By Jennifer Sloane, Esq.
As an attorney for the OOH industry, I love to see comments by local governmental officials such as those pointed out in the article New Digital Signs Headed For San Jose, CA. In that article, the city councilperson stated, in summary, that they wanted to allow billboards on city land but not on private land because if they allowed billboards on private land “…it makes it more competitive and it makes it more difficult for the city to get the ad revenue.” These comments are setting the City up for a potential suit challenging the law that would preclude advertising on private property so that the City can get their hands on all of the ad revenue spent within their City limits. This, my unsuspecting city councilmember, constitutes a violation of the Sherman Act that precludes anticompetitive legislation.
Most governments think they are immune from anticompetitive lawsuits. But that is not the case. The courts have held that local governments act for the benefit of their constituents. And since local governments are independent economic actors, they pose the same threats to the national economy that private corporations do. Thus, local governments do not get to share in the state immunity from anticompetitive lawsuits. When a municipality is acting in its financial self-interest, its motives and conduct are that of a private party and, thus, there is municipal antitrust exposure. In the case of San Jose, the comments of the city councilmember will make it difficult for the local government to show a non-anticompetitive goal behind the legislation because its motive will have been to improve its market position rather than to remedy a local problem.
Obviously, it comes down to what the local government cites as the basis for their denial of the commercial advertising on private property at the time the legislation is adopted, and not what a council member said at a preliminary hearing. However, if the basis behind the legislation precluding signs on private property is ambiguous (i.e. they did not cite aesthetics, safety, etc.), then those wonderful comments made on record at a preliminary hearing will not only make for a great argument that there are antitrust violations behind the legislation, but it will also make for a tantalizing headline… “City Precludes Residents From Earning Income To Hoard All The Money For Themselves.”
While representing the OOH for 20 years I have turned down many potential cases that operators have wanted to file against local governments that lack merit. However, I would gladly take the call of any OOH operator that wants to challenge a San Jose law that allows the City to have billboards on their land, but not grant the same rights to the citizens of San Jose. It’s a no-brainer!
Law Office of Jennifer Sloane, Esq.
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