Lamar Company, L.L.C. v. MS Transportation Commiss ( 2019 )

Case: 18-60712 Document: 00515153244 Page: 1 Date Filed: 10/09/2019
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 18-60712 FILED
October 9, 2019
Lyle W. Cayce
THE LAMAR COMPANY, L.L.C., Clerk
Plaintiff - Appellant
v.
THE MISSISSIPPI TRANSPORTATION COMMISSION,
Defendant - Appellee
Appeal from the United States District Court
for the Southern District of Mississippi
USDC No. 1:17-CV-149
Before KING, HIGGINSON, and DUNCAN, Circuit Judges.
PER CURIAM:*
A Mississippi statute states that billboards cannot be taller than forty
feet. The Lamar Company, L.L.C. and the Mississippi Transportation
Commission disagree about whether that height restriction applies to
billboards erected before April 15, 2008. Lamar believes that older billboards
are exempt, but the Commission believes that they are not. The Commission,
pursuant to its reading of the statute, told Lamar that it could not modify one
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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No. 18-60712
of its older billboards unless the modification shortened the billboard to forty
feet or less. After attempts to clarify the statute via legislative amendment
failed, Lamar sought a declaratory judgment stating that billboards erected
before April 15, 2008 are not subject to the statutory height restriction. The
district court dismissed Lamar’s suit sua sponte for failure to exhaust
administrative remedies. Because Mississippi does not provide an adequate
administrative remedy in this situation, we REVERSE.
I.
In Mississippi, “outdoor signs,” i.e. billboards, must comply with certain
statutory requirements, including the following restriction on billboard height:
For sign structures erected on or after July 1, 2003, the maximum
area for any one (1) sign face shall be six hundred seventy-two
(672) square feet . . . . The height of any sign structure shall not
exceed forty (40) feet. The height of sign structures erected on or
after April 15, 2008, shall not exceed forty (40) feet above the level
of the road grade unless the grade of the land adjacent to the road
is higher than the level of the road grade, then the height of the
sign structure may exceed forty (40) feet above the level of the road
grade but shall not exceed forty (40) feet above the grade of the site
where the sign is placed. Any embellishment on or cut-out
extension of any sign face shall not exceed twenty percent (20%) of
the square footage of such sign face.
Miss. Code. Ann. § 49-23-9(2)(b). The Mississippi Transportation Commission
(“Commission”) has promulgated an identically worded regulation. 37-7501
Miss. Code R. § 09002(1000)(1)(b)-(c). See id. § 09002(1000)(8) (“Any conflict
between the language in this section and the statutory language shall be
controlled by the language of the Statute. Any modification to said statutes
enacted after adoption of this rule shall have control over the limits set out
herein.”).
The Commission is charged with regulating outdoor advertising in
Mississippi. Miss. Code Ann. §§ 49-23-7, 65-1-8. The Commission allows
billboards to remain standing that were “legally erected under the law and
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circumstances then and there existing that fail[] to conform to the
requirements of [Commission regulations] because of subsequent changes to
the law or the circumstances,” but modifications other than “customary
maintenance or repair” are prohibited. 37-7501 Miss. Code. R. § 09002(329),
(1304). The Commission is much more permissive regarding modifications to
billboards that conform to “the requirements under [Commission regulations],
the applicable state statutes, the state-federal agreement, federal statutes and
federal regulations.” Id. § 09002(307), (1302).
The Lamar Company, L.L.C. (“Lamar”) is in the outdoor-advertising
business nationwide, and it owns billboards throughout Mississippi. Many of
those billboards were erected before April 15, 2008. One such billboard, Sign
No. 5821, was erected pursuant to a permit issued by the Mississippi
Department of Transportation (“MDOT”)—the Commission’s executive arm—
in 1986.
