Reagan National Advertising of Austin, Inc. v. City of Cedar Park

Filing 57

ORDER DENYING 50 Motion to Dismiss for Lack of Jurisdiction and Motion for Reconsideration. Signed by Judge Sam Sparks. (td)

L.

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
1

2019

i

AUG 15 PM 3:31

LJ

BY_.

REAGAN NATIONAL ADVERTISING OF
AUSTIN, INC.,
Plaintiff,

CAUSE NO.:
AU-17-CA-00717-SS

-vs-

CITY OF CEDAR PARK,
Defendant.
ORDER
BE IT REMEMBERED on this day the Court reviewed the file in the above-styled cause,

and specifically Defendant City of Cedar Park (the City)'s Motion to Dismiss for Lack of

Subject Matter Jurisdiction and Motion for Reconsideration

Advertising of Austin, Inc. (Reagan)'s Response

[#53]

[#50],

Plaintiff Reagan National

in opposition, the City's Reply

[#56]

in

support, and the City's Brief [#46-1] in support.' Having reviewed the documents, the governing
law, and the case file as a whole, the Court now enters the following opinion and order.

Background
This is a First Amendment case. Reagan is a commercial billboard company in the

business of outdoor advertising. Am. Compl.

[#18]

at 2. On March

five sign permit applications to the City. Am. Mot. Summ. J.

[#24-2]

8,

2017,

Reagan submitted

(Sign Permit Applications).

Three of these applications requested permission to install digital sign faces on existing outdoor
signs (the Digital Conversion Applications). Id. at

1,

2-16.

The other two applications sought

permits for the construction of two new signs (the New Sign Applications). Id. at

1

1,

17-32.

The Court GRANTS the City's related Motion to File [#46].
1

I

To receive approval, permit applications must demonstrate proposed signs meet the

requirements of the City's Sign

Code.2

These requirements are contained in two articles. The

is entitled "On-Premises

Sign Standards and Permits." Am. Mot.

Summ. J. [#24-5] Ex. 5 (Sign Code) at 1. The second

articleArticle 13.03is entitled "Off-

first

articleArticle

13.01

Premises Sign Standards and Permits." Id. at 25.

Both Article 13.01 and Article 13.03 contain provisions which rely upon a distinction
between on-premises and off-premises signs. An "on-premises sign" is defined as a "sign
identifying or advertising the business, person, activity, goods, products, or services located on
the site where the

sign

is installed, or that directs persons to a location on that site." Sign Code

at 4. By contrast, an "off-premises

sign"

is defined as a

services provided at a location other than that which the

"sign

sign

referring to goods, products or

occupies." Id. at 3-4. All five of

Reagan's permit applications relate to off-premises signs.
On March 14, 2017, the City denied Reagan's permit applications. Am. Mot. Summ. J.
[#24-4] Ex. 4 (Denial Letters). Among other reasons, the New Sign Applications were denied

because they proposed using light-emitting diode (LED) displays in off-premises signs and
because they proposed to erect "pylon signs." Id. at 7-10;

see also

Sign Code

§

13.01.007(i)(4)

("Electronically controlled changeable messages signs shall not advertise goods or services not
offered on the premises on which the

sign

is located."); id.

§

13.03.006(d) ("No light emitting

diode (LED) displays or signs shall be permitted."). The City also denied the Digital Conversion
Applications because, like the New

Sign

Applications, the Digital Conversion Applications

proposed installing LED displays in off-premises signs. Denial Letters at 1-6; Sign Code

2

The City enacted a new sign code the day after Reagan submitted its permit applications. Am. Mot.
Summ. J. [#24] at 5 n.4. However, 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. TEx. LOC. Gov'T CODE
§ 245.002.

2

§

13.01.007(i)(4), 13.03.006(d); see also id.

§

13.01.016(a), 13.03.007(a) ("[Nb

change or

alteration shall be made [to existing signs] that would increase the degree of nonconformity [with

the Sign Code].")
After the City denied Reagan's permit applications, Reagan filed this action in state court
arguing that the Sign Code's differing treatment of on-premises and off-premises signs
constitutes content discrimination and that this content-based distinction cannot survive
constitutional scrutiny. Notice Removal [#1-1] Ex.

