CBS Outdoor Inc v. NJ Transit Corp

Opinions of the United
2008 Decisions States Court of Appeals
for the Third Circuit
12-22-2008
CBS Outdoor Inc v. NJ Transit Corp
Precedential or Non-Precedential: Precedential
Docket No. 07-3966
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 07-3966
CAROLE MEDIA LLC,
a New Jersey Limited Liability Company
v.
NEW JERSEY TRANSIT CORPORATION;
ALL VISION LLC;
STUART BROOKS, in his official capacity as Director
of Outdoor Advertising for the
New Jersey Department of Transportation
(D.C. No. 06-cv-02428)
CAROLE MEDIA, LLC,
a New Jersey Limited Liability Company
v.
NEW JERSEY TRANSIT CORPORATION;
ALL VISION LLC
(D.C. No. 06-cv-04529)
CAROLE MEDIA, LLC,
Appellant
On Appeal from the United States District Court
for the District of New Jersey
(D.C. Nos. 06-cv-02428 and 06-cv-04529)
District Judge: Hon. Harold A. Ackerman
Argued September 11, 2008
Before: SLOVITER, FUENTES and ALDISERT, Circuit Judges
(Filed: December 22, 2008)
Gage Andretta (Argued)
Wolff & Samson
West Orange, New Jersey 07052
Attorney for Appellant, Carole Media LLC
Anne Milgram
Attorney General of New Jersey
Of Counsel:
Andrea M. Silkowitz
Assistant Attorney General
On the Brief:
Kenneth M. Worton (Argued)
Melanie E. Brown
Deputy Attorneys General
Office of Attorney General of New Jersey
Department of Law & Public Safety
Newark, New Jersey 07105
Attorneys for Appellee, New Jersey Transit Corp.
On the Brief:
Ronald L. Glick (Argued)
Julie E. Ravis
Stevens & Lee
Princeton, New Jersey 08540
Attorneys for Appellee, All Vision LLC
2
OPINION OF THE COURT
SLOVITER, Circuit Judge.
In 2004, after a scandal involving the licensing of
billboards on New Jersey property, New Jersey took steps to
revamp its billboard program. Thereafter, two of the companies
that had licenses to display those billboards filed suit against the
New Jersey Transit Corporation (“NJ Transit”), the lessor, and
All Vision LLC (“All Vision”), its managing agent. The suit
was initiated by CBS Outdoor Inc., which held licenses for 240
billboards. This suit was dismissed by the District Court. CBS
Outdoor Inc. filed a brief appealing the District Court’s order
dismissing its claim but subsequently advised this court that it
had settled with defendants. The remaining plaintiff, Carol
Media LLC, whose suit was also dismissed, and who has
licenses for 3 billboards, did not file a brief on appeal but
advised this court it would rely on portions of CBS’ brief. It has
not settled, and thus its appeal from the District Court’s
dismissal of its claim that NJ Transit violated the Takings Clause
is before us. See CBS Outdoor, Inc. v. New Jersey Transit
Corp., No. 06-2428, 2007 WL 2509633 (D.N.J. Aug. 30, 2007).
The premise of Carole Media’s appeal is that the
defendants took without a valid public purpose certain of Carole
Media’s property rights arising from its operation of billboards
on NJ Transit’s land.
I.
A. Background
NJ Transit is a public corporation organized by the State
of New Jersey in order to establish and provide public
transportation services. See N.J. Stat. Ann. §§ 27:25-1–27:25-
24. NJ Transit is statutorily authorized to lease its property, N.J.
Stat. Ann. § 27:25-5(o), including specifically to “lease or
otherwise contract for advertising in or on the equipment or
facilities of the corporation,” N.J. Stat. Ann. § 27:25-5(s).
Accordingly, NJ Transit (through a managing agent) has long
3
issued “licenses” to private parties that allow such parties to use
NJ Transit land for the erection and maintenance of billboards
and other forms of outdoor advertisement.
