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GASPARO v. CITY OF NEW YORK

May 28, 1998

VITO GASPARO, HARVEY KEDANSKY, LOUIS REID, ADAM PETRELLA, and KATHERINE ASHLEY, Plaintiffs, against CITY OF NEW YORK; DEPARTMENT OF TRANSPORTATION, CITY OF NEW YORK: RICHARD MALCHOW, ACTING COMMISSIONER, DEPARTMENT OF TRANSPORTATION, CITY OF NEW YORK; DEPARTMENT OF CONSUMER AFFAIRS, CITY OF NEW YORK, Defendants.


The opinion of the court was delivered by: ROSS

OPINION AND ORDER

 ROSS, United States District Judge:

 Plaintiffs in this action are all owners and operators of newsstands in New York City ("City"). They seek to enjoin the implementation of Local Law 29, an ordinance passed by the City Council in 1997 creating a new concession scheme for newsstands located in the City. The concession scheme replaces a licensing scheme that had previously governed the operation of newsstands throughout the City. In seeking a preliminary injunction against the enforcement of that law, plaintiffs claim that the plan violates their rights under the First and Fourteenth Amendments. They argue that the plan gives City officials "unfettered discretion" to administer the concession program in violation of First Amendment standards, and that the increased permit fees represent an unconstitutional tax on the exercise of First Amendment rights. In addition, plaintiffs argue that because the plan pertains only to newsstand vendors and does not subject other kinds of sidewalk vendors to its strictures, it violates the Equal Protection Clause of the Fourteenth Amendment. For the reasons that follow, the court concludes that it has no jurisdiction to consider plaintiffs' claims regarding the increased permit fee. Insofar as the plan gives "unfettered discretion" to licensing officials to terminate a permit, the motion is granted. The motion is denied in all other respects.

 FACTS

 The Department of Consumer Affairs ("DCA") administered the previous newsstand licensing system. Under that system, a person who wished to build a new newsstand or operate an existing newsstand was required to secure a permit from DCA. The permit was valid for two years with an annual fee of $ 538. See N.Y.C. Admin. Code § 20-230 (1991). The licensing scheme regulated the size and location of newsstands, provided that no new newsstand could be erected without the approval of the Department of Transportation ("DOT") and the Art Commission, id. § 20-231, and gave the Commissioner of DCA the authority, inter alia, to terminate or to revoke any license if the licensee violated any law or regulation related to the operation of the newsstand, see id. § 20-104e(1) (1986).

 In August of 1994, Mayor Rudolph Guiliani announced the formation of an interagency task force to "develop a master plan to reduce the congestion of sidewalk obstructions and better regulate the streetscape of New York City." Emery Decl. Ex. A (Press Release, dated Aug. 18, 1994). The task force produced the "Coordinated Street Furniture Franchise Proposal." Under the proposal, to be implemented by DOT, the City would award a single franchise for the design, construction, installation, and maintenance of what the task force referred to as "street furniture"--various public structures, such as newsstands, bus stop shelters, and public toilets. The value of the franchise, which would be awarded by competitive bid, would derive from the franchisee's right to sell the advertising space on the street furniture.

 In accordance with the Coordinated Street Furniture Franchise Proposal, on April 30, 1997, the City Council enacted Local Law 29, which became effective on May 16, 1997. Local Law 29 created a concession scheme for newsstands to be administered by DOT in place of the old licensing scheme administered by DCA. The new law provided that future newsstand concessions would be distributed subject to the competitive bidding procedures used to allocate most substantial City concessions. Cummins Decl. Ex. B (Local Law, at 1). Vendors who were then operating newsstands pursuant to a DCA license could obtain concessions without competitive bidding. Specifically, Local Law 29 stated that:

 
Current newsstand operators who have built and operated newsstands under the current licensing law should not, at least at this time, be put into this competitive system. However, there should be a moratorium on the issuance of newsstand licenses by the Department of Consumer Affairs and the City should receive revenues for the use of its sidewalks by newsstands. Therefore, pursuant to a determination made by the Department of Transportation regarding a particular newsstand location, persons who are newsstand licensees as of the effective date of this local law will be given the opportunity to become concessionaires at the site of the newstands they have already built.

 See Cummins Decl. Ex. B (Local Law 29, at [ILLEGIBLE TEXT]. The special concession agreements extended to these existing newsstand operators, however, will remain valid for only five years. After that, the City will review the effectiveness of the concession program and either extend the program, propose a new arrangement, or revert to the previous licensing system. Id.