1

(Original Pet.) at 4. The City subsequently

moved for summary judgment on Reagan's constitutional claims. See Mot. Summ. J. [#24].
The Court granted the motion in part and denied the motion in part. Order of May 23,

2019 [#49] at 16-17. As a preliminary matter, the Court concluded Reagan possessed standing to
challenge the denial of the Digital Conversion Applications but not the New
Id. at 4-7. The Court then considered the constitutionality of the

although the

Hudson, the

Sign
Sign

Sign

Sign

Applications.

Code and concluded that

Code's regulation of commercial speech survived scrutiny under Central
Code's content-based regulations of noncommercial speech were subject to

strict scrutiny under Reed v. Town of Gilbert. 135 S. Ct. 2218 (2015). Because the City had not

demonstrated the

Sign

Code's content-based regulation of off-premises

signs

containing

noncommercial speech survived strict scrutiny, the Court denied summary judgment on Reagan's
claim that denial of the Digital Conversion Applications violated the First Amendment. Order of

May 23, 2019 [#49] at 16-17. That claim is currently set for trial in November 2019. Order of
Sept. 22, 2017 [#11] at 3.

The City now moves to dismiss Reagan's claims for lack of jurisdiction. Mot. Dismiss
[#50] at 1. In the alternative, the City moves for reconsideration of the Court's prior summary

judgment order. Id. This pending motion is ripe for review.

3

Analysis

Motion to Dismiss for Lack of Jurisdiction

I.

Article III of the Constitution limits the jurisdiction of federal courts to cases and
controversies. US. Parole Comm 'n

v.

Geraghty, 445 U.S. 388, 395 (1980). In order to meet this

case-or-controversy requirement, plaintiffs must establish they have standing to sue. Raines
Byrd, 521 U.S. 811, 818 (1997). Plaintiffs have standing to sue

v.

if they have suffered an injury in

fact fairly traceable to the challenged action of the defendant and "likely to be redressed by the

requested relief." Allen
Inc.

v.

v.

Wright, 468 U.S. 737, 750-52 (1984); see also Friends

of the Earth,

Laidlaw Env't Servs. (TOC), Inc., 528 U.S. 167, 185 (2000) ("[A] plaintiff must

demonstrate standing separately for each form of relief sought."). "The party invoking federal

jurisdiction bears the burden of establishing these elements." Lujan

v.

Def 's of Wildlife, 504 U.S.

555, 561 (1992).

The City argues Reagan lacks standing to bring its remaining First Amendment

claims

which challenge the denial of Reagan's Digital Conversion Applicationsbecause (1) Reagan
has not suffered any injury; (2) any injury suffered by Reagan is not traceable to the City's denial

of the Digital Conversion Applications; and (3) the denial of the Digital Conversion Applications
is not redressable because those applications will be denied on content-neutral grounds even

if

Reagan obtains all available relief in this lawsuit. Mot. Dismiss [#50] at 3. The Court assesses
each of these arguments in turn.

A.

Injury in Fact

The City argues Reagan has not been injured by the application of the Sign Code because
"the City has only denied Reagan's request to convert the billboards to digital LED displays."
Mot. Dismiss [#50] at 5. But that denial is a cognizable injury, so the Court rejects this argument.

B.

Causation

The City argues Reagan's injury was not caused by the Sign Code because the denial of

the Digital Conversion Applications does not constitute an injury and Reagan has not suffered
any other injury traceable to the Sign Code. Mot. Dismiss [#50] at 5-6. But as the Court just
observed above, the denial of the Digital Conversion Applications is a cognizable injury. Further,

that denial is traceable to the City's application of its Sign Code. Therefore, the Court rejects this
argument, too.

C.

Redressability

The City initially argues that "any relief that could be granted under the claims left

remaining after the Court's ruling" would have "no basis in the pleadings" and "would not
provide Reagan with the commercial billboard permit it seeks." Mot. Dismiss [#50] at 4, 6-7. To
the contrary, however, Reagan's pleadings request the Court declare invalid any relevant part of
the Sign Code "as applied to Reagan" and dispense any "other relief to which Reagan is
entitled." Am. Compl. [#18] at 8. And if the Court declares the Sign Code's content-based
regulation of on- and off-premises signage is unconstitutional as applied to Reagan's

noncommercial speech and enjoins those provisions' application here, then Reagan's injury will

be redressed.
The City next argues that Reagan's claims are not redressable because Reagan is

complaining of the Sign Code's application to noncommercial speech but only seeks permits
related to commercial billboards. Id. at 7. But Reagan's permits did not specify that they sought
to erect a billboard for only commercial speech. Thus, this argument is inapposite.

