Byre v. City of Chamberlain

• Decision Date: 16 January 1985
• Docket Number: No. 14090,14090
• Citation: 362 N.W.2d 69
• Parties: 1985-1 Trade Cases 66,393 Martin T. BYRE, Plaintiff and Appellee, v. CITY OF CHAMBERLAIN, a Municipal Corporation, Defendant and Appellant.
• Court: South Dakota Supreme Court

Page 69

362 N.W.2d 69

1985-1 Trade Cases 66,393

Martin T. BYRE, Plaintiff and Appellee, v. CITY OF CHAMBERLAIN, a Municipal Corporation, Defendant and Appellant.

No. 14090.

Supreme Court of South Dakota.

Argued Oct. 24, 1983.

Decided Jan. 16, 1985.

Paul Mueller, Chamberlain, for plaintiff and appellee; Philip Stoeckle, Chamberlain, on brief.

Ronald K. Miller of Miller, Miller & Sebastian, Kimball, for defendant and appellant; Steven J. Bucher of Miller, Miller & Sebastian, Kimball, on brief.

MORGAN, Justice.

The complaint in this action was amended and the only count which survived at the conclusion of the trial alleged a violation of SDCL ch. 37-1, South Dakota's antitrust law. The jury awarded the plaintiff, Martin Byre (Byre), $40,500 in actual damages and under SDCL ch. 37-1 they trebled that amount. The trial judge signed a judgment against the city of Chamberlain, South Dakota (City), which awarded Byre $121,500. City appeals under SDCL 15-26A-3(1). We reverse and remand.

City provided garbage service for the residents and businesses of Chamberlain until 1960 when problems arose and City was unable to provide sufficient or efficient service. At that time, the city commissioners asked Byre to operate the garbage service as an employee of City. Byre refused to work for City but contracted to purchase City's equipment and to provide garbage service for City's residents and businesses as an independent contractor. The 1960 contract between Byre and City was periodically modified between 1965 and 1978 in order to increase Byre's income. Byre operated the only garbage collection and disposal service within a thirty or forty-mile radius of Chamberlain.

Upon advice of counsel in March of 1978, Byre applied for city licenses for each of his three garbage trucks. Section 6 of City Ordinance 375 provides:

No person shall use the Streets or Alleys of the City of Chamberlain for the collection, removal or disposal of any garbage or trash without first having obtained a license to perform such services from the Commission.

In June of 1978, Byre sought to increase the garbage service rates charged by City in order to increase his gross income. He asserted that increased costs made it difficult for him to operate. City asked Byre to present his records, books, and an explanation of his costs so it could determine how much to pay him. Byre refused or failed to furnish this information and negotiations broke down.

In September of 1978, City made Byre a final offer of $44,000 per year, $1,400 more than Byre's original June request. Byre's son, who is involved in the family waste disposal business, testified at trial that Byre declined the $44,000 offer on October 23, 1978, because City failed to comply with the applicable bidding procedures set out in SDCL ch. 5-18. ¹ On October 19, 1978, Byre announced in the local newspaper that beginning November 1, 1978, residential garbage would be collected on a contract basis only. The residents of Chamberlain were requested to sign and return a form that was included in the newspaper announcement if they desired Byre's service.

On November 6, 1978, City attempted to provide garbage collection for all City residents through December 31, 1978, by offering Byre $3,000 if he would collect City's residential garbage in November and $3,500 for December's garbage collection. Byre refused this offer on November 14, apparently because City had again failed to comply with the bidding procedure set out in SDCL ch. 5-18.

Under this court's decision in Northern Hills Sanitation v. Board of Com'rs., 272 N.W.2d 835 (S.D.1978), cities contracting for waste removal must comply with the bidding procedures set out in SDCL ch. 5-18. The city commission decided on November 20, 1978, to advertise for bids for the collection of all residential and commercial garbage and waste produced in City.

On November 23, 1978, Byre placed an announcement in the Chamberlain newspaper, which read:

Attention. Anyone who doesn't have their residential contract signed and sent to us by December 1 will no longer have their garbage picked up. Martin Byre and Sons. (emphasis added)

City announced that on December 1, 1978, the date upon which Byre's service to residents who were not contracted with him was to stop, City would collect the garbage. On December 1, 1978, City employees began collecting residential and commercial waste. City had no way of distinguishing at that time between Byre's customers and residents or businesses which had not contracted with Byre; consequently, City attempted to collect all the garbage.

