The U.S. District Court for the Southern District of New York recently declared unconstitutional New York City’s ban on advertising in vehicles other than exempted taxis. Under the city’s program, medallion and certain other taxis could display advertising, including seat-back television content and advertising, but other for-hire vehicles (“FHVs”), like those used for Lyft and Uber rideshare services could not do the same. Vugo, Inc., a seat-back video advertising company, challenge New York City’s regulations on ground that distinction between taxis and other FHVs violated the First Amendment. On the parties’ cross motions for summary judgment, the district court agreed.

The court reviewed the regulations under Central Hudson’s four-part commercial speech test. Under that test, if the speech regulated is neither false nor unlawful (a component not at issue in this case) and the government can show a substantial interest to justify its regulation, the court then considers whether regulation directly advances the government’s interest and whether it is narrowly drawn and not more extensive than necessary to serve the interest.

On the second prong, the court agreed with New York City that its interest in regulating vehicle advertisements as annoyances to passengers was substantial—but beyond that point the city’s arguments fared worse. Most problematic for the court was the city’s justification for allowing advertising in taxis but not other FHVs: that the advertisements allowed operators to offset the cost of expensive ride- and fare-monitoring equipment the city required taxis to maintain. That justification for the distinction shared no relationship to the city’s concerns about passenger annoyances, however. That is, the advertisement were equally annoying irrespective of whether they helped offset other costs. And because the taxi exemption allowed advertising for more than 370,000 daily trips, the court doubted its ability to advance the city’s aesthetic interests.

The court also found the exemption lacking with respect to Central Hudson’s fourth prong. Though it noted that commercial speech test does not require cities to employ the least restrictive means to achieve their goals, it concluded New York City’s outright prohibition on advertising in FHV was far too broad.

The court’s suggested alternative: just let passengers turn the ads off.

View the complete decision here: https://law.justia.com/cases/federal/district-courts/new-york/nysdce/1:2015cv08253/448867/63/