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Vista-Graphics, Inc. v. Virginia Department of Transportation

United States District Court, E.D. Virginia, Norfolk Division

March 18, 2016

VISTA-GRAPHICS, INC., ET AL., Plaintiff
v.
VIRGINIA DEPARTMENT OF TRANSPORTATION ET AL., Defendant.

OPINION AND ORDER

Robert G. Doumer, United States District Judge

This suit was filed by Vista-Graphics, Inc. and Randal W. Thompson, its president, ("Plaintiffs") in the Circuit Court of Accomack County, Virginia, pursuant to 42 U.S.C. § 19S3. Compl., ECF No. 1-1. Plaintiffs have challenged the State of Virginia's management of the informational materials and advertisements displayed in the state-owned Welcome Centers and Rest Areas, [1] which are located on various highways throughout the slate. Plaintiffs filed suit in Accomack County because the county contains a Welcome Center, which is located on U.S. Route 13 near the Virginia/Maryland border. Sec ECF No, 12-1, Ex. A. The suit was then removed to the United States District Court for the Eastern District of Virginia. ECF No. 1. Plaintiffs brought this action against the Virginia Department of Transportation ("VDOT"), the Virginia Tourism Corporation ("VTC"), Aubray L. Layne in his official capacity as Secretary of Transportation, and Charles A. Kilpatrick in his official capacity as Commissioner of VDOT (collectively, "Defendants"). First Am. Compl, ECF No. 12. Plaintiffs also sued Highway Information Media, LLC ("HIM") "solely as a party in interest." Id. ¶6. HIM has not responded to the lawsuit.

Defendant filed a Motion to Dismiss the initial complaint, which was granted. Order. ECF No. 11. Plaintiffs were permitted leave to file an Amended Complaint, which they have filed. First Am. Compl., ECF No. 12. Defendants have filed a Motion to Dismiss Plaintiffs' First Amended Complaint. ECF No. 14. This Motion has been fully briefed. ECF Nos. 15-17. The Court GRANTS the motion and DISMISSES the present action for the reasons hereinafter set forth. ECF No. 14.

I. BACKGROUND

A. Procedural History

Plaintiffs initially brought this action in in the Circuit Court for Accomack County. See Compl., ECF No. 1-1. Defendants removed the case to federal court, ECF No. 1, and filed a Motion to Dismiss. ECF No. 5. After briefing was completed, the Court held a hearing on the motion on October 6, 2015. ECF No. 10. At this hearing, the parties discussed all aspects of Defendants1 Motion, including Defendants' claims that Plaintiffs lacked standing to bring their complaint and that the Welcome Center displays constitute government speech, immune from First Amendment challenge. Id. In an Order issued on October 21, 2015, the Court granted Defendants' Motion to Dismiss. ECF No. 11. The Court held that Plaintiffs' complaint failed to plead an injury-in-fact and as a consequence failed to establish that Plaintiffs had standing to challenge the restrictions on what could be displayed in the Welcome Centers. Id. at 3. However, because at argument Plaintiffs' counsel referenced several facts unmentioned in the complaint that might support their claims of standing, the Court granted leave to amend, Id. at 3-4. The Court also noted in its Order that Plaintiffs likely had standing to challenge the fees charged to display the materials and that this issue would better be addressed with Plaintiffs' other claims in the amended complaint. Id. at 3 n.l.

Plaintiffs timely filed their First Amended Complaint on November 11, 2015. ECF No. 12. On November 24, 2015, Defendants filed a Motion to Dismiss. ECF No. 14. Plaintiffs filed their Brief in Opposition on December 12. 2015, ECF No 16, and Defendants their Rebuttable Brief on December 7, 2015. ECF No. 17. Because the issues raised in the instant Motion to Dismiss Plaintiffs' First Amended Complaint were thoroughly argued during the October 6, 2015 hearing concerning Defendants' first Motion to Dismiss, the Court finds that there is no need for an additional hearing.

B. Facts Alleged in the First Amended Complaint

The following factual summary is taken from the allegations contained in Plaintiffs' First Amended Complaint, which, for purposes of ruling on the instant Motion to Dismiss, the Court accepts as true. Nemet Chevrolet, Ltd. v. Consumeraffairs.com. Inc.. 591 F.3d 250. 253 (4th Cir. 2009).

