Ctr. for Investigative Reporting v. Se. Pa. Transp. Auth.

975 F.3d 300

The CENTER FOR INVESTIGATIVE REPORTING, Appellant

v.SOUTHEASTERN PENNSYLVANIA TRANSPORTATION AUTHORITY

No. 19-1170

United States Court of Appeals, Third Circuit.

Argued October 23, 2019

Filed: September 14, 2020

Molly M. Tack-Hooper [ARGUED], American Civil Liberties Union of Washington Foundation, 901 Fifth Avenue, Suite 630, Seattle, WA 19102, Brian M. Hauss, American Civil Liberties Union, Speech, Privacy & Technology Project, 125 Broad Street, 18^th Floor, New York, NY 10004, John S. Stapleton, LeVan Muhic Stapleton, 601 Route 73 North, Four Greentree Centre, Suite 303, Marlton, NJ 08053, Rebecca S. Melley, Robert A. Wiygul, Hangley Aronchick Segal Pudlin & Schiller, One Logan Square, 18^th & Cherry Streets, 27^th Floor, Philadelphia, PA 19103, Attorneys for Appellant

Stephen G. Harvey, Steve Harvey Law, 1880 John F. Kennedy Boulevard, Suite 1715, Philadelphia, PA 19103, James P. Davy, 2362 East Harold Street, Philadelphia, PA 19125, Bruce D. Brown, The Reporters Committee for Freedom of the Press, 1156 15^th Street, N.W., Suite 1020, Washington, DC 20005, Attorneys for Amicus Appellants

Kendra L. Baisinger, Robert E. Day, III, Maryellen Madden [ARGUED], John J. Powell, Montgomery McCracken Walker & Rhoads, 1735 Market Street, 21^st Floor, Philadelphia, PA 19103, Attorneys for Appellee

Gregory J. Krock, McGuireWoods LLP, Tower Two-Sixty, 260 Forbes Avenue, 18^th Floor, Pittsburgh, PA 15222, Attorney for Amicus Appellee

Before: GREENAWAY, JR., PORTER, and GREENBERG, Circuit Judges.

OPINION OF THE COURT

GREENAWAY, JR., Circuit Judge.

Appellant Center for Investigative Reporting ("CIR") seeks a permanent injunction that would require the Southeastern Pennsylvania Transportation Authority ("SEPTA") to run an advertisement on the inside of SEPTA buses. The advertisement promotes CIR's research on racial disparities in the home mortgage lending market. SEPTA rejected the advertisement under two provisions of its 2015 Advertising Standards, which prohibit advertisements that are political in nature or discuss matters of public debate (the "Challenged Provisions"). The question presented is whether the Challenged Provisions violate the First Amendment. Because the Challenged Provisions are incapable of reasoned application, we answer that question yes. Accordingly, we will reverse and instruct the District Court to grant declaratory relief and issue a permanent injunction preventing SEPTA from enforcing the Challenged Provisions to exclude CIR's advertisement.

I. BACKGROUND

A. The Parties

SEPTA has operated Philadelphia's mass transit system, including buses, subways, commuter rail, light rail, and trolley service, since 1964.¹ Like many other public transportation authorities, SEPTA generates revenue by accepting advertisements that it displays in its facilities and on its vehicles. The advertising agency Intersection (formerly Titan Outdoor, LLC) manages SEPTA's advertising program, including selling advertising space and reviewing proposed advertisements. SEPTA's contract with Intersection includes the Advertising Standards, which apply to all the advertising space in or on SEPTA vehicles and facilities. When Intersection determines that a proposed advertisement may violate the Advertising Standards, it sends the advertisement to Gino Benedetti, SEPTA's General Counsel, who makes the final decision whether to accept the advertisement.

CIR is a California-based, nonprofit, investigative news organization. Its mission is to advance social justice through the dissemination of verifiable, nonpartisan facts about public issues. CIR publishes its reporting on various platforms, such as its news website Reveal (www.revealnews.org ), national radio show, and podcast.

B. SEPTA's Rejection of the Proposed Advertisement

In January 2018, CIR submitted a proposed advertisement for display on the interior of SEPTA buses. The proposed advertisement consisted of a comic strip entitled "A Stacked Deck," which summarized the findings of a then-forthcoming CIR report detailing the results of its year-long investigation into mortgage lending trends throughout the United States. The report, which CIR published on February 18, 2019, indicated that in 61 metropolitan areas, applicants of color were more likely to be denied conventional home purchase mortgages.

