The City of Baltimore won a technical battle with Clear Channel Outdoor over a 2013 billboard ordinance Monday after a federal judge found the ordinance levied a tax and should be challenged in state court.
The ordinance imposed a charge on outdoor advertising displays in the city, 95 percent of which were owned and operated by Clear Channel, according to the opinion written by U.S. District Judge George L. Russell III.
Clear Channel alleged the ordinance, which imposed an annual regulatory charge of $5 to $15 per square foot annually, depending on the type of billboard, would cost it $1.5 million per year, according to its complaint.
The lawsuit was filed in U.S. District Court in Baltimore in October 2013 and alleged violations of the First and Fourteenth Amendments for impermissibly regulating commercial speech, according to electronic court records.
After the city’s motion to dismiss was denied, the parties filed cross-motions for summary judgment in 2015 on the issue of whether the court had jurisdiction to hear the case.
The Tax Injunction Act provides that federal courts do not have jurisdiction to block the assessment of state taxes where a remedy may be had in state court, according to the opinion.
In its motion for summary judgment, the city argued the ordinance imposed a tax and should be challenge in state courts.
Clear Channel did not argue Maryland’s courts do not offer a speedy and efficient remedy, but instead claimed the ordinance was not a tax.
To determine whether the charge was a tax or a fee, which is levied on certain groups for regulatory purposes, Russell looked to the entity imposing the charge, the population subject to it and the purpose served by the use of the money.
The ordinance was enacted by a legislature, indicating it could be a tax, but it only affected a narrow segment of the population, according to the opinion.
The revenue from the ordinance is credited to the city’s General Fund and because “the City does not use Billboard Ordinance revenue to advance its regulatory agenda, defray regulation costs, or provide a narrow benefit to regulated entities,” it is not a fee, Russell wrote.
Clear Channel was represented by Benjamin Rosenberg of Rosenberg, Martin, Greenberg LLP in Baltimore. Rosenberg did not return a call seeking comment Monday afternoon.
The case is Clear Channel Outdoor Inc. v. Mayor and City Council of Baltimore, 1:13-cv-02379-GLR.