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Lamar Advertising of South Dakota, Inc. v. City of Rapid City

United States District Court, D. South Dakota, Western Division

February 21, 2014

LAMAR ADVERTISING OF SOUTH DAKOTA, INC., a South Dakota corporation, and TLC PROPERTIES, INC., d/b/a Lamar TLC Properties, Inc., a Louisiana corporation, Plaintiffs,
v.
CITY OF RAPID CITY, a South Dakota municipal corporation, Defendant.

ORDER

JEFFREY L. VIKEN, Chief District Judge.

Plaintiffs, Lamar Advertising of South Dakota, Inc. ("Lamar"), and TLC Properties, Inc., d/b/a Lamar TLC Properties, Inc. ("TLC") (collectively referred to as "plaintiffs") filed a complaint against defendant City of Rapid City ("City"). (Docket 1). The complaint asserts two citizen-initiated ordinances, The Citizens' Billboard Control Initiative and The Citizens' Reform Initiative for Billboard Sign Credits (collectively referred to as "Citizen Initiatives"), were passed into law and directly contradict the South Dakota Codified Laws, result in a taking of private property without just compensation, and violate plaintiffs' rights to freedom of speech and equal protection under the law provided in the United States and South Dakota Constitutions. Id . Plaintiffs also contend they are entitled to recover attorneys' fees and costs under 42 U.S.C. §§ 1983 and 1988. Id.

Pending before the court are cross motions for summary judgement filed by plaintiffs and defendant. (Dockets 28 & 34). Based on the court's analysis, plaintiffs' motion is granted in part, denied in part, and reserved in part, and defendant's motion is granted in part and denied in part.

MATERIAL FACTS

Lamar is in the business of leasing sign spacing for outdoor advertising. (Docket 37 at ¶ 4). TLC has an ownership interest in several parcels of real property which Lamar leases for its outdoor advertising signs. Id . at ¶ 5; Docket 44 at ¶ 5.

In 2002, the City made several changes to its Sign Code contained in the Rapid City Municipal Code. (Docket 29 at ¶ 5). Included in these changes was the Off-Premises Sign Credit System ("Credit System"). Id .; see also Docket 41-1 at pp. 24-25. The Credit System permitted owners of off-premises signs to receive "Off Premises Sign Credits" ("credits") for removing an off-premises sign within the City or reducing the size of an off-premises sign to comply with the newly-enacted restrictions. (Docket 41-1 at p. 24). Under the Credit System, an off-premises sign owner would receive 2 credits for removing a sign that did not conform to the Sign Code and 1 credit for removing a sign that did conform. Id . at p. 25.

Under the Credit System, an owner of credits can transfer them or use the credits to construct new off-premises signs if the new sign otherwise complies with the requirements of the Rapid City Municipal Code and other federal, state, or local laws and regulations. Id.

From July 2002 until June 2011, Lamar removed or reduced the size of 47 off-premises signs and the City provided Lamar with 94 total credits. (Docket 29 at ¶ 8). Lamar redeemed 6 of its credits, leaving it with 88 credits as of June 2011. Id . at ¶ 9. Other companies operating within Rapid City collectively hold 16 credits under the Credit System. Id.

In 2011, a group of citizens known as Scenic Rapid City proposed two citizen-initiated ordinances, The Citizens' Billboard Control Initiative and The Citizens' Reform Initiative for Billboard Sign Credits. Id . ¶ 16. The stated purpose of The Citizens' Billboard Control Initiative was to limit new construction of electronic or digital signs in Rapid City (the Sign Initiative). (Docket 37 at ¶ 10). The stated purpose of The Citizens' Reform Initiative for Billboard Sign Credits was to limit the issuance of new sign credits (the Credit Initiative). Id . at ¶ 13. On June 7, 2011, a City election was held and the Citizen Initiatives were placed on the ballot. Id . Approximately 65 percent of the voting citizens favored the Citizen Initiatives.[1] Id.

