Court Opinion

ID: 5648765
Source: CourtListenerOpinion
Date Created: 2022-01-11 19:00:38.722605+00
Date Added: 2024-06-11T08:38:28.499619
License: Public Domain

RECOMMENDED FOR PUBLICATION
                               Pursuant to Sixth Circuit I.O.P. 32.1(b)
                                      File Name: 22a0006p.06

                   UNITED STATES COURT OF APPEALS
                                 FOR THE SIXTH CIRCUIT

                                                            ┐
 KENJOH OUTDOOR, LLC,
                                                            │
                                  Plaintiff-Appellant,      │
                                                            │
        v.                                                   >        No. 20-4026
                                                            │
                                                            │
 JACK MARCHBANKS, Director, Ohio Department of              │
 Transportation; NATHAN FLING, Supervisor, Ohio             │
 Department of Transportation,                              │
                               Defendants-Appellees.        │
                                                            ┘

   Appeal from the United States District Court for the Southern District of Ohio at Dayton.
                   No. 3:19-cv-00328—Thomas M. Rose, District Judge.

                                  Argued: October 19, 2021

                            Decided and Filed: January 11, 2022

             Before: GILMAN, THAPAR, and NALBANDIAN, Circuit Judges.
                               _________________

                                           COUNSEL

ARGUED: A. Richard M. Blaiklock, LEWIS WAGNER, LLP, Indianapolis, Indiana, for
Appellant. Mathura J. Sridharan, OFFICE OF THE OHIO ATTORNEY GENERAL, Columbus,
Ohio, for Appellees. ON BRIEF: A. Richard M. Blaiklock, Charles R. Whybrew, LEWIS
WAGNER, LLP, Indianapolis, Indiana, Thomas H. Fusonie, Kara M. Mundy, VORYS, SATER,
SEYMOUR AND PEASE, LLP, Columbus, Ohio, for Appellant. Benjamin M. Flowers,
William J. Cole, OFFICE OF THE OHIO ATTORNEY GENERAL, Columbus, Ohio, for
Appellees.
 No. 20-4026                Kenjoh Outdoor, LLC v. Marchbanks, et al.                     Page 2

                                         _________________

                                              OPINION
                                         _________________

        NALBANDIAN, Circuit Judge. This is a case about Ohio’s billboard regulations. In
Ohio, to place an advertising billboard on a highway, you must apply for a permit from the Ohio
Department of Transportation (ODOT).           But under one of its regulations, known as the
compliance rule, ODOT will not process a permit application if the applicant has outstanding
fees, changes his billboard without prior approval from ODOT, or maintains an illegal
advertising billboard.

        This controversy began when ODOT put Kenjoh’s billboard permits on hold under the
compliance rule, alleging that Kenjoh was maintaining an illegal billboard. In turn, Kenjoh sued
ODOT, asserting that the compliance rule is an unconstitutional prior restraint. It asked for a
permanent injunction and damages under 42 U.S.C. § 1983. The district court dismissed both
claims, and Kenjoh appealed. But while the case was pending on appeal, the Ohio legislature
amended a key definition in the relevant statute. This changes how the regulation applies. So
we VACATE and REMAND the injunction claim to the district court to consider the
constitutionality of the regulation given the amendment. But as to damages, we AFFIRM the
grant of qualified immunity despite the amendment. That’s because we look at the law as it
existed at the time of the official action.

                                                 I.

        We begin by laying out the background in three parts. First, we explain the relevant
regulation. Then we briefly recount the facts that gave rise to this dispute. And finally, the
procedural history.

                                                 A.

        Ohio heavily regulates billboards. And ODOT enforces these regulations. See Ohio Rev.
Code § 5516.03. Relevant here are a regulation and a definition that governs its scope.
 No. 20-4026                   Kenjoh Outdoor, LLC v. Marchbanks, et al.                                  Page 3

        The regulation. Generally, a person needs a permit from ODOT before placing an
“advertising device” on the highway. Ohio Rev. Code § 5516.10. But ODOT will not process
permit applications if the applicant falls into one of three categories. 1 See Ohio Admin. Code
§ 5501:2-2-05(D). First, if he has outstanding fees. Id. Second, if he modifies an advertising
device without prior approval. Id. And third, if he maintains an illegal device. Id. We call this
regulation the compliance rule.

