Contest Promotions, LLC v. City and County of San Francisco

Filing 27


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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 CONTEST PROMOTIONS, LLC, Case No. 16-cv-06539-SI Plaintiff, 8 v. ORDER ON PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION 9 10 CITY AND COUNTY OF SAN FRANCISCO, Defendant. 11 United States District Court Northern District of California Re: Dkt. No. 8 12 This Court has presided over several disputes between plaintiff Contest Promotions LLC 13 (“Contest Promotions”) and defendant City and County of San Francisco (“San Francisco” or “the 14 City”) related to San Francisco’s sign regulations.1 Before the Court is plaintiff’s motion for a 15 preliminary injunction.2 16 provisions of the San Francisco City Planning Code (“Planning Code”) and from levying 17 associated fines. 18 19 Plaintiff seeks an injunction to prevent the City from enforcing On December 21, 2016, the Court held a hearing on plaintiff’s motion. After careful consideration of papers submitted, the Court hereby DENIES plaintiff’s motion. 20 BACKGROUND 21 22 Contest Promotions organizes and operates contests and raffles whereby individuals are 23 invited to enter stores for the purpose of filling out applications and winning prizes. Decl. Shafner 24 25 26 27 28 1 Case Nos. 09-cv-04434 (closed Feb. 4, 2013), 15-cv-04365 (closed Mar. 17, 2016), 15cv-00093 (closed July 28, 2015), appeal docketed, No. 15-16682 (9th Cir. Aug. 25, 2015), and 16cv-06539 (filed Nov. 10, 2016). 2 Plaintiff has also filed a motion for an injunction pending its appeal in Case No. 15-cv00093. This order does not address that motion. 1 (Dkt. No. 11) ¶ 2.3 Contest Promotions advertises these contests and the products they promote by 2 posting signs on or adjacent to small businesses, directing customers to apply inside. See id. For 3 example, Contest Promotions may advertise a film or videogame on its sign, inviting entrants to 4 apply inside the store for a chance at free tickets to the film or a free copy of the game. See id. 5 ¶¶ 3-4. Contest Promotions operates by leasing a portion of a business’s permissible on-site 6 signage space and some interior space to set up materials related to the contest, describing its lease 7 payments to store owners as “typically small,” because “[t]he real benefit to [store owners] is the 8 increased in-store traffic driven by the . . . contest[.]” Id. ¶¶ 3, 6. Article 6 of the Planning Code regulates signs within San Francisco. Article 6 prohibits 10 the placement of new “General Advertising Signs,” off-site advertisements such as billboards, 11 United States District Court Northern District of California 9 after March 5, 2002. 12 prohibition on new General Advertising Signs, the Planning Code allows “Business Signs” (and 13 others) that meet various size, location, permitting, and other requirements set forth in Article 6.5 See Plaintiff’s RJN (Dkt. No. 9) at 341, Ex. II § 611.4 Despite the 14 Contest Promotions began conducting business in San Francisco in 2004. Decl. Shafner 15 (Dkt. No. 11) ¶ 7. In early 2007, San Francisco sought to enforce its ban on General Advertising 16 Signs against Contest Promotions. 17 developed its model in San Francisco precisely to avoid having its signs categorized as prohibited Id. ¶ 8. Contest Promotions resisted; the company had 18 3 19 20 21 22 23 24 25 Unless otherwise noted, ECF docket citations refer to Case No. 16-cv-06539. Pinpoint citations are to the page numbers generated by ECF. 4 Plaintiff requests the Court take judicial notice of: San Francisco Planning Department Notices of Enforcement and Notices of Planning Department Requirements; state and federal court dockets and filings; San Francisco city ordinances and resolutions; and Article 6 of the Planning Code. See Dkt. No. 9. Federal Rule of Evidence 201 permits a court to take judicial notice of facts “not subject to reasonable dispute.” Fed. R. Evid. 201. Further, a court can “take notice of proceedings in other courts, both within and without the federal judicial system, if those proceedings have a direct relation to matters at issue.” U.S. ex rel. Robinson Ranchiera Citizens Council v. Borneo, Inc., 971 F.2d 244, 248 (9th Cir. 1992) (internal citations omitted). The Court finds these items appropriate for judicial notice, and, in the absence of any opposition, GRANTS plaintiff’s request. 5 26 27 28 The Planning Code defines a “Business Sign” as “[a] sign which directs attention to the primary business, commodity, service, industry or other activity which is sold, offered, or conducted on the pemises upon which such sign is located, or to which it is affixed. . . . The primary business, commodity, service, industry, or other activity on the premises shall mean the use which occupies the greatest area on the premises upon which the business sign is located, or to which it is affixed.” Plaintiff’s RJN (Dkt. No. 9) at 298, Ex. II § 602.3. 