 Following passage of Local Law 29, concession agreements for currently licensed newsstand operators were developed by the appropriate City authorities. Cummins Decl. Exs. C-F. The newsstand operators were informed that under the concession agreements, annual "occupancy charges" would be increased from the previous flat license fee of $ 538, to a range of $ 2,500 to $ 5,000, depending on the location of the newsstand, and that newsstands would be replaced at no cost to them. Id. Ex. G. The newsstand operators were also informed that, pursuant to the new plan, all current newsstand licenses would be terminated on December 31, 1997. Id. Ex. I. In order to continue operating a newsstand after that date, vendors would have to sign a concession agreement with DOT.

 In January of 1998, however, the City apparently began to reconsider whether the Coordinated Street Furniture Franchise Proposal should be implemented. To date, no franchisee has been selected by the City to assume the duties contemplated in the original proposal. Nonetheless, the City has proceeded to implement Local Law 29. On April 7, 1998, the City mailed the occupancy permit agreements to newsstand operators. Id. Ex. K. These permit agreements included some significant amendments from a draft version that had been circulated the previous August. First, the agreement was amended to reflect the fact that the viability of the street furniture franchise program was in doubt. Thus, the promise that newsstand vendors would receive new structures was modified with conditional language to reflect the program's uncertain status. Second, a provision was added to the agreement whereby the newsstand vendor had to agree to abide by the terms of the City's recently enacted adult establishment zoning law. See Text Amendment N950384ZRY to the Zoning Resolutions of the City of New York ("Zoning Amendment"). The amended agreement contained a clause stipulating that "the Permittee shall not operate the newsstand as 'an adult bookstore,' as such is defined in Appendix A annexed hereto." See Cummins Decl. Ex. M (Summary of Changes to Newsstand Occupancy Permit). The "adult bookstore" clause places strict limits on the amount of sexually explicit literature that can be sold at a newsstand. In order to avoid application of the adult establishment zoning law, no more than 25% of display space may be occupied by "adult" materials, and no more than 40% of sales may consist of such materials. According to a deputy mayor of the City, the purpose of this amendment to the agreement is to "eliminate any issue that may exist concerning application of the adult use zoning law to street newsstands," so that newsstand vendors do not take advantage of any loophole in the zoning law by seeking to specialize in the sale of adult magazines from their stands. See Emery Decl. Ex. N (Letter from Deputy Mayor Randy Mastro to Robert S. Bookman, dated April 14, 1998).

 Along with the occupancy permit agreements mailed on April 7, newsstand operators were informed that they must sign the permit agreement and pay their "occupancy charge" by April 18 or forfeit their right to "operate the Existing Newsstand on the city streets." Emery Decl. Ex. L. The deadline was subsequently extended until April 26.

 On the eve of the compliance deadline, April 25, 1998, plaintiffs petitioned this court for a temporary restraining order ("TRO") and a preliminary injunction against the City's enforcement of the new concession scheme, arguing that the scheme violates their constitutional rights under the First and Fourteenth Amendments. Specifically, plaintiffs argued that (1) Local Law 29 grants "unfettered discretion" to licensing officials and is therefore unconstitutional, (2) the occupancy charge imposes an unconstitutional tax on the exercise of First Amendment rights, and (3) the scheme violates the equal protection clause. Plaintiffs also challenged the inclusion of the adult bookstore clause in the occupancy permit, but have agreed to withdraw the claim at this time. *fn1"

 Following discussions between the parties, the City agreed to extend the compliance date until the matter could be briefed by the parties and a decision rendered by the court.

 DISCUSSION

 I. Preliminary Injunction Standard

 A plaintiff who seeks to obtain a preliminary injunction based on alleged violations of First Amendment rights must demonstrate, first, that he or she is likely to suffer irreparable harm if the allegations are correct, and second, that there is a likelihood of prevailing on the merits of the action. See Bery v. City of New York, 97 F.3d 689 (2d Cir. 1996). The first part of the test is necessarily satisfied in a First Amendment challenge, since "'the loss of First Amendment freedoms, for even minimal periods of time, unquestionably constitutes irreparable injury.'" Hsu v. Roslyn Union Free School District, 85 F.3d 839, 853 (2d Cir. 1996) (quoting Elrod v. Burns, 427 U.S. 347, 373, 49 L. Ed. 2d 547, 96 S. Ct. 2673 (1976)); Bery v. City of New York, 97 F.3d 689, 693 (2d Cir. 1996). In order to satisfy the second part of the test,

 
ordinarily, the movant then has two options, it must either demonstrate a likelihood of success on the merits or it must raise "sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting the preliminary relief." However, in a case in which "the moving party seeks to stay governmental action taken in the public interest pursuant to a statutory or regulatory scheme," the injunction should be granted only if the moving party meets the more rigorous likelihood-of-success standard.