On May 22, 2015, Lamar notified MDOT that it had decided to modify
Sign No. 5821 by reducing its height from sixty-one feet to forty-five feet and
by changing the sign’s orientation from vertical to horizontal. In a letter dated
June 2, 2015, MDOT told Lamar that those modifications were not permissible
because the post-modification billboard would be taller than forty feet, which
MDOT believed would violate § 49-23-9(2)(b) and Commission regulations. In
reply, Lamar wrote to MDOT on June 10, 2015, explaining its view that, “under
Section 49-23-9 and Section 1000(c) of the Regulations for Control of Outdoor
Advertising, the 40 foot height limitation does not, by definition, apply to those
sign structures erected before April 15, 2008.” Accordingly, Lamar urged
MDOT—and, hence, the Commission—to reconsider its position and to allow
Lamar to modify Sign No. 5821.
The Commission did not reconsider its position or formally respond to
Lamar’s June 10 correspondence. Instead, in subsequent discussions,
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Commission representatives told Lamar that it should ask the Mississippi
Legislature to clarify whether § 49-23-9(2)(b)’s height restriction applies to
billboards erected before April 15, 2008 by amending the statute. Lamar
agreed to do so. Bills amending § 49-23-9(2)(b) were introduced during the
Mississippi Legislature’s 2015 and 2016 legislative sessions, but both bills died
in committee.
Following its second failed attempt to obtain clarity from the Mississippi
Legislature, Lamar filed a state-court suit seeking judicial guidance. In that
suit, Lamar sought a declaratory judgment “that any sign structure erected
prior to April 15, 2008 may exceed 40 feet in height above the road grade.” In
the alternative, Lamar sought compensation for damage to its property under
Article 3, Section 17 of the Constitution of the State of Mississippi, which
loosely parallels the Takings Clause of the Fifth Amendment to the
Constitution of the United States.
The Commission removed the case to the district court. After the parties
filed briefs regarding the interpretation of § 49-23-9(2)(b), the district court
asked the parties for briefing regarding whether Lamar had exhausted its
available administrative remedies. The district court believed that this issue
had to be resolved before it could reach the merits. In the second round of
briefing, the Commission and Lamar agreed that existing regulations did not
afford Lamar an administrative remedy. The Commission, however, argued
that an administrative remedy was nonetheless available to Lamar, because
the Commission could theoretically order MDOT to conduct an administrative
review regarding whether Lamar’s proposed modifications to Sign No. 5821
could proceed.
The district court dismissed Lamar’s claims for failure to exhaust
administrative remedies. The district court accepted the argument that the
Commission could order MDOT to conduct an administrative review of
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whether Lamar’s proposed modifications to Sign No. 5821 were permissible.
Because the Commission represented that it would order MDOT to conduct
such a review, the district court concluded that “it is clear that at present an
administrative review of the June 2, 2015 decision of the MDOT [to prevent
Lamar from modifying Sign No. 5821] is, in fact, available.” According to the
district court, Lamar could not continue to litigate without first exhausting
this newly available remedy.
II.
When a district court dismisses a case for failure to exhaust
administrative remedies, we apply a de novo standard of review. Pacheco v.
Mineta, 448 F.3d 783, 788 (5th Cir. 2006); Powe v. Ennis, 177 F.3d 393, 394
(5th Cir. 1999).
III.
A.
As an initial matter, Mississippi law regarding the exhaustion of
administrative remedies applies in this case. Under the Supreme Court’s
decision in Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938), federal courts
hearing state-law claims apply state substantive law and federal procedural
law. But the line between substance and procedure can be a murky one, and
exhaustion requirements are among those “matters which, though falling
within the uncertain area between substance and procedure, are rationally
capable of classification as either.” Hanna v. Plumer, 380 U.S. 460, 472 (1965).
