Contest Promotions, LLC v. City and County of San Francis ( 2017 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
CONTEST PROMOTIONS, LLC, No. 17-15909
Plaintiff-Appellant,
D.C. No.
v. 3:16-cv-06539-SI
CITY AND COUNTY OF SAN ORDER AND
FRANCISCO, AMENDED
Defendant-Appellee. OPINION
Appeal from the United States District Court
for the Northern District of California
Susan Illston, Senior District Judge, Presiding
Argued and Submitted July 12, 2017
San Francisco, California
Filed August 16, 2017
Amended October 23, 2017
Before: Susan P. Graber and Michelle T. Friedland, Circuit
Judges, and Consuelo B. Marshall,* District Judge.
Order;
Opinion by Judge Graber
*
The Honorable Consuelo B. Marshall, Senior United States District
Judge for the Central District of California, sitting by designation.
2 CONTEST PROMOTIONS V. SAN FRANCISCO
SUMMARY**
Civil Rights
The panel affirmed the district court’s Fed. R. Civ. P.
12(b)(6) dismissal of an action brought pursuant to 42 U.S.C.
§ 1983 challenging San Francisco’s sign-related regulations.
Through its Planning Code, San Francisco prohibits new
billboards but allows onsite business signs relating to
activities undertaken on the premises, subject to various rules.
Noncommercial signs are exempt from the rules. Plaintiff, an
advertiser that rents the right to post signs on the premises of
third-party businesses, alleged that the City’s Planning Code
violates the First Amendment by exempting noncommercial
signs from its regulatory ambit.
The panel held that the distinction drawn between
commercial and noncommercial signs in the City’s Planning
Code survived intermediate scrutiny under Central Hudson
Gas & Electric Corp. v. Public Service Commission, 447 U.S.
557 (1980). The panel held that the distinctions directly
advanced the City’s substantial interests in safety and
aesthetics and was not impermissibly underinclusive.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
CONTEST PROMOTIONS V. SAN FRANCISCO 3
COUNSEL
Michael F. Wright (argued), Los Angeles, California, for
Plaintiff-Appellant.
James M. Emery (argued) and Victoria Wong, Deputy City
Attorneys; Dennis J. Herrera, City Attorney; Office of the
City Attorney, San Francisco, California; for Defendant-
Appellee.
ORDER
The opinion filed on August 16, 2017, and published at
867 F.3d 1171, is amended by the opinion filed concurrently
with this order, as follows:
On slip opinion page 14, footnote 4, delete the last
sentence: “For the reasons given by the district court, see
Contest Promotions, LLC v. City of San Francisco, No. 16-
cv-06539-SI, 2017 WL 1493277, at *5 (N.D. Cal. Apr. 26,
2017) (order), we affirm the dismissal of that claim as well.”
Substitute the following for the deleted sentence: “This claim
is moot because no penalties ever were assessed.”
With this amendment, the panel has voted to deny
Appellant’s petition for rehearing. Judges Graber and
Friedland have voted to deny Appellant’s petition for
rehearing en banc, and Judge Marshall has so recommended.
The full court has been advised of the petition for
rehearing en banc, and no judge of the court has requested a
vote on it.
4 CONTEST PROMOTIONS V. SAN FRANCISCO
Appellant’s petition for rehearing and rehearing en banc
is DENIED. No further petitions for rehearing and rehearing
en banc may be filed.
OPINION
GRABER, Circuit Judge:
Plaintiff Contest Promotions, LLC, rents advertising
space from businesses in cities around the country, including
San Francisco, and places third-party advertising signs in that
space, framed by text inviting passersby to enter the business
and win a prize related to the sign. Through its Planning
Code, San Francisco prohibits new billboards but allows
onsite business signs subject to various rules.
Noncommercial signs are exempt from the rules. In this, the
latest of several challenges that Plaintiff has mounted to San
Francisco’s sign-related regulations, Plaintiff argues that the
distinction between commercial and noncommercial signs
violates the First Amendment. The district court dismissed
the complaint. Reviewing the order of dismissal de novo,
Friedman v. AARP, Inc., 855 F.3d 1047, 1051 (9th Cir. 2017),
we affirm.