2 1 General Advertising Signs under the Planning Code. See id. After unsuccessful negotiations 2 between Contest Promotions and the City Planning Department, the City served Contest 3 Promotions with a number of violation notices. Id. ¶¶ 9-10. In response, Contest Promotions 4 removed or modified some of its signs, and commenced its first lawsuit in this Court (the “2009 5 Action”), challenging the constitutionality of the S.F. Planning Code’s definitions of “Business 6 Signs” and “General Advertising Signs” as impermissibly vague.6 Id. ¶ 12. The parties eventually settled their dispute in early 2013 and entered into a settlement 8 agreement. Id. ¶ 12 & Ex. B. The settlement agreement provided that Contest Promotions’ signs 9 would “be deemed Business Signs for all purposes of the Planning Code, including but not limited 10 to the filing, processing and approval of permits . . . so long as [the signs] are consistent with the 11 United States District Court Northern District of California 7 dimensional, locational, and other requirements applicable to Business Signs . . . .” Decl. Shafner, 12 Ex. B (Dkt. No. 11) at 14. The settlement agreement further provided, in short, that Contest 13 Promotions would seek new permits from the City for its existing sign inventory and would pay 14 the City $375,000. Id. at 14, 17-18. 15 In July 2014, soon after the parties settled the 2009 Action, the City amended the definition 16 of “Business Sign” in the Planning Code to what is essentially today’s definition. See Plaintiff’s 17 RJN, Ex. X (Dkt. No. 9) at 120-21. After the City denied permit applications for some of its signs, 18 Contest Promotions commenced Case No. 15-cv-00093 (the “January 2015 Action”) in this Court, 19 challenging the constitutionality of the City’s new “Business Sign” definition. 20 dismissed the case, finding that the planning code definition was a content-neutral regulation of 21 commercial speech that withstood intermediate judicial scrutiny. After the Court’s final dismissal 22 order in July 2015, Contest Promotions appealed to the Ninth Circuit. The appeal is fully briefed 23 and awaiting oral argument. The parties have continued to litigate other claims in state court. The Court 24 In September and October 2016, the City served plaintiff with 20 Notices of Enforcement 25 (“NOEs”) alleging that certain of plaintiff’s signs violated provisions of Planning Code Article 6.7 26 6 27 28 The 2009 Action concerned an older version of the S.F. Planning Code, which included definitions for Business Signs and General Advertising Signs different from those found today. 7 The NOEs allege a variety of violations at different properties. See Plaintiff’s RJN (Dkt. 3 1 See Plaintiff’s RJN (Dkt. No. 9), Exs. A-T. In response to the City’s NOEs, plaintiff modified 2 eleven of its signs to avoid accruing penalties. See Decl. Anon (Dkt. No. 12). Plaintiff then filed 3 this lawsuit challenging Article 6 of the Planning Code in its entirety on November 10, 2016 and 4 filed a motion for preliminary injunction four days later. See Compl. (Dkt. No. 1); Mot. (Dkt. No. 5 8). 6 promotional content. See Supp. Decl. Anon (Dkt. No. 23) ¶ 2. Plaintiff has since changed at least four of its modified signs back to their original, On October 24, 2016, after serving plaintiff with the NOEs, the City passed Ordinance No. 8 218-16, amending the S.F. Planning Code to, among other things, clarify that Article 6 of the Code 9 “shall [not] apply to . . . [n]oncommercial signs,” and to create harsher penalties for repeat 10 violators of Article 6. See Decl. Emery (Dkt. No. 21), Ex. D, at 21, 27, 29-31. The Mayor signed 11 United States District Court Northern District of California 7 the ordinance on November 10, 2016, and it became effective on December 10, 2016. Id. at 31- 12 33. 13 regulations in S.F. Planning Code Article 6 only formally codified the rule from City and Cnty. of 14 S.F. v. Eller Outdoor Aver., 192 Cal. App. 3d 643 (1st Dist. 1987). See id. at 664-65 (interpreting 15 exceptions from Article 6 as “embrac[ing] all categories of noncommercial messages, thereby 16 preserving the ordinance’s neutrality[.]”); see also Metro Fuel LLC v. City of S.F., No. 07-6067, 17 2011 WL 900318, at *11 (N.D. Cal. Mar. 15, 2011) (citing Eller in finding that “all non- 18 commercial messages are still allowed throughout San Francisco.”). The City maintains that its amendment exempting all noncommercial speech from the 19 Plaintiff’s motion in this case seeks to enjoin the City’s assessment of penalties until the 20 lawsuit is fully resolved. Because plaintiff has not demonstrated a likelihood of success on the 21 merits, the Court DENIES plaintiff’s motion for a preliminary injunction. 