The proposed advertisement consists of the following comic strip:

On February 22, 2018, SEPTA rejected CIR's proposed advertisement because "[d]isparate lending is a matter of public debate and litigation." App. 576. SEPTA included in its rejection email a copy of the 2015 Advertising Standards, which were operative at the time. Id. SEPTA later clarified that it rejected the proposed advertisement "under Standards 9(b)(iv)(a) and (b)" of the 2015 Advertising Standards. App. 613. These provisions, both of which CIR challenges, read:

Prohibited Advertising Content. Advertising is prohibited on transit facilities, products and vehicles if it or its content falls into one or more of the following categories –

(a) Advertisements promoting or opposing a political party, or promoting or opposing the election of any candidate or group of candidates for federal, state, judicial or local government offices are prohibited. In addition, advertisements that are political in nature or contain political messages, including advertisements involving political or judicial figures and/or advertisements involving an issue that is political in nature in that it directly or indirectly implicates the action, inaction, prospective action or policies of a government entity.

(b) Advertisements expressing or advocating an opinion, position or viewpoint on matters of public debate about economic, political, religious, historical or social issues.

App. 616–17.

On August 6, 2018, months after commencing the instant action, CIR submitted a second proposed advertisement to SEPTA. As the District Court explained, the revised advertisement removed two panels from the original—one showing "a white hand handing keys and stick of dynamite to a black hand," and another showing "African-Americans holding signs protesting ... and a white guy not part of the protest." Ctr. for Investigative Reporting v. SEPTA , 337 F. Supp. 3d 562, 574 (E.D. Pa. 2018) (alteration in original). In the letter accompanying this proposed advertisement, CIR explained that it removed the two panels because they were ones that SEPTA identified as particularly concerning.

By letter dated September 21, 2018, SEPTA rejected this second advertisement, explaining that it violated the same provisions as the first. SEPTA explained that the comic "as a whole," as opposed to isolated elements, violated the Advertising Standards. Dist. Ct. Dkt. 2:18-cv-01839, ECF No. 32-1 at 2. Despite its contention that the entire comic was problematic, SEPTA highlighted various unchanged, individual elements of the comic that continued to concern SEPTA. These include: On panel 1, the phrase "A STACKED DECK"; on panel 2, the words "regularly," "DENIED," and "dream"; on panel 6, the sentence "This is just the latest in the United States’ SORDID HISTORY of unequal access to owning a home" and the accompanying image; and on panel 10, the phrase "a deck stacked against them" and the accompanying image. Id.

C. CIR's Allegations

On May 2, 2018, CIR filed the Complaint, alleging that SEPTA violated its First and Fourteenth Amendment rights by rejecting its proposed advertisement. To vindicate these rights, CIR seeks a declaratory judgment that the Challenged Provisions are unconstitutional and a permanent injunction prohibiting SEPTA from enforcing the Challenged Provisions to exclude CIR's proposed advertisement.

D. District Court Proceedings

On August 17, 2018, CIR filed a motion for a preliminary injunction. The Court authorized the parties to engage in limited discovery, including depositions, prior to the hearing on that motion. On September 14, 2018, the District Court held the preliminary injunction hearing.

On September 25, 2018, the District Court denied CIR's motion without prejudice. In reaching this holding, the District Court applied the familiar test for preliminary relief: "A party seeking a preliminary injunction must show: (1) a likelihood of success on the merits; (2) that it will suffer irreparable harm if the injunction is denied; (3) that granting preliminary relief will not result in even greater harm to the nonmoving party; and (4) that the public interest favors such relief." Kos Pharm., Inc. v. Andrx Corp. , 369 F.3d 700, 708 (3d Cir. 2004).

The District Court found that while CIR had shown that it suffered an irreparable injury, none of the other factors favored granting preliminary injunctive relief. The District Court explained that (1) because of the scant evidence about SEPTA's reasons for implementing the 2015 Advertising Standards the District Court could not determine whether CIR was likely to succeed on the merits, and (2) neither the balance of the equities nor the public interest clearly supported either party. Because the bench trial was scheduled to begin in less than one week, the District Court determined that it would prioritize bringing the case to a final disposition. The District Court therefore declined to enter a preliminary injunction.

On October 1, 2018, the District Court held a bench trial. At trial, the District Court heard live testimony from Gino Benedetti, SEPTA's General Counsel, and the parties presented exhibits and stipulated facts.

At trial, as to Subsection (a) (i.e. , the political provision), Benedetti testified on direct examination that the terms "political" and "political in nature" were "essentially the same to [him]." Ctr. for Investigative Reporting , 337 F. Supp. 3d at 577. He stated that the phrase "directly or indirectly implicates the action, inaction, prospective action or policies of a government entity ... defines or connects with what's political in nature." Id. On cross-examination, however, he testified that the...