Court Opinion

ID: 4542306
Source: CourtListenerOpinion
Date Created: 2020-06-18 14:11:51.843021+00
Date Added: 2024-06-11T08:00:49.098846
License: Public Domain

[Cite as Lamar Advantage GP Co., L.L.C. v. Cincinnati, 2020-Ohio-3377.]

                     IN THE COURT OF APPEALS
                 FIRST APPELLATE DISTRICT OF OHIO
                      HAMILTON COUNTY, OHIO

LAMAR ADVANTAGE GP COMPANY, :                              APPEAL NO. C-180675
LLC, d.b.a. LAMAR ADVERTISING OF                           TRIAL NO. A-1804105
CINCINNATI, OH,                  :

   and                                           :            O P I N I O N.

NORTON OUTDOOR ADVERTISING, :
INC.,
                             :
      Plaintiffs-Appellees,
                             :
  vs.
                             :
CITY OF CINCINNATI, OHIO,
                             :
NICOLE LEE, TREASURER OF THE
CITY OF CINCINNATI, OHIO,    :

ART DAHLBERG, DIRECTOR OF THE :
DEPARTMENT OF BUILDINGS AND
INSPECTIONS FOR THE CITY OF :
CINCINNATI, OHIO,
                              :
  and
                              :
REGINALD     ZENO,   FINANCE
DIRECTOR FOR THE CITY OF :
CINCINNATI, OHIO,

     Defendants-Appellants.                      :
                    OHIO FIRST DISTRICT COURT OF APPEALS

Civil Appeal From: Hamilton County Court of Common Pleas

Judgment Appealed From Is: Affirmed in Part, Reversed in Part, and Cause
                           Remanded

Date of Judgment Entry on Appeal: June 18, 2020

Strauss Troy Co., LPA, R. Guy Taft and Stephen E. Schilling, for Plaintiff-Appellee
Lamar Advantage GP Company, LLC, d.b.a. Lamar Advertising of Cincinnati, OH,

Robbins, Kelly, Patterson & Tucker, LPA, Michael A. Galasso and Esther M. Norton,
for Plaintiff-Appellee Norton Outdoor Advertising, Inc.,

Paula Boggs Muething, City Solicitor, Marion E. Haynes, III, and Kevin M. Tidd,
Assistant City Solicitors, for Defendants-Appellants.

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                       OHIO FIRST DISTRICT COURT OF APPEALS

WINKLER, Judge.

       {¶1}   This appeal addresses the constitutionality of an excise tax placed on

off-premises outdoor advertising signs, or billboards, within the city of Cincinnati.

Two advertising companies, plaintiffs-appellees Lamar Advantage GP Company,

LLC, d.b.a. Lamar Advertising of Cincinnati, OH, (“Lamar”) and Norton Outdoor

Advertising, Inc., (“Norton”) filed suit against defendants-appellants the city of

Cincinnati, Ohio, Nicole Lee, treasurer of the city of Cincinnati, Art Dahlberg,

director of the department of buildings and inspections for the city of Cincinnati, and

Reginald Zeno, finance director for the city of Cincinnati (collectively “the city”).

Lamar and Norton challenged the constitutionality of the billboard tax and sought to

preclude the city from enforcing the tax.

       {¶2}   The trial court held that the city’s excise tax on billboards was

unconstitutional and violated the First Amendment to the United States

Constitution, and the trial court granted a permanent injunction barring the city

from enforcing the tax. The city appeals the trial court’s decision. For the reasons

that follow, we affirm that portion of the trial court’s decision holding that the city’s

prohibition on communications between outdoor advertising hosts and their

customers regarding the tax is unconstitutional. We reverse the remainder of the

trial court’s decision holding the excise tax unconstitutional, and we remand for

further proceedings.

                   Factual Background and Procedural Posture

       {¶3}   In June 2018, Cincinnati City Council enacted Ordinance No. 167-

2018, which created an excise tax on billboards. The ordinance is embodied in

Chapter 313 of the Cincinnati Municipal Code (“CMC”). The billboard tax provides

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                       OHIO FIRST DISTRICT COURT OF APPEALS

that an “advertising host,” who owns or controls an outdoor advertising sign in the

city, must pay a tax that is the greater of either (1) seven percent of the gross receipts

generated by any sign, or (2) an annual minimum tax calculated based upon the type,

location, and square footage of the sign. CMC 313-3.