        Relevant here is the third category of the compliance rule. Again, this allows ODOT to
refuse to process any application if the applicant maintains an illegal device. And ODOT defines
“illegal sign”2 as “an advertising device with advertising copy which was erected or is
maintained in violation of federal, state, or local law or ordinance.”                     Ohio Admin. Code
§ 5501:2-2-01(L) (emphasis added). So the definition of illegal device is rather intuitive—it is a
device that violates a law or regulation. Usually, these signs are subject to a removal procedure.
Ohio Admin. Code § 5501:2-2-07.                 But the failure to remove them also implicates the
compliance rule. Importantly, the definition of “illegal sign” incorporates the definition of
“advertising device.” So if the applicant maintains an illegal adverting device and applies for a
permit to put up another advertising device, ODOT will not process that permit.

        The key definition, then, is that of “advertising device.” Ohio Rev. Code § 5516.01(A)
(2007). After all, the compliance rule incorporates it in two ways. First, the compliance rule has
its force in authorizing ODOT to withhold permits, and these permits are generally required
before a person can place an “advertising device” on the highway. And second, “illegal device”
incorporates the definition of “advertising device.” So before ODOT refuses to process a permit,
it must determine that the illegal device is an advertising device.

        1In   full, the compliance rule states that “No application will be processed for a new permit when the
applicant has any outstanding delinquent bills, including outstanding renewal fees for other permits, has modified a
device prior to receiving approval from the advertising device control section, or has erected or is maintaining an
illegal device.” Ohio Admin. Code § 5501:2-2-05(D).
        2Although   this definition is of “illegal sign,” not “illegal device,” “sign” and “device” are used
interchangeably. As explained below, the definition of “advertising device” includes any “outdoor sign.” See Ohio
Rev. Code § 5516.01(A).
 No. 20-4026                    Kenjoh Outdoor, LLC v. Marchbanks, et al.                                    Page 4

         The definition. While this case was on appeal, the legislature amended the definition of
“advertising device.” See Act of Mar. 25, 2021, sec. 101.02, 2021 Ohio Laws 5 (H.B. 74).
Before, the definition relied on the content of the sign. So, an “advertising device” was any
outdoor sign, including billboards, “designed, intended, or used to advertise.”3 Ohio Rev. Code
§ 5516.01(A) (2007). And this was the definition that the district court analyzed. Kenjoh
Outdoor, LLC v. Marchbanks, 485 F. Supp. 3d 947, 952 (S.D. Ohio 2020). Now? The definition
relies on the status of the person operating the sign. And so under the current statute, an
“advertising device” is any sign “owned or operated by a person or entity that earns
compensation for the placement of a message on it.”4 Ohio Rev. Code § 5516.01(A). Thus in
one sense, the definition is broader. It is not limited to advertisements. But in another sense, it is
narrower.       It only covers those who are paid for the billboard. This means that even an
advertising billboard is not covered if the owner is not paid.

         Taking the two together, we are left with this: Before the amendment, a person needed a
permit from ODOT to erect a billboard that was “designed, intended, or used to advertise.” But
if he falls into one of the categories of the compliance rule, then ODOT would not process that
application. If, for example, ODOT determined that the applicant has a billboard that violates
the law, the compliance rule will apply only if that billboard was an advertising device. Now, a
person needs a permit if he will be paid for placing a message on the billboard, regardless of the
message. And again, the application will not be processed if he falls into one of the three
categories.      The legislature did not amend the compliance rule itself.                      But in amending
“advertising device,” it amended the compliance rule’s scope.

         3The  text of the statutory definition before the amendment stated that “‘[a]dvertising device’ includes any
outdoor sign, display, device, figure, painting, drawing, message, placard, poster, billboard, or any other contrivance
designed, intended, or used to advertise or to give information in the nature of advertising, or any part thereof, the
advertising or informative contents of which are visible from the main traveled way of any highway on the interstate
system or primary system in this state.” Ohio Rev. Code § 5516.01(A) (2007).
         4And,   after the amendment, the statute provides that “‘[a]dvertising device’ includes any outdoor sign,
display, device, figure, painting, drawing, message, placard, poster, billboard, or any other contrivance that is owned
or operated by a person or entity that earns compensation for the placement of a message on it and is visible from
the main traveled way of any highway on the interstate system or primary system in this state.” Ohio Rev. Code
§ 5516.01(A).
 No. 20-4026               Kenjoh Outdoor, LLC v. Marchbanks, et al.                         Page 5

                                                 B.

       With that in mind, we turn to the facts of Kenjoh’s case. In 2017, Kenjoh decided to put
up a billboard in Sidney, Ohio. This billboard was to have two sides: one facing the highway,
the other a state road. Mark Jones, an ODOT employee, told Kenjoh that it did not need a
permit. So Kenjoh built the billboard without one and began renting it out.

