Supreme Court Provides Guidance On When Speech Regulations Are Content-Based And Level Of Scrutiny Applicable In Commercial Speech Cases

• Published date: 14 July 2022
• Subject Matter: Litigation, Mediation & Arbitration, Trials & Appeals & Compensation
• Law Firm: Cahill Gordon & Reindel LLP
• Author: Mr Joel Kurtzberg, John MacGregor and Jason Rozbruch

On April 22, 2022, the United States Supreme Court decided City of Austin, Texas v. Reagan Nat'l Advert. of Austin, LLC, 2022 WL 1177494 (U.S. Apr. 22, 2022), in which the Court held that a city regulation allowing digital signs for businesses operating on the premises where the sign was placed, but banning digital signs for off-premises activities, was not unconstitutional under the First Amendment. In so holding, the Court ruled that the law at issue was not content-based and clarified that a law is content-based only if the law discriminates based on the "topic discussed or the idea or message expressed." This holding is significant for two reasons. First, the opinion provides important clarification, following Reed v. Town of Gilbert, Ariz.¹ and NIFLA v. Becerra,² on when regulations will be considered content-based. Second, the opinion offers additional guidance on the level of scrutiny applicable to content-based restrictions on commercial speech.

I. Factual and Procedural Background

The City of Austin ("City") passed an ordinance allowing digital signs for businesses operating on the premises where the sign was placed, but banning signs describing off-premises activities. The City's stated rationale for the ordinance was to protect the aesthetic value of the City and promote public safety.

On May 25, 2017, the City of Austin denied the applications of two businesses to replace non-digital signs advertising off-premises activities with digital signs. One business, Reagan National Advertising of Austin, LLC ("Reagan"), sued the City of Austin in Texas state court, and the City removed the action to the U.S. District Court for the Western District of Texas. The other business whose application was denied, Lamar Advantage Outdoor Company ("Lamar"), intervened.

Reagan and Lamar alleged that the ordinance's distinction between on- and off-premises signs was a content-based restriction of speech that triggered strict scrutiny and was presumptively unconstitutional under the First Amendment, both facially and as applied to Reagan and Lamar.³ Following a bench trial, on March 27, 2019, District Court Judge Robert Pitman entered judgment in favor of the City of Austin after finding the ordinance content neutral and thus subject to intermediate scrutiny. The court reasoned that the ordinance "d[id] not require a viewer to evaluate the topic, idea, or viewpoint on the sign" and instead required only that the viewer "determine whether the subject matter is located on the same property as the sign."⁴ The court held that the ordinance satisfied intermediate scrutiny because the regulation "directly advanced"...