WMX Tech. v. Miller

• Decision Date: 26 August 1999
• Docket Number: No. 97-55336,97-55336
• Parties: (9th Cir. 1999) WMX TECHNOLOGIES, INC., a Delaware corporation; WASTE MANAGEMENT OF CALIFORNIA, INC., a California corporation, Plaintiffs-Appellants, v. EDWIN L. MILLER, JR., as District Attorney of San Diego County, California, Defendant-Appellee
• Court: U.S. Court of Appeals — Ninth Circuit

Page 367

197 F.3d 367 (9th Cir. 1999)

WMX TECHNOLOGIES, INC., a Delaware corporation; WASTE MANAGEMENT OF CALIFORNIA, INC., a California corporation, Plaintiffs-Appellants, v. EDWIN L. MILLER, JR., as District Attorney of San Diego County, California, Defendant-Appellee.

No. 97-55336

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Submitted August 26, 1999¹

Filed September 2, 1999

[Copyrighted Material Omitted]

COUNSEL: Robert H. Friebert, Friebert, Finerty & St. John, Milwaukee, Wisconsin, and David J. Zubkoff, Seltzer, Caplan, Wilkins & McMahon, San Diego, California, for the plaintiffsappellants.

Morris G. Hill, Office of the County Counsel, San Diego, California, for the defendant-appellee.

Appeal from the United States District Court for the Southern District of California Judith N. Keep, District Judge, Presiding

Before: Procter Hug, Jr., Chief Judge, James R. Browning, Mary M. Schroeder, Melvin Brunetti, John T. Noonan, Edward Leavy, Stephen S. Trott, Ferdinand F. Fernandez, Pamela Ann Rymer, Andrew J. Kleinfeld, and Sidney R. Thomas, Circuit Judges.

Opinion by Chief Judge Hug

OPINION

HUG, Chief Judge:

The Board of Supervisors of San Diego County, in order to evaluate plaintiffs' application for permits to develop a landfill site, directed the district attorney to conduct an investigation of the applicant and to render a report to the Board. This case involves an action by the plaintiffs under 42 U.S.C. S 1983 against the district attorney in his official capacity, alleging that statements in the report were defamatory and deprived the plaintiffs of property and liberty without due process of law. Plaintiffs also assert that their First and Fourteenth Amendment rights to petition the Government were violated. The district court dismissed the action under Federal Rule of Civil Procedure 12(b)(6). We have jurisdiction under 28 U.S.C. S 1291, and we affirm.

I. BACKGROUND

WMX Technologies, Inc., formerly known as Waste Management, Inc., is a holding company that owns and operates entities that collect, store, and dispose of solid and liquid wastes. Waste Management of California, Inc., a wholly owned subsidiary of Waste Management, Inc., proposed to develop and operate a new landfill site in San Diego County (in this appeal we refer to the plaintiffs collectively as "Waste Management."). In November 1990, Waste Management applied to the San Diego County Board of Supervisors ("Board") for the necessary use permits.

The Board unanimously voted to authorize San Diego County Supervisor Susan Golding to request District Attorney Edwin Miller to investigate allegations of improprieties by Waste Management, Inc., and its operating subsidiaries. In her letter to Miller, she stated:

Some of the specific concerns that have been brought to my attention include:

* Allegations of price-fixing and other antitrust violations.

* Allegations of criminal conduct.

* Allegations of environmental contamination and illegal dumping of toxic and hazardous material.

* Allegations of inadequate liability insurance held by WMI on their municipal and hazardous waste operations.

* Allegations of organized crime connections.

On April 1, 1992, Miller's Final Report was sent to the Board and disclosed to the press. It contained the following sections:

I. Introduction

II. Company History

III. Environmental Problems

IV. Significant Environmental Cases

V. Organized Crime Connections

VI. Public Corruption

VII. Anti-Trust and Unfair Business Practices

VIII. Waste Management, Inc., in San Diego

IX. Conclusion

In response to the report, Waste Management instituted this action under 42 U.S.C. S 1983 against Miller in his official capacity as the District Attorney of San Diego County.

