Steve Lash//May 2, 2022
//May 2, 2022
Baltimore can continue to tax commercial billboard operators.
The U.S. Supreme Court on Monday declined to hear an appeal by the city’s major billboard operator that the tax violates the company’s constitutional right to free speech in the advertisements and messages it posts.
In a one-line order, the justices let stand without comment a decision by Maryland’s top court that the tax passes First Amendment muster because it does not discriminate based on the viewpoint conveyed on the billboards and is rationally related to the city’s legitimate goal of raising revenue.
The Supreme Court’s refusal to hear Clear Channel Outdoor LLC’s appeal is just that and not a decision on the merits of the argument. However, the justices’ denial of review leaves the Maryland Court of Appeals’ March 2021 decision undisturbed and a precedent for the state.
The appeal was docketed at the Supreme Court as Clear Channel Outdoor LLC v. Henry J. Raymond, Director, Department of Finance of Baltimore City, No. 21-219.
“We are glad to see that the Supreme Court has decided to leave in place the Maryland Court of Appeals decision that affirmed the constitutionality of Baltimore’s excise tax on leasing billboards,” Baltimore Solicitor James L. “Jim” Shea, the city’s chief attorney, stated via email Monday.
A spokesperson for San Antonio, Texas-based Clear Channel Outdoor did not immediately return a message Monday seeking comment on the Supreme Court’s denial of the company’s appeal.
In its failed bid for Supreme Court review, Clear Channel Outdoor argued that enabling a city to tax billboards – and, perhaps, other methods of speech — threatens the freedom of speech, particularly that which is disfavored by or critical of the city.
“Because of their lower barriers to entry, billboards and new media platforms provide unique opportunities for sharing unpopular or provocative messages outside the mainstream,” wrote Kannon K. Shanmugam, Clear Channel Outdoor’s counsel of record at the high court.
“The decision below will permit municipalities to impose, at little political cost, crippling financial burdens on such speech platforms,” added Shanmugam, of Paul, Weiss, Rifkind, Wharton & Garrison LLP in Washington. “Municipalities could raise the tax levels to rates that would make it untenable to publish any speech at all. The decision places billboard operators and other non-traditional media that disseminate highly visible (and at times politically unpopular) speech at a significant risk of censorship.”
Baltimore responded that the tax does not violate the operators’ right to free speech because 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 in the city’s successful request that the justices deny Clear Channel Outdoor’s petition. “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 Outdoor, 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 Outdoor has paid its annual assessment each year since the ordinance’s enactment but had sought a refund based on its 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 (Outdoor) charges the person or entity responsible for the message to display it on the billboard,” Judge Robert N. McDonald wrote. “If Clear Channel (Outdoor) devoted a billboard entirely to its own message or to a message of someone else without a charge, no tax would be levied under the ordinance, regardless of the substance of the message. It is the commercial transaction, not the content of the message, that triggers the tax.”
Judge Joseph M. Getty was the court’s sole dissenter.
Getty, whom Gov. Larry Hogan elevated to chief judge in September and who stepped down last month upon reaching the state’s mandatory judicial retirement age of 70, 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.t