Carole Media obtained two licenses in 2001 (to operate
one billboard in Wayne, New Jersey and another in Bridgewater)
and a third license in 2002 (again in Wayne). Although the
licenses expressly provide for a renewable term of one year and
termination upon thirty-days notice, Carole Media alleges, as
summarized by the District Court, that the “general industry
practice is for railroads not to terminate a license with an
outdoor advertising company that is performing its obligations
under the license, unless the railroad needs to use the land for
development . . . or is going to sell the land.” CBS Outdoor,
2007 WL 2509633, at *1. Further, Carole Media alleges that, in
reliance upon this industry practice, it has invested in excess of
$1 million in the licensing, permitting, and development of its
three billboard sites on NJ Transit property. Indeed, Carole
Media contends that, prior to the new billboard program, its
property rights in these billboards were valued in excess of $4
million.
Carole Media identifies several property interests
allegedly protected by the Takings Clause arising out of its
operation of billboards on NJ Transit land. First, Carole Media
contends that the licenses issued by NJ Transit constitute
property. Second, pursuant to the New Jersey Roadside Sign
Control and Outdoor Advertising Act (“Outdoor Advertising
Act”), N.J. Stat. Ann. §§ 27:5-5–27:5-28, billboard operators
must obtain a license and permit from the New Jersey
Department of Transportation (“NJ DOT”) in order to erect, use
or maintain any sign for outdoor advertising. N.J. Stat. Ann. §
27:5-8. Carole Media contends that the NJ DOT permits it
obtained for its billboards on NJ Transit land also constitute
property. Further, Carole Media contends that its “rights to
operate billboards in [Wayne and Bridgewater] today constitute
very valuable property rights” because recent amendments to the
Outdoor Advertising Act not applicable at the time of its permit
applications provide that NJ DOT cannot issue a permit without
the applicant first obtaining local approval, and these
4
municipalities would not approve new billboards in those
locations. Complaint at ¶ 41. Finally, Carole Media alleges that
it possesses property rights in the physical billboard structures
themselves.
The series of events leading to NJ Transit’s alleged taking
of the above property rights began with a 2003 scandal that
Carole Media refers to as “Billboardgate.” Billboardgate
involved allegations that two top aides to the governor of New
Jersey “used political clout to arrange for permits to build
billboards in locations that would be highly lucrative, even
though some of the locations were governed by ordinances
prohibiting all outdoor advertising.” CBS Outdoor, 2007 WL
2509633, at *3. In response, then-Governor James McGreevey
created the Billboard Policy and Procedure Task Force (“Task
Force”), which reviewed New Jersey’s existing policies for the
sale, lease, development, construction and siting of billboards.
The Task Force ultimately made numerous recommendations,
including a proposal that state entities adopt competitive bidding
for the lease of all billboard sites on public property.
Shortly after the Task Force issued its recommendations,
NJ Transit solicited bids by those seeking to act as NJ Transit’s
billboard managing agent. The District Court stated that the
five-year contract was eventually awarded to All Vision in 2004
because the company, in light of its proposed “Monetization
Program” discussed below, was the bidder most responsive to NJ
Transit’s desire to “maximize income, foster innovative
strategies, and execute the Task Force recommendations.” CBS
Outdoor, 2007 WL 2509633, at *6.
Subsequently, the New Jersey legislature amended the
Outdoor Advertising Act and related statutes in response to the
Task Force’s recommendations (the “2004 Amendments”). The
2004 Amendments provide that “a State entity . . . shall not enter
into any contract or agreement for the sale, lease or license of
real property owned or controlled by it . . . with any person . . .
for the purpose of displaying any advertisement . . . without
publicly advertising for bids.” N.J. Stat. Ann. § 52:31-1.1a.
However, the 2004 Amendments allowed state entities to renew
5
existing licenses without public bidding for up to five years. Id.In addition to requiring public bidding for billboard sites
on state-owned land, the 2004 Amendments also imposed new
requirements on the NJ DOT permitting process. Specifically,
NJ DOT may not issue a permit for a new billboard “unless a
public hearing has been held . . . and, where the permit applicant
is a private entity, all relevant approvals required by the
municipality [in which the billboard will be located] have been
received by the private entity seeking the permit.” N.J. Stat.
Ann. § 27:5-8(b). Finally, the 2004 Amendments imposed a cap
on the aggregate square footage of outdoor advertising
permissible on various state entities’ property, including NJ
Transit. N.J. Stat. Ann. § 27:5-27.