 Bery, 97 F.3d at 693 (citations omitted). Since plaintiffs' action here challenges a government action taken in the public interest pursuant to a statutory or regulatory scheme, the higher standard applies. Thus, the court will grant plaintiffs' motion for an injunction only if plaintiffs can show a likelihood of success on the merits.

 II. Is Selling Newspapers from Newsstands Erected on City Sidewalks a Protected Activity Under the First Amendment?

 Plaintiffs' constitutional claims are premised on the assumption that the operation of a newsstand is an activity protected by the First Amendment. The First Amendment status of a newsstand, however, has not been addressed by the Supreme Court nor by any court in the Second Circuit. This threshold issue must be decided as a matter of first impression in this Circuit.

 The City argues that the operation of a newsstand is not a protected activity under the First Amendment, relying in large measure on a Seventh Circuit case, Graff v. City of Chicago, 9 F.3d 1309 (7th Cir. 1993). In Graff, a newsstand operator challenged a Chicago ordinance that required all persons wishing to operate a newsstand first to obtain a permit from the city. In an en banc decision, a plurality of five judges concluded that newsstands were not protected by the First Amendment. According to the plurality, "building and operating a newsstand is conduct, not speech." Id. at 1315. Since "no person has a constitutional right to erect or maintain a structure on the public way," id. at 1314, "there is no constitutional right to build or maintain a newsstand on the public way," id. at 1317. Reasoning that newsstands "neither concern[] simply the circulation and printing of newspapers nor conduct commonly associated with expression," id. at 1316, the court concluded that they therefore do not implicate the First Amendment. Id. In addition to reaching this conclusion, the plurality analyzed the Chicago licensing ordinance under the time, place, and manner test normally used to evaluate content-neutral laws which burden speech or expression.

 In a series of concurring and dissenting opinions, seven judges rejected the plurality's position that newsstands are not entitled to First Amendment protection. In a concurring opinion joined in by Judge Cudahy, Judge Flaum concluded that "the erection and maintenance of newspaper stands qualifies as 'conduct commonly associated with expression.'" Id. at 1327 (concurring opinion) (citing City of Lakewood v. Plain Dealer Publisher Co., 486 U.S. 750, 759, 100 L. Ed. 2d 771, 108 S. Ct. 2138 (1988)). "Accordingly," Judge Flaum wrote, "Chicago's licensing ordinance . . . implicates the First Amendment's protection of expression." Id. In a separate opinion joined in by Judges Rovner and Cudahy, Judge Ripple also rejected the plurality's view that newsstands were not protected under the First Amendment, finding the plurality's declaration "that the placement of a newsstand, as opposed to a newsrack, does not implicate expressive activity" to be "untenable." 9 F.3d at 1333-34. Finally, two judges joined in Judge Cummings's dissent, which concluded not only that the plurality's refusal to acknowledge that newsstands were engaged in First Amendment activity was "insupportable," id. at 1336, but also that the licensing scheme's de facto status as a prior restraint required a higher degree of scrutiny than that provided by application of the traditional time, place and manner test.

 At the heart of the disagreement between the five-judge plurality and the rest of the court was the degree to which case law governing regulation of "newsracks"--that is, coin-operated newspaper vending machines--was relevant with regard to newsstands. While there are relatively few cases dealing with regulation of newsstands, there are many cases concerning newsracks. Of these, the Supreme Court's opinion in City of Lakewood v. Plain Dealer Publishing Co., 486 U.S. 750, 100 L. Ed. 2d 771, 108 S. Ct. 2138 (1988), is the most significant with regard to the present case. In Lakewood, the Court held that a licensing scheme for newsracks, which granted the town mayor "unfettered discretion" to approve or deny a permit application, was unconstitutional. The Court found that "whenever a licensing law gives a government official or agency substantial power to discriminate based on the content or viewpoint of speech by suppressing disfavored speech or disliked speakers," the First Amendment is sufficiently implicated by a regulatory scheme, and that a facial challenge to the scheme is therefore appropriate. Id. at 759. The Court pointed out that such a challenge was not available in all instances where such power to discriminate was apparent. Rather, 'the law must have a close enough nexus to expression, or to conduct commonly associated with expression, to pose a real and substantial threat of the identified censorship risks." Id. The Court found such a relationship present in Lakewood 's newsrack licensing scheme for two reasons. First, the scheme called for periodic renewal, which created opportunities for licensors to exert influence over the expression of the licensee. Id. at 759. Second, the scheme was "directed narrowly and specifically at expression or conduct commonly associated with expression: the circulation of newspapers." Id. Without deciding whether the city could constitutionally ban newsracks, the Court concluded that newsracks played a sufficiently central role in a core First Amendment activity to require that government efforts to regulate them be governed by familiar First Amendment principles.

