A Complete Sign-code Reversal

As Wade Swormstedt reported in his November 2007 editorial, “Houston, We Have an Opportunity,” (page 200), a federal judge held the Houston Sign Code unconstitutional and unenforceable in a September 2007 preliminary injunction ruling. More specifically, on September 26, 2007, the Honorable Melinda Harmon, judge of the U. S. District Court for the Southern District of Texas, Houston Div., issued a preliminary injunction and supporting opinion in RTM Media Inc. vs. City of Houston; C.A. No. 07-02844. Judge Harmon’s preliminary injunction order stated:

ORDERED that the City shall be enjoined from enforcing its Sign Code, codified at Chapter 46 of the City of Houston Building Code, because there is a substantial likelihood that its content-based distinction between commercial and noncommercial speech violates the Free Speech Clause of the First Amendment and (2) from fining or threatening to fine advertisers placing advertisements on billboards in the ETJ [extraterritorial jurisdiction] not permitted by the City.

Almost exactly one year later, on September 29, 2008, Judge Harmon entered her final judgment and decision in the case. This time, however, the judge ruled completely opposite from her preliminary injunction order, against RTM and for Houston. More importantly, even though the facts, law, attorneys, parties and arguments hadn’t changed, Judge Harmon also found the code complied with the First Amendment.

Judge Harmon’s preliminary and final orders are extremely broad, in terms of both the activities that were enjoined, and the parties affected by the injunction. This article summarizes Judge Harmon’s opinions and discusses their ramifications to the sign industry.

Factual/procedural background

RTM Media Inc., an independent, Houston-based, outdoor-advertising company, started constructing billboards in the ETJ of the City of Houston, adjacent to federal interstate and primary highways, with permits issued only by the Texas Dept. of Transportation (TxDOT)

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in 2003. RTM argued it need not comply with Houston’s permit and other sign regulations, because TxDOT maintains exclusive jurisdiction over off-premise signs located in Houston’s ETJ adjacent to federal highways.

Houston disagreed and issued nearly 2,000 municipal court citations to RTM’s principal, Curtis Brooks. In addition to prosecuting these tickets in criminal court, the City of Houston also filed a lawsuit against RTM in July 2007 in the 295th Judicial District Court of Harris County, TX, seeking a mandatory injunction for the removal of RTM’s alleged illegal and unpermitted signs. Simultaneously, the City began contacting RTM’s advertisers, warning them they would be violating the Houston Sign Code and subject to ticketing for “using” RTM’s illegal signs.

On September 12, 2007, RTM filed suit in federal court, seeking an injunction against the City’s contact with its customers. RTM also alleged more broadly that the Houston Sign Code violated First Amendment free-speech protections by impermissibly distinguishing regulations on the commercial vs. non-commercial messages communicated on signage.

Preliminary injunction order

Subsequently, the Court examined the U.S. Supreme Court’s decisions in Central Hudson Gas & Electric Corp. vs. Public Service Commission of New York, 447 US 557 (1980) and City of Cincinnati vs. Discovery Network Inc., 407 US 410 (1993). Specifically, the Court noted the Houston Sign Code distinguished its regulation of commercial and noncommercial billboards based on the content of the messages displayed on such billboards.

Commercial billboards are extensively regulated by the Houston Sign Code, and even prohibited, under Section 4612(b). By contrast, Section 4619(c) of the code completely excludes from regulation all structures containing noncommercial messages:

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Exclusion. The provisions of this section shall not be construed to require the removal of a structure that is used exclusively and at all times (except when there is no copy at all on the structure) for messages that do not constitute advertising, including, but not limited to, political messages, religious or church related messages, public service, governmental and ideological messages and other copy of a nature that is not commercial advertising because such a structure is not a “sign” (either on-premise or off-premise), as that term is defined, for purposes of this chapter and is not subject to regulation under this chapter. A structure that is subject to regulation under this chapter may contain non-commercial messages in lieu of or in addition to any other messages, but the structure shall not be exempt from regulation as a sign under this chapter unless used exclusively and at all times as provided above for non-commercial messages.

During the half-day evidentiary hearing on RTM’s application for preliminary injunction, RTM showcased the difficulty in distinguishing between commercial and non-commercial billboards. Specifically, the Houston sign administrator was extensively cross-examined about her opinion on several billboard displays, including which were considered commercial and subject to her department’s regulation, or non-commercial and excluded from regulation. The Sign Administrator exhibited confusion and indecision in analyzing the billboard messages, subjectively and arbitrarily deciding if they were subject to regulation.

The court concluded the Houston Sign Code’s different treatment and regulation of commercial and non-commercial billboards was an impermissible, content-based regulation that violated the First Amendment:

This Court sympathizes with the City’s substantial interest in reducing and preventing “billboard blight” for reasons of aesthetics, traffic safety, and property values, but the City cannot achieve those goals by regulating billboards based on the content of their message. Noncommercial billboards are visual blights, traffic dangers, and undesirable for property values for the same reason as commercial billboards. The City can impose content neutral restrictions on time, place, and manner without reference to the content of the regulated speech and that are directly related to their goals, e.g., restricting the overall number of billboards it permits, their location, size, etc., but not by regulating and prohibiting only off-premises commercial billboards while allowing noncommercial billboards to proliferate freely. Moreover, threatening to fine or fining commercial advertisers, who have no control over a sign and cannot take it down, does not meet the requirement that restrictions on speech must be directly related to the City’s goals but clearly infringes on their right of freedom of speech. The City’s justification that such pressure tactics against advertisers are acceptable, because they “work,” does not cure the constitutional problem here.

