Reagan Natl Advtsng of Austin v. City of Au ( 2020 )

Case: 19-50354 Document: 00515540542 Page: 1 Date Filed: 08/25/2020
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
August 25, 2020
No. 19-50354 Lyle W. Cayce
Clerk
Reagan National Advertising of Austin, Incorporated,
Plaintiff—Appellant,
Lamar Advantage Outdoor Company, L.P., doing business as
The Lamar Companies,
Intervenor Plaintiff—Appellant,
versus
City of Austin,
Defendant—Appellee.
Appeal from the United States District Court
for the Western District of Texas
USDC No. 1:17-CV-673
Before Elrod, Southwick, and Haynes, Circuit Judges.
Jennifer Walker Elrod, Circuit Judge:
Reagan National Advertising of Austin and Lamar Advantage
Outdoor Company both filed applications to digitize existing billboards. The
City of Austin denied the applications because its Sign Code does not allow
the digitization of off-premises signs. Reagan and Lamar sued, arguing that
the Sign Code’s distinction between on-premises and off-premises signs
Case: 19-50354 Document: 00515540542 Page: 2 Date Filed: 08/25/2020
No. 19-50354
violates the First Amendment. The Sign Code’s on-premises/off-premises
distinction is content based and therefore subject to strict scrutiny. Because
the Sign Code cannot withstand this high bar, we REVERSE and
REMAND.
I.
Plaintiffs-Appellants Reagan and Lamar are in the business of outdoor
advertising. Reagan and Lamar own and operate “off-premise[s]” signs,
including billboards that display both commercial and noncommercial
messages.
In April and June 2017, Reagan submitted permit applications to
digitize its existing “off-premises” sign structures. The City denied all the
permit applications, stating that “[t]hese applications cannot be approved
under Section 25-10-152 (Nonconforming Signs) because they would change
the existing technology used to convey off-premises commercial messages
and increase the degree of nonconformity with current regulations relating to
off-premises signs.” In June 2017, Lamar submitted permit applications to
digitize its existing “off-premises” sign structures. The City denied Lamar’s
applications for the same reasons it denied Reagan’s.
The City of Austin regulates signs in Chapter 25-10 of the Austin City
Code. The Sign Code defines an “off-premise[s] sign” as “a sign advertising
a business, person, activity, goods, products, or services not located on the
site where the sign is installed, or that directs persons to any location not on
that site.” The Sign Code does not expressly define “on-premise[s] sign,”
but it does use the term “on-premise[s] sign” in some of its provisions. The
Sign Code allows new on-premises signs to be built, but it does not allow new
off-premises signs to be built. A “nonconforming sign” is defined as “a sign
that was lawfully installed at its current location but does not comply with the
2
Case: 19-50354 Document: 00515540542 Page: 3 Date Filed: 08/25/2020
No. 19-50354
requirements of [the Sign Code.]” Preexisting off-premises signs are deemed
“nonconforming signs.”
Persons are permitted to “continue or maintain nonconforming signs
at [their] existing location,” and can even change the face of the
nonconforming sign, as long as the change does not “increase the degree of
the existing nonconformity.” However, persons are not permitted to
“change the method or technology used to convey a message” on a
nonconforming sign. The Sign Code permits “on-premise[s] signs” to be
“electronically controlled changeable copy signs” (i.e., “digital signs”).
Consequently, on-premises non-digital signs can be digitized, but off-
premises non-digital signs cannot. The City’s stated general purpose in
adopting the Sign Code is to protect the aesthetic value of the city and to
protect public safety.
In June 2017, Reagan sued the City in state court alleging the Sign
Code was unconstitutional. Specifically, it alleged that the distinction
between the digitalization of on-premises and off-premises signs was a
violation of the First Amendment. In July 2017, the City removed the case to
federal court.
In August 2017, the City amended the Sign Code. The amended Sign
Code defines “off-premise[s] sign” as “a sign that displays any message
directing attention to a business, product, service, profession, commodity,
activity, event, person, institution, or other commercial message which is
generally conducted, sold, manufactured, produced, offered, or occurs
elsewhere than on the premises where the sign is located,” and it expressly
defines an “on-premise[s] sign” as “a sign that is not an off-premise[s] sign.”
The amended Sign Code also includes a new section, Ҥ 25-10-2 -
Noncommercial Message Substitution,” comprised of the following
provisions:
3
Case: 19-50354 Document: 00515540542 Page: 4 Date Filed: 08/25/2020
No. 19-50354
(A) Signs containing noncommercial speech are permitted
anywhere that signs regulated by this chapter are permitted,
subject to the same regulations applicable to the type of sign
used to display the noncommercial message. No provision of
this chapter prohibits an ideological, political, or other
noncommercial message on a sign otherwise allowed and
lawfully displayed under this chapter.