Consistent with the 2004 Amendments, NJ Transit
renewed Carole Media’s existing licenses in 2004 and 2005. In
September 2005, however, NJ Transit and All Vision began to
implement what the District Court referred to as the
“Monetization Program” (or the “Program”). Under this
Program, NJ Transit (through All Vision) intended to terminate
all existing licenses and competitively bid twenty to twenty-two
year license agreements at all of its billboard locations. Further,
the Monetization Program sought “to ‘monetize’ the licenses and
accelerate receipt by All Vision and NJ Transit of a large portion
of the license price by requiring a substantial ‘up-front’ payment
. . . equal to a percentage of all future revenues that [the] bidder
expects to earn over the twenty-year life of the license,” in
addition to yearly rent payments subject to a minimum
guarantee. CBS Outdoor, 2007 WL 2509633, at *5.
Carole Media alleges that NJ Transit and All Vision
“requested that Carole Media transfer all of its rights to its three
billboards and permits” to NJ Transit in order to facilitate the
Monetization Program. Complaint at ¶ 54. Carole Media further
alleges that “New Jersey Transit and All Vision have threatened
to destroy Carole Media’s property rights by forcing it to remove
its billboards within 30 days unless it accedes to their demand
that Carole Media transfer its permits, license and billboards to
New Jersey Transit in exchange for a paltry payment that is far
6
less than the fair market value.” Id.Although All Vision informed Carole Media in March
2006 that all three of the latter’s NJ Transit licenses would be
terminated as of August 31, 2006, these licenses have remained
in effect on a month-to-month basis.
B. Procedural History
Carole Media filed this suit in September 2006, asserting
claims pursuant to 42 U.S.C. § 1983 based on the Takings and
Due Process Clauses of the Fifth and Fourteenth Amendments,1
as well as claims based on various state law tort and breach of
contract theories. It sought declaratory and injunctive relief
enjoining All Vision and NJ Transit from terminating its licenses
or, in the alternative, just compensation for the alleged taking.
As most relevant to this appeal, Carole Media alleged that
NJ Transit’s implementation of the Monetization Program
constituted a taking of Carole Media’s property interests in its
billboards without a valid public purpose. According to Carole
Media, the Monetization Program as implemented “merely
replac[es] one long-term relationship with an incumbent
billboard operator with another long-term relationship with a
new incumbent . . . solely to benefit a private party, All Vision”
through the payment of disproportionate management fees on the
large, up-front payments bidders will be required to make under
the Program. Complaint at ¶ 66. Thus, Carole Media contends
that the taking is for a private, rather than public, purpose.
Moreover, Carole Media alleges that the Program cannot be
justified under the 2004 Amendment’s public bidding
requirements because the Program contradicts the purpose of the
1
Carole Media also alleged that the taking was invalid
under the New Jersey Constitution. See N.J. Const. art. I ¶ 20
(“Private property shall not be taken for public use without just
compensation.”). That provision is “coextensive” with the Fifth
Amendment’s Takings Clause. Pheasant Bridge Corp. v. Twp. of
Warren, 777 A.2d 334, 343 (N.J. 2001).
7
Amendments, which sought “to impose greater regulatory
control over the licensing of billboards on public land, precisely
in order to prevent state agencies from entering into special
arrangements with specific parties that enable those parties to
capture a disproportionate value from those billboards.”
Complaint at ¶ 58.
After Carole Media’s case was consolidated with that of
the original plaintiff, CBS Outdoor Inc., the District Court
granted defendants’ motion to dismiss the complaints pursuant to
Rules 12(b)(1) and (b)(6) of the Federal Rules of Civil
Procedure. As most relevant here, the District Court dismissed
the plaintiffs’ takings claims as unripe under Williamson County
Reg’l Planning Comm’n v. Hamilton Bank of Johnson City, 473
U.S. 172 (1985). In the course of reaching this conclusion, the
District Court also rejected Carole Media’s claim that the alleged
taking lacked a public purpose. Before we reach the latter issue,
we must first determine whether the Supreme Court’s decision in
Williamson County requires a plaintiff to seek just compensation
through state law procedures before a federal court may hear a
claim alleging that a taking lacks a valid public purpose. This
court has not previously addressed this issue.2
II.