The Sign Initiative amended the Sign Code to prohibit all off-premises signs with internal illumination or which display electronic variable messages, also known as digital off-premises signs. (Docket 29 at ¶ 17). Specifically, § 15.28.050 (Prohibited Signs) of the Sign Code was amended by adding the following subdivision:

R. Off-premises signs with internal illumination or displaying electronic variable messages are prohibited. Any new off-premises sign is prohibited if it is internally illuminated or operates to display electronic variable messages through light emitting diodes or any other light emitting mechanism. An existing off-premises sign may not be converted to a sign that is internally illuminated or operates to display electronic variable messages through light emitting diodes, liquid crystal display, plasma image display, or any other light emitting mechanism.

Id. at ¶ 18, see also Docket 41-1 at p. 9. Section 15.28.160 (Off-Premises Signs) of the Sign Code was amended by adding the following new subdivision:

P. No off-premises sign is permitted that is internally illuminated or operates to display electronic variable messages through light emitting diodes, liquid crystal display, plasma image display, or any other light emitting mechanism.

Id., Docket 41-1 at p. 17. The ban on digital signs only applies to off-premises signs. (Docket 29 at ¶ 17; see generally Docket 41-1). On-premises signs can use digital sign technology. (Docket 29 at ¶ 17). Any existing digital off-premises signs are not subject to removal under the new Sign Code but are regarded by the City as legal, non-conforming signs. Id.

The Sign Initiative also amended the Sign Code to increase the distance between off-premises signs. Id . at ¶ 18. Section 15.28.160 (Off-Premises Signs) of the Sign Code was amended by changing the following language:

D. Off-premises signs shall be located not nearer than 500 1, 500 feet from any other off-premises sign. The distance between off-premises signs shall be measured from the base of the sign in all directions (radial feet). In addition, no off-premises sign shall be located nearer than 1, 000 2, 000 feet from the nearest off premises signs as measured by the distance over a public road between a line that extends from the base of each sign to the nearest mid-point of any public road from which the sign is intended to be viewed.

Id., see also Docket 41-1 at p. 16. This provision only applies to off-premises signs. Id . Any existing, non-complying signs are not subject to removal but are regarded by the City as legal, non-conforming signs. (Docket 29 at ¶ 18).

The Credit Initiative amended the Sign Code by prohibiting the City from issuing any new off-premises sign credits if there are more than 20 sign credits outstanding. Id . at ¶ 19, see also Docket 41-1 at p. 25. Section 15.28.250(F) (Sunset date for sign credit) of the Credit Initiative amended the Sign Code to include a sunset provision on sign credits:

F. An off-premises sign credit shall not exist in perpetuity. An off-premises sign credit shall terminate 2 decades after it has been issued unless utilized within 20 years from the date of issuance by the Building Official or unless the same has become void by operation of the provisions of this section.

(Docket 41-1 at p. 25).

Section 15.28.250(E) (Usage) of the Sign Code was amended as follows:

E. Off-premises sign credits may only be used to erect a new off-premises sign if the proposed new sign is in full compliance with all requirements of the Rapid City Municipal Code and all federal, state or local laws and regulations. The city has no obligation to guarantee that a sign credit may be utilized within the city during the life of the credit.

Id.

Lamar alleges the new digital ban prevents it from fulfilling its comprehensive plan for the roll-out of additional digital off-premises signs in the City. (Docket 29 at ¶ 22). TLC asserts the Citizen Initiatives prevent it from fulfilling its business plan to have the vinyl off-premises signs located on its properties converted to digital signs. Id . Lamar also contends the Sign Code's sunset provision prevents it from using its remaining 88 sign credits to grow its operation in the City by constructing new off-premises signs. Id . at ¶ 23. Lamar argues its long-term business plan depends on it being able to hold its signs credits until opportunities in desirable locations become available. Id . Lamar contends the sunset provision of the Sign Code makes it impossible for Lamar to use its sign credits before they expire, effectively rendering them worthless. Id.