          {¶4}   In addition to imposing an excise tax, the ordinance also prohibits an

advertising host from issuing a statement to an advertiser in which the tax is

reflected. CMC 313-7(a). The ordinance also prohibits a host from indicating that an

advertiser will absorb the cost of the tax. CMC 313-7(b).

          {¶5}   Soon after the passage of the billboard tax, Lamar and Norton filed

separate complaints against the city challenging the constitutionality of CMC

Chapter 313. In addition to challenging the billboard tax, Lamar and Norton also

challenged another city ordinance, Ordinance 163, which raised the cost of permit

fees for the construction and renewal of billboards (“the permit-fee ordinance”). The

city has since repealed the permit-fee ordinance; however, the companies seek

damages related to the permit fees. Lamar’s and Norton’s actions were consolidated

by the trial court.

          {¶6}   In their complaints, Lamar and Norton alleged that CMC Chapter 313

was unconstitutional under the First Amendment, the Equal-Protection Clause, and

the Commerce Clause.         Lamar and Norton also alleged that the city’s actions

constituted an unlawful taking of their private property for which an appropriation

proceeding should issue, as well as claims under 42 U.S.C. 1983 and 42 U.S.C. 1988.

Lamar and Norton requested damages, including a refund of any taxes, fees, and

assessments collected by the city, and also requested declaratory and injunctive

relief.

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                     OHIO FIRST DISTRICT COURT OF APPEALS

       {¶7}    Norton and Lamar filed motions for preliminary injunctions seeking to

enjoin the city from enforcing CMC Chapter 313. The trial court held a lengthy

evidentiary hearing over several days on the requests for a preliminary injunction.

At the conclusion of the injunction hearing, the trial court entered an order

requesting objections as to whether a permanent injunction should issue. The trial

court ultimately granted in part Lamar’s and Norton’s motions for a preliminary

injunction, and entered an order declaring the billboard tax unconstitutional under

the First Amendment. The trial court then entered an order sua sponte consolidating

the preliminary-injunction hearing with the issue of whether a permanent injunction

should issue in accordance with Civ.R. 65. The city objected to any finding by the

trial court as to whether CMC Chapter 313 was unconstitutional, but it did not object

generally to the consolidation of the litigation.

       {¶8}    The trial court later entered a lengthy decision explaining its reasoning

that CMC Chapter 313 violated the First Amendment. The trial court entered an

order granting in part Lamar’s and Norton’s requests for a permanent injunction and

enjoined the city from enforcing CMC Chapter 313. The trial court included Civ.R.

54(B) language, finding that there was “no just reason for delay.” It is from the

issuance of the permanent injunction that the city now appeals.

                                          Jurisdiction

       {¶9}    After the parties filed their merit briefs, this court ordered the parties

to file supplemental briefing on the issue of whether this court had jurisdiction over

the city’s appeal.

       {¶10} Appellate court jurisdiction is limited to the review of final orders. See

Ohio Constitution, Article IV, Section 3(B)(2). An order is final and appealable only

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                        OHIO FIRST DISTRICT COURT OF APPEALS

if it meets the requirements of R.C. 2505.02 and Civ.R. 54(B), if applicable. Chef

Italiano Corp. v. Kent State Univ., 44 Ohio St.3d 86, 88, 541 N.E.2d 64 (1989).

       {¶11} R.C. 2505.02 defines final orders. In relevant part, R.C. 2505.02(B)

provides “[a]n order is a final order that may be reviewed, affirmed, modified, or

reversed, with or without retrial, when it is one of the following: * * * (2) An order

that affects a substantial right made in a special proceeding or upon a summary

application in an action after judgment[.]” A substantial right is “a right that the

United States Constitution, the Ohio Constitution, a statute, the common law, or a

rule of procedure entitles a person to enforce or protect.” See R.C. 2505.02(A)(1).

R.C. 2505.02(A)(2) defines “special proceeding” as “an action or proceeding that is

specially created by statute and that prior to 1853 was not denoted as an action at law

or a suit in equity.”

       {¶12} Here, the trial court declared the city’s excise tax unconstitutional and

permanently enjoined the city from further collection of the tax. An order that

declares a legislative enactment unconstitutional affects a substantial right of the

government. Riverside v. State, 190 Ohio App.3d 765, 2010-Ohio-5868, 944 N.E.2d

281 (1oth Dist.).       The trial court’s determination that CMC Chapter 313 was

unconstitutional and could not be enforced affected a substantial right of the city.

