Television networks and other commercial advertising platforms have wide latitude to reject advertisements because of taste and appropriateness concerns.  When the government makes advertising space available, however, things aren't so simple.  

In 2013, the U.S. State Department ran a "Faces of Global Terrorism" ad on the sides of Seattle buses.  The ad included photos of terrorists on the FBI's most wanted list, many of whom appeared to be Muslim.   A few weeks later, the State Department pulled the ad after some community backlash suggesting that the ads were inflammatory and could lead to hate crimes.  

In response, the American Freedom Defense Initiative ("AFDI") submitted a nearly-identical ad.  Seattle's transit agency, Metro, rejected it, on the grounds that the ad did not comply with its advertising standards.  Metro said that the ad contained false statements, contained demeaning or disparaging content, and may harm or disrupt the transit system.  After some initial litigation over some of the specific language in the ad, which Metro said was false, AFDI submitted a revised ad, which Metro also rejected.  AFDI then continued with its lawsuit, alleging that Metro's rejection of both versions of the ad violated its right to free speech under the First Amendment.

As a limited public forum, in order to survive a First Amendment challenge, the transit system must approve and reject ads in a manner that is reasonable and viewpoint neutral.  

In American Freedom Defense Initiative v. King County, the 9th Circuit held that Metro was well within its rights to reject the first ad, since it contained false claims about the amount of the reward being offered by the State Department.  The court said that rejecting an ad on the basis of falsity was both reasonable and viewpoint neutral.

The court said, however, that Metro improperly rejected AFDI's second ad on the grounds that it is disparaging.  Metro's standard specifically prohibits:

"Advertising that contains material that demeans or disparages an individual, group of individuals or entity.  For purposes of determining whether an advertisement contains such material, the County will determine whether a reasonably prudent person, knowledgeable of the County's ridership, and using prevailing community standards, would believe that the advertisement contains material that ridicules or mocks, is abusive or hostile to, or debases the dignity or stature of any individual, group of individuals or entity."  

The court said that, on its face, this standard violates the First Amendment, since it allows Metro to reject ads solely based on the viewpoint that is expressed. 

The court also considered whether Metro properly rejected the ad because of the concern that the ad could disrupt or harm the transit system.  The court held that it is lawful to prohibit advertising material "if harm to the transit system is reasonably foreseeable."  In its expert report, Metro argued that because the ad may perpetuate harmful stereotypes, it may upset riders, which may lead to a decrease in usage of the transit system.  Citing no disruption to the system when Metro accepted the nearly-identical ad from the State Department, the court rejected Metro's argument that harm to the transit system was reasonably foreseeable here. 

This case follows the Supreme Court's decision in Matal v. Tam, which addressed very similar issues relating to trademark law.  While this decision may be good news for advertisers trying to get out controversial or unpopular messages, it should also make it considerably more difficult for municipalities and other government entities that make advertising space available to set standards for what is acceptable content.