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Mogul Media, Inc. v. City of New York

United States District Court, S.D. New York

December 22, 2017

MOGUL MEDIA, INC., MOHAMMAD MALIK, MOGUL MEDIA LLC, BRUCKNER OUTDOOR SIGNS INC., BRUCKNER OUTDOOR SIGNS LLC, MUCHO MEDIA LLC, 34-06 73RD LLC, OUTDOOR PROMOTERS & TRADERS UNLIMITED, INC, SPOILERS & SUNDRIES PROMOTIONS, INC, MONUMENTS R US, INC, ELITE PROMOTIONS SYSTEMS, INC, MOGUL SCRAP UNLIMITED, INC, RYAN LEE PROPERTIES LLC, MAM PROPERTIES LLC, MEDIA PRODUCTIONS UNLIMITED, INC, KING SUNDRIES PROMOTION UNLIMITED LLC, PROSPECT MEDIA, LLC, SPRINT PROMOTION SYSTEMS INC, OMNI PRODUCTION SYSTEM, LLC, YAHOO MEDIA INC, SPECIAL MEDIA DINER LLC, OUTDOOR STUDIO PROMOTERS, LLC, 54-18 43RD REALTY CORP, LEXUS'S PROSPECT PROMOTION LLC, and VAN DAM SPECIALTY & PROMOTION INC, Plaintiffs,
v.
THE CITY OF NEW YORK, THE BOARD OF STANDARDS AND APPEALS OF THE CITY OF NEW YORK, THE NEW YORK CITY COUNCIL, NEW YORK CITY DEPARTMENT OF BUILDINGS, NEW YORK CITY ENVIRONMENTAL CONTROL BOARD, and NEW YORK CITY DEPARTMENT OF PARKS AND RECREATION, Defendants.

          OPINION & ORDER

          PAUL A. ENGELMAYER, District Judge

         The City of New York has long attempted to limit the visual blight and potential for danger that large billboards along its major thoroughfares may present. In this case, plaintiffs- owners or lessees of property on which billboards are or have been displayed-challenge two of the City's zoning regulations as discriminatory against them in violation of the First Amendment and as a regulatory taking without just compensation in violation of the Takings Clause of the Fifth Amendment. In particular, they contend that defendants-the City and several other municipal entities (referred to collectively as the "City")-impermissibly allow billboards at the Citi Field ballpark while prohibiting comparable billboards on nearby properties in the Willets Point neighborhood of Queens owned by plaintiffs. Plaintiffs' First Amended Complaint ("the FAC") seeks declaratory, injunctive, and monetary relief.

         The City has now moved to dismiss the FAC, arguing that the City's zoning regulations comport with the First Amendment and the Takings Clause and that the Court lacks jurisdiction to consider the Takings Clause claim because plaintiffs have not exhausted their state-law remedies. The Court grants the motion to dismiss, because on-point Second Circuit precedent forecloses the First Amendment claims and because this Court lacks jurisdiction to consider the Takings Clause claims.

         I. Background

         A. New York City's Zoning Regulations

         1.The City's Billboard Regulations

         In 1940, New York first promulgated a zoning regulation, the precursor to one at issue here, to address the visual blight and threat of distraction caused by large signs near parks and arterial roadways. New York, NY., Zoning Resolution ("ZR") § 21-B (1940), renumbered §§ 32-66, 42-53 (1961), renumbered §§ 32-662, 42-55 (2001); see Clear Channel Outdoor, Inc. v. City of New York, 594 F.3d 94, 99-100 (2d Cir. 2010) ("Clear Channel") (detailing history of City's billboard zoning); Infinity Outdoor, Inc. v. City of New York, 165 F.Supp.2d 403, 406-411 (E.D.N.Y. 2001) (same).[1] That regulation has been revised several times since then, but at its heart has remained "the distinction between off-site commercial and on-site signs." Infinity, 165 F.Supp.2d at 406; see also Clear Channel Outdoor, Inc. v. City of New York, 608 F.Supp.2d 477, 482-83 (S.D.N.Y. 2009), affd, 594 F.3d 94 (2d Cir. 2010). An off-site sign, also known as an advertising sign, is "a sign that directs attention to a business, profession, commodity, service or entertainment conducted, sold or offered elsewhere than upon the same zoning lot and is not accessory to a use located on the zoning lot." ZR § 12-10 (2001) (emphasis added). On-site signs, formerly known as business signs and now referred to as "accessory use" signs, "direct attention to a business or profession conducted upon the premises." Infinity, 165 F.Supp.2d at 406; see ZR § 12-10. The 1940 regulations prohibited signs in residential and commercial districts, while (1) making exceptions for certain particularly busy commercial districts (such as Time Square), and (2) excluding on-site signs from the general prohibition. Infinity, 165 F.Supp.2d at 406-07. "The basic prohibition contained in the 1940 Zoning Resolution remains in force today" in those manufacturing commercial districts where advertising signs are permitted at all. Clear Channel, 594 F.3d at 99.