       But despite its earlier assurances, the state determined that this billboard violated an
ODOT regulation prohibiting a billboard within 500 feet of an interchange. See Ohio Admin.
Code § 5501:2-2-02(A)(3)(a)(ii). So because Kenjoh’s billboard fell within this regulation, the
state said that Kenjoh was maintaining an “illegal device.”

       Nathan Fling, an ODOT supervisor, sent Kenjoh a notice. The notice gave Kenjoh 30
days to remove the illegal billboard. And if it did not, ODOT would fine it up to $100 a day and
put its other permit applications on hold. Despite the warning, Kenjoh did not remove the
billboard. So ODOT, acting under the compliance rule, put Kenjoh’s other applications on hold.
This forced Kenjoh to reconsider and remove the offending billboard. But since it lost revenue
when its applications were stalled, it sued.

                                                 C.

       Kenjoh asked for an injunction and damages. For its injunctive claim, it asserted only
one ground for relief—that the compliance rule is a prior restraint that violates the First
Amendment. For its damages claim, Kenjoh sued Nathan Fling in his individual capacity under
42 U.S.C. § 1983. The Defendants moved to dismiss. They argued that the compliance rule was
not an unconstitutional prior restraint, and that Fling is entitled to qualified immunity.

       The district court agreed. It found that the compliance rule regulated only commercial
speech. And it concluded that the prior restraint doctrine does not apply to commercial speech.
But the court did not end its analysis there. It analyzed the regulation as commercial speech
using intermediate scrutiny and held that the compliance rule was constitutional. Finally, the
court granted Fling qualified immunity. So the district court dismissed the case. And Kenjoh
appealed.
 No. 20-4026                Kenjoh Outdoor, LLC v. Marchbanks, et al.                          Page 6

                                                  II.

        We review the district court’s dismissal for failure to state a claim de novo. See Boxill v.
O’Grady, 935 F.3d 510, 517 (6th Cir. 2019). We allow claims to survive “only if they ‘contain
sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.’”
Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). And a claim is facially plausible if it
allows courts “to draw the reasonable inference that the defendant is liable for the misconduct
alleged.” Id.

                                                  III.

        We begin with Kenjoh’s claim for injunctive relief. Kenjoh’s only theory is that the
compliance rule is a prior restraint. But it doesn’t make much sense to analyze the compliance
rule as an alleged prior restraint in a vacuum. As we noted above, the compliance rule, on its
face, incorporates two relevant definitions that are vital to this case—“advertising device” and
“illegal sign.” Indeed, it’s the definition of “advertising device” that originally made this case
about commercial speech. And, in any event, that’s the way the parties have argued the matter.
But Ohio changed the definition of “advertising device,” making it about the speaker and not
about the content of the speech. This change, in turn, altered the scope of the compliance rule.

        So for Kenjoh’s claim for injunctive relief, this presents us with two questions. First, do
we still have a live controversy? And second, if we do, should we resolve the case or remand for
the district court to consider in the first instance how the new definition affects the regulatory
scheme and whether it remains constitutional?

                                                  A.

        First, mootness. If the legislature amends a statute relevant to a case before us, our first
task is to consider if the case is moot. Green Party of Tenn. v. Hargett, 700 F.3d 816, 822 (6th
Cir. 2012). We do this because courts apply the law as it exists at the time of the decision.
Bench Billboard Co. v. City of Cincinnati, 675 F.3d 974, 980 (6th Cir. 2012). And a change in
the law tends to “eliminate the requisite case-or-controversy.” Hargett, 700 F.3d at 822. But not
every amendment automatically moots a claim. Id. at 822-23. Otherwise, defendants could
 No. 20-4026               Kenjoh Outdoor, LLC v. Marchbanks, et al.                        Page 7

moot a case by amending the statute in “some insignificant respect.” Id. at 823. So in some
cases an amendment will moot a claim, and in other cases it will not.

        How then is a court to decide? We look at both versions of the law and ask if the new
statute “operates in the same fundamental ways” as the old one. Id. The question is about how
much the legislature changed the statute. If the new statute presents a “different controversy,”
the case is moot. Id. But if the new statute imposes the same burdens on the plaintiff, the case
isn’t. See Sable Commc’ns of California, Inc. v. Fed. Commc’n Comm’n, 492 U.S. 115, 123 n.5
(1989) (“Since the substantive prohibitions under this amendment remain the same, this case is
not moot.”). It boils down to this: If the changes “do not remove the harm” to the plaintiff, “the
case remains alive and suitable for judicial determination.” Hargett, 700 F.3d at 824 (quoting
Cam I, Inc. v. Louisville/Jefferson Cnty. Metro Gov’t, 460 F.3d 717, 720 (2006)).