 The dissent in Lakewood rejected this conclusion, arguing that the placement of newsracks on city property was not protected by the First Amendment. The dissent argued that "the Plain Dealer's right to distribute its papers does not encompass the right to take city property--a part of the public forum . . . --and appropriate it for its own exclusive use, on a semi-permanent basis, by means of the erection of a newsbox." Id. at 778 (White, J., dissenting). In other words, it argued, while the right to circulate newspapers as a general matter is protected, the right to employ a specific means of distribution is not.

 The majority rejected the dissent's reasoning, finding that such a distinction between means and ends was illusive. Because the "actual activity at issue here is the circulation of newspapers, which is constitutionally protected," the majority concluded, the mere fact that the object of regulation in this case was vending machines (which, as the dissent pointed out, can be used to sell soft drinks as well as newspapers) was irrelevant to the legal analysis. Rather, the sale of a newspaper by means of a newsrack is merely the "manner" in which the First Amendment activity--i e distribution of protected matter--is practiced, and its regulation was properly evaluated within the framework of the time, place and manner test traditionally used by the Court to evaluate such regulations. Id. at 768.

 Five years after Lakewood, the Supreme Court again considered a municipality's attempt to regulate newsracks. In City of Cincinnati v. Discovery Network, 507 U.S. 410, 123 L. Ed. 2d 99, 113 S. Ct. 1505 (1993), the Court ruled that the City's ban on newsracks containing "commercial handbills," which did not apply to newsracks containing newspapers, was unconstitutional. The Court found that newsracks "continue to play a significant role in the dissemination of protected speech," and thus held that the categorical ban on newsracks distributing commercial handbills "cannot be squared with the dictates of the First Amendment." Id. at 431.

 Even before Lakewood and Discovery Network were decided, the Second Circuit recognized that "the protection of the First Amendment extends to the sale of newspapers through newsracks." Gannett Satellite Information Network, Inc. v. Metropolitan Transportation Authority, 745 F.2d 767, 771 (2d Cir. 1984). Courts in other circuits also extend First Amendment protection to newspaper distribution through newsracks. See, e.g., Jacobsen v. Howard, 109 F.3d 1268 (8th Cir. 1997); Sentinel Communications Co. v. Watts, 936 F.2d 1189 (11th Cir. 1991) (citing cases); Jacobsen v. Lambers, 888 F. Supp. 1088, 1093 (D.Kan. 1995) (citing cases).

 It is thus well settled that news racks implicate the First Amendment. The question that this court must therefore decide is whether Lakewood and its progeny require a finding that news stands are also protected by the First Amendment. The plurality in Graff argued that Lakewood 's protection of newsracks should not be extended to newsstands because:

 
Newsstands are large, permanent-type structures. They are constructed, and once in place they are not easily moved. Newsstands do not present one viewpoint; rather they supply many and varying editorial opinions. Newsstands shelter a business operator and his operation; they do not merely dispense or hand deliver newspapers. Newsstands also are more likely to obstruct the views of pedestrians and automobile drivers. In short, newsstands compared to newsracks are much larger, more permanent structures that occupy a significant portion of limited sidewalk space. Thus, building and operating a newsstand is conduct, not speech, which the City can lawfully proscribe.

 Graff, 9 F.3d at 1314.

 The sever concurring and dissenting judges in Graff, however, were highly critical of this conclusion. Judge Cummings, for instance, noted that while "it is true that the size of newsstands might make them a more inviting subject of municipal regulation," nonetheless

 
size itself suggests nothing about whether the selling of newspapers and magazines from a stand is speech or conduct. And since the First Amendment is all about seeing to it that citizens have access to a wide variety of opinions and information, the fact that stands offer more opinions than racks would suggest that they should receive greater, not less protection.

 Id. at 1336.