Plaintiff Vista-Graphics publishes guides for visitors to Virginia such as Virginia Beach Visitors Guide and GoWilliamsburg Visitors Guide, First Am. Compl. ¶ 1. Co-plaintiff Randal W. Thompson is the president and owner of Vista-Graphics. Id. ¶ 2. The guides contain listings of "lodging, attractions, restaurants and other products and services" along with advertisements. Id. ¶¶ 1, 22-23. Plaintiffs have for the past eight years placed these guides in various state-run Welcome Centers and Rest Areas. Id. ¶ 22. Plaintiffs' present suit challenges the constitutionality of a subsection of the Virginia Administrative Code, 24 VAC 30-50-10(L), and two state programs that allegedly govern the display of Plaintiffs' guides in the State Welcome Centers and Rest Areas: the Sponsorship. Advertising, and Vending Enhancement ("SAVE") program and the Partnership Marketing and Advertising Program ("PMAP"). Id. at 1.

Because of budget shortfalls. Virginia had been forced to close some Welcome Centers and Rest Areas beginning in 2009.[2] Virginia instituted the SAVE program in 2012 in order to generate revenue and make the Welcome Centers and Rest Areas more self-sufficient. First Am. Compl. ¶¶ 8-9; see generally Advertising Opportunities At Viminia Welcome Centers, ECF No. 12-3, Ex. C (describing the SAVE program and listing different ways that businesses may advertise at the Welcome Centers). Prior to the implementation of the SAVE program, Vista-Graphics was able to place its guides free of charge in the Welcome Centers and Rest Areas, which were then run by VDOT. First Am. Compl. ¶¶ 8, 10. After the institution of the program. VDOT through its contractor Highway Information Media, LLC ("HIM"), began requiring Vista-Graphics to pay ions to place materials in the Welcome Centers and Rest Areas. Id. ¶ 10.

The challenged provision of the Virginia Administrative Code, 24 VAC 30-50-10(L), regulates "waysides and rest areas" and provides in part that

No threatening, abusive, boisterous, insulting or indecent language or gesture shall be used within this area. Nor shall any oration, or other public demonstration be made, unless by special authority of the commissioner.

Id. ¶15. Plaintiffs argue-and Defendants do not appear to dispute-that the "waysides and rest areas" covered by this regulation are in some instances the same spaces managed under the SAVE and PMAP programs.[3] See Id. (alleging that the SAVE program and 24 VAC 30-50-10(L) create two different sets of rules governing Welcome Centers). They allege that the restrictions contained in 24 VAC 30-50-10(L) are unconstitutionally over broad and vague and that vesting "final decision authority in a single public official (i.e. 'the commissioner') without meaningful guiding standards or procedures" or a right to appeal violates the due process guarantees in the State and Federal Constitutions. Id., ¶ 15.

Plaintiffs allege that three separate documents control the administration of the SAVE and PMAP programs and that each of these documents contains unconstitutional restrictions on what materials may be placed in the Welcome Centers. On March 29, 2013, VDOT issued the first of these documents, which is captioned "VDOT Implementation of Rest Area Revenue Generating Programs" ("VDOT Implementation"). Id. ¶ 14; see also VDOT Implementation, ECF No. 12-5, Ex. E. Plaintiffs allege that the restrictions contained in this document are unconstitutional both because they are content based restrictions on speech and because they are over broad and vague. First Am. Compl. ¶ 14. As an example of the alleged unconstitutionality, Plaintiffs cite to a provision that limits the "subject matter" of "advertisements and other similar media" to "commercial speech, VDOT or government information (e.g. maps, 511 traffic monitoring program) relating to highways, the safety and welfare of the traveling public, and other activities of the commonwealth." Id. see also VDOT Implementation at 3. The document also forbids "subject matter that. . . states or implies that the Commonwealth or any of its agencies endorse a commercial vendor product or service." Id.