(B) The owner of any sign allowed and lawfully displayed under
this chapter may substitute noncommercial speech in lieu of
any other commercial or noncommercial speech, with no
permit or other approval required from the City solely for the
substitution of copy.
(C) This section does not authorize the substitution of an off-
premise[s] commercial message in place of a noncommercial or
on-premise[s] commercial message.
The amendments do not change the prohibition on changing the method or
technology used to convey messages (e.g., digitalization) for nonconforming
signs, Section 25-10-152, or the definition of “nonconforming sign.”
In October 2017, Lamar joined the case as an intervenor plaintiff. In
their amended complaints, Reagan and Lamar asserted nearly identical
causes of action and requests for relief. They sought declaratory judgments
that the Sign Code’s distinction between on-premises and off-premises signs
was an unconstitutional content-based speech restriction, that the Sign Code
was invalid and unenforceable, and that Reagan and Lamar should be allowed
to digitize their signs without permits. Reagan sought a declaratory judgment
that the Sign Code was invalid as applied to Reagan, but Lamar did not seek
this specific relief.
After a bench trial, the district court denied Reagan and Lamar’s
requests for declaratory judgment, held that the Sign Code was content
neutral and satisfied intermediate scrutiny, and entered judgment for the
City. Reagan and Lamar appeal.
4
Case: 19-50354 Document: 00515540542 Page: 5 Date Filed: 08/25/2020
No. 19-50354
II.
The first issue we must address is mootness. In August 2017, the City
amended the Sign Code. The impact of the amendment was two-fold. First,
it amended the definition of “off-premise[s] sign” and expressly defined
“on-premise[s] sign.” Second, it included a new section on “noncommercial
message substitution.” The amendment did not alter the prohibition on
changing the method or technology used to convey messages for
nonconforming signs (e.g., digitalization) or the definition of a
nonconforming sign.
The district court sua sponte addressed the question of mootness
because the Sign Code amendments occurred after the denial of Reagan and
Lamar’s applications. The district court reasoned that amendments to a
challenged law are not enough to moot an underlying claim unless the law has
been sufficiently altered so as to present a substantially different controversy.
See Ne. Fla. Chapter of Associated Gen. Contractors of Am. v. City of
Jacksonville, 508 U.S. 656, 662 & n.3 (1993).
The district court determined that the amendments to the Sign Code
did not present a substantially different controversy because they: (1) did not
alter the prohibition against new digital sign-faces for billboards; and (2) did
not change Reagan and Lamar’s claim that the application of the Sign Code
required an enforcer to read the sign to determine whether it was “on-
premises” or “off-premises,” and thus, in Reagan and Lamar’s view, the
post-amendment Sign Code was still content based.
Reagan and Lamar agree with the district court that their case is not
moot. However, they disagree on the why. Reagan and Lamar sought to
update grandfathered signs, and they filed their applications to do so in April
2017 and June 2017. At that time, the prior version of the Sign Code was still
in effect and Reagan and Lamar’s applications were denied under the prior
5
Case: 19-50354 Document: 00515540542 Page: 6 Date Filed: 08/25/2020
No. 19-50354
version of the Code. Therefore, they assert that under Texas law, they have
the right to have their applications determined based on the regulations in
effect at the time their applications were filed. Tex. Loc. Gov’t Code Ann.
§ 245002(a)(1); see Reagan Nat. Advert. of Austin, Inc. v. City of Cedar Park,
387 F. Supp. 3d 703, 706 n.3 (W.D. Tex. 2019) (“Texas law requires the
permit applications be evaluated under the law as it existed at the time they
were submitted, rather than under the new, revised sign code.”).
We agree with Reagan and Lamar; the case is not moot. As Reagan
and Lamar applied for permits under the old ordinance, we evaluate the
constitutionality of the previous version of the ordinance. 1
III.
There are two substantive issues we must address to determine what
standard of scrutiny applies to Austin’s Sign Code. First, whether the Sign
Code’s distinction between on-premises and off-premises signs is content
based and second, whether the Sign Code is a regulation of commercial
speech and therefore subject to intermediate scrutiny under Central Hudson
Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557, 561 (1980).
We hold that because the Sign Code is a content-based regulation that is not
subject to the commercial speech exception, strict scrutiny applies, and the
City has not satisfied that standard. We walk through this analysis below.
A.
We turn first to whether the Sign Code’s distinction between “on-
premises” and “off-premises” signs is a content-based or content-neutral
distinction. If the distinction is content based, then it is “presumptively
unconstitutional” and subject to strict scrutiny. Reed v. Town of Gilbert, 576
1
We therefore do not need to address the amended ordinance’s constitutionality.
6
Case: 19-50354 Document: 00515540542 Page: 7 Date Filed: 08/25/2020
No. 19-50354
U.S. 155, 163 (2015). If the Sign Code is content neutral, then it is subject to
intermediate scrutiny. Id. Because an off-premises sign is determined by its
communicative content, we hold that the Sign Code’s distinction between
on-premises and off-premises signs is content based.
