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Strict Scrutiny Media, Co. v. City of Reno

United States District Court, D. Nevada

November 15, 2017

STRICT SCRUTINY MEDIA, CO., a Nevada Corporation; INDEPENDENT OF ODD FELLOWS RENO LODGE # 14/MOUNTAIN VIEW CEMETERY, a Nevada non-profit corporation, Plaintiffs,
THE CITY OF RENO, a municipal corporation, Defendant.



         I. SUMMARY

         Pending before the Court is Defendant City of Reno's Motion to Dismiss Second Amended Complaint (“MTD”) (ECF No. 40) and Plaintiffs' Motion for Preliminary Injunction (“PI Motion”) (ECF No. 47). The Court has reviewed the responses (ECF Nos. 42, 49) and replies (ECF Nos. 44, 50) relating to these two motions. For the following reasons, the MTD is granted in part and denied in part and the PI Motion is denied.


         A. Procedural History

         Strict Scrutiny Media, Co. (“SSM”) filed its original complaint on December 17, 2016, against the City of Reno (“the City”). (ECF No. 1.) SSM then filed its First Amended Complaint (“FAC”) on January 30, 2017, in which SSM added an additional plaintiff, Independent Order of Odd Fellows Reno Lodge #14/Mountain View Cemetery (“Oddfellows”). (ECF No. 17.) The FAC appeared to challenge the constitutionality of two specific provisions of Reno's municipal law concerning signs: Reno's Land Development Code §§ 18.16.203 (Exempted On-Premises Permanent Signs) and 18.16.902 (Restrictions on Permanent Off-Premises Advertising Displays). The City then moved to dismiss Plaintiffs' FAC on February 13, 2017 (ECF No. 20), which this Court granted on April 18, 2017, but with leave for Plaintiff to file an amended complaint consistent with the Court's order (ECF No. 38). That order stated that the Court was “unclear on whether amendment would be futile as to Plaintiffs' First Amendment challenges to §§ 18.16.902 and 18.16.203 of the City's Land Development Code” and that it was unclear as to whether Plaintiffs may be able to allege a claim under Central Hudson Gas & Electric Corporation v. Public Service Commission of New York, 447 U.S. 557 (1980), as to the City's prohibition on the building of new off-premises permanent signs that display commercial speech. (ECF No. 38 at 8; Id. at 5 n.8.)

         On April 18, 2017, Plaintiffs filed a Second Amended Complaint (“SAC”). (ECF No. 39.)

         B. Relevant Facts

         The following facts are taken from Plaintiffs' SAC. (ECF No. 39.)

         SSM is a publishing company that was established to lease private property to build billboard structures, maintain those structures, advertise its own messages on structures, and sell or sublease these structures to other advertising companies at fair market value. (ECF No. 39 at ¶ 7.) SSM publishes both commercial speech as well as “all other varieties of lawful speech.” (Id.)

         SSM hired Jeff Herson[1] to secure and oversee construction of these structures in the City, specifically six leases on six parcels and four leases on a seventh parcel. (Id. at ¶¶ 8-9.) One of the properties Herson secured was for property located at 1300 Stardust Street in Reno, Nevada (“Stardust Property”). (Id. at ¶ 10(a).) This property is owned by Oddfellows. (Id.) SSM is the sole owner of the billboard structure on the Stardust Property (Id. at ¶ 10(j).) On or about October 3, 2016, Oddfellows applied for a building permit to construct a pole style billboard with a 240 square foot face and a height of 25 feet. (Id. at ¶ 10(b).) The permit was issued on October 5, 2016. (Id. at ¶ 10(c).) Sign Crafters, a licensed general contractor, began construction of the billboard, building the footing and erecting the pole. (Id. at ¶ 10(d).) However, on December 8, 2016, the City issued a Stop Work Notice, stating that the reason for the notice was “violation of [Reno Municipal Code] Section or Clause: RMC 18.16.” (Id. at ¶ 10(f).) Sign Crafters then refused to finish the project, but SSM allowed the face structure to be attached to the already erected pole and become permanent. (Id. at ¶¶ 10(g) & (h).) The structure has an 8 foot by 30 foot face capable of displaying messages on both side. (Id. at ¶ 10(i).) The billboard has the following message, “BANQUET HALL AVAILABLE” to advertise the availability of the banquet hall of Oddfellows. (Id. at ¶ 10(k).) SSM is not charging Oddfellows a fee to display this message, but SSM values the billboard's fair market rental rate at $6, 000 per side (or $12, 000 total). (Id. at ¶¶ 10(m) & (n).)

