Sign, Sign, Everywhere a Sign… on the Supreme Court’s Docket


The United State Supreme Court’s recent decision in City of Austin v. Reagan National Advertising may have broad application to a pair of cases still pending before the Supreme Court. Cities in both Maryland and Ohio have sought to tax billboards, but signs, including advertising billboards, are protected by the First Amendment. The issue before the Court is whether taxes aimed specifically at billboards violate the Constitution. 

Since the 2015 case Reed v. Town of Gilbert, courts interpreted the First Amendment’s protections to apply to signs in  a straight-forward test: if the government official needs to read a sign in order to apply the law, then the law is a “content-based” regulation of speech and is subject to strict scrutiny. The distinction between “on premises” signs (advertising items sold where the sign is located—like a sign above a diner saying “Eat Here”) and “off-premises” signs (advertising items sold elsewhere, typically a roadside billboard) was thought to be a “content-based” regulation of speech under Reed

City of Austin clawed back Reed’s reach. Under this new decision, handed down on April 21, the distinction between “on premises” and “off-premises” signs is a question of geography, not content, and therefore “intermediate scrutiny” applies. The Court remanded the City of Austin case, however, noting there may be “evidence that an impermissible purpose or justification underpins a facially content-neutral restriction” which would make it content-based and trigger strict scrutiny.

The judicial standard of scrutiny is important to the outcome of these cases. Content-based laws—those that target speech based on its communicative content—are presumptively unconstitutional and may be justified only if the government proves that they are narrowly tailored to serve compelling state interests. This is a hard standard for the government to meet. On the other end of the judicial scrutiny spectrum is “rational basis” review, which demands that the citizen challenging the law show that there is no legitimate state interest and that the law is not rationally connected to that interest. The rational basis test is so easy on the government that courts often supply the rationale even when the legislature fails to do so. In the middle is “intermediate scrutiny” which is applied to commercial speech and other areas where the judiciary wants to protect expression but does not mandate the government meet the almost-impossible standard of strict scrutiny (there are multiple formulations of intermediate scrutiny).

City of Austin,  therefore, changed what level of deference the courts will give to the regulation of roadside signs. Yet it is not the only billboard case on the Supreme Court’s docket. The aforementioned pair of cases from Maryland and Ohio ask if off-premises billboards can be taxed at a higher rate than other signs. 

In Clear Channel Outdoor, Inc. v. Director, Department of Finance of Baltimore City, the Maryland Court of Appeals (the state’s highest court), upheld a Baltimore tax that targeted “off-premises” advertising against a First Amendment challenge. Maryland's highest court applied rational basis rather than strict scrutiny, focusing on the tax context rather than the implications of First Amendment-protected speech. Maryland’s high court reasoned that the Baltimore tax was not “content-based” because, in its view, the tax is triggered by the commercial transaction of renting the billboard, not the content on the billboard. Baltimore’s law could easily survive rational basis review.

At about the same time, a unanimous Ohio’s Supreme Court came to the opposite conclusion in examining Cincinnati’s similar billboard tax in the case Lamar Advantage GP Co., LLC v. Cincinnati. The Ohio high court in Lamar found the regulation to be content-based because a government official would have to determine if the advertisement was for an on-premise or off-premise sale. Therefore the billboard tax for “off-premises” signs failed strict scrutiny. Cincinnati couldn’t meet the high bar of providing a compelling governmental interest and that the tax itself was narrowly tailored.

Both ClearChannel and Lamar are now on petition for review from the U.S. Supreme Court. Because both the Ohio and Maryland high courts based their reasoning on First Amendment case law, as opposed to each state’s own constitutional protections of speech rights,  the split between the two decisions will likely be resolved by the United States Supreme Court. After all, the First Amendment should have consistent application across the country. Both the Maryland and Ohio cases have been waiting for months for the Supreme Court to decide if it will decide the cases.

In a pair of orders on April 25, the U.S. Supreme Court scheduled conferences on both cases on April 28. For those who want the Supreme Court to agree with Maryland, they will look at the City of Austin holding that a regulation of off-premises signs by itself is facially content-neutral and does not trigger strict scrutiny. For those who want the Supreme Court to agree with Ohio, they will look at the Court applying intermediate scrutiny, not rational basis like in Maryland, and remand to explore purposes or justifications that demonstrate it's not really content-neutral when applied. 

We will keep you posted on further developments.