       {¶13} As to whether an order has been entered in a special proceeding, the

character of the order on appeal is not determinative. Walters v. Enrichment Ctr. of

Wishing Well, Inc., 78 Ohio St.3d 118, 676 N.E.2d 890 (1997). Instead, courts must

examine the character of the underlying action to determine whether a special

proceeding exists. Id. Although the order from which the city appeals enters a

permanent injunction, the character of the underlying proceeding brought by Norton

and Lamar ultimately sought a declaration that CMC Chapter 313 was

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                     OHIO FIRST DISTRICT COURT OF APPEALS

unconstitutional. An action seeking a declaratory judgment is a “special proceeding.”

Riverside at ¶ 12; Whitley v. Progressive Cas. Ins. Co., 1st Dist. Hamilton No. C-

110157, 2012-Ohio-329, ¶ 7. Thus, the trial court’s injunction order was made in a

special proceeding. Because the trial court’s order affected the city’s substantial

rights, and it was made in a special proceeding, the order is final under R.C.

2505.02(B)(2).

       {¶14} Even if an order is final under R.C. 2505.02, the order is only

appealable if it satisfies Civ.R. 54(B), if applicable. Chef Italiano Corp., 44 Ohio

St.3d 86, 541 N.E.2d 64. Civ.R. 54(B) allows a court to enter “final judgment as to

one or more but fewer than all of the claims or parties only upon an express

determination that there is no just reason for delay.” When a trial court makes the

determination under Civ.R. 54(B) that an interlocutory appeal “is consistent with the

interests of sound judicial administration” and that “no just reason for delay exists,”

the trial judge has made a factual determination, which is entitled to deference.

Wisintainer v. Elcen Power Strut Co., 67 Ohio St.3d 352, 617 N.E.2d 1136 (1993),

paragraphs one and two of the syllabus. Use of Civ.R. 54(B) language in an order,

however, is not a “mystical incantation which transforms a nonfinal order into a final

appealable order.” Id. at 354.

       {¶15} At the time the trial court entered its permanent injunction and

declared CMC Chapter 313 unconstitutional, Lamar and Norton had multiple claims

either still pending or that the trial court had failed to specifically dismiss. Norton

and Lamar requested monetary damages and attorney’s fees as part of their claims

alleging that the billboard tax violated the First Amendment. In their supplemental

briefs, the parties correctly assert that any damages and attorney’s fees recoverable

by Norton and Lamar would arise as separate claims against the city under 42 U.S.C.

                                          7
                      OHIO FIRST DISTRICT COURT OF APPEALS

1983 and 42 U.S.C. 1998. Therefore, the claims for monetary relief are sufficiently

separate, and the trial court’s Civ.R. 54(B) certification is entitled to deference.

       {¶16} Norton and Lamar also alleged several claims challenging the

constitutionality of the city’s billboard tax, and the trial court never addressed the

other grounds, despite the apparent trial of those claims at the injunction hearing.

       {¶17} Appellate courts have held that where a trial court enters a judgment

in favor of a plaintiff on fewer than all of the alternate grounds argued by the

plaintiff, this “ ‘does not strip the trial court’s judgment of finality.’ ” Cleveland v.

State, 8th Dist. Cuyahoga No. 106688, 2019-Ohio-315, ¶ 16, quoting Riverside, 190

Ohio App.3d 765, 2010-Ohio-5868, 944 N.E.2d 281, at ¶ 12. This is because a

judgment that has the effect of rendering other claims moot is final and appealable

without regard to Civ.R. 54(B). Wise v. Gursky, 66 Ohio St.2d 241, 421 N.E.2d 150

(1981). In both Cleveland and Riverside, the courts determined that Civ.R. 54(B) did

not apply when a trial court held a statute unconstitutional on one of multiple

grounds raised. See Cleveland at ¶ 16; Riverside, 190 Ohio App.3d 765, 2010-Ohio-

5868, 944 N.E.2d 281, at ¶ 15.

       {¶18} The trial court’s decision to hold the billboard tax unconstitutional

under the First Amendment had the effect of rendering moot Norton’s and Lamar’s

other claims challenging the constitutionality of the billboard tax. Civ.R. 54(B) does

not apply to Norton’s and Lamar’s other claims regarding the constitutionality of the

billboard tax because those claims are no longer pending. Even if Civ.R. 54(B)

applied, however, the trial court’s entry included a Civ.R. 54(B) certification, which is

entitled to deference.

