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Clear Channel Outdoor, Inc. v. City of New York

February 3, 2010



Appeal from an order of the District Court for the Southern District of New York (Crotty, J.), entered on March 31, 2009, granting summary judgment to Defendants, and finding that the challenged provisions of the New York City Zoning Resolution do not impose unconstitutional restrictions on Plaintiffs' commercial speech rights in violation of the First Amendment or the New York State Constitution.


The opinion of the court was delivered by: WESLEY,Circuit Judge

Argued: November 16, 2009

Before: POOLER and WESLEY, Circuit Judges, and KEENAN, District Judge.*fn1


Plaintiffs, owners of billboards and panel signs in New York City, appeal from an Opinion and Order of the District Court for the Southern District of New York granting summary judgment to Defendants, the City of New York, Patricia J. Lancaster, named in her official capacity as Commissioner of the New York City Department of Buildings, and Edward Fortier, Director of Padlock and Enforcement (collectively the "City"). Clear Channel Outdoor, Inc. v. City of N.Y., 608 F. Supp. 2d 477 (S.D.N.Y. 2009) (Crotty, J.). The district court found that the challenged provisions of New York City's Zoning Resolution did not impose unconstitutional restrictions on Plaintiffs' commercial speech rights in violation of the First Amendment or the New York State Constitution. Id. at 481, 508.

The district court's opinion applies to two cases, argued in tandem before this Court.*fn2 The first case is the consolidated action of Plaintiffs Clear Channel Outdoor, Inc., Atlantic Outdoor Advertising, Inc., Scenic Outdoor, Inc., Troystar City Outdoor LLC, and Willow Media, LLC (collectively, the "Clear Channel Plaintiffs" or "Clear Channel"). The Clear Channel Plaintiffs own large billboards located near arterial highways in New York City.*fn3 Clear Channel operates an estimated 236 signs throughout New York City; approximately 85 of these signs face arterial highways. The Clear Channel signs that form the basis of this dispute are illuminated and range in size from 315 square feet to 11,258 square feet.

The Clear Channel Plaintiffs specifically challenge New York City Zoning Resolution §§ 42-55 and 32-662, which ban offsite advertising signs within 200 feet of, and within sight of, arterial highways in manufacturing and commercial districts. They also challenge the attendant enforcement regime set forth in New York City Local Law 14 of 2001, Local Law 31 of 2005, and Department of Buildings ("DOB") Rule 49 (collectively the "Regulations") as applied to their current inventory of arterial signs in New York City.

The second case involves Plaintiff Metro Fuel LLC, which owns smaller "panel" advertising signs.*fn4 Metro Fuel's panel signs are internally illuminated poster advertisements that are approximately 24 square feet. Metro Fuel's signs are either placed on undeveloped lots, such as parking lots, affixed to the front of businesses, usually at or near ground level, or placed inside parking garages near the means of ingress and egress. Metro Fuel operates an estimated 440 panel signs in New York City. The challenged City regulations impact approximately 324 of Metro Fuel's panel signs.

Plaintiff Metro Fuel is not generally affected by the provisions of the Zoning Resolution that address arterial advertising signs. Rather, Metro Fuel challenges those aspects of the Zoning Resolution that control where it may place its panel advertisements, and how it may illuminate them.

A. History of the New York City Zoning Resolution

Since 1940, New York City's zoning regulations have banned outdoor advertising companies from placing commercial billboards, which do not advertise on-premises businesses, within 200 feet and within view of the City's major parkways and roadways. See Infinity Outdoor, Inc. v. City of N.Y., 165 F. Supp. 2d 403, 406 (E.D.N.Y. 2001). On-premises signs are defined as "business signs" in the 1940 Zoning Resolution and as "accessory signs" in a 1961 revision of the Zoning Resolution. The 1961 Zoning Resolution added location and illumination restrictions relevant to Metro Fuel's panel signs.

The basic prohibition contained in the 1940 Zoning Resolution remains in force today in manufacturing and certain commercial districts where advertising signs are permitted. During the periods between 1940 and 1979 arterial advertising signs were erected and maintained in violation of the Zoning Resolution. Enforcement efforts by the City were rare.

In 1965, Congress enacted the Highway Beautification Act to "protect the public investment" in highways, to "promote the safety and recreational value of public travel, and to preserve natural beauty." 23 U.S.C. § 131(a).*fn5 In order to comply with the Highway Beautification Act, New York City granted legal non-conforming status to existing advertising signs that failed to comply with Zoning Resolution provisions, but which complied with state and federal standards. The signs that did not comply with state and federal standards remained illegal.

