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Media Alerts - iMatter Utah v. Njord - Tenth Circuit
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December 31, 2014
  iMatter Utah v. Njord - Tenth Circuit
Case Name: iMatter Utah v. Njord - Tenth Circuit

Headline: Tenth Circuit holds that insurance and indemnification requirements of Utah's parade permit scheme violate the First Amendment of the United States Constitution.

Areas of Law: Constitutional Law

Issues Presented:

1. Does the First Amendment require that an exception to costly permit requirements be given to indigent applicants?

2. Did Utah's insurance requirements for the issuance of parade permits violate the First Amendment?

3. Did Utah's indemnification requirements for the issuance of parade permits violate the First Amendment?

Brief Summary:

Two environmental groups applied for permits to hold parades on State Street, a public state highway in Utah. Utah requires such applicants to obtain insurance naming Utah, the Department of Transportation, and its employees as additional insured parties. It also requires applicants to indemnify, hold harmless, and promise to defend Utah, its agencies, and its employees. The permit applications were denied because the environmental groups could not afford to purchase the necessary insurance.

The environmental groups filed suit against the Utah Department of Transportation and several officials challenging the insurance and indemnification provisions of the permit scheme as unconstitutional. The district court awarded summary judgment in favor of the plaintiffs, holding that both provisions were facially invalid restrictions in violation of the First Amendment. The Tenth Circuit affirmed the judgment of the district court, holding that both provisions were invalid time, place, and manner restrictions because they were not narrowly tailored to a significant governmental interest.

Extended Summary:

The State of Utah requires that the organizers of parades taking place on state highways first obtain a permit from the Utah Department of Transportation. As part of the application process, an applicant must "obtain and provide proof of liability insurance at time of application naming the 'State of Utah, the Department and its employees' as additional insured under the certificate, with a minimum of $1,000,000 coverage per occurrence and $2,000,000 in aggregate." Additionally, the applicant must sign an agreement to indemnify, hold harmless, and defend the State of Utah, its agencies, and its employees against various claims resulting from the event or the conduct of the organizers.

Two environmental groups, iMatter Utah and Positive Change Utah, applied separately for permits to hold parades on State Street, a state highway in Salt Lake City, Utah. Both groups were unable to afford the necessary insurance policies, and their applications were later denied. They each filed suit against the Utah Department of Transportation and several of its officials (collectively "Utah"), challenging the insurance and indemnification provisions of the permit scheme as unconstitutional. Their cases were consolidated in the district court, which granted summary judgment in favor of the plaintiffs and held that both requirements were facially invalid under the First Amendment because neither was narrowly tailored to any significant governmental interest espoused by the state. Utah appealed to the Tenth Circuit Court of Appeals.

The court used a de novo standard of review. It began by explaining some of the well-established First Amendment jurisprudence that would form the basis of its analysis. It explained that a law's proponent has the burden of establishing its constitutionality when that law infringes on the exercise of First Amendment rights, citing Ass'n of Cmty. Orgs. for Reform Now (ACORN) v. Municipality of Golden, Colo., 744 F.2d 739, 746 (10th Cir. 1984). It further explained that, as per Supreme Court precedent, the government is allowed to establish reasonable time, place, and manner restrictions on the use of government property considered a traditional public forum. The court did not address whether State Street was a traditional public forum because both parties agreed that it was.

The court first addressed the plaintiffs' argument that the insurance and indemnification provisions were unconstitutional as applied to them because they were unable to afford the insurance coverage necessary for a permit. The court noted that the Supreme Court itself has yet to address whether the First Amendment requires that an exception to costly permit requirements be given to indigent applicants. It highlighted a circuit split in which the Third and Eleventh Circuits have held that such an exception is required while the First and Sixth Circuits have not, particularly when there are "ample alternative forums" for the protected speech. The court adopted the position of the Third and Eleventh Circuits, holding that there is no broad indigency exception required by the First Amendment. While it acknowledged that there may be instances when the First Amendment requires accommodation of indigent people whose "rights are infringed upon by fees they are not capable of paying", the facts of this case did not render Utah's permit scheme unconstitutional.

Turning to the facial challenge to Utah's insurance and indemnification requirements, the Tenth Circuit applied the four-prong test adopted by the Supreme Court in Forsyth Cnty. v. Nationalist Movement, 505 U.S. 123, 130 (1992) and McCullen v. Coakley, 134 S. Ct. 2518, 2529 (2014). The Supreme Court had held that time, place, and manner restrictions must be justified without reference to the content of the regulated speech, be narrowly tailored to serve a significant governmental interest, leave open ample alternative channels for communication of the information, and not delegate overly broad licensing discretion to a government official. The Tenth Circuit did not address the requirement of content neutrality in this case because the district court had concluded (and the parties agreed) that the permit requirements were content neutral.

The court then turned to the question of whether the insurance and indemnification requirements of the permit scheme were narrowly tailored to serve a substantial governmental interest. Utah argued that it had several significant interests to which the requirements were narrowly tailored: the interest in maintaining public order, preventing traffic and sidewalk obstructions, and promoting safety, and the interest in recovering expenses it incurs as a result of the parade and protecting itself from liability resulting from the use of its property.

The court quickly addressed the first set of interests espoused by Utah. The district court previously concluded that neither the insurance nor the indemnification requirement would have any effect on the likelihood that an accident would occur during an event. Utah did not present any evidence to demonstrate otherwise, and so the Tenth Circuit held that the insurance and indemnification requirements were not narrowly tailored to the government's interest in maintaining public order, preventing traffic and sidewalk obstructions, and promoting safety.

The court also quickly addressed Utah's interest in recovering expenses incurred in the production of parades, summarizing it as an interest in "protecting the fisc". The court found that Utah had not presented any evidence to show that the insurance and indemnification requirements are tailored to address that interest, noting that neither requirement forces the permittee to reimburse the state for the various costs it incurs.

