Filed: January 29, 2020
Opinion By: Stuart
R. Berger
Holding: A
Baltimore City ordinance that imposes an excise tax on outdoor advertising
displays does not violate the right to freedom of speech guaranteed by the
First Amendment of the Constitution or Article 40 of the Maryland Constitution.
Facts: Clear
Channel Outdoor, Inc. (“Clear Channel”) owns billboards in Baltimore City that
it rents out to third parties. The third
parties pay Clear Channel fees to use the billboards to advertise. In 2013, Baltimore City signed Ordinance
13-139 (the “Ordinance”) into law, which imposes an excise tax on advertising
hosts who (1) own or control a billboard in Baltimore City and (2) charge fees
for the billboard’s use as an outdoor advertising display. The amount of tax (the “Tax”) levied on such
advertising hosts depends on the size of the display and whether it is an
electronic display. Baltimore City enacted
the Ordinance purely as a revenue-raising measure to lower property tax rates,
increase infrastructure investment, and better manage Baltimore City’s pension
and retiree healthcare liabilities.
For the 2014 and 2015 fiscal years, Clear Channel paid the
Tax for each year, but in February 2016, demanded a refund of its Tax payments. When Baltimore City refused to issue a
refund, Clear Channel appealed the denial in the Maryland Tax Court, alleging
that outdoor advertising is a “constitutionally protected medium of speech
under the First and Fourteenth Amendment and Article 40 of the Maryland Declaration
of Rights” and that the Tax unconstitutionally restricts that speech. Clear Channel also argued that heightened
scrutiny applied to the Ordinance because the Tax “targeted a small group of
speakers on the basis of their participation in such speech.” Baltimore City argued that the Tax is an
excise tax that does not implicate the First Amendment or Article 40 because it
is “simply a tax on the privilege to charge fees.” The Tax Court agreed with Baltimore City and affirmed
Baltimore City’s denial of Clear Channel’s refund requests. The Circuit Court for Baltimore City affirmed
the Tax Court’s decision.
Analysis: The Court
of Special Appeals of Maryland first determined that the Ordinance does not
implicate the right to free speech because it is an excise tax that lacks sufficient
communicative elements to invoke First Amendment protection. Classified by the Baltimore City Council as
an excise tax, the Tax is imposed on the billboard owners’ ability, or privilege,
to charge third parties fees to use the billboards to display the third parties’
messages. The Tax is only triggered when
the billboard owner charges third parties a fee to host the advertisement; it
is not triggered by the actual content of the advertisement.
Because the First Amendment and Article 40 protect speech,
including symbolic or expressive conduct, and not the privilege to receive financial
compensation for displaying such symbolic or expressive conduct, the Court held
that the Ordinance does not violate the First Amendment or Article 40. Thus, the Court did not apply a heightened
scrutiny to the Ordinance and instead analyzed it under a rational basis
review. The Court found that Baltimore
City has a legitimate governmental interest in raising revenue, and the
Ordinance is rationally related to such interest as the Ordinance does raise
revenue for Baltimore City. The Court accordingly
affirmed the circuit court’s judgment and denied Clear Channel’s request for
refunds.
The opinion is available in PDF.