In 2015, the Supreme Court decided Reed v. Town of Gilbert, which
clarified the law surrounding content-based speech regulations. Justice
Thomas, writing for the majority, explained that a law is content based when
it “target[s] speech based on its communicative content,” or in other words,
when it “applies to particular speech because of the topic discussed or the
idea or message expressed. Id. To determine whether a law is content based,
Reed states that a court must “consider whether a regulation of speech ‘on
its face’ draws distinctions based on the message a speaker conveys.” Id. It
may be the case that a distinction “defining regulated speech by its function
or purpose” is drawn based on the message the speaker conveys and is thus
facially content based and subject to strict scrutiny. Id.Reed held that if a law is facially content based, it is “subject to strict
scrutiny regardless of the government’s benign motive, content-neutral
justification, or lack of ‘animus toward the ideas contained’ in the regulated
speech.” Id. at 165 (quoting Cincinnati v. Discovery Network, Inc., 507 U.S.
410, 429 (1993)). For this reason, a court must consider whether a law is
facially content based or content neutral “before turning to the law’s
justification or purpose.” Id. at 166.
While Reed did not profess to be creating new First Amendment law,
federal courts have recognized that Reed constituted “a drastic change in
First Amendment jurisprudence.” Free Speech Coal., Inc. v. Att’y Gen. U.S.,
825 F.3d 149, 160 n.7 (3d Cir. 2016); see also Wollschlaeger v. Governor of
Florida, 848 F.3d 1293, 1332–33 (11th Cir. 2017) (en banc) (Tjoflat, J.,
dissenting) (“Reed announced a sea change in the traditional test for content
7
Case: 19-50354 Document: 00515540542 Page: 8 Date Filed: 08/25/2020
No. 19-50354
neutrality under the First Amendment, and, in the process, expanded the
number of previously permissible regulations now presumptively invalid
under strict scrutiny.”); Cahaly v. Larosa, 796 F.3d 399, 405 (4th Cir. 2015)
(“Reed has made clear that, at the first step, the government’s justification
or purpose in enacting the law is irrelevant.”).
Given this “sea change,” other circuits have had to assess their pre-
Reed case law. The Third and Fourth Circuits, recognizing that Reed
conflicted with their prior precedent, both abrogated certain pre-Reed cases.
See Free Speech Coalition, 825 F.3d at 149 (explaining that Reed “requires us
to take another look at our holding that intermediate scrutiny applies to the
First Amendment analysis”); Cahaly, 796 F.3d at 405 (“This formulation
conflicts with, and therefore abrogates, our previous descriptions of content
neutrality . . . .”). The Sixth and Seventh Circuits have also acknowledged
the impact of Reed in cases before them on rehearing. See Wagner v. City of
Garfield Heights, 675 F. App’x 599 (6th Cir. 2017) (revisiting prior decision
on remand from the Supreme Court after Reed); Norton v. City of Springfield,
806 F.3d 411 (7th Cir. 2015) (reversing a prior holding, on petition for
rehearing, based on Reed).
This circuit has yet to take inventory of our pre-Reed cases. 2 We do
so now. We had previously held that “[a] statute that appears content-based
on its face may still be deemed content-neutral if it is justified without regard
to the content of the speech . . . . Content-neutrality has continued to be
defined by the justification of the law or regulation, and this court has
2
This is not the first instance since 2015 that this court has cited to Reed. Several
of our cases have cited Reed, but not for the direct proposition at issue here. See Seals v.
McBee, 898 F.3d 587, 595 (5th Cir. 2018); United States v. Petras, 879 F.3d 155, 166–67 (5th
Cir. 2018); Def. Distributed v. U.S. Dep’t of State, 838 F.3d 451, 468–69 (5th Cir. 2016)
(Jones, J., dissenting).
8
Case: 19-50354 Document: 00515540542 Page: 9 Date Filed: 08/25/2020
No. 19-50354
consistently employed that test.” Asgeirsson v. Abbott, 696 F.3d 454, 459–60
(5th Cir. 2012) (citing Ward v. Rock Against Racism, 491 U.S. 781, 791 (1989)
(“The principal inquiry in determining content neutrality, in speech cases
generally and in time, place, or manner cases in particular, is whether the
government has adopted a regulation of speech because of disagreement with
the message it conveys. The government’s purpose is the controlling
consideration.” (citation omitted))). The Asgeirsson case predates Reed and
cites to Ward, which the Supreme Court addressed in Reed.