         In 1997, the New York Supreme Court, Kings County, held that the City's zoning regulation violated the First Amendment because it impermissibly favored commercial off-site advertisements over non-commercial advertisements. City of New York v. Allied Outdoor Advert, Inc., 659 N.Y.S.2d 390, 394-95 (Sup. Ct. 1997). In response, the City revised its regulations. See Infinity Outdoor, 165 F.Supp.2d at 408; Clear Channel, 608 F.Supp.2d at 482. "Thus, the amended Zoning Resolution continues to prohibit advertising signs near highways and parks and to permit accessory signs, but now provides for non-commercial signs. As with accessory signs, it permits non-commercial signs near highways and parks." Infinity Outdoor, 165 F.Supp.2d at 408. "Thus, as a result of the 1998 amendments, both on-site accessory-use signs and off-site non-commercial signs were-and currently are-permitted within 200 feet of an arterial highway. Off-site advertising signs are still prohibited in those areas." Clear Channel, 608 F.Supp.2d at 483.

         In 2001, the City once again amended its sign regulations by adopting Local Law 14. See Clear Channel, 594 F.3d at 99-100. "The reason for these amendments was the proliferation in the number and size of signs that had resulted from new technologies and the 'rampant illegality and lack of effective enforcement' that threatened the City's aesthetic appeal and traffic safety." Infinity Outdoor, 165 F.Supp.2d at 409 (quoting City Planning Commission Report 2-8, 30 (Dec. 13, 2000); Hearing Before the New York City Council Subcommittee on Zoning & Franchises 11, 16-18 (Jan. 9, 2001)). The 2001 amendments (1) added certain limits on size, illumination, and projection for signs in manufacturing districts; (2) granted non-conforming use status to certain signs in manufacturing districts; and (3) limited the size of accessory signs. See Id. at 410-11.

         The current version of Zoning Regulation 32-662, applicable in commercial districts, provides that "no advertising sign shall be located, nor shall an existing advertising sign be structurally altered, relocated or reconstructed within 200 feet of an arterial highway or of a public park with an area of one half acre or more, if such advertising sign is within view of such arterial highway or public park." ZR § 32-662 (2016). Section 42-55 provides for substantially the same restriction in manufacturing districts.[2] Off-site advertising signs in residential districts are banned entirely. See Clear Channel, 608 F.Supp.2d at 485 n.7.

         "In sum, under the current Zoning Resolution, advertising signs are allowed, subject to regulation of size and other qualities, in some commercial districts and all manufacturing districts, so long as they are not within 200 feet of an arterial highway or public park, or located at a distance from the highway or public park in linear feet equal to or greater than their size in square feet. Accessory signs and non-commercial signs are allowed in all commercial and manufacturing districts, but they are subject to stricter size regulations near highways and parks." Infinity, 165 F.Supp.2d at 411.

         2.The Special Willets Point District

         In 2008, the City created a "Special Willets Point District" to "promote and protect public health, safety and general welfare" in the Willets Point neighborhood of Queens, with the specific purposes of, inter alia, "transform[ing] Willets Point into a diverse and sustainable community that enhances connections to its surroundings through a unique combination of uses, " "creat[ing] a retail and entertainment destination that catalyzes future growth and strengthens Flushing's role as a nexus of economic, social and cultural activity, " and "encourag[ing] a mix of uses that complement sporting venues within Flushing Meadows-Corona Park . . .." ZR § 124-00. As part of the creation of the Special District, the City re-zoned the area, allowing for higher-density development on certain lots. ZR § 124-21; see FAC ¶ 68. ZR § 124-21 allows property owners of lots greater than 200, 000 square feet to exceed the "floor area ratio" (FAR) of 2.0 that otherwise prevails in the Special District. Lots under 200, 000 square feet may not exceed a FAR of 2.0-that is, the total amount of floor space built on such a lot may not exceed twice the square footage of the lot itself. See ZR § 124-21. For lots greater than 200, 000 square feet in the Special District, the maximum allowable FAR can be as high as 5.0. See id.

         B. Plaintiffs' Properties At Issue Here [3]

         Plaintiffs here are several owners, former owners, or lessees of property "on which outdoor advertising sign structures were and are located." FAC ¶ 49.[4] Those properties "are located within distances from Arterial highways where Defendants have prohibited outdoor advertising signs-----" Id.[5] One plaintiff, Mucho Media LLC, had a permit to construct a sign structure and began construction on that sign. Id. ¶ 12. Mucho Media's permit was cancelled by the City. Id. ¶ 75. Since 2010, the other plaintiffs have also been "forced to discontinue the use of their signs, on pain of prohibitive civil penalties and fines and the possibility of criminal prosecution ...." Id. ¶ 86.

         Several of plaintiffs' properties are located in Queens County, including at least one, Mucho Media's property, in the Willets Point neighborhood. See Id. ¶¶ 12-21, 23, 29-31, 37-40, 45-8. In the Willets Point neighborhood, the New York Mets constructed a new stadium, known as Citi Field, which has been open for business since April 1, 2009. Id. ¶ 79. At the Citi Field site, the Mets have erected outdoor advertising signs and accessory use signs "that are located the same distances from arterial highways and parks as the outdoor advertising signs or accessory use signs of Plaintiffs." Id. ¶ 80.

         Plaintiff Mucho Media LLC owns a piece of property within the Special Willets Point District. See FAC ¶¶ 12, 97. Mucho Media's property is "of insufficient size to enable" it to develop it. Id. ¶97.

         C. Proce ...


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