
For the city: Kenneth Fong, cit attorney's office, (213) 978-8064.
For CBS-Decaux: Laura Brill, Irell & Manella, (310) 277-1010.
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