BACKGROUND
Like other local governments, the City and County of San
Francisco, Defendant here, uses its Planning Code to regulate
outdoor advertising, including billboards. The purposes of
Planning Code Article 6, which contains the advertising rules,
include “promot[ing] the aesthetic and environmental values
of San Francisco,” “protect[ing] public investment in and the
CONTEST PROMOTIONS V. SAN FRANCISCO 5
character and dignity of public buildings, streets, and open
spaces,” “protect[ing] the distinctive appearance of San
Francisco,” and “reduc[ing] hazards to motorists, bicyclists,
and pedestrians.” S.F., Cal., Planning Code (“Planning
Code”) § 601.
The Planning Code draws two distinctions that are
relevant here. First, the Planning Code distinguishes between
“general advertising signs” and “business signs.” A general
advertising sign is
[a] Sign, legally erected prior to the effective
date of Section 611 of this Code, which
directs attention to a business, commodity,
industry or other activity which is sold,
offered or conducted elsewhere than on the
premises upon which the Sign is located, or to
which it is affixed, and which is sold, offered
or conducted on such premises only
incidentally if at all.
Id. § 602 (emphasis added). By contrast, a business sign is
defined in part as
[a] Sign which directs attention to the primary
business, commodity, service, industry or
other activity which is sold, offered, or
conducted on the premises upon which such
Sign is located, or to which it is affixed.
Id. (emphasis added). In other words, general advertising
signs, like traditional billboards, refer primarily to offsite
activities, whereas business signs refer to the activities
undertaken on the same premises as the sign. The Code
6 CONTEST PROMOTIONS V. SAN FRANCISCO
decrees that “[n]o new general advertising signs shall be
permitted at any location within the City as of March 5,
2002.” Id. § 611(a). By contrast, business signs are
permitted, subject to other limitations related to neighborhood
and development type.
Second, the Planning Code distinguishes between
commercial and noncommercial signs. The latter are
exempted from Article 6 altogether. See Planning Code
§ 603(a) (explaining that “[n]othing in this Article 6 shall
apply to . . . Noncommercial Signs”).1 Article 6 does not
define “noncommercial” except by reference to a non-
exhaustive list that includes “[o]fficial public notices,”
“[g]overnmental signs,” “[t]emporary display posters,”
“[f]lags, emblems, insignia, and posters of any nation or
political subdivision,” and “[h]ouse numbers.” Id.
Plaintiff is an advertiser that rents the right to post signs
on the premises of third-party businesses. Taking the
allegations in the complaint as true, Plaintiff’s signs advertise
contests in which passing customers can participate by going
inside the business and filling out a form. Plaintiff alleges
1
An earlier version of the sign ordinance exempted a long list of
types of noncommercial signs without categorically exempting them all.
In response to state and federal court decisions that interpreted the
ordinance to exempt all noncommercial signs in order to preserve its
constitutionality, see Metro Fuel LLC v. City of San Francisco, No. C 07-
6067 PJH, 2011 WL 900318, at *9 (N.D. Cal. Mar. 15, 2011) (so
holding); City of San Francisco v. Eller Outdoor Advert., 237 Cal. Rptr.
815, 828 (Ct. App. 1987) (same), Defendant recently amended the
ordinance to formally exempt noncommercial signs, full-stop. See
Enactment No. 218-16, File No. 160553, San Francisco Board of
Supervisors, eff. Dec. 10, 2016 (exempting all noncommercial signs from
Article 6).
CONTEST PROMOTIONS V. SAN FRANCISCO 7
that the signs depict prizes that customers may win in
Plaintiff’s contests. No party disputes that Plaintiff’s signs
are “commercial” under Article 6. In September and October
of 2016, and in January of 2017, Defendant issued several
Notices of Enforcement, accusing Plaintiff’s signs of
violating various requirements of Article 6.
Although the San Francisco Charter sets forth an
administrative process for challenging the denial of permits
for signs, see S.F., Cal., Charter § 4.106(b), Plaintiff did not
avail itself of that process. Instead, Plaintiff responded by
filing suit under 42 U.S.C. § 1983 alleging, inter alia, that
Article 6 of the Planning Code violates the First Amendment
by exempting noncommercial signs from its regulatory
ambit.2 Plaintiff moved for a preliminary injunction, which
the district court denied. Plaintiff then filed the operative first
amended complaint, and Defendant moved to dismiss the
action under Federal Rule of Civil Procedure 12(b)(6). The
district court granted Defendant’s motion and entered a
judgment of dismissal, and Plaintiff timely appeals.