Two bids were received in response to the November bid notice. They were opened at the December 4, 1978, city commission meeting and neither met the advertised bid specifications; consequently, City re-let the bid. The bid specifications, however, were changed to request a five-year contract instead of three, and to allow for an alternative bid price based on a percentage of gross revenues collected by City for garbage collection and disposal. The same two parties who bid the first time around, Byre and the Stienfeld and Steckelberg partnership (S & S), bid again. Byre's second bid, like his first, did not meet the bid specifications. He attempted to reserve his contracted pick ups as private customers. On December 29, 1978, City accepted S & S's bid to collect the waste from city residences and businesses for eighty-three percent of City's annual revenues collected for waste collection and disposal.

At the December 29 meeting, Byre and his supporters submitted a petition to initiate a new ordinance to permit the private collection of garbage and to prohibit City from charging residents and businesses contracted with private garbage collectors. The city commission, on January 8, 1979, began to formulate its own modification of the city garbage ordinance. It directed the city attorney to modify the garbage ordinances to establish a dumping fee for private collectors who deposited waste in the city landfill. The city commission awarded S & S the bid on January 17, 1979, because the S & S bid was the only one that conformed to the advertised specifications. S & S began performing as City's contracted garbage collector on February 1, 1979.

On March 6, 1979, City residents adopted the initiated ordinance to prevent City from charging City residents and businesses for waste disposal services provided under contracts with private garbage collectors. The ordinance was retroactive to March 1, 1979. The city commission decided on March 19 to bill all city residents and businesses for waste disposal services furnished in December 1978 and January and February 1979 and to continue billing each resident or business until a signed private contract was filed with City. This decision was based upon City's interpretation of Ordinance 375. Section 9 of that ordinance reads:

The City shall make a charge of $6.00 per each quarter for the collection of garbage from each family domestic unit.... The City shall make a charge, to be determined by the Commission for each month to each place of business.... Such charge ... shall be noted on the quarterly water bill of each unit and shall immediately become due and payable....

As a result of City's decision to comply with the literal meaning of the ordinance, some residents and businesses under contract with Byre were billed by both Byre and City for waste disposal services furnished by Byre during those three months.

When Byre delivered garbage collection contracts to City for his customers, City stopped billing contract customers for garbage collection after March 1, 1979. The garbage charges for December 1978 and January and February 1979 continued to appear on the quarterly water bills mailed to residents who had not paid City for garbage collection for those months. City ordinance required payment of all outstanding indebtedness prior to transfer of licenses and water service.

Byre filed a complaint against City and initiated this lawsuit on December 4, 1978. He predicated his damages on loss of one-half of the total Chamberlain garbage collection market and the start-up costs of a private landfill. After both sides rested their cases, the trial court dismissed all counts except the question of City's antitrust liability and submitted that to the jury. The jury awarded Byre $23,000 for lost profits, $17,500 for the costs of opening a landfill, and trebled the actual damages awarded, for a total award of $121,500.

City has appealed and raises five issues: (1) Whether City is immune from state antitrust liability when providing for waste collection and disposal; (2) whether City violated state antitrust laws by letting bids, contracting for waste collection and disposal and continuing to bill all city residents when City had issued a license to a private collector who had private contracts with some city residents; (3) whether an initiated ordinance, petitioned for by city residents to except residents who had contracted with a private collector from an ordinance requiring City to mandatorily bill all residents for waste collection and disposal, is a valid use of the initiative power; (4) whether it was reversible error to admit exhibits and testimony based on hearsay, speculation and self-serving time and motion studies, all of which demonstrated City's actions as evidence of Byre's alleged damages; and (5) whether, under the facts of this case, the trial court committed reversible error by failing to instruct the jury properly.

The first issue raises the question of City's immunity from state antitrust laws in its role as waste collector. Byre's announcement placed City in a dubious situation. The announcement clearly implied that garbage would not be collected from residents who did not contract with Byre. He apparently expected to break his connection with City and take advantage of his position as the only garbage collector in the market area in...