Discussion
A. Ripeness
In Williamson County, the plaintiff, a land developer who
2
The District Court had jurisdiction pursuant to 28 U.S.C.
§ 1331. We have jurisdiction over the District Court’s final
judgment pursuant to 28 U.S.C. § 1291. The District Court also
dismissed under Rule 12(b)(6) the plaintiffs’ claims alleging a
violation of Substantive Due Process, as well as CBS Outdoor
Inc.’s Contract Clause claim. Finally, the Court refused to exercise
supplemental jurisdiction over Carole Media’s state law claims.
Carole Media does not appeal these rulings.
8
had purchased a large tract, brought suit in federal court pursuant
to 42 U.S.C. § 1983 against the county planning commission and
its members, alleging that the application of various new zoning
laws to the plaintiff’s property amounted to a taking of that
property without just compensation. 473 U.S. at 175. The jury
awarded substantial damages and the claim eventually reached
the Supreme Court. The Court assumed without deciding that
the plaintiff stated a claim under the Just Compensation Clause,
but held that such a claim was not ripe for adjudication in the
federal courts because the plaintiff had “not yet obtained a final
decision regarding the application of the zoning ordinance and
subdivision regulations to its property, nor utilized the
procedures [the state] provides for obtaining just compensation.”
Id. at 186.
First, the Supreme Court explained that the question
whether a “taking” has occurred “simply cannot be evaluated
until the [relevant state actor] has arrived at a final, definitive
position” on the issue. Id. at 191. Noting that the plaintiff had
failed to seek any variances from the zoning regulations to which
it objected, the Court stated that “until the [relevant state actor]
determines that no variances will be granted, it is impossible for
the jury to find, on this record, whether [the plaintiff] ‘will be
unable to derive economic benefit’ from the land.” Id. The
Court distinguished the line of cases requiring exhaustion of
state administrative remedies, noting that the issue presented in
the case before it was that the government entity charged with
implementing the regulation had not reached a final decision on
how the regulations would be applied to plaintiff’s property. Id.
at 192-93. Second, the Court noted that the Just Compensation
Clause “does not proscribe the taking of property; it proscribes
taking without just compensation.” Id. at 194. Thus, “if a State
provides an adequate procedure for seeking just compensation,
the property owner cannot claim a violation of the Just
Compensation Clause until it has used the procedure and been
denied just compensation.” Id. at 195.
Neither of these bases for Williamson County’s holding
apply to Carole Media’s Public Use Clause claim. Carole
Media’s claim is based on the Supreme Court’s “repeated[]
9
state[ment] that ‘one person’s property may not be taken for the
benefit of another private person without a justifying public
purpose, even though compensation be paid.’” Hawaii Hous.
Auth. v. Midkiff, 467 U.S. 229, 241 (1984) (quoting Thompson
v. Consol. Gas Corp., 300 U.S. 55, 80 (1937)). Thus, unlike the
Just Compensation Clause claim at issue in Williamson County,
a Public Use Clause claim is ripe before the plaintiff seeks just
compensation through state procedures because such
“proceedings do not supply the appropriate remedy.”
Montgomery v. Carter County, 226 F.3d 758, 767 (6th Cir.
2000). A plaintiff that proves that a government entity has taken
its property for a private, not a public, use is entitled to an
injunction against the unconstitutional taking, not simply
compensation. Moreover, “forcing the plaintiff to pursue state
‘remedial’ procedures would be an exhaustion requirement, a
requirement that Williamson County explicitly does not impose.”
Id. (citing Williamson County, 473 U.S. at 193-94). Finally,
there is no doubt that Carole Media has received a final decision
from NJ Transit in light of the latter’s termination of Carole
Media’s licenses.
We thus conclude that Williamson County’s rejection of
that plaintiff’s claim for lack of ripeness does not apply to
Carole Media’s Public Use Clause claim. The clear majority of
our sister Courts of Appeals to address the issue have reached
the same conclusion. See Rumber v. District of Columbia, 487
F.3d 941, 944 (D.C. Cir. 2007) (“[T]he ripeness requirements of
Williamson County do not apply to public use claims under the
Fifth Amendment.”); Montgomery, 226 F.3d at 766-67 (same);
McKenzie v. City of White Hall, 112 F.3d 313, 317 (8th Cir.
