U.S. Supreme Court declines to hear Baltimore billboard case that invoked Free Speech, controversial excise tax upheld

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The Supreme Court declined to hear a case about whether an excise tax on billboards in Baltimore violated the right to Free Speech, tacitly affirming an earlier decision by Maryland’s highest court that the tax is reasonable. 

Key Players

Clear Channel Outdoor LLC (CCO), an advertising company based in San Antonio, Texas, specializes in outdoor services, including management of billboards, digital billboards, and airport signs. CCO operates in 43 of the largest designated market areas in the United States and numerous international markets, with market capitalization estimated at nearly $590 million.

Henry J. Raymond, the director of the department of finance in Baltimore, collects “all Baltimore City revenue through various taxes, fines, fees, and penalties.”  

Further Details

On June 20, 2013, Baltimore introduced Ordinance 13-139, mandating a tax on “the privilege of exhibiting outdoor advertising displays,” specifically for signs exceeding 10 square feet not located on business property. According to The Associated Press, CCO’s billboards account for about 90% of the tax revenue generated by the ordinance. 

In August of that year, CCO filed a lawsuit in federal court, arguing the ordinance violated the First and 14th Amendments by impermissibly regulating commercial speech. 

In December 2015, U.S. District Judge George L. Russell III, who had been nominated by former President Barack Obama, dismissed the case under the Tax Injunction Act, which prevents federal courts from enjoining state taxes if state law provides a remedy through the state courts. 

Until that point, CCO had protested by not paying the tax due for the 2014 and 2015 fiscal years. After the district court’s decision, CCO paid what it owed. However, it requested a refund, reiterating that the tax violated the First and 14th Amendments and also asserting it violated Article 40 of the Maryland Declaration of Rights. 

“That the liberty of the press ought to be inviolably preserved; that every citizen of the State ought to be allowed to speak, write and publish his sentiments on all subjects, being responsible for the abuse of that privilege,” Article 40 states. 

Baltimore refused to grant the refund, maintaining the tax was constitutional and meant to raise revenue. 

In July 2016, CCO again requested a refund, which was again denied by the city. In response, CCO filed an administrative appeal in the Maryland Tax Court, invoking its previous arguments that the ordinance chilled Free Speech by targeting a limited number of speakers. 

On Feb. 27, 2018, the state tax court rejected CCO’s argument, ruling that the ordinance was “a tax on the privilege of continuing in business, not on exercising free speech.” 

Subsequently, CCO appealed to the Circuit Court for Baltimore City, which affirmed the tax court’s decision. The company then appealed to the Court of Special Appeals, which also affirmed the tax court’s decision. CCO ultimately took the case to the Maryland Court of Appeals, the state’s highest court.

On March 15, 2021, in a 6-1 decision, the Court of Appeals affirmed that the ordinance did not violate Free Speech rights because it “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 mattered, it said, was whether CCO “charges the person or entity responsible for the message to display it on the billboard,” Judge Robert N. McDonald wrote for the court. If CCO “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.” 

According to The Daily Record, the high court said the ordinance did not discriminate against any viewpoint conveyed on the billboards and determined it was also rationally related to Baltimore’s legitimate goal of raising revenue. 

In his sole dissent, Judge Joseph M. Getty said billboards were “a constitutionally protected medium of communication and, thus, any legislation potentially affecting the ‘speech’ from this platform implicates free expression concerns.”

On Aug. 12, 2021, CCO filed a petition for a writ of certiorari with the U.S. Supreme Court. Kannon K. Shanmugam, CCO’s counsel, wrote in his petition that the Maryland high court decision would “permit municipalities to impose, at little political cost, crippling financial burdens on such speech platforms.”

“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,” Shanmugam added. 

Outcome

Supreme Court declines to hear case, permitting excise tax to remain in effect

On May 2, 2022, the Supreme Court declined to hear CCO’s appeal. In a one-line order, the justices let the Maryland decision stand without comment.