While the Supreme Court did not overturn Ward in Reed, it did
explain that the Ninth Circuit, who had interpreted Ward just as this court
had in Asgeirsson, “misunderst[ood] [the] decision in Ward as suggesting that
a government’s purpose is relevant even when a law is content based on its
face.” Reed, 576 U.S. at 166. The Supreme Court explained: “That is
incorrect. Ward had nothing to say about facially content-based restrictions
because it involved a facially content-neutral ban . . . .” Id. at 166–67. It went
on to clarify the correct law:
Our precedents have . . . recognized a separate and additional
category of laws that, though facially content neutral, will be
considered content-based regulations of speech: laws that
cannot be “justified without reference to the content of the
regulated speech,” or that were adopted by the government
“because of disagreement with the message [the speech]
conveys.” Those laws, like those that are content based on
their face, must also satisfy strict scrutiny.
Id. at 164 (alteration in original) (quoting Ward, 491 U.S. at 791). But, if a law
is content based on its face, then it is “subject to strict scrutiny regardless of
the government’s . . . content-neutral justification.” Id. at 165.
In the wake of Reed, our Asgeirsson precedent must be revisited. Like
the Ninth Circuit, our pre-Reed case law ascribed to an incorrect
understanding of the test for content-neutrality given in Ward. See Asgeirsson,
9
Case: 19-50354 Document: 00515540542 Page: 10 Date Filed: 08/25/2020
No. 19-50354
696 F.3d at 459–60. Therefore, Asgeirsson and any portion of a case that relies
on Asgeirsson’s content-neutrality analysis must be abrogated. 3
Having clarified our case law, we now return to the case at bar and
consider whether the challenged ordinance is content neutral or content
based. Reed serves as our guide.
All nine Justices concurred in the judgment in Reed, six joining fully in
the majority opinion and three concurring in the judgment only and
proffering instead that intermediate scrutiny should have applied. Reed, 576
U.S. at 179 (Kagan, J., concurring in the judgment). Justice Alito, joined by
Justices Kennedy and Sotomayor, all of whom concurred fully in the majority
opinion, wrote a “few words of further explanation” in which he cautioned
against the potential breadth of the majority opinion by discussing certain
types of regulations that would still be content neutral under the opinion’s
holding. Id. at 174 (Alito, J., concurring). Justice Alito specifically notes,
without further explanation, that “[r]ules distinguishing between on-
premises and off-premises signs” should not be considered content based. Id.
at 175 (Alito, J., concurring).
The City cites to Justice Alito’s concurrence as support for its
position that the type of regulation here is not content based and is simply
3
See, e.g., Palmer v. Waxahachie Indep. Sch. Dist., 579 F.3d 502, 510 (5th Cir. 2009);
Pruett v. Harris Cty. Bail Bond Bd., 499 F.3d 403, 409 n.5 (5th Cir. 2007); Illusions–Dall.
Private Club, Inc. v. Steen, 482 F.3d 299, 308 (5th Cir. 2007); Fantasy Ranch Inc. v. City of
Arlington, 459 F.3d 546, 554–56 (5th Cir. 2006); Brazos Valley Coal. for Life, Inc. v. City of
Bryan, 421 F.3d 314, 326–27 (5th Cir. 2005); de la O v. Hous. Auth. of City of El Paso, 417
F.3d 495, 503 (5th Cir. 2005); N.W. Enters. Inc. v. City of Houston, 352 F.3d 162, 174 (5th
Cir. 2003); Encore Videos, Inc. v. City of San Antonio, 330 F.3d 288, 292 (5th Cir. 2003);
Horton v. City of Houston, 179 F.3d 188, 193 (5th Cir. 1999).
10
Case: 19-50354 Document: 00515540542 Page: 11 Date Filed: 08/25/2020
No. 19-50354
exempted from Reed. But we do not agree that Justice Alito’s concurrence
supports the City. Like the Sixth Circuit, we
agree[] it is possible for a restriction that distinguishes between
off-and on-premises signs to be content-neutral. For example,
a regulation that defines an off-premise[s] sign as any sign
within 500 feet of a building is content-neutral. But if the off-
premises/on-premises distinction hinges on the content of the
message, it is not a content-neutral restriction. A contrary
finding would read Justice Alito’s concurrence as disagreeing
with the majority in Reed. The Court declines such a reading.
Justice Alito’s exemplary list of “some rules that would not be
content-based” ought to be read in harmony with the
majority’s holding. [ ] Read in harmony with the majority,
Justice Alito’s concurrence enumerates an ‘on-premises/off-
premises’ distinction that is not defined by the sign’s content,
but by the sign’s physical location or other content-neutral
factor.
Thomas v. Bright, 937 F.3d 721, 732–33 (6th Cir. 2019) (Batchelder, J.)
(alteration in original) (quoting Thomas v. Schroer, 248 F. Supp. 3d 868, 879
(W.D. Tenn. 2017)); see also Note, Free Speech Doctrine after Reed v. Town
of Gilbert, 129 Harv. L. Rev. 1981, 1993 (2016) (explaining the potential
“inconsistency between the Reed majority’s far-ranging reasoning and
Justice Alito’s attempt to identify exceptions”). The City’s Sign Code must
be evaluated under the clear rule set forth by the Reed majority.