1997) (same); Armendariz v. Penman, 75 F.3d 1311, 1320-21 &
n.5 (9th Cir. 1996) (en banc) (same); Samaad v. City of Dallas,
940 F.2d 925, 936-37 (5th Cir. 1991) (same). But see Forseth v.
Village of Sussex, 199 F.3d 363, 373 (7th Cir. 2000) (holding
that claim that taking was for private purpose was not ripe
because plaintiffs “failed to utilize their state law remedies” such
as an appeal of the relevant state actors’ decisions).
The District Court recognized this substantial authority
that Williamson County does not apply to claims under the
10
Public Use Clause. Nonetheless, the District Court held that
Carole Media’s claim was not ripe because Carole Media failed
to alleged sufficient facts that, if true, would demonstrate a
violation of that Clause. However, the issue of whether Carole
Media’s Public Use Clause claim was ripe is distinct from the
issue of whether Carole Media alleged sufficient facts on the
merits to survive a motion to dismiss under Rule 12(b)(6).3 Cf.
County Concrete Corp. v. Town of Roxbury, 442 F.3d 159, 168
n.1 (3d Cir. 2006) (holding that Just Compensation Clause claim
at issue was ripe under Williamson County but “express[ing] no
view on the merits of [the] Just Compensation Takings claim”).
Because we agree with the majority of Courts of Appeals that
have held that Williamson County does not apply to claims
under the Public Use Clause, we conclude that the District Court
erred by dismissing Carole Media’s Public Use Clause claim as
unripe.
B. Public Purpose
Although the District Court ultimately held that Carole
Media’s takings claims were unripe, it also concluded that the
alleged taking was supported by valid public purposes,
specifically NJ Transit’s implementation of the 2004
3
Similarly, it is possible to read the District Court’s opinion
as holding that, if a plaintiff successfully alleges a Public Use
Clause claim, then all of that plaintiff’s takings claims (including
claims for just compensation) are ripe regardless of whether
Williamson County’s requirements are satisfied. However, where
a plaintiff alleges both a violation of the Public Use Clause and, in
the alternative, a claim for just compensation, that plaintiff may
bring only the Public Use Clause claim without first satisfying
Williamson County. See Montgomery, 226 F.3d at 767 (“We
conclude that to the extent that [plaintiff] claims that its property
was taken for a private use, the claim is ripe and [plaintiff] may sue
immediately without resorting to state remedies; but that to the
extent that [plaintiff] claims that the taking was a taking for a
public use without just compensation, the claim is not ripe until the
requirements of Williamson County are met.”).
11
Amendment’s public bidding requirements and its effort to
maximize income through innovative approaches to billboard
management. Carole Media contends that this conclusion was
erroneous because, in its view, a state entity’s desire to increase
revenue cannot constitute a valid public purpose and in any case,
the alleged taking was actually intended solely to benefit a
private party, All Vision.4
There can be no dispute that NJ Transit “would no doubt
be forbidden from taking [Carole Media’s property] for the
purpose of conferring a private benefit on a particular private
party.” Kelo v. City of New London, 545 U.S. 469, 477 (2005).
See also Midkiff, 467 U.S. at 245 (“A purely private taking
could not withstand the scrutiny of the public use requirement; it
would serve no legitimate purpose of government and would
thus be void.”); Missouri Pac. Ry. Co. v. Nebraska, 164 U.S.
403, 417 (1896) (invalidating state administrative order requiring
railroad to provide land to private parties for erection of private
grain elevator because order constituted impermissible private
taking). Similarly, the Supreme Court has indicated that the
state may not “take property under the mere pretext of a public
purpose, when its actual purpose was to bestow a private
benefit.” Kelo, 545 U.S. at 478.
However, the Supreme Court has also made it clear that
the Public Use Clause is satisfied when a taking is made for a
“public purpose,” a concept that the Court has defined “broadly,
reflecting [the Court’s] longstanding policy of deference to
legislative judgments in this field.” Kelo, 545 U.S. at 480.