       {¶19} Finally, even though the city repealed the permit-fee ordinance,

Norton and Lamar have surviving claims related to the permit fees that the city had

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                     OHIO FIRST DISTRICT COURT OF APPEALS

collected from them pursuant to that ordinance. As to these remaining claims, the

trial court’s Civ.R. 54(B) certification that the legal and factual issues related to the

billboard tax are separate from the issues surrounding the permit-fee ordinance is a

factual determination that is entitled to deference. See Wisintainer, 67 Ohio St.3d

352, 617 N.E.2d 1136, at syllabus.

       {¶20} Therefore, we hold that the city has appealed from a final, appealable

order, and this court has jurisdiction over the city’s appeal.

                                 Standard of Review

       {¶21} In this case, the order from which the city appeals grants a permanent

injunction in favor of Lamar and Norton. Ordinarily, this court reviews the grant of a

permanent injunction for abuse of discretion. P&G Co. v. Stoneham, 140 Ohio

App.3d 260, 268, 280, 747 N.E.2d 268 (1st Dist.2000). Even though the trial court

entered a permanent injunction, in doing so, the trial court declared the entirety of

CMC Chapter 313 unconstitutional under the First Amendment and prohibited the

city from enforcing the ordinance in all circumstances. As pointed out by the city, a

duly-enacted municipal ordinance is entitled to a presumption of constitutionality

with the burden placed on a challenger of the ordinance. Arnold v. Cleveland, 67

Ohio St.3d 35, 38, 616 N.E.2d 163 (1993). The constitutionality of a legislative

enactment is a question of law, which is reviewed de novo. Crutchfield Corp. v.

Testa, 151 Ohio St.3d 278, 2016-Ohio-7760, 88 N.E.3d 900, ¶ 16.

                   Billboards, Taxes, and the First Amendment

       {¶22} In its first assignment of error, the city argues that the trial court erred

in holding that the billboard tax violated the First Amendment.

       {¶23} The First Amendment to the United States Constitution guarantees the

freedom of speech. The notion that billboards are a means of “speech” entitled to

                                            9
                     OHIO FIRST DISTRICT COURT OF APPEALS

First Amendment protection is not disputed. The United States Supreme Court first

recognized the First Amendment protection given to billboards in Metromedia, Inc.

v. City of San Diego, 453 U.S. 490, 101 S.Ct. 2882, 69 L.Ed.2d 800 (1981). In

Metromedia, the billboard owners challenged a San Diego ordinance that prohibited

outdoor advertising signs.    The ordinance created an exception to the general

prohibition on outdoor advertising displays for those depicting religious symbols,

government signs, and political-campaign signs. The Court recognized the use of

billboards as a means to communicate a wide array of messages, and thus deserving

of First Amendment protection. The Court held that the ordinance violated the First

Amendment, although a majority could not agree on the reasoning. A plurality held

that the ordinance violated the First Amendment because the ordinance made

content-based distinctions among types of noncommercial speech.            Two other

justices concurred and reasoned that the ordinance was content neutral, but that San

Diego had failed to provide an adequate reason for a total ban.

       {¶24} The United States Supreme Court has also recognized that the

government’s taxation of the media can implicate the First Amendment. The first of

these cases was Grosjean v. Am. Press Co., Inc., 297 U.S. 233, 56 S.Ct. 444, 80 L.Ed.

660 (1936). In Grosjean, Louisiana had imposed a license tax of two percent of the

gross receipts from the sale of advertising on all newspapers with a weekly

circulation above 20,000. Only 13 of the 124 publishers in the state were subject to

the tax. In holding that the tax violated the First Amendment, the Court reasoned

that the tax appeared to be a calculated means to limit the flow of information.

       {¶25} Next, the Supreme Court considered a use tax on ink and paper

products consumed by publishers in Minneapolis Star and Tribune Co. v. Minnesota

Commr. of Revenue, 400 U.S. 575, 103 S.Ct. 1365, 75 L.Ed.2d 295 (1984).            In

                                          10
                     OHIO FIRST DISTRICT COURT OF APPEALS

Minneapolis Star, the state of Minnesota had enacted a use tax on the cost of paper

and ink products consumed in the production of a publication. The tax created an

exemption for the first $100,000 worth of ink and paper consumed by a publication

in a calendar year. After application of the $100,000 exemption, only 14 of 388 of

the paid-circulation newspapers were required to pay the tax the first year the tax

was imposed. One of those newspapers challenged the tax on First Amendment

grounds.