Austin’s Sign Code permits on-premises sign owners to install digital
sign faces that allow the copy to be changed electronically, while off-premises
sign owners are forbidden from using this technology. To determine whether
a sign is on-premises or off-premises, one must read the sign and ask: does it
advertise “a business, person, activity, goods, products, or services not
located on the site where the sign is installed, or that directs persons to any
location not on that site”? The City claims that this is not a regulation over a
11
Case: 19-50354 Document: 00515540542 Page: 12 Date Filed: 08/25/2020
No. 19-50354
sign’s content; rather, it is a time, place, or manner restriction based on the
location of signs. But “whether the Act limits on-premises signs to only
certain messages or limits certain messages from on-premises locations, the
limitation depends on the content of the message.” Thomas, 937 F.3d at 731.
The Sixth Circuit recently decided a nearly identical question. In
Thomas v. Bright, the court considered an “on-premises exception allow[ing]
a property owner to avoid the permitting process and proceed to post a sign
without any permit, so long as the sign is ‘advertising activities conducted on
the property on which [the sign is] located.’” Id. at 730 (second alteration in
original) (quoting Tenn. Code Ann. § 54-21-103(3)). The enabling regulation
specified that the sign had to be “located on the same premises as the
activity” and “have as its purpose the identification of the activity, products,
or services offered on that same premises.” Id. (alterations omitted) (quoting
Tenn. Comp. R. & Regs. 1680-02-03-.06)).
The Sixth Circuit explained that to determine whether the on-
premises exception applied, the government official had to read the message
written on the sign and determine its meaning, function, or purpose. Id. It
wrote: “Some facial distinctions based on a message are obvious, . . . and
others are more subtle, defining regulated speech by its function or purpose.”
Id. (quoting Reed, 576 U.S. at 163). Consequently, the Sixth Circuit held the
challenged regulation “contains a non-severable regulation of speech based
on the content of the message.” Id. at 733.
The D.C. Circuit has interpreted Reed differently. See Act Now to Stop
War and End Racism Coal. & Muslim Am. Soc’y Freedom Found. v. District of
Columbia, 846 F.3d 391, 404 (D.C. Cir. 2017), cert. denied, 138 S. Ct. 334(2017). In Act Now, the D.C. Circuit concluded that a distinction between
event-related signs and those not related to an event was content neutral
because it was “not a ‘regulation of speech,’ but a ‘regulation of the places
12
Case: 19-50354 Document: 00515540542 Page: 13 Date Filed: 08/25/2020
No. 19-50354
where some speech may occur.’” 846 F.3d at 403 (quoting Hill v. Colorado,
530 U.S. 703, 719 (2000)).
The D.C. Circuit reasoned that even though government “officials
may look at what a poster says to determine whether it is ‘event-related,’”
that did “not render the District’s [regulation] content-based,” and “the fact
that a [government] official might read a date and place on a sign to determine
that it relates to a bygone demonstration, school auction, or church
fundraiser does not make the [regulation] content based.” Id. at 404.
“[S]uch ‘cursory examination’ did not render the statute facially content
based.” Id. (quoting Hill, 530 U.S. at 720).
We do not see, as the D.C. Circuit does, an exception for mere
“cursory” inquiries into content in the holding of Reed. But even if we did,
the sign ordinance here does not depend on merely a cursory inquiry into
content. The City of Austin advances this “cursory” test as well, but the
distinction does not hold water. It takes no more than a cursory reading to
figure out if a sign supports Candidate A or Candidate B. But a law allowing
advertising for Candidate A and not Candidate B would surely be content
based. See Rosenberger v. Rector & Visitors of Univ. of Va., 515 U.S. 819, 829
(1995) (explaining that viewpoint discrimination is a more “blatant” and
“egregious” form of content-based discrimination).
Determining whether a sign is on-premises or off-premises is not a
“cursory” inquiry under the circumstances here. At oral argument, the panel
posed numerous hypotheticals to the City asking whether a certain sign
would be on-premises or off-premises:
• Could Sally have a digital sign in her front yard that says “Sally makes
quilts here and sells them at 3200 Main Street”?
13
Case: 19-50354 Document: 00515540542 Page: 14 Date Filed: 08/25/2020
No. 19-50354
• Could Barbara and Tom maintain a digital sign in their yard that says
“We love hamburgers” that contained the logo and address to a
Whataburger location two miles away?
• Could the local school have an electronic message board that rotated
between messages that said “Finals Start Tuesday” and “Eat at the
Main Street Café on Friday to Support the Boosters”?
• Could Sarah place a digital sign in her yard that said “Vote for Kathy”
if Kathy did not live at Sarah’s house?
• How could one determine whether a digital billboard that said “God
Loves You” is on-premises or off-premises?