        Applying these principles, Kenjoh’s claim is not moot.             Kenjoh challenged the
compliance rule as an unconstitutional prior restraint. That challenge is still valid. After all, the
amendment here did not change the compliance rule itself. Rather, the rule operates in the same
fundamental ways. ODOT can still deny a permit under the compliance rule. Ohio Admin.
Code § 5501:2-2-05(D). The amendment only changed the set of signs that the rule applies to.
The rule now extends to any billboard where the owner or operator “earns compensation” for the
message on it. Ohio Rev. Code § 5516.01(A). But Kenjoh is still burdened to the same extent.
After all, its business model relies on getting paid for placing advertisements on billboards. And
so, because we face the same controversy decided by the district court, Kenjoh’s claim is not
moot.

                                                 B.

        But even though the claim is not moot, it does not mean we decide “the effect of the
new legislation . . . in the first instance.” Hargett, 700 F.3d at 824. Instead, the “preferred
procedure” is for us to remand so that the district court can reconsider the case under the
amended law. Id. We do this to allow the district court “an opportunity to pass judgment on the
changed circumstances.” Id. (quoting Hadix v. Johnson, 144 F.3d 925, 935 (6th Cir. 1998)).
 No. 20-4026                   Kenjoh Outdoor, LLC v. Marchbanks, et al.                                   Page 8

        In Hargett, for example, we remanded the case to the district court after the legislature
amended the law while the case was on appeal. Id. We did not decide how the amendments
changed the overall framework of the law. Id. And we left it to the district court to consider in
the first instance. Id.

        So too here. The district court should be given an opportunity to evaluate how the new
definition of “advertising device” operates. In its original opinion, the district court found that
the compliance rule regulates only commercial speech and held that prior restraint does not apply
to commercial speech. But now, the compliance rule is not limited to commercial speech. As
explained above, it applies to any speech, commercial or not, if the person responsible for it is
compensated for the message. See Ohio Rev. Code § 5516.01(A). This makes the compliance
rule a content-neutral regulation, but one that turns on the identity of the speaker. And so the
district court should consider the effects of these changes in the first instance.

                                                        IV.

        Now we turn to Kenjoh’s claim for damages under 42 U.S.C. § 1983. 5 Here, Kenjoh
cannot show it was clearly established that prior restraint applied to commercial speech.
If anything, our precedent seems to go the other way. So the district court properly granted
Nathan Fling qualified immunity.

        Government officials are entitled to qualified immunity unless (1) they violate a
constitutional right that (2) was “clearly established.” See District of Columbia v. Wesby,
138 S. Ct. 577, 589 (2018). The plaintiff has the burden of meeting this test. Crawford v. Tilley,
15 F.4th 752, 760 (6th Cir. 2021). And we can tackle the test in either order. Pearson v.
Callahan, 555 U.S. 223, 236, 241-42 (2009). If one prong is decisive, we need not to consider
the other. Id. And here we skip to the second prong.

        5Unlike   the injunctive claim, mootness is not an issue here. A change to the law does not moot a claim for
damages even if it moots other claims. See Int’l Outdoor, Inc. v. City of Troy, 974 F.3d 690, 698 (6th Cir. 2020).
This is especially true for qualified immunity where we look at the law “as it existed at the time” of the challenged
“official behavior.” Donta v. Hooper, 774 F.2d 716, 719 (6th Cir. 1985); see also District of Columbia v. Wesby,
138 S. Ct. 577, 590 (2018). So we decide the issue here.
 No. 20-4026                   Kenjoh Outdoor, LLC v. Marchbanks, et al.                                   Page 9

        A right is “clearly established” if “every reasonable official would have understood that
what he is doing violates that right.” Mullenix v. Luna, 577 U.S. 7, 12 (2015) (internal quotation
marks omitted). And although the plaintiff need not provide “a case directly on point,” the
“existing precedent must have placed the . . . question beyond debate.” Id. (quoting Ashcroft v.
al-Kidd, 563 U.S. 731, 741 (2011)). The point is to give the official “fair notice” that his actions
violated the plaintiff’s rights. Rivas-Villegas v. Cortesluna, 142 S. Ct. 4, 7 (2021). For this
reason, we look to the law at the time the official acted. See Pearson v. Callahan, 555 U.S. 223,
244 (2009).