       {¶26} The Supreme Court invalidated Minnesota’s use tax on publications

for two reasons: (1) the Minnesota tax singled out the press for differential

treatment, and (2) the tax targeted a small group of newspapers. As to the first

ground, the Court reasoned that singling out the press for differential treatment

threatened to censor critical speech. The Court reasoned that “differential treatment,

unless justified by some special characteristic of the press, suggests that the goal of

the regulation is not unrelated to suppression of expression, and such a goal is

presumptively unconstitutional.” Id. at 585.

       {¶27} As to the second ground for invalidating Minnesota’s tax, the Court

reasoned that the taxing of only those publications consuming over $100,000 in ink

and paper targeted a small group of newspapers. The Court reasoned that “when the

exemption selects such a narrowly defined group to bear the full burden of the tax,

the tax begins to resemble more a penalty for a few of the largest newspapers than an

attempt to favor struggling smaller enterprises.” Id. at 591. The Court continued

that “a power in the State not only to single out the press but also to tailor the tax so

that it singles out a few members of the press presents such a potential for abuse that

no interest suggested by Minnesota can justify the scheme.” Id. at 591-592.

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                     OHIO FIRST DISTRICT COURT OF APPEALS

       {¶28} The Court applied strict scrutiny to Minnesota’s tax, meaning that the

tax could not stand unless Minnesota could show that the burden placed on the First

Amendment was necessary to achieve an overriding state interest. The Court held

that Minnesota’s interest in raising revenue did not justify the burden placed on the

First Amendment.

       {¶29} Following Minneapolis Star, the United States Supreme Court again

considered whether a tax violated the First Amendment in Arkansas Writers’

Project, Inc. v. Ragland, 481 U.S. 221, 107 S.Ct. 1722, 95 L.Ed.2d 209 (1987). In

Arkansas Writers’ Project, the Court considered whether the Arkansas gross receipts

tax, which contained an exemption for religious, professional, trade, and sports

magazines, violated the First Amendment. Even though the tax applied generally to

the sales of all tangible personal property, the Court determined that the differential

tax treatment among magazines “suffers from the second type of discrimination

identified in Minneapolis Star.”     Id. at 229.    Because a magazine’s tax status

depended entirely on its content, the Court applied strict scrutiny, which required

Arkansas to show that differential taxation of magazines was necessary to serve a

compelling interest, and that the tax scheme was narrowly drawn to achieve that

interest. Finding that none of the state’s alleged interests sufficed, the Court held

that the Arkansas tax violated the First Amendment.

       {¶30} Finally, in Leathers v. Medlock, 499 U.S. 439, 111 S.Ct. 1438, 113

L.Ed.2d   494   (1991),   the   United   States    Supreme   Court    considered   the

constitutionality of a generally applicable Arkansas sales tax, which exempted certain

media segments. The Arkansas Gross Receipts Act imposed a four percent tax on the

sale of all tangible personal property, and the tax contained an exemption for

newspaper sales and magazine-subscription sales. A cable-television subscriber and

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                      OHIO FIRST DISTRICT COURT OF APPEALS

provider argued that the sales tax violated the First Amendment by treating

television differently.

       {¶31} The Leathers Court recognized that cable television is a means of

speech, but that the Arkansas tax treating cable-television providers differently than

other media did not present the same concerns as Minneapolis Star and Arkansas

Writers’ Project.    The Arkansas tax applied generally to the sale of all tangible

personal property and did not single out the press for special treatment. Moreover,

the Arkansas tax did not target a small group of cable providers. The tax applied to

approximately 100 suppliers of cable television, and the record established that cable

television provided a wide variety of messaging—including news and entertainment.

Thus, the Court held that the First Amendment was not violated.