22 23 24 25 26 27 28 No. 9), Exs. A-T. The majority of the NOEs cite violations of district-specific size or location requirements. At least four NOEs state that plaintiff’s signs are located on, or adjacent to, vacant businesses. Others cite violations of restrictions on signs in historic, conservation, or residential districts without proper approval. None of the NOEs state that plaintiff’s signs do not fit the definition of onsite business signs, just that the signs are, inter alia, too large, located too far from the business, lack district-specific permits, or are affixed to vacant businesses. At the hearing on this matter, the City suggested that it carefully cited only those Contest Promotions signs violating provisions other than Planning Code section 602.3, in an effort to “clean up” some of Contest Promotions’ inventory during the appeal of the January 2015 Action. 4 LEGAL STANDARD 1 Federal Rule of Civil Procedure 65 governs the issuance of preliminary injunctions. In 3 order to obtain a preliminary injunction, a plaintiff “must establish that he is likely to succeed on 4 the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the 5 balance of equities tips in his favor, and that an injunction is in the public interest.” Winter v. 6 Natural Res. Defense Council, 555 U.S. 7, 20 (2008) (citations omitted). Courts have also applied 7 an alternative “sliding scale” or “serious questions” test, requiring that the plaintiff raise “serious 8 questions going to the merits” and show that “the balance of hardships tip[s] sharply in plaintiff’s 9 favor.” See Alliance for Wild Rockies v. Cottrell, 632 F.3d 1127, 1131-32 (9th Cir. 2011); id. at 10 1135 (stating plaintiff must also show a “likelihood of irreparable injury and that the injunction is 11 United States District Court Northern District of California 2 in the public interest.”). The sliding scale approach allows courts to balance the factors, offering 12 flexibility where, for example, the plaintiff makes a weaker showing of likelihood of success, but a 13 strong showing of irreparable harm. Id. at 1131. Regardless of the approach, a preliminary 14 injunction is an “extraordinary remedy that may only be awarded upon a clear showing that the 15 plaintiff is entitled to such relief.” Winter, 555 U.S. at 22; see also Earth Island Inst. v. Carlton, 16 626 F.3d 462, 469 (9th Cir. 2010) (plaintiffs “face a difficult task in proving that they are entitled 17 to this ‘extraordinary remedy[.]’”). 18 DISCUSSION 19 20 I. Standing 21 Contest Promotions brings this action challenging, facially and as-applied, the 22 constitutionality of Article 6 of the Planning Code. See Mot. (Dkt. No. 8) at 12. The City argues 23 that Contest Promotions lacks standing to challenge Article 6 in its entirety as Contest Promotions 24 has only been cited for violations of a handful of provisions in Article 6. Opp’n (Dkt. No. 20) at 25 12-13. In its Reply, Contest Promotions concedes that a challenge to the entire Article 6 is 26 inappropriate – Contest Promotions therefore narrows its challenge to focus on sections 602.3, 27 604(a), 604(i), 606, 607.1, 607.2, and 610 of the Planning Code. Reply (Dkt. No. 22) at 6. 28 “To seek injunctive relief, a plaintiff must show that he is under threat of suffering ‘injury 5 1 in fact’ that is concrete and particularized; the threat must be actual and imminent, not conjectural 2 or hypothetical; it must be fairly traceable to the challenged action of the defendant; and it must be 3 likely that a favorable judicial decision will prevent or redress the injury.” Summers v. Earth 4 Island Institute, 555 U.S. 488, 493 (2009). The Ninth Circuit has held that a sign company only 5 has standing to challenge the provisions applied to it, and “cannot leverage its injuries under 6 certain, specific provisions to state an injury under [a] sign ordinance generally.” Get Outdoors II, 7 LLC v. City of San Diego, Cal., 506 F.3d 886, 892 (9th Cir. 2007) (citation omitted). 8 In addition to lost revenues from the signs it has changed, plaintiff faces daily fines from 9 the City for each of its signs in violation of the code; the threat of accruing fines is actual and imminent, and redressable through a favorable judicial decision. 11 United States District Court Northern District of California 10 Plaintiff has standing to challenge the provisions of the Planning Code cited in its Reply, as well as provisions directly 12 impacting the interpretation or enforcement thereof. 