         Herson also secured another lease on behalf of SSM at 435 Stoker Avenue in Reno, Nevada (“Stoker Property”). (Id. at ¶ 11(a).) Oddfellows also owns the Stoker Property. (Id.) Plaintiffs had not applied for a permit to build a billboard on the Stoker Property, yet Plaintiffs had a permanent monopole billboard constructed that has a face of 12 feet by 36 feet and that is 25 feet in height. (Id. at ¶ 11(d).) SSM is the sole owner of the billboard. (Id. at ¶ 11(e).) Currently, the message on the face of the structure states “MOUNTAIN VIEW CEMETERY” and advertises the location of the cemetery operated by Oddfellows which is on the same site as the sign. (Id. at ¶ 11(f).) SSM is not charging a fee to present this message, but the monthly fair market rental rate is supposedly $6, 000. (Id. at ¶¶ 11(h) & (i).) /// Herson secured a third lease on behalf of SSM that is also located at the Stoker Property. (Id. at ¶ 12(a).) Plaintiffs similarly did not apply for a permit to build a second structure at the Stoker Property. (Id. at ¶ 12(b).) The structure is a permanent monopole sign with a face that is 12 feet by 36 feet and a height of 25 feet. (Id. at ¶ 12(d).) SSM is the sole owner of the structure. (Id. at ¶ 12(e).) There has never been and is currently not a message on the face of this structure, but the monthly fair market rental rate to third parties is purportedly $6, 000. (Id. at ¶¶ 12(f) & (g).)

         Herson secured eight additional leases on various properties, but SSM has not erected any structures on these properties. (Id. at ¶ 13; see also id. at ¶ 14(d).) SSM states that it planned to build digital billboards at these properties at a supposed fair market monthly rental value of $160, 000. (Id. at ¶¶ 14(a) & (c).)

         After initiation of this lawsuit, on or about December 30, 2016, the City sent Oddfellows a Notice of Violation alleging that the sign located at the Stardust Property violated Reno Administrative Law Code § 14.16.040 and Reno Land Development Code § 18.22.201(a). (Id. at ¶¶ 16(a)(i) & (a)(ii).) Specifically, Oddfellows had violated § 14.16.040 because the building permit for the Stardust Property sign was issued to Sign Crafters, yet Sign Crafters was no longer a contractor as of December 8, 2016, making the building permit no longer valid. (See id. at ¶ 16.) The corrective action identified in the Notice of Violation was to apply for a site plan review, which was required because the sign was within 100 feet of a “freeway right-of-way.”[2] (Id. at ¶ 16(b).) If and once the plan was approved, the Notice of Violation indicated that a licensed sign contractor would need to obtain a building permit for the sign. (Id.)

         Similarly, on or about December 30, 2016, Oddfellows received a Notice of Violation as to one of the Stoker Property signs. (Id. at ¶ 17(a).) The Notice indicated that the sign was built without a valid permit and that the sign was also within 100 feet of a freeway, requiring it to go through a site plan review. (Id. at ¶ 17(b).) SSM also planned its future billboards, for which it has leased property, to be within 100 feet of a freeway, with faces oriented towards a freeway and visible from a freeway.[3] (Id. at ¶ 19(b).)


         A court may dismiss a plaintiff's complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). A properly pleaded complaint must provide “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). The Rule 8 notice pleading standard requires Plaintiff to “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Twombly, 550 U.S. at 555 (internal quotation marks and citation omitted). While Rule 8 does not require detailed factual allegations, it demands more than “labels and conclusions” or a “formulaic recitation of the elements of a cause of action.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). “Factual allegations must be enough to rise above the speculative level.” Twombly, 550 U.S. at 555. When determining the sufficiency of a claim, “[w]e accept factual allegations in the complaint as true and construe the pleadings in the light most favorable to the non-moving party[; however, this tenet does not apply to] . . . legal conclusions . . . cast in the form of factual allegations.” Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir. 2011) (citation and internal quotation marks omitted). Thus, to survive a motion to dismiss, a complaint must contain sufficient factual matter to “state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678 (internal quotation marks omitted).

