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VANGO MEDIA, INC. v. CITY OF NEW YORK

June 1, 1993

VANGO MEDIA, INC., Plaintiff,
v.
THE CITY OF NEW YORK, THE NEW YORK CITY DEPARTMENT OF HEALTH, and THE NEW YORK CITY TAXI AND LIMOUSINE COMMISSION, Defendants.


McKENNA


The opinion of the court was delivered by: LAWRENCE M. MCKENNA

McKENNA, D.J.

 With this Memorandum and Order, the Court decides Plaintiff Vango Media, Inc.'s ("Plaintiff" or "Vango") motion for summary judgment seeking declaratory and injunctive relief pursuant to Rule 56 of the Federal Rules of Civil Procedure ("Fed. R. Civ. P.") and Defendants the City of New York's, the New York City Department of Health's and the New York City Taxi and Limousine Commission's ("Defendants" or "the City") motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Fed. R. Civ. P. 12(b)(6).

 For the following reasons, the Court grants Plaintiff's motion for summary judgment, and denies the City's motion to dismiss as moot.

 I.

 Background

 Vango brings this action to challenge Local Law No. 83 of 1992 of the City of New York ("the Local Law") which amends, inter alia, the Administrative Code of the City of New York in relation to tobacco products. Vango is a New York company involved in the business of displaying advertising signs on the roofs of New York City taxicabs. A provision of the Local Law adds a new Section 17-621 to the Administrative Code of the City of New York which requires the display of a minimum of one public health message pertaining to the health dangers of smoking for every four tobacco advertisements on certain property and facilities owned, operated or licensed by the City of New York. In its Complaint, Vango challenges the application of the Local Law to it, alleging six causes of action on a variety of statutory, constitutional and other grounds.

  In this motion for summary judgment, Vango seeks declarative and injunctive relief on three of the claims raised in the Complaint. *fn1" First, Vango argues that the imposition of local mandatory anti-smoking message requirements whenever and wherever certain tobacco advertisements are displayed is preempted by the Federal Cigarette Labeling and Advertising Act (current version shortened to "the Federal Act"), 15 U.S.C. §§ 1331-1340 (as amended) (1988). Second, Vango asserts that the Local Law violates its First Amendment rights because it requires Vango to pay for and display messages written by third parties and approved by government officials, the content and viewpoint of which are contrary to the cigarette advertisements Vango displays.

 Vango's third argument on the present motion is that with respect to some, but not all, of its taxicab tobacco advertising, it is exempt from the reach of the anti-smoking provisions of the Local Law. The Local Law exempts from its requirements holders of valid City licenses or advertising permits if the holders are parties to valid contracts entered into on or before the date of enactment of the Local Law if compliance with the Local Law would result in a material breach of the contracts. Prior to the Local Law's enactment, Vango and the representatives of some of the taxicab companies with which it has previously contracted to install and display advertising entered into a new five year contract that specifies that compliance with the new law would constitute a material breach of the contract. Regarding this particular contract only, Vango seeks a declaratory judgment that it is not subject to the Local Law until the expiration of this contract.

 Defendants argue that the Local Law is not preempted by federal law. They contend that the Local Law is a valid exercise of the City's police power, advances a substantial local interest by means no more extensive than necessary to serve that interest, and that it violates no federal or state law or constitutional provision. In addition, Defendants assert that dismissal is appropriate because both Plaintiff's request for a declaratory judgment respecting its exemption from the requirements of Local Law Section 17-621 and its attendant constitutional claims may be rendered moot because Defendants have not yet determined Plaintiff's claim for an exemption, and a favorable determination regarding Vango's exemption under the Local Law could avoid the need to reach the constitutional issues.

 * * *

 Under the City Administrative Code, the Taxi and Limousine Commission (TLC) issues one-year permits costing $ 50.00 per cab for the cab to carry exterior advertising. Admin. Code of the City of New York § 19-525. (Compl. P 17.)