 The court agrees with the seven concurring and dissenting judges in Graff and rejects the plurality's conclusion that the size of newsstands compared with newsracks does not provide a sufficient distinction on which to deny First Amendment protection. It might provide the City with grounds to impose more stringent regulations to ensure that newstands do not obstruct traffic flows or otherwise unreasonably impede the use of public streets, but such a legitimate basis for regulation does not excuse a failure to recognize the importance of newstands as a means by which residents of the City obtain news and other information. While the City argues that newsstands are mere commercial structures, the City's own regulations require that "the Permittee shall at all times allocate at least one-half of the total available display space for the sale of newspapers and periodicals." Emery Decl. Ex. M (Occupancy Permit, P3). *fn2" This restriction suggests a recognition by the City that the operation of a newsstand is closely connected with the distribution of newspapers and periodicals. That newsstands disseminate a variety of views, rather than a single viewpoint, is not compelling from a First Amendment perspective. The Supreme Court, for instance, has recognized that the operator of a cable network exercises important First Amendment values in the process of making editorial decisions about the content of the programs that are presented to the public. See, e.g., Turner Broadcasting Systems, Inc. v. Federal Communications Commission, 512 U.S. 622, 637, 129 L. Ed. 2d 497, 114 S. Ct. 2445 (1994) ("'By exercising editorial discretion over which stations or programs to include in its repertoire,' cable programmers and operators 'see[k] to communicate messages on a wide variety of topics and in a wide variety of formats.'") (quoting Los Angeles v. Preferred Communications, Inc., 476 U.S. 488, 494, 90 L. Ed. 2d 480, 106 S. Ct. 2034 (1986)).

 Moreover, the distribution of printed material has long been protected by the First Amendment. Indeed, the historical purpose of the First Amendment was in large part to protect the free circulation of newspapers and periodicals. See, e.g., Near v. Minnesota, 283 U.S. 697, 716, 75 L. Ed. 1357, 51 S. Ct. 625 (1931); Minneapolis Star and Tribune Co. v. Minnesota Comm'r of Revenue, 460 U.S. 575, 583, 103 S. Ct. 1365, 75 L. Ed. 2d 295 (1983).

 The protection afforded the distribution of printed material by the First Amendment is not lost simply "because the written material, sought to be distributed are sold rather than given away." Heffron v. Int'l Society for Krishna Consciousness, Inc., 452 U.S. 640, 647, 69 L. Ed. 2d 298, 101 S. Ct. 2559 (1981); Riley v. Nat'l Fed'n of the Blind of North Carolina, 487 U.S. 781, 101 L. Ed. 2d 669, 108 S. Ct. 2667 (1988) ("It is well settled that a speaker's rights are not lost merely because compensation is received; a speaker is no less a speaker because he or she is paid to speak."); Murdock v. Pennsylvania, 319 U.S. 105, 111, 87 L. Ed. 1292, 63 S. Ct. 870 (1943); Gannett Satellite Info. Network, Inc. v. Metro. Trans. Auth., 745 F.2d 767, 771 (2d Cir. 1984).

 Stated another way, the First Amendment protects not only the right to speak or write but also the public's right to purchase the information or opinions being made available. "Liberty of circulating is as essential to [the right of freedom of speech] as liberty of publishing; indeed, without the circulation, the publication would be of little value." Lovell v. City of Griffin, 303 U.S. 444, 452, 82 L. Ed. 949, 58 S. Ct. 666 (quoting Ex parte Jackson, 96 U.S. 727, 733, 24 L. Ed. 877 (1877)); see also Distribution Systems of America, Inc. v. Village of Old Westbury, 785 F. Supp. 347 (E.D.N.Y. 1992) (finding unconstitutional municipal ordinance requiring license for distribution of newspapers); Providence Journal Co. v. City of Newport, 665 F. Supp. 107, 110 (D.R.I. 1987) ("The right to receive information is 'the indispensable reciprocal of any meaningful right of expression.'") (quoting Sheck v. Baileyville School Committee, 530 F. Supp. 679, 685 (D.Me. 1982)). That newsstand vendors engage in the commerce of speech on publicly owned sidewalks only enhances their claim to basic First Amendment protections. As stated by Justice Roberts:

 
Wherever the title of streets and parks may rest, they have immemorially been held in trust for the use of the public and, time out of mind, have been used for purposes of assembly, communicating thoughts between citizens, and discussing public questions. Such use of the streets and public places has, from ancient times, been a part of the privileges, immunities, rights, and liberties of citizens. The privilege of a citizen of the United States to use the streets and parks for communication of views on national questions may be regulated in the interest of all; it is not absolute, but relative, and must be exercised in subordination to the general comfort and convenience, and in consonance with peace and good order; but it must not, in the guise of regulation, be abridged or denied.

 Hague v. CIO, 307 U.S. 496, 515, 83 L. Ed. 1423, 59 S. Ct. 954 (1939).

 Accordingly, this court concludes that newstands, like newsracks, are entitled to the protections of free speech and expression guaranteed by the First Amendment. ...


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