Thus, “the ‘public use’ requirement is . . . coterminous with the
scope of a sovereign’s police powers,” Midkiff, 467 U.S. at 240,
and therefore is satisfied “where the exercise of the eminent
4
As noted above, Carole Media’s action was consolidated
in the District Court with that of another party (CBS Outdoor Inc.).
On their consolidated appeal, Carole Media adopted CBS
Outdoor’s briefs and appendix notwithstanding that the factual and
legal bases of Carole Media and CBS Outdoor’s claims on appeal
differed to some extent.
12
domain power is rationally related to a conceivable public
purpose.” Id. at 241. Indeed, the Court has cautioned that a
federal court should “not substitute its judgment for a
legislature’s judgment as to what constitutes a public use ‘unless
the use be palpably without reasonable foundation.’” Id.(quoting United States v. Gettysburg Elec. Ry. Co., 160 U.S.
668, 680 (1896)); see also Berman v. Parker, 348 U.S. 26, 32
(1954) (“The role of the judiciary in determining whether [the
takings] power is being exercised for a public purpose is an
extremely narrow one.”).
Finally, the Supreme Court has also held that the fact that
a taking creates incidental benefits for individual private parties
“does not condemn that taking as having only a private purpose.”
Midkiff, 467 U.S. at 243-44; see also Kelo, 545 U.S. at 485(“[T]he government’s pursuit of a public purpose will often
benefit individual private parties.”); Hughes v. Consol-
Pennsylvania Coal Co., 945 F.2d 594, 612-13 (3d Cir. 1991)
(“[P]roperty [that] is taken by eminent domain and is transferred
to a private party can still fall within the gambit of public use.
This is so even when the motive for taking is to give to a private
party.”) (citing Midkiff, 467 U.S. at 243-44).
Examples from the Supreme Court’s cases demonstrate
the breadth of permissible public purposes under the Public Use
Clause. The Court has indicated that economic revitalization
constitutes a public purpose for a taking, even if the
revitalization program involves transfers of property to private
parties. Kelo, 545 U.S. at 489-90; Berman, 348 U.S. at 33-34.
Similarly, the state and federal governments may validly transfer
property from one private party to another in order to correct
market failures. Midkiff, 467 U.S. at 243; Ruckelshaus v.
Monsanto Co., 467 U.S. 986, 1014-15 (1984). The Court has
also held that the government may take property from a party
that fails to maintain it and transfer the property to another
private party, where the recipient will provide appropriate
upkeep of the property and thereby allow the government to use
it. Nat’l R.R. Passenger Corp. v. Boston & Maine Corp., 503
U.S. 407, 422-23 (1992).
13
In light of these teachings, we cannot hold that NJ
Transit’s alleged taking is invalid for lack of a valid public use.
Indeed, as the Supreme Court held in Berman, property, “which,
standing by itself, is innocuous and unoffending,” may be taken
to further the legislature’s purpose, looking at the issue as a
whole. Berman, 348 U.S. at 35. As an initial matter, Carole
Media focuses unduly on the District Court’s language that one
of NJ Transit’s public purposes was to maximize revenue. The
District Court did not hold that the Public Use Clause was
satisfied solely by NJ Transit’s desire to increase revenue–nor
need it have done so in light of the other public purposes
underlying NJ Transit’s conduct.
First, in the 2004 Amendments, the New Jersey
legislature ordered NJ Transit (along with every other state
entity) to conduct public bidding for its billboard sites in
response to alleged corruption by state officials. N.J. Stat. Ann.
§ 52:31-1.1a. The state’s desire to clean up political corruption
in this industry surely constitutes a valid public purpose.5
Further, NJ Transit and All Vision designed the Monetization
Program to implement these public bidding requirements. NJ
Transit instructed bidders for the contract to manage its billboard
properties to assume that the Task Force’s recommendations
(which included public bidding) would become law. All
Vision’s proposal included long-term competitive bidding.
Carole Media alleges that the Monetization Plan as
implemented violates the “purpose” of the 2004 Amendments
because All Vision, which is under contract as NJ Transit’s
managing agent only until 2009, will “capture a disproportionate
value” from the up-front payments on the twenty-year billboard
5
Even the dissent in Kelo noted that the Public Use Clause
is satisfied where the “precondemnation use of the targeted
property inflicted affirmative harm on society.” 545 U.S. at 500(O’Connor, J., dissenting). Here, the New Jersey legislature, in
response to Billboardgate, required public bidding for permits to
operate billboard on public land in order to prevent harmful
political corruption.