13 Having resolved the threshold inquiry of standing, the Court turns to the parties’ 14 substantive arguments on plaintiff’s motion for a preliminary injunction. Plaintiff asserts it is 15 entitled to a preliminary injunction under both the standard and sliding scale approaches. Either 16 approach involves an assessment of all four Winter factors, beginning with the plaintiff’s 17 likelihood of success on the merits. 18 19 II. Likelihood of Success 20 “The first factor under Winter is the most important—likely success on the merits.” Garcia 21 v. Google, Inc., 786 F.3d 733, 740 (9th Cir. 2015) (citation omitted). Courts treat likelihood of 22 success as a “threshold inquiry,” disregarding the other factors when a plaintiff fails to show a 23 likelihood of success on the merits. See id. 24 25 A. First Amendment 26 The First Amendment provides that “Congress shall make no law . . . abridging the 27 freedom of speech.” U.S. Const. amend. I. States and local governments are bound by this 28 prohibition through the Fourteenth Amendment to the Constitution. Reed v. Town of Gilbert, 6 1 Ariz., 135 S. Ct. 2218, 2226 (2015). The First Amendment protects both commercial and 2 noncommercial speech. 3 “Constitution accords less protection to commercial speech than to other constitutionally 4 safeguarded forms of expression.” Bolger v. Youngs Drugs Prods. Corp., 463 U.S. 60, 64 (1983) 5 (citing Central Hudson Gas & Electric Corp. v. Pub. Serv. Comm’n of N.Y., 447 U.S. 557, 562-63 6 (1980)); see also Florida Bar v. Went For It, Inc., 515 U.S. 618, 623 (1995) (“[The Supreme 7 Court] ha[s] always been careful to distinguish commercial speech from speech at the First 8 Amendment’s core.”). See Bigelow v. Virginia, 421 U.S. 809, 818 (1975). However, the Courts typically evaluate regulations affecting commercial speech using a form of 10 intermediate scrutiny established by the Supreme Court in Central Hudson, whereas content-based 11 United States District Court Northern District of California 9 regulations of noncommercial, fully protected speech are presumptively unconstitutional and must 12 withstand strict scrutiny. Central Hudson, 447 U.S. at 556. Contest Promotions argues that in 13 light of recent Supreme Court and Ninth Circuit precedent, Central Hudson no longer applies to 14 restrictions that distinguish between commercial and noncommercial speech, and the Court must 15 instead apply either strict scrutiny or “heightened” scrutiny to the Planning Code. 16 1. 17 Level of Scrutiny 18 First, the Court must determine which level of constitutional scrutiny applies to the 19 challenged provisions of the Planning Code. Contest Promotions asserts that the portions of 20 Article 6 the City seeks to enforce against it are facially unconstitutional content-based restrictions 21 on speech. 22 distinguish between commercial and noncommercial speech are “content-based” and subject to 23 strict scrutiny. Mot. (Dkt. No. 8) at 20-23, 25-26; Reply (Dkt. No. 22) at 6-9; Reed, 135 S. Ct. 24 2218. Contest Promotions further argues that under Sorrell v. IMS Health Inc. and City of 25 Cincinnati v. Discovery Network, Inc., content-based restrictions on commercial speech are 26 subject to at least “heightened” scrutiny. Mot. (Dkt. No. 8) at 24-25; Reply (Dkt. No. 22) at 7-9; 27 Sorrell, 564 U.S. 552 (2011); Discovery Network, 507 U.S. 410 (1993). The City argues that none 28 of the cases plaintiff cites to have changed the constitutional framework applicable to regulations Contest Promotions argues that under Reed, regulations such as Article 6 that 7 1 suppressing or burdening commercial speech, and that Central Hudson and Metromedia, Inc. v. 2 City of San Diego, 453 U.S. 490 (1981), continue to govern the sign regulations at issue here. 3 Opp’n (Dkt. No. 20) at 15-20. For the reasons set forth below, the Court agrees with the City. 4 The Reed Court addressed a restriction on noncommercial speech. Reed concerned a law 5 banning outdoor signs without a permit, with some 23 exemptions for specific types of signage. 6 135 S. Ct. 2218 (2015). The exemptions placed varying restrictions on signage depending on 7 which exemption a sign fell into. For example, the law exempted “ideological signs” or “political 8 signs” from the outright ban. Plaintiffs, a local church, challenged the law after the Town of 9 Gilbert repeatedly cited them for failure to comply with the requirements imposed by the “Temporal Directional Signs Relating to a Qualifying Event” exemption. 