       Applying United States Supreme Court Cases to the Billboard Tax

       {¶32} The trial court in this case relied on Grosjean, Minneapolis Star,

Arkansas Writers’ Project, and Leathers in holding that the billboard tax violated

the First Amendment.      The trial court reasoned that these cases stood for the

proposition that the government could not “single out and direct or target a tax solely

at the exercise of First Amendment rights or at the means or instruments utilized in

exercising First Amendment rights nor may the government impose a tax that targets

a small narrow group to bear the burden of the tax.” The trial court distinguished

Leathers, the main case relied upon by the city, by reasoning that the sales tax at

issue in Leathers applied generally to the sale of all tangible personal property,

unlike the city’s billboard tax. The trial court applied the strict-scrutiny analysis

used in Minneapolis Star, which required the city to show a compelling

governmental interest that the city could not have achieved without the

discriminatory tax. Minneapolis Star, 460 U.S. at 585, 103 S.Ct. 136, 575 L.Ed.2d

                                          13
                     OHIO FIRST DISTRICT COURT OF APPEALS

295. The trial court determined that the city had not met its burden to show that it

could not have achieved its interest in raising revenue without the billboard tax.

       {¶33} The city contends that the trial court erred in applying strict scrutiny

to the billboard tax. The city relies on a recent case from Maryland in which the

court considered whether a similar billboard tax violated the First Amendment,

Clear Channel Outdoor, Inc. v. Dir., Dept. of Fin. of Baltimore City, 244 Md.App.

304, 316, 223 A.3d 1050 (Md.App.2020). Just like the city in this case, Maryland

created an excise tax applicable only to billboard operators. Once implemented, the

majority of the tax burden fell upon plaintiff Clear Channel, even though three other

groups also had to pay the tax. Clear Channel challenged the tax under the First

Amendment.

       {¶34} The Clear Channel court examined the relevant United States

Supreme Court decisions in Metromedia, Minneapolis Star, and Leathers.               The

court reasoned that after Leathers, a tax would trigger First Amendment concerns as

follows:

       when it threatens to suppress the expression of particular ideas or

       viewpoints. Absent a compelling justification, the government may

       not exercise its taxing power to single out the press. The press plays a

       unique role as a check on government abuse, and a tax limited to the

       press raises concerns about censorship of critical information and

       opinion. A tax is also suspect if it targets a small group of speakers.

       Again, the fear is censorship of particular ideas or viewpoints. Finally,

       for reasons that are obvious, a tax will trigger heightened scrutiny

       under the First Amendment if it discriminates on the basis of the

       content of taxpayer speech.

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                     OHIO FIRST DISTRICT COURT OF APPEALS

Clear Channel at 321, quoting Leathers, 499 U.S. at 447, 111 S.Ct. 1438, 113 L.Ed.2d

494.

       {¶35} The court reasoned that Maryland’s billboard tax was content neutral

in that the tax applied whenever an advertising host charged a fee to a third party,

regardless of the advertiser’s message.         Maryland’s tax did not threaten the

expression of any particular speech.       The court also rejected Clear Channel’s

argument that the tax targeted a small group of speakers. The court reasoned that

the tax applied to all billboard owners and operators, and it did not single out any

particular group of billboard operators.

       {¶36} We consider the analysis in Clear Channel persuasive here. The city’s

billboard tax applies to billboards regardless of the message displayed, and is

therefore content neutral. Nothing in the language of the tax itself or the record

suggests that the tax will threaten to suppress the expression of certain viewpoints.

Moreover, the billboard tax does not single out a particular group of billboard

operators to bear the burden of the tax.

       {¶37} The trial court determined that the billboard tax wrongfully targets a

small, narrow group of the media.       The reason that a small group of billboard

operators exists is because of a decades-old “cap and replace” program instituted by

the city. The “cap and replace” program essentially means that a billboard operator

must surrender an existing billboard in order to construct a new billboard. As a

result of the city’s market restrictions on billboards, the supply of billboards has held

steady over time. Norton and Lamar have an oligopoly on the market of billboard

licenses in Cincinnati with an approximate total of 415 signs and 450 signs

respectively. Thus, market forces and other government restrictions on billboards

                                           15
                     OHIO FIRST DISTRICT COURT OF APPEALS

created a small group of billboard operators to bear the burden of the tax. The tax

itself did not single out a small group for taxation.

       {¶38} Furthermore, differential taxation of the media is not constitutionally

suspect if “justified by some special characteristic of the press.” Minneapolis Star,

460 U.S. at 585, 103 S.Ct. 1365, 75 L.Ed.2d 295. Billboard operators are different

from more traditional press mediums like news organizations. Billboard operators

themselves seldom display their own content, and news organizations generally

publish their own content or viewpoints.