14
licenses. Complaint at ¶ 58. However, Carole Media does not
allege that NJ Transit or All Vision have violated or will violate
any specific provision of the 2004 Amendments or other law.
Indeed, Carole Media concedes that “[t]here is no requirement in
the Amendments that the public bidding process award contracts
for any set period.” Id.Additionally, the District Court held, and we agree, that
NJ Transit’s desire to “maximize income and employ innovative
approaches to its billboard management” constitutes a valid
public purpose. CBS Outdoor, 2007 WL 2509633, at *14.
Again, the 2004 Amendments required NJ Transit to terminate
its existing licenses and publicly bid its billboard locations. In
light of that statutory mandate, it was not inappropriate for NJ
Transit to seek to increase its billboard revenues through a new
licensing structure–especially because the New Jersey legislature
authorized NJ Transit to lease its property as it saw fit in order to
fulfill its statutory purposes. N.J. Stat. Ann. § 27:25-5(o).
Indeed, the Supreme Court has made it clear that “the means of
executing the project [resulting in a taking] are for [the
legislature] alone to determine, once the public purpose has been
established.” Berman, 348 U.S. at 33.
Finally, the fact that All Vision will receive incidental
benefits as a result of the taking (i.e., management fees for its
role in bidding out the new, long-term licenses) does not
undermine the aforementioned public purposes. See Kelo, 545
U.S. at 485-86; Midkiff, 467 U.S. at 243-44; Hughes, 945 F.2d
at 612-13. We recognize that the Supreme Court has suggested
that a taking may be invalid under the Public Use Clause where
an avowed public purpose is actually a “mere pretext” to an
“actual purpose . . . to bestow a private benefit.” Kelo, 545 U.S.
at 478; see also id. at 490 (Kennedy, J., concurring) (“[T]ransfers
intended to confer benefits on particular, favored private entities,
and with only incidental or pretextual public benefits, are
forbidden by the Public Use Clause.”).
However, aside from making a conclusory allegation that
NJ Transit engaged in the alleged taking “solely to benefit a
private party, All Vision,” Complaint at ¶ 66, Carole Media has
15
not made “a plausible accusation of impermissible favoritism.”
Kelo, 545 U.S. at 491 (Kennedy, J., concurring); see also
Goldstein v. Pataki, 516 F.3d 50, 63 (2d Cir. 2008) (“[W]e hold
today that where, as here, a [taking] is justified in reference to
several classic public uses whose objective basis is not in doubt,
we must continue to adhere to the Midkiff standard” and reject
any claim that the purported public uses are mere pretexts for an
impermissible private purpose.). Further, Carole Media does not
allege that All Vision will receive its rights to operate billboards
on NJ Transit’s land, but rather that the taking will lead to All
Vision’s receipt of management fees. Indeed, this case cannot
be the textbook private taking involving a naked transfer of
property from private party A to B solely for B’s private use and
benefit because there is no allegation that NJ Transit, at the time
it terminated Carole Media’s existing licenses, knew the identity
of the successful bidder for the long-term licenses at those
locations. Cf. Kelo, 545 U.S. at 493 (Kennedy, J., concurring)
(noting, as evidence of validity of taking, that the “identities of
most of the private beneficiaries were unknown at the time that
the city formulated its plans”). To the extent that Carole Media
merely argues that All Vision will receive an excessive payment
for its role as management agent for NJ Transit, that argument
simply fails to demonstrate that NJ Transit’s alleged taking was
not “rationally related to a conceivable public purpose.”
Midkiff, 467 U.S. at 241.
In sum, we agree with the District Court that the alleged
taking comports with the Public Use Clause. Carole Media has
failed to plead facts that, if true, would demonstrate that NJ
Transit’s avowed public purposes were “palpably without
reasonable foundation,” Midkiff, 467 U.S. at 230, or that NJ
Transit’s actual, sole purpose was to confer a private benefit on
All Vision.
III.
For the above-stated reasons, we will affirm the judgment
of the District Court dismissing Carole Media’s complaint.
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