In Billboard Company’s Challenge to a Michigan Sign Ordinance, the Sixth Circuit Finds That Content-Based Commercial Speech Regulations Are Now Subject to Strict Scrutiny

Source Rocky Mountain Sign Law , Author  on 

A billboard company’s challenge to the Troy, Michigan sign variance standards–which we reported on three years ago–has now resulted in an appellate decision that has the potential to greatly change commercial speech regulation as we know it.  Two weeks ago, the Sixth Circuit Court of Appeals ruled that the city’s sign code was an unconstitutional prior restraint and was content-based in its regulation of temporary signs.  The most remarkable aspect of the decision, however, was the court’s conclusion that any content-based commercial sign regulation should now be subjected to strict scrutiny analysis, which is nearly always fatal to a sign regulation.

The Troy sign ordinance allows property owners to post one ground sign of up to 12 feet in height and not exceeding 100 square feet, plus one additional ground sign, so long as the second sign is set back 200 feet from a right-of-way, is no more than 25 feet tall, does not exceed 300 square feet in area, and is not less than 1,000 feet from any other sign exceeding 100 square feet.  International Outdoor sought to install 672-square-foot, double-sided advertising signs in Troy that did not meet the foregoing requirements and sought a variance.  The criteria used by the city’s appeals board were threefold:  “(1) the variance would not be contrary to the public interest or general purpose and intent of this Chapter; and (2) the variance does not adversely affect properties in the immediate vicinity of the proposed sign; and (3) the petitioner has a hardship or practical difficulty resulting from the unusual characteristics of the property that precludes reasonable use of the property.”  The board denied the variance for failure to meet the criteria.

International Outdoor first sought reversal of the board’s decision in state court, but abandoned that proceeding and filed a claim in federal court, alleging that the city’s variance criteria created an unconstitutional prior restraint and that the sign code was content based because it exempted certain types of temporary signs (including real estate, political, and others) from the permitting requirement.  The district court dismissed the claim pertaining to content bias, finding that International Outdoor’s speech was commercial and thus the content neutrality analysis did not apply.  After Troy amended its ordinance in 2018, purportedly to address the prior restraint claim, the district court granted summary judgment in favor of the city.  The district court also denied damages and attorneys’ fees to the billboard company.

On appeal, the Sixth Circuit issued a divided opinion.  The majority concluded that the variance criteria in effect prior to 2018 were an unconstitutional prior restraint because they were not sufficiently definite as to provide clear direction to the appeals board.  The court also determined that the city’s amendment to the criteria in 2018 served to moot International Outdoor’s challenge to the constitutionality of the criteria, but did not moot the billboard company’s damages claim.  However, the court determined that, because the ordinance contained a severability clause, the variance provisions were severable from the law and thus precluded the billboard company from obtaining damages on the prior restraint claim.

The Sixth Circuit reversed the district court’s dismissal of the billboard company’s claims of content bias.  The appeals court first observed that International Outdoor had standing to challenge provisions of the ordinance that did not directly regulate its signs, because the variance provision that it challenged related to the entire sign ordinance.  Going on to discuss the content neutrality issues in the case, the appeals court observed that Reed requires strict scrutiny analysis, i.e., a compelling interest and least-restrictive means tailoring, for any content based law, including commercial speech regulations.  The court remanded the case to the district court for analysis consistent with that determination.

One judge of the panel, Judge Suhrheinrich, dissented, finding that the billboard company lacked standing to challenge the temporary sign regulations.  Accordingly, Judge Suhrheinrich did not join the majority’s treatment of content-based commercial speech regulations.

The Sixth Circuit’s conclusion that content-based commercial speech regulations are subject to strict scrutiny conflicts with prior Supreme Court holdings, including Metromedia, and does not appear to be expressly required by Reed.  That conclusion seems wholly unnecessary, since the court ultimately concluded that the regulation in question applied to both commercial and noncommercial speech, thus mandating strict scrutiny due to its coverage of content-based noncommercial signs.  Yet the decision, if it stands, is problematic for the clear majority of local governments.  Most local governments distinguish between commercial and noncommercial signs in their sign regulations, and they often regulate billboards specially based on their commercial content.  Courts previously applied Central Hudson intermediate scrutiny (requiring a significant governmental interest and direct furthering of the interest at stake) to both content-based and content neutral commercial speech regulations.  However, the Sixth Circuit’s decision—whether an aberration or preview of things to come from other federal appeals courts—reflects the steady closing of the distinction between commercial and noncommercial speech that has pervaded First Amendment jurisprudence since the mid-1970s.

We will continue to report on this case, as further appeals are taken.

Int’l Outdoor, Inc. v. City of Troy, ___ F.3d ___, Nos. 19-1151, 19-1399 (6th Cir. Sept. 4, 2020).