Counsel for the City struggled to answer whether these hypothetical
signs were on-premises or off-premises. And if prepared counsel cannot
quickly assess whether these signs are permitted under the Sign Code, the
inquiry is not a mere cursory one. A reader must ask: who is the speaker and
what is the speaker saying? These are both hallmarks of a content-based
inquiry. See Reed, 576 U.S. 166–69. The fact that the reader must also ask,
where is this sign located?—a content-neutral inquiry—does not save the
regulation.
Reed reasoned that a distinction can be facially content based if it
defines regulated speech by its function or purpose. Here, the Sign Code
defines “off-premises” signs by their purpose: advertising or directing
attention to a business, product, activity, institution, etc., not located at the
same location as the sign. The City clams that it is not content based because
it does not target one specific viewpoint or message, but the Sign Code does
not need to discriminate against a specific viewpoint to be “content based.”
As explained in Reed, “A regulation that targets a sign because it
conveys an idea about a specific event is no less content based than a
14
Case: 19-50354 Document: 00515540542 Page: 15 Date Filed: 08/25/2020
No. 19-50354
regulation that targets a sign because it conveys some other idea.” 576 U.S.
at 171. Hence why the ordinance at issue in Reed was deemed content based;
it “single[d] out signs bearing a particular message: the time and location of
a specific event.” Id.
Our sister circuits have recognized this important principle. In
addition to the Sixth Circuit decision discussed above, consider Norton v. City
of Springfield, a decision in which the Seventh Circuit struck down an anti-
panhandling ordinance that prohibited asking for immediate donations but
allowed requests for future donations. 806 F.3d at 412. Relying on Reed, the
Seventh Circuit reasoned that the ordinance was content based. Id. at 413. It
prohibited speech that said “Donate Now!” but allowed speech that said
“Donate Later!” What time was to the anti-panhandling ordinance in
Norton, location is to Austin’s on-premises/off-premises distinction.
Austin’s Sign Code treats a sign that says “Stop Here!” differently than a
sign that says “Stop Over There!”
We take Reed at its word. Recall that in Reed, the sign code required
town officials to examine a sign to determine its purpose, and “[t]hat obvious
content-based inquiry does not evade strict scrutiny review simply because
an event . . . is involved.” 576 U.S. at 170.
Or recall Thomas’s faithful application of Reed: The fact that a
government official had to read a sign’s message to determine the sign’s
purpose was enough to subject the law to strict scrutiny even though the
sign’s location was also involved. Thomas, 937 F.3d at 730–31 (explaining that
the fact that Tennessee’s law involved location did not make it content
neutral because “the Supreme Court has repeatedly held that laws combining
content-based and content-neutral factors are nonetheless content-based”).
So here too. To determine whether a sign is “off-premises” and therefore
unable to be digitized, government officials must read it. This is an “obvious
15
Case: 19-50354 Document: 00515540542 Page: 16 Date Filed: 08/25/2020
No. 19-50354
content-based inquiry,” and it “does not evade strict scrutiny” simply
because a location is involved.
“[A]bove all else, the First Amendment means that government has
no power to restrict expression because of its message, its ideas, its subject
matter, or its content.” Police Dep’t of Chicago v. Mosley, 408 U.S. 92, 95
(1972). “Content-based regulations of speech ‘pose the inherent risk that the
Government seeks not to advance a legitimate regulatory goal, but to
suppress unpopular ideas or information or manipulate the public debate
through coercion rather than persuasion.’” Wollschlaeger, 848 F.3d at 1327
(Pryor, J., concurring) (quoting Turner Broad. Sys., Inc. v. FCC, 512 U.S. 622,
641 (1994)). “The power of the state must not be used to ‘drive certain ideas
or viewpoints from the marketplace,’ even if a majority of the people might
like to see a particular idea defeated.” Id. (Pryor, J., concurring) (quoting
Simon & Schuster, Inc. v. Members of N.Y. State Crime Victims Bd., 502 U.S.
105, 116 (1991)).
The rule in Reed is broad, but this is not an unforeseen consequence.
The separate opinions in Reed warned of just how broadly the rule could be
interpreted. Justice Kagan’s concurrence in Reed highlights the majority
opinion’s breadth by pointing out that the Reed majority opinion subjects
signs advertising a one-time event to strict scrutiny because “a law with an
exception for such signs ‘singles out specific subject matter for differential
treatment.’” 576 U.S. at 181 n.1 (Kagan, J., concurring in the judgment)
(quoting 576 U.S. at 156, 169). Justice Breyer wrote that the Reed majority
opinion cannot “avoid the application of strict scrutiny to all sorts of
justifiable governmental regulations.” Id. at 178 (Breyer, J., concurring in the
judgment).