The City further argues Reagan's claims are not redressable because the Digital
Conversion Applications are subject to denial under several content-neutral provisions of the

5

Sign Code. Id. at 7-8. First, the City contends Reagan's Digital Conversion Applications could

be denied under

§

13.01.016(a) or

of another provision,

§

§

13.03.007 because they sought to use LED lights in violation

13.01.006(g). Id. at 7-8. But

§

13.01.006(g) is not content neutral

because it relies on a content-based distinction between on- and off-premises speech,
Code §13.01.006(g) (relying on
§

13.01.016(a) and

§

§

13.01.007),

13.03.007 depended on

§

see

Sign

and thus, insofar as the application of

13.01.006(g), their application was not content

neutral. Because application of the provisions apparently did depend on

§

13.01.006(g),

see

Mot.

Dismiss [#50] at 8, the City's argument fails on its own terms. Second, the City contends

Reagan's Digital Conversion Applications could have been denied under

§

13.01.016(a). Mot.

Dismiss [#50] at 10-11. That provision imposes various requirements on "replacement sign[s]."
See Sign

Code

§

13.01.016(a). But it is not clear that modifications to install an LED face would

qualify as a "replacement" under the provision as opposed to a "change or alteration."

See

id.

Thus, the City has failed to carry its burden of persuasion on this argument. Third, the City
argues the Digital Conversion Applications could have been denied under

which requires nonconforming

signs

to abide by size limitations set by

§

§

13.01.01 6(a)(3),

13.01.018. Mot.

Dismiss [#50] at 11. The City argues Reagan's applications violated this provision not by

violating
§

§

13.01.018 but by violating a separate size limitation imposed on LED

13.01.011. Id. Yet

§

limitation imposed by

signs

by

13.01.01 6(a)(3) does not require nonconforming signs to abide by the
§

13.01.011, nor did the City rely on

Digital Conversion Applications.

See

§

13.01.011 when it denied the

Denial Letters at 1-6. Therefore, the Court rejects this

The City implies it does not matter whether § 13.01.007 is content neutral because that section "does not
provide any exception[] to the LED Sign Prohibition." Mot. Dismiss [#50]. The Court rejects this hard-to-follow
argument as unsupported by the text of § 13.01.007. See Sign Code § 13.01.007 ("Electronically controlled
changeable copy signs shall be permitted as follows[] . . .

argument and concludes Reagan still has standing because its claims are still redressable

following the Court's previous ruling on the City's summary judgment motion.

II.

Motion for Reconsideration
"Rule 54(b) allows parties to seek reconsideration of interlocutory orders." Austin

Kroger Tex., LP, 864 F.3d 326, 336 (5th Cir. 2017); see also FED. R.

CIV. P.

v.

54(b). "Under Rule

54(b), the trial court is free to reconsider and reverse its decision for any reason it deems
sufficient, even in the absence of new evidence or an intervening change in or clarification of the

substantive law." Kroger, 864 F.3d at 336 (internal quotation marks and citation omitted).
The City argues the Court's prior order erred in using strict scrutiny to assess the

constitutionality of the Sign Code as applied to regulate Reagan's noncommercial speech. Mot.
Dismiss [#50] at 12-13. Specifically, the City argues that the Fifth Circuit's decision in RTM
Media, LLC

v.

City

of Houston, 578

F. Supp. 3d 220 (5th Cir. 2009), precludes application

of

strict scrutiny to billboards that exhibit both commercial and noncommercial speech. Mot.

Dismiss [#50] at 12-13.
RTM Media is distinguishable. In that case, the Fifth Circuit considered the

constitutionality of an ordinance that exempted from regulation all noncommercial
as those

signs

so long

were used to display exclusively noncommercial speech. RTM Media, 578 F.

