Lebron v. National Railroad Passenger Corporation

Petitioner
Michael A. Lebron
Respondent
National Railroad Passenger Corporation
Petitioner's Claim
That refusal to place an advertisement on Amtrak's Spectacular billboard hadviolated his First and Fifth Amendment rights.
Chief Lawyer for Petitioner
David D. Cole
Chief Lawyer for Respondent
Kevin T. Baine
Justices for the Court
Stephen Breyer, Ruth Bader Ginsburg, Anthony M. Kennedy, William H. Rehnquist, Antonin Scalia (writing for the Court), David H. Souter, John Paul Stevens,Clarence Thomas
Justices Dissenting
Sandra Day O'Connor
Place
Washington, D.C.
Date of Decision
21 February 1995
Decision
The Supreme Court reversed the decision of the U.S. Court of Appeals for theSecond Circuit and held that Amtrak was a government agency. Therefore, Amtrak is part of the federal government subject to the free speech requirements of the First Amendment. As such, Amtrak could not prohibit political billboards from train stations.
Significance
The decision extended the First Amendment to corporations created by, and under the control of, the government in the case of an artist who argued successfully that Amtrak had been wrong to reject his billboard display because of its political message. The First Amendment bars only governments and instruments of government from infringing upon the freedom of speech. Private personsand corporations generally are free to regulate speech in whatever ways thatthey wish. The Court's holding that Amtrak is a part of government extends First Amendment protections to federally created corporations. The Supreme Court indicated that it might not extend these protections to other federally created corporations that are not as closely affiliated with and controlled by the government.
American concern about inefficiency in government dates back to the First Continental Congress. In over 200 years since the First Congress, reorganizationhas taken place, but the fundamental structure of government departments haschanged little. However, their jurisdiction has grown. The Reinventing Government program of Vice President Al Gore is only the latest in a series of plans to reinvigorate the federal government.
Petitioner, Michael A. Lebron, created a billboard display that involved commentary on public issues. In August of 1991, he contacted Transportation Displays Incorporated (TDI), which managed the leasing of the billboards in Amtrak's Pennsylvania Station in New York City. He sought to display an advertisement on a large billboard known to New Yorkers as "the Spectacular." The Spectacular was a curved, illuminated billboard, approximately 103 feet long and 10feet high. It dominated the main entrance to Penn Station's waiting room andticket area.
On 30 November 1992, Lebron signed a contract with Transportation Displays Incorporated to display an advertisement on the Spectacular for two months beginning in January of 1993. The contract provided that all advertising was subject to approval of Transportation Displays Incorporated and Amtrak as to character, text, illustration, design and operation. Lebron declined to disclosethe specific content of his advertisement throughout his negotiations with Transportation Displays Incorporated, but explained that it was political.
On 2 December 1992, he submitted to Transportation Displays Incorporated andAmtrak an advertisement. The advertisement was described by the district court

The work is a photomontage, accompanied by considerable text. Taking off on a widely circulated Coors beer advertisement which proclaims Coors to be the `Right Beer,' Lebron's piece is captioned `Is it the Right's Beer Now?' It includes photographic images of convivial drinkers of Coors beer,juxtaposed with a Nicaraguan village scene in which peasants are menaced by acan of Coors that hurtles towards them, leaving behind a trail of fire, as if it were a missile. The accompanying text, appearing on either end of the montage, criticizes the Coors family for its support of right wing causes, particularly the contras in Nicaragua. Again taking off on Coors' advertising which uses the slogan of `Silver Bullet' for its beer cans, the text proclaims that Coors is `The Silver Bullet that aims The Far Right's political agenda atthe heart of America.'