11 United States District Court Northern District of California 10 encompassed signs directed at motorists or other passersby that advertised for events sponsored by 12 a non-profit. Id. at 2225. The law imposed certain size, location, and duration restrictions on 13 these types of signs that were more severe than the restrictions placed on ideological signs or 14 political signs. Id. The exemption 15 Justice Thomas, joined by five other Justices, struck down the law, finding that the 16 exemptions were content-based on their face, and could not withstand strict scrutiny. In arriving 17 at this conclusion, the Court emphasized three guiding principles that compelled the result. First, 18 a content-based restriction on speech is subject to strict scrutiny regardless of the government’s 19 motive; therefore “an innocuous justification cannot transform a facially content-based law into 20 one that is content neutral.” Id. at 2222. Second, “‘[t]he First Amendment's hostility to content- 21 based regulation extends not only to restrictions on particular viewpoints, but also to prohibition of 22 public discussion of an entire topic.” Id. at 2230 (quoting Consolidated Edison Co. of N.Y. v. 23 Public Serv. Comm'n of N. Y., 447 U.S. 530, 537 (1980)). Therefore, the mere fact that a law is 24 viewpoint neutral does not necessarily insulate it from strict scrutiny. Third, whether a law is 25 speaker-based or event-based makes no difference for purposes of determining whether it is 26 content-based. Id. at 2231 (“A regulation that targets a sign because it conveys an idea about a 27 specific event is no less content based than a regulation that targets a sign because it conveys some 28 other idea.”). 8 1 Justice Alito, joined by Justices Sotomayor and Kennedy, took part in the majority opinion but wrote separately to “add a few words of further explanation.” 3 concurring). 4 content-based distinctions, and as a result [had to] satisfy strict scrutiny.” Id. Justice Alito stated 5 that the decision “does not mean, however, that municipalities are powerless to enact and enforce 6 reasonable sign regulations,” and outlined a non-exhaustive list of signage regulations that would 7 not trigger strict scrutiny. Id. These included, inter alia, “[r]ules distinguishing between on- 8 premises and off-premises signs” and “[r]ules distinguishing between the placement of signs on 9 commercial and residential property.” Id. Justice Alito concluded by writing that “[p]roperly 10 understood,” the “decision will not prevent cities from regulating signs in a way that fully protects 11 United States District Court Northern District of California 2 public safety and serves legitimate esthetic objectives.” Id. at 2233-34. Justices Kagan, Ginsburg, 12 and Breyer rejected the notion that a content-based regulation must necessarily trigger strict 13 scrutiny, and concurred only in the judgment. Id. at 2234-39. Id. at 2233 (Alito, J., Therein, Justice Alito noted that “the regulations at issue” were “replete with 14 Four years before Reed, in Sorrell v. IMS Health Inc., the Supreme Court held that content- 15 or speaker-based restrictions on protected expression must undergo “heightened judicial scrutiny.” 16 564 U.S. 552, 565-66 (2011). There, the Court invalidated a Vermont law restricting the sale, 17 disclosure, and use of pharmacy records for marketing purposes. Id. at 557-58. On its face, the 18 law was both content- and speaker-based. In fact, Vermont enacted the law with the avowed 19 purpose of “diminish[ing] the effectiveness of marketing by manufacturers of brand-name drugs.” 20 Id. at 565. After determining that heightened judicial scrutiny of the law was likely required, the 21 Court did not actually define or apply heightened scrutiny. Id. at 571. The Court concluded that it 22 need not “determine whether all speech hampered by [the Vermont law]” was commercial, 23 because “the outcome [would be] the same whether a special commercial speech inquiry or a 24 stricter form of judicial scrutiny [was] applied.” Id. at 571. The Court applied intermediate 25 Central Hudson scrutiny and struck down the Vermont statute. Nowhere in the opinion did the 26 Court overrule Central Hudson or declare that intermediate scrutiny should no longer apply to 27 restrictions burdening only commercial speech. 28 Additionally, in Discovery Network, the Court struck down a Cincinnati ordinance which 9 1 banned newsracks containing “commercial handbills,” but not newsracks containing newspapers. 2 The Court applied Central Hudson intermediate scrutiny. 