Indeed, the Reed majority itself acknowledged that “laws that might
seem ‘entirely reasonable’ will sometimes be ‘struck down because of their
16
Case: 19-50354 Document: 00515540542 Page: 17 Date Filed: 08/25/2020
No. 19-50354
content-based nature.’” Id. at 165 (quoting City of Ladue v. Gilleo, 512 U.S.
43, 60 (1994) (O’Connor, J., concurring)). As Justice Thomas explained,
“[i]nnocent motives do not eliminate the danger of censorship presented by
a facially content-based statute, as future government officials may one day
wield such statutes to suppress disfavored speech. That is why the First
Amendment expressly targets the operation of the laws—i.e., the
‘abridg[ement] of speech’—rather than merely the motives of those who
enacted them.” Id. at 167 (alteration in original) (quoting U.S. Const. amend.
I).
For the foregoing reasons, we hold that Austin’s on-premises/off-
premises distinction is content based.
B.
That still leaves the question of whether the Sign Code is regulating
commercial speech. “Commercial speech is ‘[e]xpression related solely to
the economic interests of the speaker and its audience.’” Express Oil Change,
L.L.C. v. Miss. Bd. of Licensure for Prof’l Eng’rs & Surveyors, 916 F.3d 483,
487 n.2 (5th Cir. 2019) (alteration in original) (quoting Central Hudson, 447
U.S. at 561). Prior to Reed, “commercial speech enjoy[ed] lesser,
intermediate-scrutiny constitutional protection.” RTM Media, L.L.C. v. City
of Houston, 584 F.3d 220, 224 (5th Cir. 2009), cert. denied, 130 U.S. 644(2010); see also Metromedia, Inc. v. City of San Diego, 453 U.S. 490, 507 (1981).
We need not decide the issue of whether Reed changes the analysis of
commercial speech unless Austin’s Sign Code regulates only commercial
speech. 4
4
The district court concluded that the lesser scrutiny outlined in Central Hudson
and Metromedia applied because the Sign Code’s “on/off-premises distinction is content
neutral.” This was error. Assuming Reed has not altered the law on commercial speech,
courts do not apply the Central Hudson test to “content neutral” regulations, but to
17
Case: 19-50354 Document: 00515540542 Page: 18 Date Filed: 08/25/2020
No. 19-50354
So, does Austin’s Sign Code regulate commercial speech?
Commercial speech is protected by the First Amendment, Va. State Bd. of
Pharmacy v. Va. Citizens Consumer Council, Inc., 425 U.S. 748, 761–62 (1976),
but Central Hudson dictates that commercial speech is given “lesser
protection . . . than . . . other constitutionally guaranteed expression,” 447
U.S. at 563. This is because commercial speech “serves the economic
interest of the speaker.” Id. at 561. While the Supreme Court has “rejected
the . . . view that government has complete power to suppress or regulate
commercial speech,” id. at 562, there is no “constitutional objection to the
suppression of commercial messages that do not accurately inform the public
about lawful activity,” id. at 563.
The parties do not dispute that the Sign Code, prior to the
amendments, applied to both commercial and noncommercial speech. The
relevant provisions made no exceptions or carve outs to the applicability of
the law based on whether the speech involved commercial or noncommercial
messages. Notwithstanding the law’s general applicability, the City argues
that because the Sign Code applies to billboards, which primarily share
commercial messages, and only intermittent noncommercial messages are
affected, the ordinance should be evaluated in the realm of commercial
speech. But the Sign Code does not regulate noncommercial speech only
intermittently. The regulation applies to any noncommercial message “off-
premises” whether it is displayed for ten minutes or ten years.
The Eleventh Circuit dealt with a similar question in Solantic, LLC v.
City of Neptune Beach, 410 F.3d 1250, 1269 n.15 (11th Cir. 2005). There, a city
commercial speech regulations—regardless of whether they regulate content. Therefore,
the district court erred in applying Central Hudson’s test based on the law’s content
neutrality—both because this is a misapplication of Central Hudson and because, as we
establish above, the law is not content neutral.
18
Case: 19-50354 Document: 00515540542 Page: 19 Date Filed: 08/25/2020
No. 19-50354
ordinance regulating signs applied to both commercial and noncommercial
messages. The City argued that it nonetheless should be reviewed under the
Central Hudson test because it regulates primarily commercial speech. Id.The Eleventh Circuit reasoned that because the sign code at issue did not
regulate commercial speech as such, but rather applied “without distinction
to signs bearing commercial and noncommercial messages,” the Central
Hudson test had no application and strict scrutiny applied. Id. 5
Indeed, the Supreme Court has warned against parsing speech in
order to apply the proper test. Where “the component parts of a single
speech are inextricably intertwined, we cannot parcel out the speech,
applying one test to one phrase and another test to another phrase. Such an
endeavor would be both artificial and impractical. Therefore, we apply our
test for fully protected expression.” Riley, 487 U.S. at 796.