Supp. 3d at 222. Here, by contrast, the

noncommercial

signs,

signs,

Sign

Code does not contain any exception for

and the permitting process established by the

Sign

Code does not take into

account, in any way, whether an applicant seeks to erect a sign displaying commercial or

noncommercial

speech.4

See

Sign

Code

§

13.01.005. What's more, the City's motion for

"Although the Sign Code does distribute some exemptions based on a distinction between on- and offpremises commercial speech, that content-based distinction does not directly track the distinction between
commercial and noncommercial speech. The City attempts to argue off-premises speech is the same thing as
7

reconsideration does not point to any evidence that the City's rejection of the Digital Conversion
Applications took into consideration whether Reagan's proposed signs would display
commercial or noncommercial

speech.5

And even if the City had taken into consideration

whether the proposed signs were to display commercial or noncommercial speech, it would not
have made a difference because the Sign Code does not contain any mechanism or exemption
through which the City can avoid applying the Sign Code's content-based restrictions to
noncommercial

speech.6

In sum, there is no plausible basis upon which the Court could conclude that the City did

not apply content-based restrictions to noncommercial speech. Because the Sign Code fails to
distinguish between commercial and noncommercial speech and instead indiscriminately applies

content-based restrictions to both forms of speech, strict scrutiny applies. See Solantic, LLC
City

v.

of Neptune Beach, 410 F.3d 1250, 1268 n.15 (11th Cir. 2005) ("Because the sign code does

not regulate commercial speech as such, but rather applies without distinction to signs bearing
commercial and noncommercial messages, the Central Hudson test has no application here [and
strict scrutiny applies].");

cf

Lone Star Sec. & Video, Inc.

v.

City ofLos 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." (emphasis added) (internal
citation omitted)).

The City protests that applying strict scrutiny in this case would "eliminate [cities']
authority to regulate commercial billboards." Mot. Dismiss [#50] at 15. The Court disagrees. If a
commercial speech, but it cites no law in support of its position, and the Court concludes the City has failed to carry
its burden of persuasion on this point.
As a result, the Court has no way of knowing whether the content-based restrictions imposed by the Sign
Code were imposed because the proposed signs were to display commercial speech; because they were to display
noncommercial speech; or for some other reason entirely.
' Because the Sign Code lacks such a mechanism, the City would have had to deny Reagan's permits even
if the proposed signs were to display only noncommercial speech.

municipality imposes

content-based regulations

on

commercial

speech but

exempts

noncommercial speech, then the application of those regulations to billboards containing both

commercial and noncommercial speech would be subject to only intermediate scrutiny because
in that instance, no content-based regulations are applied to noncommercial speech. That is the

path many municipalities have chosen. See, e.g., Contest Promotions, LLC

v.

City

of San

Francisco, 874 F.3d 597, 600 (9th Cir. 2017) (noting city's sign code "distinguishe[d] between
commercial and noncommercial signs" by exempting the latter from the challenged regulation).
The problem here, however, is that the Sign Code does not contain any exemption for

noncommercial speech and instead imposes content-based regulations on both commercial and
noncommercial speech. This imposition of content-based restrictions on noncommercial speech
requires the application of strict scrutiny.
Finally, the City argues its regulations are content neutral even if they draw a distinction

between on- and off-premises signage. Mot. Dismiss [#50] at 16-17. Because the City already
urged these same arguments in its motion for summary judgment and because the Court is
satisfied that its previous order rejecting those arguments was correct, the Court rejects them

once again. See Order of May 23, 2019 [#50] at 13-14.

Conclusion
The Court concludes it retains jurisdiction over Reagan's remaining claims because
Reagan possesses standing to bring those claims. The Court therefore denies the City's motion to
dismiss for lack of jurisdiction. Further, the Court again concludes that the Sign Code applies
content-based restrictions to noncommercial speech and that the constitutionality of the

application of these restrictions to noncommercial speech must be evaluated under strict scrutiny.

Because the City has still not carried its burden of demonstrating the Sign Code's content-based

regulations of noncommercial speech satisfy strict scrutiny, the Court again concludes the City is

not entitled to summary judgment on Reagan's claims. Correspondingly, the Court denies the

City's motion for reconsideration.
Accordingly,
The City's Motion to Dismiss for Lack of Subject Matter Jurisdiction and Motion
for Reconsideration {#50] is DENIED.

SIGNED this the

/

day of August 2019.
SAM SPARKS
SENIOR UNITED STATES DISTRICT JUDGE

10