The complaint alleges that Section V of the Report contained a conclusion that Waste Management is connected to organized crime and attaches, as Exhibit C, to the complaint a copy of Section V of the Report. An examination of Exhibit C reveals that there is no statement in Section V that reaches such a conclusion. Waste Management's brief clarifies the basis for its contention to be that "[t]he title of Section V, `Organized Crime Connections,' is a conclusory statement that Waste Management, Inc., is connected to organized crime. The contents of the section contain the defendant's support for the conclusion."

Section V of the complaint does trace some early history, from 1960 to 1984, of lawsuits, Justice Department actions, and Congressional hearings concerning persons, subsidiaries, and organizations merged into Waste Management, Inc., that may have had some connections with organized crime. There was no statement in Section V that Waste Management, Inc., or its subsidiaries had any current connections with organized crime. It is only if the heading of the section can be considered a "conclusion" that Section V of Miller's Final Report can be construed to conclude that there exists any current connection to organized crime. Another reasonable inference is that the heading "Organized Crime Connections " is merely a heading to the discussions of one of the subject areas of investigation requested by Susan Golding, similar to the other headings of the report.

Other portions of the Final Report under separate headings were critical of environmental violations, public corruption, antitrust violations, and unfair business practices. The ultimate conclusion to the Final Report in Section IX, although critical of these other areas, does not mention any connection with organized crime. It stated:

Waste Management, Inc.'s, methods of doing business and history of civil and criminal violations has established a predictable pattern which has been fairly consistent over a significant number of years. The history of the company presents a combination of environmental and anti-trust violations and public corruption cases which must be viewed with considerable concern. Waste Management has been capable of absorbing enormous fines and other sanctions levied against it while still maintaining a high earnings ratio. We do not know whether these sanctions have had any punitive effect on the company or have merely been considered as additional operating expenses.

We have reviewed recent practices and problems and our concerns have not diminished. The company's recent business practices and violations do not appear to be different from the past. We have been unable to determine whether Waste Management's history, as reflected by this report, has been due to a failure of proper management, or has been the result of deliberate corporate policy. Whatever the case, the company's history requires extreme caution by the San Diego County Board of Supervisors or any other governmental entity contemplating any contractual or business relationship with Waste Management.

The complaint seeks relief only with regard to Section V, "Organized Crime Connections." No relief is sought with regard to the other portions of the report that were critical of antitrust and environmental violations, public corruption cases, and unfair business practices by Waste Management, Inc. The complaint seeks only declaratory and injunctive relief.

Waste Management requests a declaration that Miller's actions in preparing and issuing the part of the report entitled "Organized Crime Connections" violated Waste Management's rights under the First, Fifth, and Fourteenth Amendments and that the portions of the report referring to organized crime are invalid. Waste Management also request that (1) Miller be ordered to cease and desist from further circulation and dissemination of the portions of the report referring to organized crime, (2) a continuing and permanent obligation be imposed on Miller to retrieve parts of the report referring to organized crime whenever and wherever they have been disseminated including an obligation to take further action anywhere in the world as may be requested by plaintiffs on approval by the court, and (3) Miller be ordered to destroy those parts of the report he retrieves and deliver satisfactory proof of such destruction on a continuing basis to the court.

The complaint alleges that Section V of the Report dam-aged Waste Management's "honor and reputation " and business goodwill, and that Miller intended this effect. The complaint asserts that Miller's dissemination of the report deprived Waste Management of their liberty and property interests without due process of law, as well as violating their First Amendment right to petition the Government. Specifically, the complaint sets forth the following claims for relief:

1. The defendant deprived plaintiffs of their business goodwill, a legislatively created property interest in California, without due process of law;

2. The defendant deprived plaintiffs of liberty by stigmatizing them "plus" distinctly altering their property interest in their business goodwill without due process;

3. The defendant violated plaintiffs' First Amendment right to petition the Government;

4. The defendant deprived plaintiffs of liberty by stigmatizing it in connection with the exercise of their First Amendment right to petition the Government; and

5. The defendant deprived plaintiffs of liberty by making an official and public adjudication of criminal activity.

The district court dismissed the Waste Management's First Amended Complaint for failure to state a claim upon which relief could be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). Claims one, two, and five were dismissed with prejudice, while claims three and four were dismissed with leave to amend within thirty days. Waste Management neither took advantage of the opportunity to amend nor informed the district court that they would do so. Instead, on the thirtieth day, they filed a notice of appeal without obtaining a separate judgment of the district court dismissing all five claims with prejudice.

A divided three-judge panel affirm...