The court turned its analysis to whether the requirements were narrowly tailored to Utah's last identified interest: protecting itself from liability. The parties agreed that such an interest is a significant one. The court began its analysis with Utah's insurance requirement. Utah argued that the requirement was narrowly tailored because the sidewalk was "an available, worthy alternative to the street" and the use of it does not require a permit. It also argued, more generally, that requiring the permittee to have insurance and name the state agencies as additionally insured was an "exact fit" to the state's interest of protecting itself from liability. The court rejected both of these arguments.

The court rejected the first argument because satisfaction of the requirement that a valid time, place, and manner restriction "leave open ample alternative channels for communication of the information" does not automatically satisfy the requirement that the restriction be narrowly tailored to a significant governmental interest, nor does it eliminate that requirement. The two requirements are distinct and both must be satisfied for such a restriction to be constitutional.

The court rejected the second argument because Utah had not provided any evidence to support its assertion that the insurance requirement was an "exact fit" to the state's interest in protecting itself from liability. The court explored various hypothetical scenarios in which restricting parades to sidewalks would actually result in greater liability for the state than if it allowed the permit to take place on the street with proper precautions in place. The court then explored the case law cited by Utah as grounds to uphold its insurance requirement. Those cases saw various courts uphold permit fees as constitutional, but those same cases all advanced the proposition that those fees must be demonstrably related to the costs or liability incurred by the state. Utah cited Sullivan v. City of Augusta, 511 F.3d 16 (1st Cir. 2007), where the court held that "it [was] a violation of the First Amendment to have charged [the plaintiff] more than the actual administrative expenses of the license". Id. at 38. Because the insurance premiums to be paid by the permittee would vary based on the policy amounts, Utah was required to demonstrate that its requirement of $1,000,000/$2,000,000 in insurance coverage was aligned to its potential liability. The Tenth Circuit found that Utah had failed to do so.

The court further addressed Utah's potential liability by noting how improbable it was that Utah would incur liability for damages arising from parades. Under the Governmental Immunity Act of Utah (GIAU), Utah Code ยงยง 63G-7-101 to 63G-7-904, the state waived sovereign immunity for injuries "proximately caused by a negligent act or omission of an employee committed within the scope of employment" and for injuries caused by defective, unsafe, or dangerous conditions of highways, roadways, and streets unless the injury was caused by a "latent" condition. In short, Utah's only potential parade liability would be for its own negligence. The court further explained that "Utah cannot require the permittee to bear the cost of insuring Utah against Utah's own negligence."

Finally, the court reasoned that the insurance requirement was not narrowly tailored because it forced permittees to bear the cost of insuring against conduct that the permittees could not be held liable for, such as reactions of third-party bystanders and the actions of police officers or employees of the state. In NAACP v. Claiborne Hardware Co., 458 U.S. 886, 931 (1982), the Supreme Court held that such liability cannot be imposed on organizations exercising their First Amendment rights to free speech unless those organizations actually or apparently authorized or afterwards ratified unlawful conduct. The court held that Utah's insurance requirement was not narrowly tailored to its interest in protecting itself from financial liability and that it violated the First Amendment.

The court then shifted its analysis to determine whether the indemnification requirements were narrowly tailored to the significant governmental interest of protecting the state from liability. It acknowledged that Utah's indemnification provision was narrower in scope than the insurance provision. The court then recalled that, because Utah would avoid liability in most situations because of sovereign immunity, the only real duty imposed by the indemnification clause would be for the permittee to defend Utah against frivolous or meritless lawsuits. The court noted that this duty could easily result in a "heckler's veto" through which third parties who disagree with the reason for or content of a demonstration could punish the demonstrators after the fact through meritless lawsuits against the state.

Utah argued that its indemnification requirement should be upheld because of its similarity to Hawaii's, which was recently upheld by the Ninth Circuit in Kaahumanu v. Hawaii, 682 F.3d 789 (9th Cir. 2012). That provision required permit applicants to indemnify, defend, and hold harmless the state, but it only extended to claims arising from the applicant's conduct. The Tenth Circuit noted that Hawaii's indemnification provision did not, on its face, regulate core expressive conduct as Utah's provision does. Utah's indemnification provision was part of a permit scheme designed to regulate parades which, by their very nature, involve expressive conduct. Hawaii's indemnification provision, by contrast, regulated people engaging in "commercial activities of any kind" on a public beach. This core distinction rendered Kaahumanu inapplicable to the present case.

The court held that Utah's indemnification requirement was not narrowly tailored to its interest in protecting itself from liability and so violated the First Amendment.

To read the full opinion, please visit:

https://www.ca10.uscourts.gov/opinions/13/13-4173.pdf

Panel: Briscoe, Hartz, Holmes

Date of Issued Opinion: December 22, 2014

Docket Number: No. 13-4173

Decided: Affirmed district court's award of summary judgment in favor of plaintiffs.

Counsel:
J. Clifford Petersen, Assistant Attorney General (Joni J. Jones and Kyle J. Kaiser,
Assistant Utah Attorneys General, with him on the briefs), Salt Lake City, Utah,
for Defendants-Appellants.

Stewart Gollan, of the Utah Legal Clinic, (John Mejia and Leah Farrel, ACLU of
Utah, with him on the brief), Cooperating Attorney for the Utah Civil Rights &
Liberties Foundation, Salt Lake City, Utah, for Plaintiffs-Appellees.

Author: Briscoe

Case Alert Author: Ian M. Alden

Case Alert Circuit Supervisor: Barbara Bergman

    Posted By: Dawinder Sidhu @ 12/31/2014 06:24 PM     10th Circuit  

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