DISCUSSION
A. Level of Scrutiny
Our First Amendment analysis begins by determining the
level of scrutiny that applies to the Planning Code’s Article
2
This is one of several actions that Plaintiff has filed against
Defendant, challenging various aspects of its billboard regulations. In a
separate memorandum disposition, we affirm the dismissal of an earlier-
filed suit raising different First Amendment issues under the Planning
Code. And in a second memorandum disposition, also filed this date, we
dismiss as moot Plaintiff’s appeal from the denial of its motion for a
preliminary injunction in this case.
8 CONTEST PROMOTIONS V. SAN FRANCISCO
6. Because noncommercial signs are exempted from its
regulatory framework, Article 6 is a regulation of commercial
speech. Restrictions on commercial speech are subject to
intermediate scrutiny under Central Hudson Gas & Electric
Corp. v. Public Service Commission, 447 U.S. 557 (1980).
Citing Sorrell v. IMS Health Inc., 564 U.S. 552 (2011), and
Reed v. Town of Gilbert, 135 S. Ct. 2218 (2015), Plaintiff
argues that review more searching than Central Hudson’s
intermediate scrutiny standard should govern our analysis of
Defendant’s billboard laws. But we recently held that
“Sorrell did not mark a fundamental departure from Central
Hudson’s four-factor test, and Central Hudson continues to
apply.” Retail Dig. Network, LLC v. Prieto (“RDN”),
861 F.3d 839, 846 (9th Cir. 2017) (en banc).
In RDN, we rejected the plaintiff’s argument that a liquor
advertising rule “imposed a content- or speaker-based
burden” and therefore merited “heightened scrutiny.” Id. at
847. We held that the speaker- or content-based nature of a
regulation merely meant that such a regulation “implicates
the First Amendment, which requires scrutiny greater than
rational basis review.” Id. (citing Sorrell, 564 U.S. at 567).
In those situations, the proper level of scrutiny was the
longstanding commercial speech doctrine, which calls for
intermediate review. Id. at 848.
We have likewise rejected the notion that Reed altered
Central Hudson’s longstanding intermediate scrutiny
framework. See Lone Star Sec. & Video, Inc. v. City of Los
Angeles, 827 F.3d 1192, 1198 n.3 (9th Cir. 2016)
(“[A]lthough laws that restrict only commercial speech are
content based, such restrictions need only withstand
intermediate scrutiny.” (citing Reed and Central Hudson)).
CONTEST PROMOTIONS V. SAN FRANCISCO 9
We thus reject Plaintiff’s argument that review more
searching than intermediate scrutiny applies here.
Under that standard, we undertake our analysis in four
steps. First, the speech “must concern lawful activity and not
be misleading.” Central Hudson, 447 U.S. at 566. Second,
“we ask whether the asserted governmental interest is
substantial.” Id. Then, “[i]f both inquiries yield positive
answers, we must determine whether the regulation directly
advances the governmental interest asserted, and whether it
is not more extensive than is necessary to serve that interest.”
Id.
B. Central Hudson Analysis
“Applying the Central Hudson test in the context of
billboard regulations is not new for the Supreme Court or us.”
Outdoor Sys., Inc. v. City of Mesa, 997 F.2d 604, 610 (9th
Cir. 1993). At the first step, neither party disputes that, as
alleged, Plaintiff’s advertisements concern lawful, non-
misleading activity. And at the second step, the Supreme
Court and this court have long held—and today, we
reaffirm—that a locality’s asserted interests in safety and
aesthetics, see Planning Code § 601 (describing the purpose
of Defendant’s sign controls), are substantial. See
Metromedia, Inc. v. City of San Diego, 453 U.S. 490, 507–08
(1981) (plurality) (explaining that there was no “substantial
doubt that the twin goals that the ordinance seeks to
further—traffic safety and the appearance of the city—are
substantial governmental goals”); accord Metro Lights,
L.L.C. v. City of Los Angeles, 551 F.3d 898, 904 (9th Cir.
2009) (noting that “[i]t is well-established that traffic safety
and aesthetics constitute substantial government interests”);
Outdoor Media Grp., Inc. v. City of Beaumont, 506 F.3d 895,
10 CONTEST PROMOTIONS V. SAN FRANCISCO
905 (9th Cir. 2007) (noting that “both the Supreme Court and
our circuit have endorsed these rationales as substantial
governmental interests”); Ackerley Commc’ns of Nw. Inc. v.