The second document is a contract the Virginia Tourism Corporation ("VTC") and HIM entered into on June 1, 2015. First Am. Compl. ¶ 16; Virginia Tourism Corporation Standard Contract ("VTC Contract"), ECF No. 12-7, Ex. G. This contract governs HIM's management of the Welcome Centers and Rest Areas. Id., This contract obligates HIM to follow several "General Rules and Restrictions for Advertising, " which apply to HIM's uses of the contractual rights licensed to it, including the right to display brochures in the Welcome Centers. First Am. Compl, ¶16; VTC Contract. §§ (A)(2)(d){2)(c), (A)(2)(h), at 3, 4. Among the restrictions are prohibitions on displaying advertising for "political candidates or political purposes" or for "religious purposes." First Am. Compl. ¶ 16; VTC Contract. §§ (A)(2)(h)(3), (A)(2)(h)(5), at 4-5. Plaintiffs argue that the restrictions contained in the contract are "vastly over broad, unduly vague." inconsistent with state regulations, and "offend the free speech provisions of the United States and Virginia Constitutions." First Am. Compl. ¶ 17. They also argue that the authority granted to VTC under the contract violates "due process and equal protection rights." Id.

The third and final document was released by VTC on June 1, 2015, and is titled, "Virginia Welcome Centers & Safety Rest Areas Partnership Marketing & Advertising Program Policies" ("PMAP Policies"). First Am. Compl. ¶ 18; PMAP Policies. ECF No. 12-8, Ex. H. The release describes the administration of the PMAP program that was being implemented through the VTC and HIM partnership, Id. The document, like the partnership contract, restricts what may be contained in advertisements "displayed or distributed" at the Welcome Centers under the heading "Disqualified Content." First Am. Compl. ¶ 18; PMAP Policies, ECF No. 12-8. Ex. H. at 9. For instance, the document forbids "political or religious advertisement." Id. Plaintiffs again object to the State's inconsistent rules governing the Welcome Centers, to the "policies controlling speech, " and the lack of "due process mechanisms." First Am. Compl. ¶ 20.

Plaintiffs' complaint alleges that the policies of the SAVE and PMAP programs are not only inconsistent with each other and with 24 VAC 30-50-10(L), but also with 24 VAC 30-151- 670 (2). Id. ¶¶ 12, 17. 21. This portion of the Virginia Administrative Code provides that

Vendors of newspapers and written materials enjoy constitutional protection under the First Amendment to place or operate their services within rights-of-way, provided that they neither impede traffic nor impact the safely of the traveling public.

24 VAC 30-151-670(2). According to Plaintiffs, "[w]elcome centers and rest areas have traditionally allowed business such as Vista-Graphics to distribute printed materials without charging for this right, ostensibly because free speech protections afforded by the United States and Virginia Constitutions, as recognized by 24 VAC 30-151-670(2), Id. ¶ 12.

In three paragraphs that contain allegations new to the Amended Complaint, Plaintiffs elaborate on how the various regulations on what may be displayed in the Welcome Centers have affected them. Id. ¶¶ 22-24. They allege that in the eight plus years that they have supplied the Welcome Centers with information they have included material that would violate the current restrictions. Id. ¶ 22. For instance, they have included political and religious materials in their travel guides. Id. The Plaintiffs allege that they "may currently be in violation of the ban on religious advertisements because they generally list 'places of worship.'" Id. Plaintiffs allege that because of the restrictions they "have engaged in self-censorship and have refrained from soliciting and distributing many forms of information and advertising." Id. ¶ 23. As example, Plaintiffs allege that they

would like to solicit, draft, publish and display materials that: (1) solicit donations, (2) advertise commercial or residential real estate, (3) provide ratings and opinions relating to various businesses and services. (4) advertise properties with membership requirements, (5) advertise liquor and tobacco products, and (6) constitute political and religious advertisements and messages.

Id. All of these materials would be prohibited by one or more of the just described documents that allegedly implement the SAVE and PMAP programs. See Id. ¶¶ 14, 16-18. They are forced to self-censor because they do not know the consequences of being in violation of the rule. Id. ¶ 24. Specifically, Plaintiffs worry that it may damage their reputation if they solicit advertisements and then arc unable to publish them because of the restrictions. Id.

In addition to these new allegations of injury, Plaintiffs allege again without specific facts that

they have been forced to: (1) pay significant fees (totaling more than 580, 000 to date, and climbing) well above mere administrative or maintenance costs, (2) contend with uneven and unequal enforcement of SAVE and PMAP program rules and restrictions, (3) endure excessive burdens, threats and restrictions in attempting to exercise free speech rights, (4) contend with content rules and restrictions ...

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