Amtrak did not approve the advertisement. Amtrak's policy was not to allow political advertising on the Spectacular Billboard. Lebron filed suit against Amtrak and Transportation Displays Incorporated. He claimed that refusal to place his advertisement on the Spectacular billboard had violated his First andFifth Amendment rights. The district court ruled that Amtrak, because of itsclose ties to the federal government, was a government entity for First Amendment purposes. Rejection of Lebron's proposed advertisement violated the First Amendment. The district court granted Lebron an injunction and ordered Amtrak and Transportation Displays Incorporated to display Lebron's advertisement on the Spectacular.
The U.S. Court of Appeals for the Second Circuit reversed the decision. The court noted that Amtrak was, by the terms of the legislation that created it,not a government entity. It concluded that the federal government was not soinvolved with Amtrak that the latter's decisions could be considered federalaction. The U.S. Supreme Court then issued a writ of certiorari, a written order commanding a lower court to forward the proceedings of a case forreview, and took on the case.
An Important Reversal
By a majority ruling (8-1), the Supreme Court reversed the decision of the U.S. Court of Appeals for the Second Circuit. The Court relied on the confluence of a number of factors to conclude that Amtrak, a federally chartered for-profit corporation, is "part of the government" for "the purpose of individualrights guaranteed against the Government by the Constitution." Amtrak is wholly owned by the United States, and the government controls its board of directors. In incorporating Amtrak, Congress declared that it "will not be an agency or establishment of the United States Government," although it subjectedAmtrak to the Government Corporation Control Act, and classified it as a mixed-ownership government corporation.
Amtrak was created by the Rail Passenger Service Act of 1970 (RPSA) to avertthe threatened extinction of passenger trains in the interest of "the publicconvenience and necessity." The legislation established detailed goals for Amtrak, set forth its structure and powers, and assigned the appointment of a majority of its board of directors to the president.
In giving the majority opinion, Justice Scalia distinguished between two types of government corporations. The first type was that such as Conrail, in which the responsibilities of the federal directors are not different from thoseof the other directors. Each director had a role to operate the corporationat a profit for the benefit of its shareholders. In the second type of government corporations, such as Amtrak, the public directors had other duties besides profit.
The Court ruled that "where, as here, the government created a corporation byspecial law for the furtherance of governmental objectives, and retains foritself permanent authority to appoint a majority of that corporation's directors, the corporation is part of the Government for purposes of the First Amendment." There was a long history of corporations created and participated inby the United States for the achievement of governmental objectives. Amtrak'sauthorizing statute provided that it will not be an agency or establishmentof the United States Government.
The Court relied on a number of factors to conclude that Amtrak is an agencyof the United States for the purpose of individual rights guaranteed againstthe government by the Constitution. This conclusion accords with the public,judicial and congressional understanding over the years that government-created and government-controlled corporations are part of the government itself.
A Dissenting Opinion
In her dissent, Justice O'Connor said that the Court had avoided the issue that Amtrak was a private entity. Justice O'Connor wrote that she must continueto answer the question that is properly presented to the Court: whether Amtrak's decision to ban Lebron's speech, although made by a concededly private entity, is nevertheless attributable to the government and therefore considered state action for constitutional purposes. The conduct of a private entity is not subject to constitutional scrutiny if the challenged action resulted from the exercise of private choice, and not from state influence, or coercion.
Justice O'Connor saw no basis to credit to the government Amtrak's decision to disapprove Lebron's advertisement. Although there were a number of factorsindicating government influence in Amtrak's management and operation, none suggested that the government had any effect on Amtrak's decision to turn downLebron's proposal. The advertising policy that allegedly violated the First Amendment originated with a predecessor to Amtrak, the wholly private Pennsylvania Railroad Company. A prior lease by that company prohibited "any advertisement which in the judgement of Licensor is or might be deemed to be slanderous, libelous, unlawful, immoral, or offensive to good taste . . . " Amtrak continued this policy after it took over. The specific decision to disapprove Lebron's advertising was made by Amtrak's Vice President of Real Estate and Operations Development, who was not appointed by the president, nor by the president appointed board.
Lebron nevertheless contends that the board, through its approval of the advertising policy, controlled the adverse action against him. Justice O'Conner wrote, "it assumes that the board members sit as public officials and not as business directors, thus begging the question whether Amtrak is a Government agency or a private entity." The particular lease, which permitted Amtrak to disallow Lebron's billboard was neither reviewed, nor approved, directly by the board. The Amtrak Board approved only one contract between Amtrak and Transportation Displays Incorporated, the billboard leasing company that served asAmtrak's agent. In this case, no evidence suggested that the government controlled, coerced, or influenced Amtrak's decision, made according to corporatepolicy and private business judgment, to not approve of the advertisement proposed by Lebron.
Justice O'Conner wrote, "the Court of Appeals properly applied our precedentsand did not impute Amtrak's decision to the Government. I would affirm on this basis and not reverse the Court of Appeals based on a theory that is foreign to this case. Respectfully, I dissent."
A Second Appeal
The nation's highest court reversed the ruling in 1995 and sent Lebron's caseback to the appeals court. The justices had left undecided whether Amtrak had committed any free speech violation. Ordered to study Lebron's First Amendment arguments, the appeals court again ruled against him in October of 1995."Amtrak's historical refusal to accept political advertisements such as Lebron's on the Spectacular is a reasonable use of that forum that is neutral as to viewpoint," the appeals court ruled. The court of appeals denied a rehearing on 29 December 1995. Lebron again appealed to the Supreme Court, but it rejected his appeal on 27 May 1996.
Impact
The cases of McCulloch v. Maryland (1819) and Osborn v. Bank of United States (1819) set the foundation for the constitutional status of federal government corporations. These two decisions established three clear principles concerning a federal government corporation. First, the federal government may charter private corporations. Second, the presence of a minority ofdirectors appointed by the president, or federal ownership of a minority ofshares, did not make an otherwise private corporation into an agency. Third,the federal government may give special advantages and powers, such as stateand federal tax exemptions or control of the money supply, to a private federal corporation. No subsequent court decision has seriously questioned any ofthese general principles. The Supreme Court's decision in this case added a fourth principle to the list: A corporation created for a public purpose overwhich the government retains permanent control is a federal government corporation.
Related Cases

• McCulloch v. Maryland, 4 Wheat 316 (1819).
  
• Osborn v. Bank of United States, 9 Wheat 738 (1819).
  
• Burton v. Wilmington Park Authority, 365 U.S. 715 (1961).