Bennett Elec. Co. v. Village of Miami Shores
| Citation | 11 F.Supp.2d 1348 |
| Decision Date | 06 May 1998 |
| Docket Number | No. 97-0727-CIV.,97-0727-CIV. |
| Court | U.S. District Court — Southern District of Florida |
| Parties | BENNETT ELECTRIC COMPANY, a Florida corporation, and West Side Sanitation, Inc., d/b/a Lazaro's Waste & Recycling Systems, Inc., a Florida corporation, Plaintiffs, v. The VILLAGE OF MIAMI SHORES, a Florida municipality, Defendant. |
Susan April, Holland & Knight, Howard Mazloff, Howard Mazloff, P.A., Miami, FL, for Plaintiffs.
Scott E. Perwin, Kenny Nachwalter Seymour Arnold Critchlow & Spector, P.A., Richard Sarafan, Richard & Richard, P.A., Miami, FL, for Defendant.
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS AND ORDER CLOSING CASE
This case presents the question of whether a municipality's decision to take control of the local waste collection market violates the Commerce Clause or the federal antitrust laws. The Court concludes that the municipality's actions neither discriminate against nor unduly burden interstate commerce, and that the municipality is entitled to state action immunity from the antitrust laws. Therefore, the municipality's motion to dismiss the Amended Complaint is GRANTED.
Pursuant to the Miami Shores Village Code, commercial establishments and residential units must use the waste collection and disposal services of the Village of Miami Shores unless authorized to hire a private, village-licensed waste collector.1 Plaintiffs' Amended Complaint2 alleges that this municipal Ordinance violates the Commerce Clause, and the Sherman and Clayton Acts.
In their Amended Complaint, Plaintiffs claim that Miami Shores did not begin to enforce the portion of the Ordinance at issue until July 1995. At that time, numerous multi-family buildings and businesses contracted with private collectors for waste collection and disposal services, instead of using Miami Shores' services. On July 11, 1995, Miami Shores' Public Works Director recommended to the Miami Shores Manager that the entities that used private collectors be prohibited from doing so and be required to use and pay for Miami Shores' waste collection and disposal services.
On July 18, 1995, the Miami Shores Council began to enforce the Ordinance based in part on the recommendation of the Public Works Director and the Manager. The Council required all accounts, except for certain accounts which were exempted, to use and pay for Miami Shores' waste collection and disposal services. Plaintiffs allege that the Council began enforcing the Ordinance in order to fund capital improvements that are unrelated to waste collection.
As of the July 18, 1995, Council vote, Plaintiff Bennett Electric Company was utilizing Miami Shores' waste collection and disposal services. In September 1995, Bennett received a $3,170.50 statement from Miami Shores for anticipated waste collection and disposal services from October 1, 1995 to September 30, 1996.
Bennett subsequently sent a letter to Miami Shores terminating the municipal waste collection and disposal service. On October 1, 1995, Bennett entered into a one-year contract with a private collector — Environmental Waste Systems ("EWS") — for waste collection and disposal services. Bennett's contract with EWS was for $737.52, which Bennett notes is less than 25% of what Miami Shores would have charged for comparable services.
In early April 1996, Bennett received a notice from the Public Works Department indicating that the private collectors' licenses would not be renewed and that Bennett would be required to use Miami Shores' waste collection and disposal services. On April 26, 1996, Bennett's owner was informed by the Public Works Director that Bennett could no longer use the private collector, and that Bennett would have to use and pay for Miami Shores' waste collection and disposal services. Bennett was also informed by the Manager that Miami Shores would begin servicing Bennett on June 1, 1996.
In early May 1996, Bennett received a letter from the Public Works Director indicating that the charge for Miami Shores' waste collection and disposal services would be $3,589.35. Based on Miami Shores' actions, Bennett was unable to renew its contract with EWS after it expired on September 30, 1996, and Bennett was billed by both EWS and Miami Shores from June 1, 1996 through September 30, 1996.
Plaintiff West Side Sanitation, Inc., d/b/a Lazaro's Waste & Recycling Systems, Inc. ("Lazaro's") alleges that numerous contracts that it had with private commercial residents of Miami Shores to collect and dispose of their waste, as well as contracts that Lazaro's had purchased from another private collector, became valueless and were terminated as a result of Miami Shores' enforcement of the Ordinance.