The City Council amended the Administrative Code in 2001 by adopting Local Law 14, which sought to enhance the City's ability to enforce the arterial advertising regulations.*fn6 In a public hearing regarding the amendment, the President of the New York Outdoor Advertising Group (a then-existing industry group comprised of several outdoor advertising companies) submitted written materials admitting that "the outdoor advertising industry unquestionably employed creative methods to obtain building permits for arterial highway signs." Neufeld Decl. ¶ 21, May 12, 2008 (emphasis added).

The President of the Outdoor Advertising Group did not dispute that the industry routinely claimed that advertising signs would be used for permissible on-premises accessory business purposes in order to obtain permits from the DOB. Despite these representations made to the DOB, the signs were in fact used for offsite advertising purposes, which were proscribed under the applicable regulations. Some outdoor advertising companies, including the Plaintiffs, also erected billboards without obtaining permits of any kind.

In 2005, the City Council adopted Local Law 31 that revised Local Law 14 in various ways, but preserved the main requirements and provisions of Local Law 14 at issue in this case. Neither Local Law went into effect in material part until the DOB promulgated Rule 49 on July 26, 2006.*fn7

B. The Current Controversy

Plaintiffs do not dispute the City's authority to enact and enforce regulations tailored to address outdoor commercial advertising. However, they argue that "loopholes and inconsistencies in the regulatory regime" prevent the regulations from advancing a substantial government interest, rendering it invalid under the First Amendment.

1. The Clear Channel Plaintiffs

The Clear Channel Plaintiffs first contend that the City's sporadic enforcement of its regulatory regime from 1940 to 2001 undermines its validity. They state that "a great number of . . . signs were built abutting the arterial highways from 1940 through 2001. In general, the City issued permits for large accessory signs along the arterial highways, and, without permission, the sign owners converted the signs to advertising signs." Plaintiffs maintain that the "City has sought to newly enforce its ban on arterial advertising signs on private property while permitting offsite advertising signs on government property, including on billboards, bus shelters, subway[] entrances and phone kiosks, several hundred of which are within 200 feet of an arterial highway."*fn8 In support of this assertion,

Plaintiffs allege that "there are currently between 1,400 and 1,600 advertising signs on government or public property on billboards, bus shelters, phone kiosks and subway[] panels on roadways designated as arterial highways or blocks intersecting with arterial highways."

Plaintiffs next draw our attention to a few specific inconsistencies in the applicable regulations, which the City subsequently remedied. First, two Clear Channel signs, both measuring 960 square feet and located within 200 feet and in view of the Belt Parkway in Brooklyn. Following the commencement of these lawsuits, the City declined to renew Clear Channel's lease to maintain these signs and requested that the signs be taken down. Second, arterial advertising signs on City-owned property located within 200 feet, and within view of, the West Side Highway. Plaintiffs acknowledge that the company that operates these signs has entered into an agreement with the City to remove these signs. Yet, Plaintiffs maintain that these signs undermine the alleged purposes of the Zoning Resolution and render it an unconstitutional restraint on commercial speech.

The Clear Channel Plaintiffs maintain that "[o]ne of the most glaring inconsistencies in the regulatory scheme is the exemption for Arterial Advertising Signs on Transit Authority Property." As the district court noted, the "parties disagree over the City's reasons for not enforcing its laws on [the property controlled by the Metropolitan Transit Authority ('MTA'), the Port Authority of New York and New Jersey (the 'Port Authority'), and Amtrak,] and the City's good faith in prospectively enforcing the Zoning Resolution." Clear Channel, 608 F. Supp. 2d at 489. City officials claim that they did not enforce the Zoning Resolution against the MTA, the Port Authority, or Amtrak because they believed that they did not have the authority to do so. The City now concedes that it has the legal authority to enforce the Zoning Resolution against properties owned or controlled by the MTA, including the Long Island Railroad ("LIRR") and the Metro North Railroad.

Clear Channel, 608 F. Supp. 2d at 489.

The Clear Channel Plaintiffs take the position that "New York City viewed increased revenues for mass transit - not aesthetics or traffic safety - as the paramount concern in actively supporting an exemption for Transit Authority signs from its zoning regulations." Plaintiffs contend that "the City has made a concerted effort over several decades . . . not to enforce the Arterial Advertising Ban against billboards on any railroad property, including billboards on the MTA, LIRR, Conrail, Amtrak and other railroad or Port Authority property."

Finally, Plaintiffs dispute the validity of the City's proffered justification for its regulatory scheme - the desire to promote traffic safety and aesthetics. They assert that "there is no credible evidence that these signs, which have stood [illegally] for years and often decades, have created ...

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