507 U.S. 410 (1993). The Court found 3 that the ordinance Cincinnati relied on for its ban was enacted at a time “long before any concern 4 about newsracks[,]” and rather than regulate the “size, shape, appearance, or number” of racks, the 5 city resorted to outright prohibition. Id. at 417. The Court also found an insufficient “fit” between 6 the city’s goals, safety and aesthetics, and its method of achieving those goals, an outright ban on 7 commercial newsracks, because commercial newsracks comprised a very small percentage of the 8 city’s total newsracks. Id. Much of the Court’s discussion centered on the city’s inability to 9 provide a basis for distinguishing between newspapers and commercial handbills in this manner. 10 Id. at 424-28. United States District Court Northern District of California 11 In brief, a regulation that suppresses or burdens noncommercial speech based on its 12 content or the speaker must undergo strict scrutiny after Reed. Similarly, Sorrell dictates that a 13 regulation that suppresses or burdens protected expression, based on the speaker or content 14 thereof, must undergo “heightened” scrutiny. See Sorrell, 564 U.S. 552. Discovery Network 15 demonstrates that intermediate scrutiny is a searching inquiry, and that courts should examine 16 whether a regulation actually advances the government’s interests. Plaintiff may be correct that, 17 after Reed, a restriction merely distinguishing between speech based on whether it is 18 “commercial” or “noncommercial” is “content-based,” even if it does not target a particular topic 19 or speaker. However, it is not clear that such a generalized restriction on commercial speech need 20 withstand anything more than Central Hudson’s intermediate scrutiny. See Lone Star Security & 21 Video, Inc. v. City of L.A., 827 F.3d 1192, 1198 n.3 (9th Cir. 2016) (dictum) (“But, although laws 22 that restrict only commercial speech are content based, see Reed III, 135 S. Ct. at 2232, such 23 restrictions need only withstand intermediate scrutiny. See Central Hudson . . . .”). Plaintiff cites 24 to no authority that a regulation burdening only commercial speech, without restricting a particular 25 commercial speaker or subject, must undergo a higher level of scrutiny. 26 Subjecting content-based restrictions of noncommercial speech to strict scrutiny ensures 27 that a particular speaker, viewpoint, or subject cannot be treated less favorably than other 28 speakers, viewpoints, or subjects, except in the most extreme circumstances. Commercial speech, 10 1 however, has historically been afforded lesser First Amendment protection. See Sorrell, 564 U.S. 2 at 582-83 (Breyer, J., dissenting) (citations and internal quotation marks omitted) (“[S]peech- 3 related risks and offsetting justifications differ depending upon context,” and “the First 4 Amendment offers considerably less protection to the maintenance of a free marketplace for goods 5 and services.”); Metromedia, 453 U.S. at 505 (1981) (citing Valentine v. Chrestensen, 316 U.S. 52 6 (1942)) (“The extension of First Amendment protections to commercial speech is a relatively 7 recent development in First Amendment jurisprudence. 8 advertisements of services or goods for sale were considered to be outside the protection of the 9 First Amendment.”). Since Central Hudson, regulations suppressing or burdening commercial Prior to 1975, purely commercial speech must withstand intermediate judicial scrutiny. 447 U.S. at 566. 11 United States District Court Northern District of California 10 This rule presently remains undisturbed. 12 Under Central Hudson, First Amendment protections apply to commercial speech only if 13 the speech concerns a lawful activity and is not misleading. 447 U.S. at 563-66. Once it has been 14 established that the speech is entitled to protection, any government restriction on that speech must 15 satisfy a three-part test: (1) the restriction must seek to further a substantial government interest; 16 (2) the restriction must directly advance the government’s interest; and (3) the restriction must 17 reach no further than necessary to accomplish the given objective. Id. Here, the City does not 18 contend that plaintiff’s signs are either unlawful or misleading. Accordingly, the Court will 19 presume the commercial speech at issue is entitled to First Amendment protection and apply the 20 Central Hudson framework. 21 22 2. Application of Scrutiny 23 Having determined that Central Hudson’s intermediate scrutiny applies to the Planning 24 Code restrictions at issue here, the Court must now determine whether: (1) the restriction seeks to 25 further a substantial government interest; (2) the restriction directly advances the government’s 26 interest; and (3) the restriction reaches no further than necessary to accomplish the objective. 27 Cent. Hudson, 447 U.S. at 563-66. 28 First, the sign regulations at issue must seek to further a substantial government interest. 