Krochalis, 108 F.3d 1095, 1099 (9th Cir. 1997) (reaffirming
that “a city’s interest in avoiding visual clutter suffices to
justify a prohibition of billboards”); Nat’l Advert. Co. v. City
of Orange, 861 F.2d 246, 248 (9th Cir. 1988) (same). We
therefore proceed to the last two steps of Central Hudson.
“The last two steps of the Central Hudson analysis
basically involve a consideration of the ‘fit’ between the
legislature’s ends and the means chosen to accomplish those
ends.”3 United States v. Edge Broad. Co., 509 U.S. 418,
427–28 (1993) (internal quotation marks omitted). The third
Central Hudson step asks whether “the restriction . . . directly
advance[s] the state interest involved.” Valle Del Sol Inc. v.
Whiting, 709 F.3d 808, 821 (9th Cir. 2013) (internal quotation
marks omitted). In considering that question, “we must look
at whether the City’s ban advances its interest in its general
application, not specifically with respect to [the defendant].”
Metro Lights, 551 F.3d at 904. The regulation also must not
be underinclusive, such that it “‘undermine[s] and
counteract[s]’ the interest the government claims it adopted
the law to further.” Id. at 905 (quoting Rubin v. Coors
Brewing Co., 514 U.S. 476, 489 (1995)). The fourth step
“guards against over-regulation rather than under-regulation.”
Id. at 911. It “does not require that the regulation be the
3
As we have observed before, “[i]t has not always been clear how
this basic inquiry differs with respect to the last two steps of the Central
Hudson analysis, and indeed the Supreme Court has observed that the
steps of the analysis are ‘not entirely discrete.’” Metro Lights, 551 F.3d at
904 (quoting Greater New Orleans Broad. Ass’n v. United States,
527 U.S. 173, 183 (1999)).
CONTEST PROMOTIONS V. SAN FRANCISCO 11
least-restrictive means to accomplish the government’s goal.
Rather, what is required is a reasonable fit between the ends
and the means, a fit ‘that employs not necessarily the least
restrictive means, but a means narrowly tailored to achieve
the desired objective.’” Outdoor Sys., 997 F.2d at 610
(alteration omitted) (quoting Bd. of Trs. v. Fox, 492 U.S. 469,
480 (1989)).
Relying on City of Cincinnati v. Discovery Network, Inc.,
507 U.S. 410 (1993), Plaintiff argues that Article 6 falters at
the last two steps of the Central Hudson analysis because it
exempts noncommercial signs for reasons unconnected to
Defendant’s asserted interests in safety and aesthetics. We
disagree for two reasons.
First, Discovery Network is materially distinguishable.
There, the Supreme Court considered a First Amendment
challenge to a city’s ordinance that “completely prohibit[ed]
the distribution of commercial handbills on the public right of
way” using newsracks, while leaving unaffected a far greater
number of newsracks that distributed noncommercial
material. Id. at 414. In particular, the record showed that
“the number of newsracks dispensing commercial handbills
was ‘minute’ compared with the total number (1,500–2,000)
on the public right of way.” Id. The Court held that the
ordinance’s distinction between commercial and
noncommercial speech “b[ore] no relationship whatsoever to
the particular interests that the city has asserted,” making the
ordinance “an impermissible means of responding to” the
city’s “admittedly legitimate interests” in safety and
aesthetics. Id. at 424; see also id. at 428 (concluding that “the
distinction [the city] has drawn has absolutely no bearing on
the interests it has asserted”).
12 CONTEST PROMOTIONS V. SAN FRANCISCO
The Court’s conclusion rested in significant part on the
details of the record before it and on the empirically poor
connection between the ordinance and the asserted problem.
For example, the Court noted that, “[w]hile there was some
testimony in the District Court that commercial publications
are distinct from noncommercial publications in their
capacity to proliferate, the evidence of such was exceedingly
weak,” id. at 425, and that if the “aggregate number of
newsracks on its streets” was the real concern, then
“newspapers are arguably the greater culprit because of their
superior number,” id. at 426. Thus, “the fact that the
regulation ‘provide[d] only the most limited incremental
support for the interest asserted,’—that it achieved only a
‘marginal degree of protection,’ for that interest—supported
[the Court’s] holding that the prohibition was invalid.” Id. at
427 (first alteration in original) (quoting Bolger v. Youngs
Drug Prods. Corp., 463 U.S. 60, 73 (1983)). As the Court
emphasized: “Our holding, however, is narrow. As should
be clear from the above discussion, we do not reach the
question whether, given certain facts and under certain
circumstances, a community might be able to justify
differential treatment of commercial and noncommercial
newsracks. We simply hold that on this record [the city] has
failed to make such a showing.” Id. at 428.