On August 26, 2011, Lamar and TLC commenced this action against the City, asserting the Citizen Initiatives directly contradict the South Dakota Codified Laws, result in a taking of private property without just compensation, and violate their rights to freedom of speech and equal protection under the law provided in the United States and South Dakota Constitutions. (Docket 1).

On July 20, 2012, the City again amended the Sign Code. (Docket 29 at ¶ 28). The City retained all the regulations in the Citizen Initiatives. Id . However, § 15.29.050 of the Sign Code was amended to permit digital on-premises signs, including those with motion:

On-premises electronic message centers, reader boards and other signs that allow for the display of varying messages through either manual means, or by the use of a digital, plasma, or LCD display, or other similar technology are allowed. The maximum area of an on-premises sign authorized by this section is Sixty (60) square feet. Notwithstanding any other provisions of this code, on-premises signs utilizing a digital display or other similar technology authorized by this section may incorporate graphic, animated or scrolling messages, but may not incorporate full motion video.

Id., see also Docket 41-19 at p. 3.

Lamar, TLC, and the City filed cross-motions for summary judgment. (Dockets 28 & 34). Plaintiffs argue the Sign Code provisions enacted through the Citizen Initiatives (1) violate South Dakota state law and must be struck down; (2) result in the taking of property without just compensation; (3) violate the right to free speech; and (4) violate the right to equal protection. (Docket 30). The City contends preliminarily that the court lacks jurisdiction over counts I, III, VI, IX, and X of the complaint because plaintiffs failed to notify the South Dakota Attorney General as required by SDCL § 21-24-8. (Docket 35). The City also argues many of plaintiffs' claims are not ripe. (Docket 35). The City contends the Sign Code as amended by the Citizen Initiatives does not constitute a taking and does not violate plaintiffs' rights to equal protection and freedom of speech. Id.

DISCUSSION

A. Summary Judgment Standard

Under Fed.R.Civ.P. 56(a), a movant is entitled to summary judgment if the movant can "show[] that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Once the moving party meets its burden, the nonmoving party may not rest on the allegations or denials in the pleadings, but rather must produce affirmative evidence setting forth specific facts showing that a genuine issue of material fact exists. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 256 (1986). Only disputes over facts that might affect the outcome of the case under the governing substantive law will preclude summary judgment. Id . at 248. Accordingly, "the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Id . at 247-48 (emphasis in original).

If a dispute about a material fact is genuine, that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party, then summary judgment is not appropriate. Id . However, the moving party is entitled to judgment as a matter of law if the nonmoving party fails to "make a sufficient showing on an essential element of her case with respect to which she has the burden of proof." Celotex Corp. v. Catrett , 477 U.S. 317, 323 (1986). In that event, "there can be no genuine issue as to any material fact, ' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Id . at 323.

In determining whether summary judgment should issue, the facts and inferences from those facts must be viewed in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp. , 475 U.S. 574, 587-88 (1986). The key inquiry is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson , 477 U.S. at 251-52.

B. Whether SDCL § 21-24-8 Deprives the Court of Jurisdiction over Counts I, III, VI, VII, IX, and X of Plaintiffs' Complaint.

Counts I, III, VI, VII, IX, and X of plaintiffs' complaint are brought pursuant to SDCL § 21-24-1 et seq. (Docket 1 at ¶¶ 49, 68, 95, 102, 114, and 121). Each of these counts allege the Sign Code provisions enacted following the Citizen Initiatives are unconstitutional. SDCL § 21-24-8 provides:

In any proceeding which involves the validity of a municipal ordinance or franchise, such municipality shall be made a party and shall be entitled to be heard, and if the statute, ordinance, or franchise, is alleged to be unconstitutional, the attorney general of the state shall ...

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