The Local Search Association filed suit today against the City and County of San Francisco, the Board of Supervisors, and Mayor Edwin Lee asking the U.S. District Court to overturn the city’s recently passed opt-in ordinance. The suit claims that the city’s rationale for the ordinance is unconstitutional on the grounds that it is “arbitrary” and “irrational.” For example, the suit claims that the city “singles out Yellow Pages while other sources produce 99 percent of paper waste.”

The YP industry has fought against opt-in since the legislation was first considered in February. By the end of March, the industry received a small victory after a vote was delayed to commission a study on whether opt-in would economically harm local SMBs. Ultimately, the city won the battle. Now the industry is pushing back through its only recourse, the courts.

In a blog post announcing the decision to sue, LSA President Neg Norton said: “This is not an action we take lightly. For years, we have worked to improve the San Francisco community by providing residents with important local civic and business information. We are disappointed that we now need to sue the city in order to provide our services to its residents and local businesses. That said, we believe there are limits to any city’s ability to control how we distribute community information, whether it is print or online.”

 The ordinance’s architect, San Francisco Supervisor David Chiu, told the The SF Appeal online newspaper that he expected the city to win the suit.

“I am confident San Francisco’s new law will stand up to court scrutiny…We carefully crafted the legislation to address the significant environmental harm and blight caused by mass over-distribution of yellow pages while still allowing for them to get into the hands of all who want them,” Chiu told the Appeal.

The suit’s prospects are unclear. In Seattle, where the city has passed a robust opt-out ordinance, the Yellow Pages industry has lost the early rounds of that legal battle. However, the industry seems confident that the more draconian opt-in measure is on shakier legal ground.

In a related development, the Association of Directory Publishers announced it has established the Delivery Rights Defense Fund. The DRDF will receive, hold and disburse voluntary financial contributions for the industry’s legal challenge. ADP has sought legal counsel from Jeffrey Yablon, of Pillsbury Winthrop Shaw Pittman LLP, concerning the tax-deductibility of contributions. Yablon advised that funds from publishers and partner members deposited into the account are tax-deductible as long as they are not used to influence legislation.

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We just learned that San Francisco Mayor Ed Lee has signed into law the San Francisco opt-in ordinance. Lee’s signature was anticipated since the ordinance passed the city’s Board of Supervisors by an overwhelming margin. The Yellow Pages industry has vowed to take the city to court to challenge the ordinance’s legality.

Here is a statement from Local Search Association (formerly Yellow Pages Association) President Neg Norton, issued a short time after the signing.

“From day one, we committed to addressing the city’s waste reduction goals, but neither the Supervisors nor the Mayor would let us be part of the process,” said Neg Norton, president, Local Search Association.  “What’s most frustrating is that, behind closed doors, many in the city government admit that the arguments and statistics used to support this ban were questionable at best, but for political reasons, did not feel they could oppose it. This leaves us little choice but to pursue legal remedies to this harmful ordinance.”

In other developments, the U.S. Ninth Circuit denied the industry’s motion for preliminary injunction and temporary restraining order relating to the City of Seattle’s opt-out ordinance.

While not happy that the motion was denied, the industry took some encouragement from the Court’s willingness to schedule oral arguments on the appeal for July.

Click here to review our coverage of the opt-in, opt-out issue.

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Pauline Martinson, head of the nonprofit waste-prevention group, I Love A Clean San Diego, told the Union-Tribune, “To most of us, they are no longer necessary.” The UT article also suggested major cities like San Diego and Chicago may jump on the bandwagon if the San Francisco ordinance survives court challenges from the industry.

Richard Anthony, who runs a San Diego zero-waste consulting firm, isn’t on board with the opt-in movement. Anthony said, “the free market should dictate the fate of phone books.”

Steven Osinski, an authority on phone book advertising and teacher at San Diego State’s business school, told the newspaper he doesn’t expect phone books to disappear but acknowledges that they “face major challenges staying relevant in the digital age.”

“As this generation grows up, they’re not interested in the print product,” Osinski said. “They want immediate access to updated information.”

BIA/Kelsey will release an advisory later this week on the history of opt-in/opt-legislation and the implications for the industry.

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Yesterday, the San Francisco Board of Supervisors passed the opt-in ordinance that the Yellow Pages industry had vigorously opposed. Immediately following the vote, the Local Search Association (formerly the Yellow Pages Association) called on San Francisco Mayor Edwin Lee to veto the ordinance. The ordinance passed 10-1 but formal passage must wait until a routine “second reading” next week, which is likely to be a rubber stamp.