11 S.F. Planning Code section 601 lists the purposes of Article 6 in regulating signs. See Plaintiff’s 2 RJN (Dkt. No. 9) at 297, Ex. II § 601. Article 6 aims to, among others, “safeguard and enhance 3 property values in residential, commercial, mixed use, and industrial areas”; “protect public 4 investment in and the character and dignity of public buildings, open spaces and thoroughfares”; 5 “protect the distinctive appearance of San Francisco . . .”; “encourage sound practices and lessen 6 the objectionable effects of competition in respect to size and placement of signs”; “aid in the 7 attraction of tourists and other visitors . . .”; and “reduce hazards to motorists and pedestrians 8 traveling on the public way; and thereby to promote the public health, safety and welfare.” Id. In 9 essence, Article 6 seeks to promote safety and aesthetics. This Court has previously held that the 10 City’s interest in promoting traffic safety and aesthetics is a substantial governmental interest. See 11 United States District Court Northern District of California 1 Contest Promotions, 100 F. Supp. 3d at 842 (citing Metromedia, 453 U.S. at 507-09). Moreover, 12 as in the previous litigation, plaintiff appears to concede that regulation of safety and aesthetics are 13 substantial governmental interests. See, e.g., Compl. (Dkt. No. 1) ¶¶ 2, 48. The Court finds that 14 the City has satisfied the first factor. 15 Second, the sign regulations must directly advance the government’s substantial interests 16 in safety and aesthetics. The Supreme Court has held that ordinances differentiating between on- 17 site and off-site advertisements, as the San Francisco scheme does here, are directly related to the 18 interests of safety and aesthetics.8 Metromedia, 453 U.S. at 507-09; see also Nat’l Adver. Co. v. 19 8 20 21 22 23 24 25 26 27 28 Plaintiff contends that Metromedia is not binding because the decision, which split 4-2-3, had no clear majority. However, Justice Stevens joined in much of the plurality’s opinion, including those portions upholding distinctions between onsite and offsite commercial signs. Metromedia, 453 U.S. at 541 (Stevens, J., dissenting in part) (“I agree with the conclusion that the constitutionality of this prohibition is not undercut by the distinction San Diego has drawn between onsite and offsite commercial signs . . . and I therefore join Parts I through IV of [the plurality opinion.]”). Plaintiff argues that dissenting opinions “do not count” when applying the Supreme Court’s guidance from Marks v. United States, 430 U.S. 188 (1977), to extract a majority view from fractured Supreme Court decisions. The Court rejects plaintiff’s contention that Justice Stevens’s opinion cannot be used to demonstrate a majority as to those sections of Metromedia in which he joined. Whether courts may rely on a dissent to form a Marks majority is an open question in this Circuit. See United States v. Davis, 825 F.3d 1014, 1025 (9th Cir. 2016) (en banc) (“[W]e assume but do not decide that dissenting opinions may be considered in a Marks analysis.”); see also id. at 1029 (Christen, J., concurring) (“[W]e leave unanswered whether our court will take into account dissenting opinions when applying Marks.”). In this Court’s view, because Justice Stevens expressly joined the plurality in Metromedia with respect to the first four sections, at least those four sections represent the opinion of a majority of the Court. 12 1 City of Orange, 861 F.2d 246, 248 (9th Cir. 1988) (“The City may prohibit billboards entirely in 2 the interest of traffic safety and aesthetics, and may also prohibit them except where they relate to 3 activity on the premises on which they are located.”). Here, the City has created regulations that 4 directly advance its interests in safety and aesthetics. The City’s classification of business signs, 5 with accompanying restrictions on size and location, undoubtedly reduce the overall number and 6 square footage of signs in San Francisco, preventing additional distraction of motorists and 7 pedestrians, and promoting aesthetics. The Court finds that the City has satisfied the second 8 factor. Finally, the restrictions must reach no further than necessary to accomplish the City’s 10 objectives. This element bears the most scrutiny. Here, the City “is not required to employ the 11 United States District Court Northern District of California 9 least restrictive means conceivable, but it must demonstrate narrow tailoring of the challenged 12 regulation to the asserted interest—a fit that is not necessarily perfect, but reasonable; that 13 represents not necessarily the single best disposition but one whose scope is in proportion to the 14 interest served.” Greater New Orleans Broad. Ass’n, Inc. v. U.S., 527 U.S. 173, 188 (1999) 15 (internal