The question in this case is whether a New York City law regulating companies that provide outdoor advertising space “to others” applies where one company provides advertising space to another company, but both companies are owned by the same person.
In its attempt to regulate the use of outdoor advertising, city law imposes certain requirements on any “outdoor advertising company” (OAC). City law defines an OAC in relevant part as any person or corporation that makes space on outdoor signs “available to others for advertising purposes.”
The OAC law is enforced in administrative proceedings before the New York City Environmental Control Board (ECB), which has interpreted what it means to provide advertising space “to others.” Under that interpretation, a person does not provide advertising space “to others”–and thus is not an OAC–where the person advertises their own business on property that they directly own. But this exception–called the Nativo exception after the administrative decision that first applied it–does not apply if the building owner and the company advertised are two separate corporations. And this is true even if the two corporations are owned by the same person.
That’s this case: petitioners are corporate entities that own buildings that display signs advertising a solo practitioner’s law practice. Although the building owners and the law practice are separate corporate entities, they’re owned by the same person. The building owners were cited for failing to comply with rules governing OACs, and the ECB upheld the citations after concluding that the Nativo exception did not apply.
A divided panel of the First Department confirmed the ECB’s determination. The majority concluded that interpreting the phrase “to others” broadly to apply to separate corporate entities, even if they share common ownership, rationally advanced the law’s purpose of having “strong enforcement of outdoor sign regulation.” And because the ECB’s interpretation was rational, the majority held, that interpretation was entitled to deference. The dissenters disagreed, arguing that it was irrational to hinge application of the regulatory scheme on whether a person owned property formally through a holding company as opposed to directly.
Petitioners appealed to the Court of Appeals as a matter of right.
Return to the case page for Matter of Franklin Street v. NYC Environmental Control Board.