5
The City relies on International Outdoor, Inc. v. City of Troy, No. 17-10335, 2017
WL 2831702 (E.D. Mich. June 30, 2017), for the proposition that intermittent
noncommercial speech does not take a regulation out of the realm of commercial speech.
We find City of Troy both factually distinguishable and unpersuasive. First, City of Troy
evaluated a variance, which meant it was evaluating the specific sign at issue: an electronic
billboard that had 32 rotating messages, 31 of which were commercial. The Michigan
district court determined that this was “intertwined” speech. Id. at *5. Because the
billboards were going to carry mostly commercial messages, the court concluded that this
“intertwined” speech was essentially commercial in nature. Id. (citing Riley v. Nat. Fed'n
of the Blind of N.C., Inc., 487 U.S. 781, 796 (1988); Adventure Commc'ns, Inc. v. Ky. Registry
of Election Fin., 191 F.3d 429, 441 (4th Cir. 1999)).
We do not speak on whether the billboard at issue in City of Troy was a proper
example of “intertwined” speech, but do point out that the speech at issue (one out of 32
billboards sharing a commercial message) is considerably different than the two cases the
district court relied on for support—Kentucky Registry and Riley. The sort of “intertwined”
speech addressed in the cited cases did not involve the kind of discrete messages carried on
billboards, where one speaker’s message may be noncommercial and another speaker’s
message commercial. Here, the potential noncommercial messages are not intertwined
with other commercial speech. Austin’s regulation applies fully to a billboard that seeks to
display only noncommercial messages on an off-premises billboard.
19
Case: 19-50354 Document: 00515540542 Page: 20 Date Filed: 08/25/2020
No. 19-50354
This logic also applies to parsing regulations. A regulation covering
billboards is not exempt from strict scrutiny simply because most billboards
display commercial messages. Here, the regulation applies with equal force
to both commercial and noncommercial messages. For that reason, strict
scrutiny applies. See Solantic, 410 F.3d at 1269 n.15 (explaining that because
the sign code applies without distinction to signs bearing commercial and
noncommercial messages, the Central Hudson test does not apply); Southlake
Prop. Assocs., Ltd. v. City of Morrow, 112 F. 3d 1114, 1116–17 (11th Cir. 1997)
(holding that to the extent that a sign ordinance regulates noncommercial
speech, it must withstand a heightened level of scrutiny); Cedar Park, 387 F.
Supp. 3d at 712–14 (noting that a law that applies to both commercial and
noncommercial speech must survive strict scrutiny).
C.
Having determined that the Sign Code is content based and that the
commercial-speech exception does not apply, we assess the relevant
provisions of the pre-amendment Sign Code under strict scrutiny. Under that
standard, “the Government [must] prove that the restriction furthers a
compelling interest and is narrowly tailored to achieve that interest.” Reed,
576 U.S. at 171. Strict scrutiny is, understandably, a hard standard to meet.
See Williams-Yulee v. Florida Bar, 575 U.S. 433, 444 (2015); Reed, 576 U.S. at
176 (Breyer, J., concurring) (explaining that strict scrutiny leads to almost
certain legal condemnation). This is not one of those cases.
The City relied on the stated purpose of the Sign Code—to “protect
the aesthetic value of the City and to protect public safety”—for justification
of the ordinance. These were the same two justifications relied upon by the
municipality in Reed. 576 U.S. at 171. As the Supreme Court held in Reed, we
hold here that these purported justifications do not satisfy strict scrutiny. See
id. at 172.
20
Case: 19-50354 Document: 00515540542 Page: 21 Date Filed: 08/25/2020
No. 19-50354
The City has not provided any argument that on-premises signs are a
greater eyesore than off-premises signs, and the City cannot “plac[e] strict
limits on” off-premises signs, as “necessary to beautify the [City] while at
the same time allowing” on-premises signs of the same type. Id. The City has
also failed to support its second stated justification: that off-premises digital
signs pose a greater risk to public safety than on-premises digital signs. It has
provided no evidence that on-premises signs pose less of a risk to public
safety than off-premises signs.
Therefore, like the ordinance in Reed, the ordinance here is
underinclusive. See id. at 171. A “law cannot be regarded as protecting an
interest of the highest order, and thus as justifying a restriction upon truthful
speech, when it leaves appreciable damage to that supposedly vital interest
unprohibited.” Republican Party of Minn. v. White, 536 U.S. 765, 780 (2002)
(quoting Florida Star v. B.J.F., 491 U.S. 524, 541–42 (1989) (Scalia, J.,
concurring in the judgment)). The City has failed to show that this ordinance
is narrowly tailored to serve a compelling government interest. It therefore
fails strict scrutiny.
IV.
We hold that the on-premises/off-premises distinction is content
based and fails under strict scrutiny. It thus runs afoul of the First
Amendment. We REVERSE the district court’s decision and REMAND
to the district court for further proceedings consistent with this opinion.
21