The ordinance is the first opt-in (where consumers must proactively choose to receive a print directory) measure to pass in the United States. While the industry sees opt-out (where consumers can choose not to receive a book) as a serious challenge, it has viewed opt-in as a lethal threat. Opt-in could decimate reach, increase costs and drive secondary operators out of business.

Proponents argue that in an era of declining usage, ubiquitous distribution is incredibly wasteful. if someone wants a book, no one is stopping him or her from requesting one under an opt-in plan.

The San Francisco ordinance is positioned as a “three-year pilot program” that will commence in 2012. The ordinance was proposed based on environmental concerns as well as concerns over the cost of disposing of unwanted phone books.

Here is what LSA President Neg Norton said in a statement released after Tuesday’s vote:

“It is unfortunate that the Board of Supervisors relied upon myths about the industry’s environmental impact, production processes, financial impact on the community, advertiser ROI and usage statistics. It is also unfortunate that they failed to honor the First Amendment rights of publishers, advertisers and residents of the City,” said Norton. “We will continue to oppose any attempt to single out the Yellow Pages industry and will be working with the Mayor’s office to ensure that the truth about this ill-conceived ordinance becomes known.

“The Board of Supervisors has also failed to provide the public with accurate information on potential tax and revenue losses to the city as a result of the legislation, including the decrease in recycling revenues from the city’s curbside recycling program or the cost to taxpayers of a court battle over the Constitutionality of such a law.”

The industry remains committed to honoring stop-delivery requests from consumers immediately via www.yellowpagesoptout.com, and working with San Francisco residents, and consumers across the country.

The Yellow Pages industry had scored an apparent victory last month when it got the San Francisco Board of Supervisors to delay voting on an opt-in delivery bill in order to generate an economic impact report. The decision to ask for the report came in large part because the industry had marshaled together a coalition of unions and small businesses that voiced concerns about lost jobs and lost customers if Yellow Pages directories weren’t allowed to thrive.

What the city controller’s office came back with Monday is a report that actually says opt-in will be a net positive for the local economy. One of its key points is fewer directories distributed would mean lower ad rates, and thus more efficient advertising for local businesses.

On Tuesday, the Association of Directory Publishers issued an “industry response” to the economic impact report. Basically the ADP argues the report makes very little sense. For example, the report estimates Yellow Pages revenues in San Francisco will decline from $17.5 million to $2.9 million as a result of the ordinance. “Yet is claims that only 20 out of 235 current jobs will be eliminated,” the ADP responds. “This defies all consideration of how the Yellow Pages industry has responded to lower revenues across the country.”

Finally, the ADP responds, “On behalf of the small businesses throughout San Francisco, including those in the Hispanic, Chinese and LGBT communities, we urge the supervisors to see this report for the hogwash that it is.”

The report appeared to be a crushing blow to hopes of staving off a yes vote on the ordinance. Absent a veto, the industry will now be forced to accept the ordinance (unlikely) or file a lawsuit challenging its constitutionality. This week, the industry was handed a setback in Seattle, where it failed to win a ruling that would prevent the Seattle opt-out ordinance from taking effect pending the outcome of the lawsuit there.

Supervisor David Chiu, a mayoral candidate and chief sponsor of the proposed ordinance, cited the report’s findings in an op-ed piece published on SFGate and in the San Francisco Chronicle.

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The Yellow Pages industry has failed to win a preliminary injunction or restraining order from a U.S. District Court in Seattle. This mean the Seattle opt-out ordinance can move forward as the industry pursues its lawsuit seeking to have the ordinance ruled unconstitutional. This decision doesn’t mean the lawsuit will fail, but it does seem to suggest victory is not assured. The industry can either just carry on with the suit or appeal the District Court decision to the 9th Circuit Court in San Francisco.

The Seattle lawsuit, filed by the Local Search Association, Dex One and SuperMedia, followed passage of an opt-out measure by the Seattle city council.

Tomorrow, the San Francisco Board of Supervisors is expected to vote on an opt-in measure, which had been delayed pending a report on the proposed ordinance’s impact on small businesses. The Yellow Pages industry rallied all of the affected constituencies, including unions and small businesses, to oppose the opt-in ordinance. This effort led to delay for further study. Whether it’s enough to stave off final passage remains to be seen.

