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From Antitrust Law Daily, February 15, 2017

Billboard company’s claims against Illinois village, competitor dismissed

By Jody Coultas, J.D.

Image Media Advertising, Inc. and the Village of Bellwood, Illinois, were granted dismissal of First Amendment and Sherman Act claims by the federal district court in Chicago. Paramount Media Group, Inc. was unable to establish standing to assert claims that Bellwood’s outdoor sign ordinance violated the First Amendment. The court noted that, even if Paramount had standing, the sign ordinances were constitutional. Paramount was also unable to establish that the defendants conspired to restrain and monopolize trade, in violation of Sections 1 and 2 of the Sherman Act, or that Bellwood could be held liable for antitrust violations (Paramount Media Group, Inc. v. Village of Bellwood, February 14, 2017, Alonso, J.).

In February 2005, Paramount entered into a lease agreement (Sodhi property) with property owners in Bellwood, Illinois, that provided Paramount with the rights to erect and maintain one new 20x60 double faced advertising sign and structure on the property. State regulations required Paramount to obtain a sign permit from the Illinois Department of Transportation (IDOT) before building a billboard there. However, Paramount never built a sign even after obtaining a permit.

In February 2009, Bellwood amended the Bellwood Zoning Code to establish regulations for on- and off-premises signs. The sign ordinance provides in pertinent part that subsequent to its effective date, “no new off-site advertising sign permits will be issued by the village.” In March 2012, Bellwood enacted Ordinance 12-9, which amended the statute to add the following exception to the ban on off-site signs: “An off-site advertising sign permit proposed to be located on village owned or controlled property may be exempted from the terms of this chapter subject to any condition set by the Mayor and Board of Trustees.”

In 2012, Bellwood agreed to use its “best efforts” to grant Image Media Advertising, Inc. “permitting” for an outdoor advertising structure on the property and that Bellwood would provide Image Media with a leasehold interest or easement in the property. The property was across the street from the Sodhi property. Paramount had also submitted a bid for a lease on the property.

Paramount filed claims for violation of its First Amendment rights; violation of its Fourteenth Amendment rights to due process and equal protection; attempt to monopolize, monopolization, and conspiracy to monopolize the billboard market in Bellwood, in violation of Section 2 of the Sherman Act; conspiracy in restraint of trade, in violation of Section 1 of the Sherman Act; and a claim for a declaratory judgment that Bellwood did not have the authority under Illinois law to enter into the agreement with Image Media.

After the claims were filed, Image Media entered into a lease option agreement for the Sodhi property, under which the Sodhis granted Image Media “the option to lease a portion of” the property for the purpose of constructing a billboard there. Paramount filed a complaint against the Sodhi property owners, seeking a declaratory judgment that the Sodhi lease agreement was valid and enforceable.

First Amendment claims. Paramount lacked standing to challenge Bellwood’s sign regulations on First Amendment grounds, according to the court. To show standing, Paramount needed to show that its asserted injury likely will be redressed by a favorable decision. Paramount could only opine that it may be able to “work with” Bellwood to design a billboard that could be built. That would have only come after a victory in the case filed against the Sodhi property owners such that Paramount had a protectable interest in the property, and the issuance of a permit by IDOT to build a permit on the Sodhi property. Paramount would also have to design and obtain approval for a new proposed billboard that would fit on the property. Thus, Paramount had not shown that its alleged injury would likely be addressed by a ruling that either the billboard ban or the exception for Bellwood-controlled property was unconstitutional.

The court also noted that Paramount could not show an injury fairly traceable to the billboard ban exemption. Paramount challenged the sign ordinance’s exception for property owned or controlled by Bellwood. When Bellwood amended the statute to create the exception to the billboard ban, it included a severability clause, which allows the provision to be invalidated without condemning the entirety of the legislation. Thus, the exception was severable from the billboard ban. Although Paramount challenged both the billboard ban and the exception, it did not show that its alleged injury was traceable to the exception because prior to the amendment of the sign ordinance Paramount was unable to build a billboard on the Sodhi property.

Even if Paramount had standing, the court held that the billboard ban did not violate the First Amendment because it met the four-part test for assessing commercial speech restrictions. The court looked at (1) whether the speech in question concerns lawful activity and is not misleading; (2) whether the asserted governmental interest is substantial, and, if so, (3) whether the regulation directly advances that interest and (4) whether the regulation is not more extensive than necessary to serve that interest. Aesthetic concerns, such as those articulated by Bellwood, are widely recognized as legitimate governmental interests that may be addressed by the regulation of signs. While Paramount argued that Bellwood’s ordinance did not advance the asserted governmental interests, it did not show that the billboard ban on its own failed to advance Bellwood’s visual environment. It was unclear how a limited exception enacted three years after the ban completely undermined the ban’s effects. The ban undoubtedly advanced Bellwood’s interests in its appearance and compatibility with adjacent land uses. Finally, Bellwood’s prohibition of new off-site commercial signs did not go any further than necessary than needed to preserve the visual environment and compatibility with adjacent land uses.

Image Media argued that it was a private actor that could not be liable for the enactment and amendment of Bellwood’s ordinance. “Suits under § 1983 are meant to deter state actors from using the ‘color of state law’ to deprive individuals of rights guaranteed by the Constitution.” There was no evidence that Image Media was involved in the enactment of Bellwood’s billboard ordinance or the amendment to the ordinance. Thus, Image Media was not be liable under § 1983 for the alleged constitutional injuries resulting from that action, the court determined.

Due process claims. Because Bellwood’s billboard ordinance had a rational basis, the court found that it did not violate substantive due process and granted the defendants summary judgment. Paramount did not invoke a fundamental liberty or property right but contended that Bellwood’s billboard ordinance was not “rationally related to achieve its alleged goals” because the exception for billboards on Bellwood’s property “cannot be squared with any legitimate interest in aesthetics and safety.” However, Paramount cited no authority for this proposition, and the court was unpersuaded.

Antitrust claims. Bellwood was entitled to immunity from the federal antitrust laws for its activities relating to its regulation of billboards, according to the court. Paramount did not dispute Bellwood’s authorization to regulate outdoor advertising signs, but argued that Bellwood “asserted itself into the market” by making itself the only “entity [that] could lease land to another whose purpose was to erect a billboard” in Bellwood, and therefore, due to the “market participant” exception to the Parker doctrine, Bellwood did not have antitrust immunity. The “market participant” exception, however, was “merely a suggestion” in dictum, not a rule of law. Thus, the immunity doctrine applied to the antitrust claims.

The court found that Paramount waived its argument for Image Media’s antitrust liability and there was no evidence that Image Media was involved in the enactment of the billboard ordinance or its amendment.

State law claims. The court declined to exercise supplemental jurisdiction over the non-federal claims and dismissed them without prejudice.

The case is No.  13 C 3994.

Attorneys: Joseph K. Nichele (Broida and Nichele, Ltd.) for Paramount Media Group, Inc. John Joseph Rock (Rock Fusco & Connelly, LLC) for Village of Bellwood. John C. Gekas (Arnstein & Lehr LLP) for Image Media Advertising, Inc.

Companies: Paramount Media Group, Inc.; Village of Bellwood; Image Media Advertising, Inc.

MainStory: TopStory Advertising Antitrust IllinoisNews

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