100 F. Supp. 3d 835
N.D. Cal.2015Background
- Contest Promotions, a company that leases in-store signage to advertise third‑party contests, previously sued San Francisco (2009), settled in 2013: City agreed to treat the signs as "Business Signs," plaintiff would re‑permit its signs, dismiss suit, and pay $375,000. Board approved settlement and partial payment was made.
- In July 2014 the Board amended Planning Code §602.3 to redefine "Business Sign" by emphasizing the "primary" use on the premises (defining "primary" as the use occupying the greatest area).
- When Contest Promotions sought re‑permits under the settlement, the City denied them based on the amended code; plaintiff sued in federal court asserting federal constitutional claims and state law contract/tort claims.
- Federal claims asserted: First Amendment (commercial speech and prior restraint/unbridled discretion), substantive due process, takings/inverse condemnation, and Equal Protection (including a "class‑of‑one" theory).
- The City moved to dismiss under Rule 12(b)(6). The court granted dismissal of all federal claims (commercial speech, prior restraint, substantive due process, takings as unripe, and equal protection) and deferred ruling on state law claims, intending to consider whether to dismiss federal claims with prejudice at the case management conference.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Commercial speech under First Amendment (Central Hudson) | §602.3 unlawfully restricts Contest Promotions' protected commercial speech by reclassifying its signs as off‑site | The ordinance is content‑neutral, advances traffic safety/aesthetics, and is analogous to upheld on‑site/off‑site bans (Metromedia/Metro Lights) | Dismissed — ordinance survives Central Hudson; commercial speech claim failed |
| Prior restraint / unbridled discretion | The term "primary" is vague, giving officials unfettered discretion in permitting, creating an unconstitutional prior restraint | The code defines "primary" (use occupying greatest area), includes objective criteria, and provides administrative and judicial review | Dismissed — definition and review process adequately cabin discretion |
| Substantive due process | §602.3 is arbitrary/capricious, uses unfettered discretion, and deprives protected property interest | Claims rest on the same facts covered by First Amendment, Equal Protection, or Takings; those specific provisions control | Dismissed — substantive due process claim subsumed by other constitutional tests and inadequately pleaded |
| Takings / inverse condemnation (ripeness) | Denial of re‑permits deprived plaintiff of substantially all value; claim may proceed without exhausting state compensation remedies | Williamson County requires final agency decision and exhaustion of state compensation procedures before federal takings claim is ripe | Dismissed as unripe — plaintiff failed to pursue state compensation procedures; facial takings challenge not pleaded |
| Equal Protection (including class‑of‑one) | City amended code to target Contest Promotions and denied permits while treating others differently | Ordinance is rationally related to legitimate interests (safety/aesthetics); plaintiff pleaded no non‑conclusory facts showing disparate treatment | Dismissed — no adequate facts to show intentional, irrational differential treatment |
| Supplemental state law claims (contract, fraud, promissory estoppel) | Arise from settlement and denial of re‑permits; cognizable if federal claims remain | Federal court has supplemental jurisdiction but may decline if federal claims dismissed early | Ruling deferred — court intends to likely dismiss without prejudice under §1367(c)(3) if federal claims are dismissed entirely |
Key Cases Cited
- Metromedia, Inc. v. City of San Diego, 453 U.S. 490 (1981) (upheld content‑neutral distinction between on‑site and off‑site commercial advertising)
- Central Hudson Gas & Elec. Corp. v. Public Serv. Comm'n, 447 U.S. 557 (1980) (established four‑part test for restrictions on commercial speech)
- Metro Lights, L.L.C. v. City of Los Angeles, 551 F.3d 898 (9th Cir. 2009) (upheld an on‑site/off‑site sign ordinance under Central Hudson)
- Ballen v. City of Redmond, 466 F.3d 736 (9th Cir. 2006) (invalidated content‑based portable sign restriction; distinguished in this case)
- G.K. Ltd. Travel v. City of Lake Oswego, 436 F.3d 1064 (9th Cir. 2006) (found sign ordinance's objective design criteria sufficient to avoid unbridled discretion)
- Outdoor Media Group v. City of Beaumont, 506 F.3d 895 (9th Cir. 2007) (upheld off‑site prohibition with compatibility criteria and review procedures)
- Williamson County Regional Planning Comm'n v. Hamilton Bank, 473 U.S. 172 (1985) (ripeness rule for takings claims: final decision and exhaustion of state compensation remedies required)
- Lingle v. Chevron U.S.A. Inc., 544 U.S. 528 (2005) (Takings Clause not to be used to challenge law's failure to advance legitimate state interests)
- Village of Willowbrook v. Olech, 528 U.S. 562 (2000) (recognition of "class‑of‑one" equal protection theory requiring irrational, intentional differential treatment)
- Ward v. Rock Against Racism, 491 U.S. 781 (1989) (regulation affecting speech must provide reasonable, not perfect, guidance to officials)