The Commerce Clause provides that Congress "shall have Power ... To regulate Commerce with foreign Nations, and among the several States ...." U.S. Const. art. I, § 8, cl. 3. "Although the Commerce Clause is by its text an affirmative grant of power to Congress to regulate interstate and foreign commerce, the Clause has long been recognized as a self-executing limitation on the power of the States to enact laws imposing substantial burdens on such commerce." South-Central Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 87, 104 S.Ct. 2237, 81 L.Ed.2d 71 (1984). This negative restriction on state power is known as the "dormant" Commerce Clause. Oklahoma Tax Comm'n v. Jefferson Lines, Inc., 514 U.S. 175, 179, 115 S.Ct. 1331, 131 L.Ed.2d 261 (1995).
Under pertinent Supreme Court caselaw, this Court must conduct two inquiries to determine whether the Ordinance is valid despite its effect on interstate commerce.3 First, the Court must determine "whether the ordinance discriminates against interstate commerce ...." C & A Carbone, Inc. v. Town of Clarkstown, 511 U.S. 383, 390, 114 S.Ct. 1677, 128 L.Ed.2d 399 (1994). "Discrimination against interstate commerce in favor of local business or investment is per se invalid, save in a narrow class of cases in which the municipality can demonstrate, under rigorous scrutiny, that it has no other means to advance a legitimate local interest." Id. at 392, 114 S.Ct. 1677 (citing Maine v. Taylor, 477 U.S. 131, 106 S.Ct. 2440, 91 L.Ed.2d 110 (1986)).
If, however, the Court finds that the Ordinance does not discriminate against interstate commerce, then the Court must proceed to the second inquiry: assessing "whether the ordinance imposes a burden on interstate commerce that is `clearly excessive in relation to the putative local benefits.'" Id. at 390, 114 S.Ct. 1677 (quoting Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 90 S.Ct. 844, 25 L.Ed.2d 174 (1970)).
The parties' arguments as to whether the Ordinance violates the Commerce Clause focus on two recent cases addressing similar Commerce Clause issues: C & A Carbone, Inc. v. Town of Clarkstown, 511 U.S. 383, 114 S.Ct. 1677, 128 L.Ed.2d 399 (1994), and USA Recycling, Inc. v. Town of Babylon, 66 F.3d 1272 (2d Cir.1995), cert. denied, 517 U.S. 1135, 116 S.Ct. 1419, 134 L.Ed.2d 544 (1996). Carbone involved a challenge by a solid waste processing company and related entities to a so-called flow control ordinance adopted by the Town of Clarkstown, New York. The flow control ordinance basically provided that all nonhazardous solid waste within the town had to be processed at a designated transfer station before leaving Clarkstown. At this transfer station, bulk solid waste would be separated into recyclable and nonrecyclable items. The recyclable waste would then be shipped to a recycling facility, while the nonrecyclable waste would be sent to a landfill or incinerator. Carbone operated a recycling center in Clarkstown, performing many of the functions that the transfer station would perform. For example, Carbone would sort and bale bulk solid waste, and then ship it off to various processing facilities.
Under the flow control ordinance, the processing fees charged at the transfer station would be used to amortize the cost of the station. The local contractor who agreed to construct the facility was permitted to charge haulers a so-called tipping fee of $81 per ton, and the town guaranteed the contractor a minimum of 120,000 tons per year. If the station did not receive the minimum 120,000 tons, the town agreed to pay the deficit in the tipping fees. After five years under this arrangement, the town would purchase the facility from the contractor for one dollar.
The facility's ability to reach the 120,000 ton yearly guarantee was made more difficult by the fact that the $81 per ton tipping fee was greater than the disposal cost on the private market. To solve this problem and to help achieve the 120,000 ton guarantee, the town passed the flow control ordinance, thereby requiring all nonhazardous solid waste within Clarkstown to pass through the transfer station.
Under the flow control ordinance, Carbone was still allowed to receive solid waste, but Carbone had to bring the nonrecyclable items from that waste to the transfer station. Carbone thus could not ship the nonrecyclable waste itself, and Carbone had to pay the tipping fee on trash it had already sorted.
The Supreme Court held that the flow control ordinance violated the Commerce Clause. Carbone, 511 U.S. at 386, 114 S.Ct. 1677. The Court explained that Id. at 391, 114 S.Ct. 1677. The Court further reasoned that the flow control ordinance "hoards solid waste, and the demand to get rid of it, for the benefit of the preferred processing facility." Id. at 392, 114 S.Ct. 1677. Similarly, the flow control ordinance was found to "squelch[ ] competition in the waste-processing service altogether,...
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