Judge Harmon then ruled Houston’s violation of RTM’s constitutional right of free speech constitutes irreparable harm as a matter of law, which outweighed any damage the requested injunction could cause the city. So the court granted the preliminary injunction.

Preliminary-order ramifications

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Judge Harmon’s preliminary injunction order wasn’t limited to RTM, its advertisers, billboards, federally funded highways or the ETJ. Instead, the order said “the City shall be enjoined from enforcing its Sign Code.” Even though RTM originally disputed only the permitting requirements over its off-premise signs located adjacent to federally funded highways in the ETJ, a literal reading of the preliminary order broadens such a narrow issue. The order seems to cover all parties, all types of signs, all thoroughfares and all areas. Indeed, any effort by the Houston Sign Administration to enforce any of its regulations would appear to be enjoined under the preliminary order.

Subsequent action

Judge Harmon, the Houston City Council and at least one sign operator made news after the September 26, 2007 preliminary injunction order. The first event was an exploitation attempt, as Wade addressed in his editorial.

Specifically, another independent Houston billboard operator erected a billboard within Houston’s corporate limits within a couple of weeks after the order. The company argued, under a literal reading of the order, that enforcement of the Houston sign code was enjoined in its entirety, so that even the ban on new billboards wasn’t applicable.

It also sought to intervene in the RTM litigation. Houston contested the intervention and sued the company in state court, arguing that deed restrictions and building and electrical codes prohibited the billboard, even if the entire Houston Sign Code was enjoined. Judge Harmon denied the request to intervene, and the State court granted the City’s request for a mandatory injunction that required the billboard’s removal. Otherwise, the Houston sign community voluntarily refrained from capitalizing on the preliminary order.

Second, Judge Harmon significantly narrowed her original Order on October 16, 2007, the day after the other operator constructed its billboard. The Order Clarifying Preliminary Injunction, entered September 26, 2007, effectively enjoins the city from enforcing its sign code only against RTM and its advertisers and billboards. RTM advised Judge Harmon, at the hearing on the City’s Motion for Reconsideration, that it didn’t oppose this “clarification.”

Third, the Houston City Council attempted to make the sign code constitutional by repealing the non-commercial-signage exemption from regulation contained in Section 4619(c). The October 30, 2007 City of Houston Ordinance changes the definitions for both on-premise and off-premise signs to “include any new sign that would otherwise meet this definition, but that would be excluded from regulation by Section 4619(c) of the Sign Code.”

The new ordinance also states “the construction, erection, placement, attachment, painting, installation or other implementation of new off-premise signs is prohibited,” and that “any new on-premise sign must comply with all applicable requirements of the Building Code, the Sign Code and this Ordinance.” Finally, the ordinance states it “shall not be construed to limit or restrict the City of Houston in its defense of the Sign Code in [the RTM litigation],” and that it “shall remain in full force and effect until 90 days following a final resolution of that cause of action.”

Final judgment

So, a year later, Judge Harmon ruled against RTM, based on the parties’ written summary-judgment motions in her final decision. Although neither the facts nor the law had changed, the judge reached an opposite result by factually distinguishing Discovery Network, where the Supreme Court had stricken a Cincinnati ordinance banning newsracks containing commercial publications while allowing those with noncommercial publications. The Supreme Court believed the Cincinnati ordinance didn’t establish a “reasonable fit” between the city’s goal of aesthesis and the ban of commercial newsracks as the means for achieving it, because only 62 commercial newsracks would be removed, while 1,500 to 2,000 non-commercial newsracks would remain.

By contrast, Judge Harmon noted off-premise commercial signs in Houston had decreased by approximately 50% since the passage of the sign code, so Houston’s fit was reasonable and not “minute” or “paltry” like Cincinnati’s efforts. The judge also placed more emphasis on Metromedia vs. City of San Diego, 453 US 490 (1981), where the Supreme Court addressed a San Diego ordinance that permitted onsite commercial advertising, while prohibiting other commercial and noncommercial advertising on signs. Judge Harmon cited the plurality opinion in Metromedia as holding “that, insofar as the ordinance regulated commercial speech, it satisfied the Central Hudson test.”

RTM has already filed a notice to appeal the final decision to the Fifth Circuit Court of Appeals. Such appellate procedures typically last nearly a year, during which the Houston Sign Code will continue to be considered constitutional and enforceable.

Conclusion

The preliminary and final decisions in RTM Media, Inc. vs. City of Houston are broad and far reaching. The preliminary order represents a significant expansion of the Supreme Court’s First Amendment jurisprudence, such as Central Hudson Gas & Electric Corp. vs. Public Service Commission of New York and City

of Cincinnati vs. Discovery Network, Inc. The final decision cites the same cases, but arrives at an opposite result. Regardless of the result of the Fifth Circuit appeal, sign codes in Houston and across the country will be more closely scrutinized to confirm they don’t base regulations on the content of the messages displayed on the signage because of this case.

Editor’s note: RTM is now effectively out of business.