A state appellate panel today struck down a 2006 settlement agreement that allowed two billboard companies to put up highly lucrative digital signs in the city of Los Angeles and ordered the signs taken down.
In a unanimous written ruling of a three-justice panel of the 2nd District Court of Appeal, Associate Justice Elizabeth Grimes called the agreement between the city and Clear Channel Outdoor and CBS Outdoor "invalid and unenforceable."
The settlement allowed the two sign companies to violate a 2002 ban on new signs and a ban on digital billboards.
The case dates back to 2006, when then-City Attorney Rocky Delgadillo cut a special agreement with Clear Channel and CBS to end a previous lawsuit over the city's billboard inspection laws and fees. The settlement gave the two companies permission to obtain permits to convert 840 static billboards to digital signs each in exchange for taking down other static billboards.
The agreement drew a legal challenge from Summit Media, which was not part of the deal.
A Superior Court judge ruled in 2009 that the settlement was illegal and called it "poison." That led the city to stop issuing digital sign permits to the two billboard companies, but not before they were able to put up about 100 digital signs, mostly on the city's Westside, including on Lincoln Boulevard in Venice.
The Court of Appeal disagreed with the trial court ruling on what to do about the existing digital sign permits. The lower court previously ruled the decision was an administrative matter that should be the purview of city officials, who should address each permit on a case-by-case basis.
Lawyers for the two sign companies argued that forcing the removal of the digital signs would be "grossly excessive" in relation to the injury suffered by Summit Media in not being included in the illegal settlement.
However, "we see nothing 'grossly excessive' in the revocation of illegal permits issued under an illegal settlement agreement that contravenes municipal ordinances," the justices' ruling states.
It is unclear how the decision will affect an effort the City Council initiated in October to regulate and charge a fee for digital billboards.
Special Assistant City Attorney Jane Usher said the ruling "simply adds an additional note of judicial clarity, but doesn't alter the city's ability to regulate digital signs so long as that legislation treats all comers evenly."
Clear Channel Outdoor Vice President of Communications Jim Cullinan did not say whether the company will appeal the ruling to the California Supreme Court. But he said Clear Channel disagreed with the court's ruling and is in the process of reviewing the court's complete opinion.
"While this legal process continues to move forward, Clear Channel Outdoor remains focused on delivering great advertising solutions for our customers and working with the city and community of Los Angeles," Cullinan said.