On Monday, the San Francisco Bay Guardian published an online poll asking consumers to weigh in on the opt-in ordinance. Both the Association of Directory Publishers and the Local Search Association sent email alerts to their members, asking them to vote in the poll. Whether the poll results will have any influence on Tuesday’s vote is unclear.

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In a move that can be seen as a victory for the Yellow Pages industry, the San Francisco board of supervisors decided to delay a vote on its contentious Yellow Pages opt-in ordinance, seeking a study from the city economist to determine if arguments about job loss and hardship for small businesses are valid. The report is due May 10, and its contents may help determine whether the industry’s victory is temporary.

The opt-in ordinance was proposed by board of supervisors president David Chiu, who has announced plans to run for mayor. He may have seen attacking phone book distribution as an easy pro-environment issue. The Yellow Pages industry organized small-business owners, unions representing directory employees and competing publishers to oppose the bill, even mounting a demonstration, which is the San Francisco version of fighting fire with fire.

At first, the demonstrations seemed only to stiffen Chiu’s spine. However, the delay and comments from some of council members suggest the claims that jobs are at risk have at least gotten the attention of supervisors.

In the end, the study may only delay a yes vote on the ordinance, but the industry has at least scored some points in its effort to fight the ordinance. Given his ambitions and the prestige he has invested in this ordinance, Chiu is likely to fight hard for passage. If support weakens, he may be forced to water down the ordinance so that he can win a vote and declare victory. Time will tell.

In an email this morning, Yellow Pages Association President Neg Norton said the industry is working to get small businesses more involved in the effort.

“We’ve begun a merchant outreach program this week in the key districts that will produce letters, videos and petitions as well as a phone bank program where concerned citizens can be patched through to their supervisor to express their opinions. We’ll also begin to gather data on the issues they’re likely to raise with us. It’s been an amazing effort by the coalition we’ve established and we’re making progress.”

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The San Francisco board of supervisors (the city council, essentially) today will consider a phone book opt-in ordinance that directory publishers believe will be devastating to their business. The measure, supported by announced mayoral candidate David Chiu, has drawn urgent opposition from the directory publishing industry, as well as local businesses that rely on Yellow Pages leads. Unions representing workers whose jobs would be at stake under an opt-in regime have also joined the fight.

It’s unclear whether the measure will face a vote today, but so far it has sailed through all the steps leading up to a final vote, so passage seems possible, if not likely.

The San Francisco measure is the toughest yet proposed in a major U.S. city. Seattle recently passed a tough opt-in bill, which prompted an industry lawsuit. Seattle has since modified the bill, but the lawsuit remains active.

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For the past few years, the U.S. Yellow Pages industry has been playing a nationwide version of the arcade game “whack a mole” — beating down one opt-in or opt-out legislative initiative after another with a metaphoric sledgehammer.

For the most part, these efforts have succeeded. Last week was different. A committee of the California state senate passed a very strict White Pages opt-out measure by a 6-4 vote. The Yellow Pages industry (on this one, rival trade groups YPA and ADP are on the same page) doesn’t just fear the consequences in California. What really makes publishers perspire is the idea of copycat legislation — something particularly dangerous when a bill passes in a bellwether state like California.

State and local legislative bodies have targeted directory publishers because directories have become a visible symbol of waste to many, particularly in markets where there are multiple books distributed and in dense urban markets where stacks of phone books are often left uncollected in apartments foyers, photos of which have become the de facto symbols of the opt-out movement. The directory industry has countered that the environmental impact is exaggerated and that it can address any waste problems through self-regulation.

This is how ADP (the group representing smaller, independent directory publishers) President Larry Angove describes the California measure in a letter e-mailed this afternoon to the association membership:

“SB 920 mandates White Pages opt-out, requires independent publishers to honor opt-out requests made directly to the telephone company, establishes virtual lifetime opt-out, stipulates onerous cover language, dictates directory components, requires inclusion of recycling information in a directory, demands publisher participation in a program or organization promoting recycling, insists that publishers comply with state newsprint recycled content law, and criminalizes non-compliance with the law.”

The next step is the Senate Appropriations Committee, which is expected to pass the measure, meaning it’s likely to face a vote by the full senate. The bill was originally written as an opt-in measure, but later amended into an opt-out. However, the industry still sees the measure as unduly harsh.

In his letter, Angove makes clear the importance to publishers of defeating the bill.

“The defeat of SB 920 is critical,” he writes. “If SB 920 passes, copycat legislation across the country is a realistic threat. Prepare for battle!”

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