         In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply when considering motions to dismiss. First, a district court must accept as true all well-pleaded factual allegations in the complaint; however, legal conclusions are not entitled to an assumption of truth. Iqbal, 556 U.S. at 679. Mere recitals of the elements of a cause of action, supported only by conclusory statements, do not suffice. Id. at 678. Second, a district court must consider whether the factual allegations in the complaint allege a plausible claim for relief. Id. at 679. A claim is facially plausible when the plaintiff's complaint alleges facts that allow a court to draw a reasonable inference that the defendant is liable for the alleged misconduct. Id. at 678. Where the complaint does not permit the court to infer more than the mere possibility of misconduct, the complaint has “alleged-but it has not shown-that the pleader is entitled to relief.” Id. at 679 (internal quotation marks omitted). When the claims in a complaint have not crossed the line from conceivable to plausible, the complaint must be dismissed. Twombly, 550 U.S. at 570. A complaint must contain either direct or inferential allegations concerning “all the material elements necessary to sustain recovery under some viable legal theory.” Id. at 562 (quoting Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1106 (7th Cir. 1989)).


         The City argues that Plaintiffs' SAC should be dismissed with prejudice pursuant to the law of the case doctrine and Federal Rules of Civil Procedure 8, 12(b)(6), and 41(b). The Court agrees with the City that Plaintiffs' SAC contains claims outside those permitted by the Court's prior order and added without leave of Court. After extensive time spent untangling the SAC's claims and legal bases for them, the Court finds that certain claims may go forward. See discussion infra Sec. IV(b). The Court begins its analysis by addressing Plaintiffs' standing.

         A. Standing

         The City points out that by grouping SSM and Oddfellows together for all their claims, it is unclear whether the factual allegations in the SAC support Plaintiffs' standing. (See ECF No. 44 at 2.) The Court agrees and finds that each Plaintiff has standing to bring only certain types of claims. “Federal courts are required sua sponte to examine jurisdictional issues such as standing.” Bernhardt v. Cty. of Los Angeles, 279 F.3d 862, 868 (9th Cir. 2002) (internal quotation marks, alteration, and citation omitted). “Article III of the Constitution limits federal-court jurisdiction to ‘Cases' and ‘Controversies.'” Massachusetts v. EPA, 549 U.S. 497, 516 (2007). “To satisfy Article III's standing requirements, a plaintiff must show (1) it has suffered an ‘injury in fact' that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.” Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC) Inc., 528 U.S. 167, 180-81 (2000) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)). The party invoking federal jurisdiction bears the burden of establishing these elements. FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 231 (1990). Moreover, the party invoking standing must show that it has standing for each type of relief sought. Summers v. Earth Island Inst., 555 U.S. 488, 493 (2009).

         The Court construes the allegations in the SAC as alleging two sets of claims: those which challenge the total ban on the building of new permanent off-premises advertising displays and those which challenge the exemptions to permit requirements for certain temporary or permanent on-premises signs. Reno's Municipal Code differentiates between on-premises signs that advertise a business and off-premises advertising displays (commonly referred to as “billboards”). Reno's Municipal Code defines an “off-premises advertising display” as:

Any arrangement of material, words, symbols or any other display erected, constructed, carved, painted, shaped or otherwise created for the purpose of advertising or promoting the commercial interests of any person, persons, firm, corporation or other entity, located in view of the general public, which is not principally sold, available or otherwise provided on the premises on which the display is located. An off-premises advertising display includes its structure.

         Land Development Code § By contrast, Reno's Municipal Code defines “on-premises sign” as:

Any arrangement of material, words, symbols or any other display erected, constructed, carved, painted, shaped or otherwise created for the purpose of advertising or promoting the commercial interests of any person, persons, firm, corporation or other entity, located in view of the general public, which is principally sold, ...

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