       {¶39} As discussed in Leathers, differential taxation of the press “is

constitutionally suspect when it threatens to suppress the expression of particular

ideas or viewpoints.” Leathers, 499 U.S. at 447, 111 S.Ct. 1438, 113 L.Ed.2d. 494. In

this case, the billboard tax does not pose a danger of suppression of ideas. The

billboard tax applies regardless of the message conveyed, and the evidence presented

at the injunction hearing shows that the billboard operators display a myriad of

messages from various corporate, nonprofit, and government agencies. Therefore,

the billboard tax does not implicate First Amendment concerns.

       {¶40} We determine that the billboard tax does not infringe on the First

Amendment. As a result, we sustain the city’s first assignment of error.

                 The “Not to be Separately Stated or Charged” Provision

       {¶41} In the city’s second assignment of error, it argues that the trial court

erred in separately enjoining CMC 313-7, entitled “Tax Not to be Separately Stated or

Charged.” CMC 313-7 limits communications between advertising hosts, like Lamar

and Norton, and their customers.

       {¶42} CMC 313-7 provides:

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                       OHIO FIRST DISTRICT COURT OF APPEALS

       (a) The tax shall not be stated or charged separately from the rent or

           other consideration paid by an advertiser for use or occupancy of

           an outdoor advertising sign or shown separately on any record

           thereof, or otherwise reflected upon any bill, statement, or charge

           made for the sign’s use or occupancy issued or delivered by the

           advertising host.

       (b) No advertising host shall state in any manner, whether directly or

           indirectly, that the tax or any part thereof will be assumed or

           absorbed by an advertiser, or that it will be added to the rent or

           other charge.

       (c) Nothing in this section prohibits an advertising host from doing the

           following:

               i.   including in the rent or price it charges an advertiser an

                    amount sufficient to recover the tax imposed by this

                    chapter;

               ii. including an amount sufficient to recover the tax imposed

                    by this chapter on a billing or invoice pursuant to the terms

                    of a written license or lease agreement providing for the

                    recovery of the advertising host’s tax costs; or

               iii. otherwise recovering an amount sufficient to recover the tax

                    imposed by this chapter on a billing or invoice pursuant to

                    the terms of a written agreement executed prior to the

                    effective date of this chapter.

       {¶43} In urging us to reverse the trial court’s decision, the city argues that

the trial court failed to exercise judicial restraint in reaching the constitutionality of

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                     OHIO FIRST DISTRICT COURT OF APPEALS

CMC 313-7. The city argues that it did not have notice that the trial court would

decide the constitutionality of this provision. The record belies the city’s notice

argument. During closing arguments at the injunction hearing, all parties argued the

constitutionality of CMC 313-7. The trial court and counsel discussed the possible

severability of provisions of CMC Chapter 313. Therefore, the city had sufficient

notice that the constitutionality of CMC 313-7 would be separately considered by the

trial court.

        {¶44} The city also argues that the trial court overstated the breadth of

speech that CMC 313-7 prohibits. The trial court determined that CMC 313-7 was a

content-based restriction on noncommercial speech, and therefore must be subject

to strict scrutiny, meaning that the city must show that CMC 313-7 is necessary to

serve a compelling interest by the city, and that CMC 313-7 is narrowly drawn to

achieve that end. See Boos v. Barry, 485 U.S. 312, 321, 108 S.Ct. 1157, 99 L.Ed.2d

333 (1988) (applying strict scrutiny to content-based regulations of political speech).

The trial court reasoned that CMC 313-7 restricted noncommercial, political speech,

because the provision was a calculated means for public officials to avoid

accountability for the billboard tax and the inevitable increased advertising costs of

billboards.

        {¶45} The trial court’s determination that CMC 313-7 prohibits political

speech is not supported by the evidence at the hearing and contradicts the plain

language of the ordinance. No evidence of political motive for CMC 313-7 was

offered at the hearing. The plain language of CMC 313-7 only regulates the billboard

operator’s speech vis-à-vis an advertiser for the billboard space.        Speech that

“relate[s] solely to the economic interests of the speaker and its audience,” or speech

that “propos[es] a commercial transaction” is commercial speech. Central Hudson

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                        OHIO FIRST DISTRICT COURT OF APPEALS

Gas & Elec. Corp. v. Pub. Serv. Comm., 447 U.S. 557, 561-562, 100 S.Ct. 2343, 65

L.Ed.2d 341 (1980).       “The Constitution therefore accords a lesser protection to

commercial speech than to other constitutionally guaranteed expression.” Id. at 562-

563.