Because the Federal Rules of Civil Procedure do not address administrative
exhaustion, we determine whether we should treat the issue as substantive or
procedural by looking to “the twin aims of the Erie rule: discouragement of
forum-shopping and avoidance of inequitable administration of the laws” to
determine whether we should treat the issue as substantive or procedural. Id.
at 468. Litigants would engage in forum shopping if federal courts and state
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courts applied different administrative exhaustion regimes, because some
claims could proceed in one court system but not the other. Further, it would
be unfair for non-diverse litigants to be able to proceed in state court when
diverse but otherwise identically situated litigants could not proceed because
their case was in federal court. Thus, we treat administrative exhaustion as
substantive for Erie purposes and therefore apply Mississippi law. See
Autobahn Imports, L.P. v. Jaguar Land Rover N. Am., L.L.C., 896 F.3d 340,
345 (5th Cir. 2018) (“Sitting in diversity, we apply Texas substantive law on
the exhaustion question . . . .”).
B.
Lamar was not required to exhaust administrative remedies before filing
suit, because no adequate administrative remedy existed. Under Mississippi
law, “[g]enerally, a party is required to exhaust available administrative
remedies before seeking judicial review.” Pub. Emps. Ret. Sys. v. Hawkins, 781
So. 2d 899, 905 (Miss. 2001). But “[w]here no adequate administrative remedy
is provided, the exhaustion doctrine is not applicable.” Campbell Sixty-Six
Express, Inc. v. J. & G. Express, Inc., 141 So. 2d 720, 726 (Miss. 1962); accord
Miss. Dep’t of Env. Quality v. Weems, 653 So. 2d 266, 276 (Miss. 1995)
(concluding that administrative exhaustion was not required because “Weems
was not afforded a plain, speedy, adequate and complete remedy”). Even when
“there is reasonable doubt as to the availability and adequacy of the
administrative remedy,” the Mississippi Supreme Court has not required
administrative exhaustion. Campbell, 141 So. 2d at 726.
Commission regulations do not afford Lamar an administrative remedy.
Those regulations state that “[a]n administrative review may only be taken
from decisions involving the following: a. the denial of a permit to erect a sign;
b. the denial of a vegetation removal permit; or c. the revocation of a permit; or
d. the imposition of” certain penalties. 37-7501 Miss. Code. R. § 09002(1800)(1).
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The June 2, 2015 letter—which conveyed the Commission’s reading of § 49-23-
9(2)(b) and told Lamar that it could not modify Sign No. 5821—does not fit into
any of those categories, so no review is available under existing regulations.
While the Commission argues that it could create a new procedure to
review whether Lamar’s proposed modifications to Sign No. 5821 are
permissible, such a review does not qualify as an adequate and available
remedy. We are not willing to conclude that such a review is available,
notwithstanding the Commission’s representations in litigation, because “[f]or
over a century, Mississippi has required that a public board speak and act only
through its minutes.” Lefoldt v. Horne, L.L.P., No. 18-60581, ___ F.3d ____,
2019 WL 4231355, at *1 (5th Cir. Sept. 6, 2019). The record does not contain
any indication that the representations made by the Commission’s counsel
have been approved in the Commission’s official minutes, so those
representations do not bind the Commission and no administrative review is
available. 1
Additionally, the administrative review suggested by the Commission
would not be an adequate remedy even if it were available. At most, such a
review would allow Lamar to modify Sign No. 5821. But when Lamar filed suit,
it asked for a declaratory judgment stating that § 49-23-9(2)(b)’s height
restriction does not apply to any billboard erected before April 15, 2008, not
just Sign No. 5821. Because Lamar owns billboards throughout Mississippi,
and many of those billboards were erected before April 15, 2008, an
1 To decide this case, we do not need to consider whether an administrative remedy
created after the commencement of litigation can ever qualify as an “available” remedy for
the purposes of administrative exhaustion. We doubt, however, that a doctrine created to
ensure that litigants do not short-circuit the administrative process by pursuing “judicial
review of an administrative action not as yet deemed complete,” applies to litigants who file
suit after exhausting all then-existing remedies. Louis L. Jaffe, Primary Jurisdiction, 77
Harv. L. Rev. 1037, 1037 (1964).
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administrative review regarding a single billboard would not offer Lamar an
opportunity to obtain complete relief.
IV.
For the foregoing reasons, we REVERSE the judgment of the district
court and remand for further proceedings consistent with this opinion.
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