citation and quotation marks omitted). Contest Promotions argues that the contested 16 provisions fail this prong because “[t]he City has exempted certain content and speakers, rather 17 than regulating the ‘size, shape and appearance’ of signs.” Mot. (Dkt. No. 8) at 31. The Court 18 disagrees. The City exempts all noncommercial signs from the regulations in Article 6; Article 6 19 manages the size, shape, and appearance of Business Signs and other commercial signs. The 20 City’s restrictions on Business Signs appropriately balance the needs of business owners to 21 identify their businesses and advertise certain products sold on-site with the City’s interest in 22 promoting aesthetics and safety by reducing the additional visual clutter and distractions 23 associated with commercial signage and off-site advertising. See Metromedia, 453 U.S. at 512 24 (citations omitted) (“As we see it, the city could reasonably conclude that a commercial 25 enterprise—as well as the interested public—has a stronger interest in identifying its place of 26 business and advertising the products or services available there than it has in using or leasing its 27 available space for the purpose of advertising commercial enterprises located elsewhere.”); see 28 also id. at 501 (“Each method of communicating ideas is ‘a law unto itself’ and that law must 13 1 reflect the ‘differing natures, values, abuses and dangers’ of each method.”). As such, “[t]he 2 [C]ity has gone no further than necessary in seeking to meet its ends. Indeed, it has stopped short 3 of fully accomplishing its ends: It has not prohibited all billboards, but allows onsite advertising 4 and” noncommercial speech. See Metromedia, 453 U.S. at 508. The Court finds that the City has 5 satisfied the third factor. 6 Plaintiff has failed to make a threshold showing of likelihood of success on the merits. 7 Plaintiff’s request for a preliminary injunction would ordinarily end here; however, plaintiff 8 separately argues that it is entitled to an injunction under a line of cases beginning with Ex Parte 9 Young, 209 U.S. 123 (1908). 10 United States District Court Northern District of California 11 B. Due Process / Ex Parte Young 12 Contest Promotions argues that it is forced to risk substantial daily penalties while 13 litigating this action in violation of due process. Contest Promotions seeks an injunction under Ex 14 Parte Young to prevent the imposition of penalties under the Planning Code while it obtains a 15 determination as to the code’s validity. The City argues that plaintiff is not entitled to Ex Parte 16 Young relief because violation of the planning code is not the sole avenue of judicial review, the 17 penalties are not severe enough to deter litigation, and determination of plaintiff’s compliance 18 does not require a complicated factual analysis. 19 A state cannot force a party to risk severe penalties to obtain a judicial determination if that 20 determination involves a complicated or technical question of fact. Ex Parte Young, 209 U.S. 21 at 145, 148. A statutory scheme that imposes penalties on those seeking judicial review is 22 unconstitutional if “the penalties for disobedience are fines so enormous . . . as to intimidate the 23 company and its officers from resorting to the courts to test the validity of the legislation.” Id. 24 at 147. The right to judicial review “is merely nominal and illusory if the party to be affected can 25 appeal to the courts only at the risk of having to pay penalties so great that it is better to yield to 26 orders of uncertain legality rather than to ask for the protection of the law.” Wadley S. Ry. Co. v. 27 Georgia, 235 U.S. 651, 661 (1915). 28 The Court finds that the risks to plaintiff here are insufficient to justify relief under Ex 14 1 Parte Young. As the City points out, plaintiff can apply for a permit and contest the denial of that 2 permit on the same grounds, without incurring daily penalties. Contest Promotions need not 3 violate the Planning Code in order to challenge its constitutionality. Moreover, years of ongoing 4 litigation between the parties also demonstrate that plaintiff has not been deterred by “prohibitive 5 penalties.” Accordingly, plaintiff’s motion for preliminary injunction is DENIED. 6 CONCLUSION 7 8 9 For the foregoing reasons, the Court hereby DENIES plaintiff’s motion for a preliminary injunction. 10 United States District Court Northern District of California 11 This order resolves Dkt. No. 8. 12 13 14 15 16 IT IS SO ORDERED. Dated: January 9, 2017 ______________________________________ SUSAN ILLSTON United States District Judge 17 18 19 20 21 22 23 24 25 26 27 28 15

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