       {¶46} In Central Hudson, the United States Supreme Court developed a level

of intermediate scrutiny to be applied to commercial speech:

       it at least must concern lawful activity and not be misleading. Next, we

       ask whether the asserted governmental interest is substantial. If both

       inquiries yield positive answers, we must determine whether the

       regulation directly advances the governmental interest asserted, and

       whether it is not more extensive than is necessary to serve that

       interest.

Id. at 566.

       {¶47} The Sixth Circuit applied the Central Hudson test to a similarly-

worded Kentucky tax in BellSouth Telecommunications, Inc. v. Farris, 542 F.3d 499

(6th Cir.2008). The Kentucky statute imposed a tax on telecommunications services.

Part of the Kentucky tax prohibited telecommunications providers from separately

stating the tax on the bill to consumers. Kentucky’s justification for the “no-stating-

the-tax” provision was to avoid consumer confusion over who bore the responsibility

of the tax—the providers.

       {¶48} The BellSouth court held that the “no-stating-the-tax” provision

violated      the   Central   Hudson   standard.   The   court   reasoned    that   the

telecommunications providers would not be engaging in unlawful or misleading

speech by telling consumers that they were raising prices as the result of a new tax.

The court assumed for the sake of argument that Kentucky’s justification for the

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                     OHIO FIRST DISTRICT COURT OF APPEALS

provision was substantial, but the court reasoned that the provision as worded did

not directly advance the government’s interest. The court reasoned that the no-

stating-the-tax provision allowed providers to tell consumers anything they wanted

about the tax except in an invoice.

       {¶49} As to the third prong of the Central Hudson test, the “reasonable-fit”

prong, the court theorized multiple ways Kentucky could avoid consumer confusion

that would not restrict speech, including enforcement of existing federal-consumer-

protection laws, or the requirement of a disclaimer stating that the tax must be borne

by the providers. BellSouth at 508. Therefore, the court held that the no-stating-

the-tax provision violated the First Amendment.

       {¶50} The city argues that the Central Hudson test applicable to commercial

speech is inapplicable here because CMC 313-7 is aimed at prohibiting misleading

speech by advertising hosts regarding the tax. The United States Supreme Court has

held that “inherently misleading” speech made in the course of a commercial

transaction may be prohibited by the government. In re R. M. J., 455 U.S. 191, 203,

102 S.Ct. 929, 71 L.Ed.2d 64 (1982). The city’s argument that any communications

between advertising hosts and their customers regarding the billboard tax is

somehow inherently misleading is unpersuasive.

       {¶51} Applying Central Hudson to CMC 313-7, we assume that the city has a

substantial interest in ensuring that the billboard tax operates as an excise tax and

not a sales tax. The same governmental interest was at issue in BellSouth. However,

just as in BellSouth, CMC 313-7 is broader than necessary to achieve the city’s

interest. CMC 313-7 prohibits billboard operators from issuing a bill, statement, or

charge to an advertiser in which the tax is reflected. CMC 313-7(a). CMC 313-7 even

prohibits “indirect” statements by billboard operators that the tax will be absorbed

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                       OHIO FIRST DISTRICT COURT OF APPEALS

by the advertisers. CMC 313-7(b). However, CMC 313-7 permits billboard operators

to increase rent to recover the cost of the tax. CMC 313-7(c). It is not clear how

billboard operators could justifiably raise their customers’ advertising costs without

informing them of the billboard tax. Just as in BellSouth, a simple disclaimer to the

customers would clear up any would-be confusion that the billboard tax remains the

operators’ responsibility to pay.

       {¶52} Therefore, we determine that CMC 313-7 is broader than necessary to

achieve the city’s interest in ensuring that the billboard tax remains an excise tax and

not a sales tax, and, therefore, CMC 313-7 fails the Central Hudson test. See Central

Hudson, 447 U.S. at 566, 100 S.Ct. 2343, 65 L.Ed.2d 341. We overrule the city’s

second assignment of error.

                                       Conclusion

       {¶53} We affirm that portion of the trial court’s decision holding CMC 313-7

unconstitutional under the First Amendment. The remainder of the trial court’s

decision holding the entirety of CMC Chapter 313 unconstitutional is reversed. We

remand the case to the trial court for further proceedings consistent with this

opinion and the law.

                    Judgment affirmed in part, reversed in part, and cause remanded.

MYERS, P.J., and BERGERON, J., concur.

Please note:
       The court has recorded its own entry this date.

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