Unlike in Discovery Network, Article 6 is not
impermissibly under-inclusive. The text of Article 6 explains
why such a rule is necessary. It explains that, when the
ordinance was adopted, the “increased size and number of
general advertising signs” in particular were “creating a
public safety hazard,” that such signs “contribute to blight
and visual clutter as well as the commercialization of public
spaces,” that there was a “proliferation” of such signs in
“open spaces all over the City,” and that there was “currently
CONTEST PROMOTIONS V. SAN FRANCISCO 13
an ample supply of general advertising signs within the City.”
Planning Code § 611(f). These are statements of legislative
purpose specific to commercial signs. In contrast to a ban on
commercial sidewalk newsracks affecting only a tiny fraction
of the overall number of newsracks, Defendant’s choice to
regulate commercial signs (but not noncommercial signs) has
a substantial effect on its interests in safety and aesthetics.
Accordingly, Article 6 is not constitutionally underinclusive.
Its exceptions ensure that the regulation will achieve its end,
and the distinctions that it makes among different kinds of
speech relate empirically to the interests that the government
seeks to advance. Metro Lights, 551 F.3d at 906.
Outdoor Systems is not to the contrary. Defendant relies
on that case to argue that Defendant impermissibly
“discriminate[s] against commercial speech solely on the
ground that it deserves less protection than noncommercial
speech.” 997 F.2d at 610. As explained above, that is not the
reason for the distinction drawn by Article 6, which focuses
instead on the unique risks to Defendant’s interests that
commercial signs pose. Plaintiff also contends that, unlike
the billboard regulations that survived intermediate scrutiny
in Outdoor Systems, the ones at issue here are not neutral as
between commercial and noncommercial speech. But neither
were the regulations that we approved in Outdoor Systems.
As we observed—in a factual recitation that is admittedly in
some tension with other analysis in the opinion—Mesa’s
regulations “contain[ed] a provision that except[ed] all
noncommercial signs from the Code’s definition of offsite
signs.” Id. at 608–09.
More generally, a second principle supports our
conclusion. It is well established that a law need not deal
perfectly and fully with an identified problem to survive
14 CONTEST PROMOTIONS V. SAN FRANCISCO
intermediate scrutiny. The Supreme Court long ago rejected
the notion “that a prohibition against the use of unattractive
signs cannot be justified on [a]esthetic grounds if it fails to
apply to all equally unattractive signs.” Members of City
Council v. Taxpayers for Vincent, 466 U.S. 789, 810 (1984)
(noting that “[a] comparable argument was categorically
rejected in Metromedia”). Instead, for example, “the validity
of the [a]esthetic interest in the elimination of signs on public
property is not compromised by failing to extend the ban to
private property.” Id. at 811. And in Metromedia, the
Supreme Court noted with approval that the city “ha[d] gone
no further than necessary in seeking to meet its ends,” when
it declined to ban all billboards and instead “allow[ed] onsite
advertising and some other specifically exempted signs.”
453 U.S. at 508.
We therefore hold that the distinctions drawn in Article 6
between commercial and noncommercial speech directly
advance Defendant’s substantial interests. We find no
constitutional infirmity in the ordinance’s failure to regulate
every sign that it might have reached, had Defendant (or its
voters) instead enacted another law that exhausted the full
breadth of its legal authority.
CONCLUSION
The distinction drawn between commercial and
noncommercial signs in Article 6 of the Planning Code
survives intermediate scrutiny under Central Hudson.
CONTEST PROMOTIONS V. SAN FRANCISCO 15
Accordingly, we affirm the dismissal of Plaintiff’s First
Amendment claims.4
AFFIRMED.
4
Plaintiff also argues that the district court erred by refusing to enjoin
the accrual of penalties while this litigation is pending, in violation of the
due process principle set forth in Ex Parte Young, 209 U.S. 123, 147–48
(1908). This claim is moot because no penalties ever were assessed.