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Billboard firm hopes Ohio case helps high court challenge to Baltimore tax

A company mounting a constitutional challenge to Baltimore’s tax on commercial billboard operators hopes a recent Ohio high court decision striking down a similar Cincinnati assessment will convince the U.S. Supreme Court to hear its claim that the Maryland city’s tax violates the freedoms of speech and the press.

In papers filed with the justices last week, Clear Channel Outdoor LLC stated the Ohio Supreme Court’s Sept. 16 decision directly contradicts a Maryland high court ruling that upheld Baltimore’s tax as constitutional and creates a conflict that only the U.S. Supreme Court can resolve.

Clear Channel’s filing was its last before the justices consider whether to review the Maryland Court of Appeals’ March decision that Baltimore’s tax does not violate the First Amendment because it applies regardless of the viewpoint conveyed on the billboards and is rationally related to the city’s legitimate goal of raising revenue.

The justices are scheduled to consider Clear Channel’s request that they hear the billboard company’s appeal during their private conference on Oct. 15. The case is docketed at the Supreme Court as Clear Channel Outdoor LLC v. Henry J. Raymond, Director, Department of Finance of Baltimore City, No. 21-219.

In its final filing, Clear Channel cited the Ohio Supreme Court’s holding that Cincinnati’s assessment violates the rights to free speech and press because the power to tax is the power to censor messages disfavored by the taxing authority, the city’s leadership.

A billboard tax is “selective taxation” that can be imposed in an amount “that both directly limits the circulation of protected speech and creates the danger that speech will be added or removed based on a desire to please, or avoid the wrath of, city council,” Ohio’s high court stated in Lamar Advantage GP Co. v. Cincinnati.

The court added it had reviewed the Maryland high court’s contrary holding and found its analysis not “persuasive,” a comment that Clear Channel’s counsel seized upon in its petition for Supreme Court review

“There is now a clear conflict between state courts of last resort on the important question of First Amendment law presented here,” wrote Kannon K. Shanmugam, Clear Channel’s counsel of record at the high court and a partner at Paul, Weiss, Rifkind, Wharton & Garrison LLP in Washington. “In upholding a tax targeting a protected speech platform and a small group of speakers, the (Maryland court’s) decision below opens the door to taxes that censor and chill speech.”

Baltimore, by contrast, has urged the justices to deny Clear Channel’s request for review, stating the tax on commercial billboard operators does not violate their right to free speech and press as the assessment applies regardless of the messages they post.

“It (the tax) applies equally to any person who charges for billboard space in Baltimore, no matter what the billboard says or even if it says nothing,” wrote Michael Redmond, of the Baltimore Law Department and the city’s counsel of record before the high court.

“The economic transaction is what is taxed, not its subject,” Redmond added. “The ordinance that petitioner challenges is a content-neutral excise tax on a particular business that applies uniformly to a rationally defined class and does not invite censorship.”

Clear Channel, which owned more than 95 percent of the city’s billboards as recently as 2017, challenged the constitutionality of the 2013 Baltimore ordinance that imposes an excise tax on billboard owners who charge fees for outdoor advertising displays of at least 10 square feet. The assessment is $15 per square foot for an electronic outdoor display that changes images at least twice a day and $5 per square foot for any other outdoor display.

The tax raises $1.5 million annually, according to the city.

Clear Channel has paid its annual assessment each year since the ordinance’s enactment but has sought a refund based on its as-yet-unsuccessful First Amendment challenge.

The company initiated its constitutional fights against the assessment in U.S. District Court in Baltimore in 2013.

U.S. District Judge George L. Russell III dismissed the case two years later when he agreed with the city that the federal court lacked jurisdiction under the Tax Injunction Act. The U.S. law precludes federal courts from enjoining state taxes if state law provides a remedy through the state’s courts.

The Maryland Tax Court, Baltimore City Circuit Court, the Court of Special Appeals and the Court of Appeals subsequently ruled for the city.

The Court of Appeals, in its 6-1 decision, held that Baltimore’s tax does not violate free speech rights because the assessment “does not depend on what messages are displayed on a billboard, who a message is attributed to, or how long any particular message is displayed.”

“What matters is whether Clear Channel charges the person or entity responsible for the message to display it on the billboard,” Judge Robert N. McDonald wrote. Judge Joseph M. Getty was the court’s sole dissenter.

Getty, whom Gov. Larry Hogan elevated to chief judge last month, called billboards “a constitutionally protected medium of communication and, thus, any legislation potentially affecting the ‘speech’ from this platform implicates free expression concerns.”

The Court of Appeals rendered its decision in Clear Channel Outdoor Inc. v. Director, Department of Finance of Baltimore City, No. 9 September Term 2020.