        And here, at the time Fling acted, the compliance rule only regulated commercial speech.
See Ohio Rev. Code § 5516.01(A) (2007).                   And Kenjoh made only one challenge to the
regulation—that it was a prior restraint. So, to succeed, Kenjoh must show that prior restraint
applied to commercial speech. But Kenjoh fails to make this showing. It cites no cases from this
Court holding that prior restraint applies to commercial speech. If anything, we have strongly
suggested that prior restraint never applies to commercial speech. 6 See Disc. Tobacco City &
Lottery, Inc. v. United States, 674 F.3d 509, 532-33 (6th Cir. 2012). In Discount Tobacco, the
FDA required tobacco companies to get approval before advertising their products as healthy.
Id. at 532. Like Kenjoh, the tobacco companies argued this was a prior restraint. Id. We
disagreed.     Id.    We noted that the Supreme Court “on several occasions ‘observed that
commercial speech is such a sturdy brand of expression that traditional prior restraint doctrine
may not apply to it.’” Id. (quoting Central Hudson Gas & Elec. Corp. v. Public Servs. Comm’n,
477 U.S. 557, 571 n.13 (1980)). And we held that the prior restraint doctrine did not apply to the
commercial speech in that case. Id. So, in the face of Discount Tobacco, Kenjoh fails to show
that the question was beyond debate.

        6Kenjoh    argues that Discount Tobacco is distinguishable because it dealt with potentially misleading
advertising. Although we are skeptical of this argument, we need not decide whether Discount Tobacco should be
read so narrowly. This is because even if Kenjoh’s reading is right, the most it does is show that the law is not
clearly established that prior restraint applies to commercial speech. But that is not the burden that Kenjoh has to
meet. Rather, Kenjoh has to show that the law was clearly established that the prior-restraint doctrine did apply. So
Kenjoh would still fail to meet its burden.
 No. 20-4026               Kenjoh Outdoor, LLC v. Marchbanks, et al.                        Page 10

       Kenjoh attempts to get around this by generalizing its right. It asserts that Fling violated
its right to speak through billboards and argues that this is a clearly established right. But that
conflicts with Supreme Court precedent. The Court has warned against framing a right at such a
high level of generality. White v. Pauly, 137 S. Ct. 548, 552 (2017) (calling this a “longstanding
principle”). Or else, “[p]laintiffs would be able to convert the rule of qualified immunity . . . into
a rule of virtually unqualified liability simply by alleging violation of extremely abstract rights.”
Crawford, 15 F.4th at 765-66 (quoting White, 137 S. Ct. at 552).

       Instead, we define the right “in light of the specific context of the case.” Rivas-Villegas
v. Cortesluna, 142 S. Ct. 4, 8 (2021). So the inquiry is not whether Fling violated Kenjoh’s right
to free speech. That is too general. Rather, it is whether stalling permit applications for
advertising billboards counts as an unconstitutional prior restraint. But, to answer this, we must
first answer if prior restraint even applies to commercial speech. And as explained above, it does
not.

       Finally, Kenjoh argues that it is generally inappropriate to grant qualified immunity at the
motion to dismiss stage. Kenjoh is correct that some of our caselaw has suggested a presumption
against granting qualified immunity on a motion to dismiss. But we recently clarified the scope
of this “presumption” in Crawford. See 15 F.4th at 765.

       As we said, any presumption only has bite when the “clearly established” inquiry turns
on “case-specific details that must be fleshed out in discovery.” Crawford, 15 F.4th at 765. But
if the complaint is “distinguishable from our past cases on its face,” it will not survive a motion
to dismiss. Id. at 766. Kenjoh’s complaint need not proceed to discovery. After all, it is easily
distinguishable from our past caselaw. That is because it asks us to apply the prior restraint
doctrine to commercial speech, which we haven’t done.

       All in all, we will do here what the Supreme Court did in al-Kidd. We will “affirm[] the
application of qualified immunity” because it is “apparent from the complaint that the law was
not clearly established because ‘not a single judicial opinion’ ha[s] held the official’s action
unconstitutional.” Id. (quoting al-Kidd, 563 U.S. at 741).
 No. 20-4026           Kenjoh Outdoor, LLC v. Marchbanks, et al.          Page 11

                                          V.

       For these reasons, we VACATE and REMAND the district court’s opinion on the
injunctive claim but AFFIRM on damages.