 Vango states that it has been in the business of displaying advertisements on the exterior of City taxicabs since 1975. Vango enters into contracts with taxicab companies under which it pays for the right to install and maintain its own frames (which hold the advertisements Vango obtains). (Id. at P 14.) Vango currently pays approximately $ 850,000.00 annually to taxicab companies to display advertisements on approximately 1,600 cabs. (Id. at P 15.) Vango has a contract with the Metropolitan Taxi Board of Trade (MTBOT), which represents a large number of taxicab companies, involving 1,400 of the 1,600 cabs on which Vango now has advertisements. Regardless of whether or not Vango is able to obtain advertisements for all of the cabs for which it has contracted with MTBOT, it must pay for the space on all 1,400 cabs. Its failure to obtain advertising is not a ground for termination under the MTBOT contract. (Kanefield Decl. at PP 6-7.) In addition to the MTBOT contract, Vango has renewable five-year contracts for the right to install and maintain exterior taxicab advertisements on approximately 200 cabs with three other companies. (Id. at P 10 and Exs. C & D.) Under these contracts, Vango must pay a monthly fee for the right to place advertisements on the cabs, prorated for any month in which the companies' cabs do not carry advertisements. If Vango fails to obtain paid advertising on company taxicabs for three successive months, either Vango or the companies may terminate the agreements on thirty days written notice. (Kanefield Decl. P 10.) Under all of its contracts, Vango has the sole and continuing obligation to pay the necessary City advertising permit fees. (Id. P 12.)

 Vango is also party to a contract with a tobacco advertiser to place cigarette advertisements on 1,150 New York taxicabs. (Compl. P 18.) These advertisements are lawful and meet all the requirements of the Cigarette Labeling and Advertising Act, 15 U.S.C. §§ 1331-1340 (1988). (Id. P 19.) The terms of the contract grant the advertiser the right to terminate the contract on 60 days' notice. (Kanefield Decl. P 15.) Vango asserts that 82% of its current paid advertisements are cigarette advertisements. Historically, 75% of Vango's advertising revenue has come from cigarette advertisers. (Id. at P 17.)

 On October 8, 1992, the New York City Council adopted the Local Law, and the Mayor approved it on October 27, 1992. The Local Law is to become effective 180 days following enactment, on April 26, 1993. Section 1 sets forth the Council's declaration of legislative findings and intent. Section 1 begins with a lengthy statement of the known risks of smoking, including national and New York City smoking-related health statistics, and discussion of the high incidence of smoking in young people. The declaration continues with the Council's findings that tobacco use has high economic costs to taxpayers, in the form of direct health care costs and indirect costs, such as loss of productivity among city workers. Section 1 then states:

 
The Council concludes that the enormous public costs resulting from tobacco addiction must be decreased by attempting to discourage all New Yorkers from the use of tobacco products. The Council deems the placement of tobacco product advertisements on . . . certain property or facilities licensed by the city, inappropriate and contrary to the general welfare of the city's residents. It is the Council's desire to eliminate tobacco product advertisements from such properties and facilities. However, if such tobacco product advertisements are permitted on these properties and facilities, it is the intention of the Council to require the placement of at least one public health message for every four tobacco advertisements placed or appearing in or on . . . certain property and facilities licensed by the City of New York. It is not the intent of the Council to require the placement or display of such public health messages on privately owned real property. *fn2"

 (See Section 1 of Local Law No. 83, Ex. 1, Poser Decl.)

 Section 2 of Local Law No. 83 amends Title 17 of the City Administrative Code by adding a new Chapter 7, comprising Sections 17-616 to 17-626, and entitled, "Tobacco Product Regulation Act." Section 17-621a(1) states in pertinent part: "There shall be a minimum of one public health message placed or displayed in or on a unit of advertising space for every four tobacco advertisements placed or displayed in or on such unit." The Local Law defines "a unit of advertising space" to include exterior advertisements on taxicabs, because they are a "facility or instrumentality of public transportation . . . with respect to which a license or permit has been issued by the city that expressly grants the right to place or display advertisements." N.Y. City Admin. Code § 17-617u. "Public health message" is defined as "words, pictures, photographs, symbols, graphics or visual images of any kind, or any combination thereof, the primary purpose of which is to communicate the health risks of tobacco product use or the health benefits of not using tobacco products." N.Y. City Admin. Code § 17-621j. The Local Law requires that the anti-smoking messages must "to the greatest extent possible, be comparable in size, location and visibility to the tobacco advertisements," must "be installed and maintained by the holder of the right to place or display advertisements . . . in accordance with the same standards" as tobacco advertisements, and must "utilize the same materials and methods for display" as are used for the tobacco advertisements. N.Y. City Admin. Code § 17-621a(2).

 The Local Law places responsibility for compliance on "the holder of the right to place or display advertisements in or on a unit of advertising space" and sets forth daily recordkeeping and quarterly reporting requirements. N.Y. City Admin. Code § 17-621b(1)-(2). It further states that "any costs associated with the posting of the public health messages required by this section and any costs in terms of foregone advertising revenues associated with the placement or display of such ...


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