COUNTY OF OAKLAND BY KUHN v. City of Detroit

• Decision Date: 14 February 1992
• Docket Number: No. 84-71068.,84-71068.
• Citation: 784 F. Supp. 1275
• Parties: The COUNTY OF OAKLAND, by George W. KUHN, the Oakland County Drain Commissioner, Plaintiff, and the County of Macomb, by Thomas S. Welsh, Macomb County Public Works' Commissioner, Intervening Plaintiff, v. The CITY OF DETROIT; Coleman A. Young; Charles Beckham; Nancy Allevato, as Personal Representative for the Estate of Michael J. Ferrantino, Sr.; Darralyn Bowers; Sam Cusenza; Joseph Valentini; Charles Carson; Walter Tomyn; Vista Disposal, Inc.; Michigan Disposal, Inc.; Wayne Disposal, Inc.; Wolverine Disposal, Inc.; and Wolverine Disposal-Detroit, Inc., Defendants.
• Court: U.S. District Court — Western District of Michigan

784 F. Supp. 1275

The COUNTY OF OAKLAND, by George W. KUHN, the Oakland County Drain Commissioner, Plaintiff and the County of Macomb, by Thomas S. Welsh, Macomb County Public Works' Commissioner, Intervening Plaintiff, v. The CITY OF DETROIT; Coleman A. Young; Charles Beckham; Nancy Allevato, as Personal Representative for the Estate of Michael J. Ferrantino, Sr.; Darralyn Bowers; Sam Cusenza; Joseph Valentini; Charles Carson; Walter Tomyn; Vista Disposal, Inc.; Michigan Disposal, Inc.; Wayne Disposal, Inc.; Wolverine Disposal, Inc.; and Wolverine Disposal-Detroit, Inc., Defendants.

No. 84-71068.

United States District Court, E.D. Michigan, S.D.

February 14, 1992.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Philip G. Tannian, Detroit, Mich., Robert Hurlbert, Bloomfield Hills, Mich., for plaintiff.

William W. Misterovich, Mount Clemens, Mich., James A. Smith/Vincent Tatone, Bodman Longley, Detroit, Mich., for intervening plaintiff.

S. Allen Early, III, Miller Canfield, Edward F. Bell, Bell & Gardner, Kenneth M. Zorn, Richard E. Zuckerman, Honigman Miller, N.C. Deday Larene, Detroit, Mich., Robert S. Harrison, David N. Zacks, Birmingham, Mich., Daniel J. LaCombe, Sharon M. Woods, Barris Sott Denn & Driker, Detroit, Mich., for defendants.

OPINION AND ORDER

GADOLA, District Judge.

Plaintiff County of Oakland and intervening plaintiff County of Macomb filed the instant civil action in 1984 to recover damages from defendants for allegedly violating the Sherman Act, 15 U.S.C. §§ 1-7, and the Racketeer Influenced and Corrupt Organizations Act "RICO", 18 U.S.C. §§ 1961-68.¹ Plaintiffs named as defendants 14 officials and corporations, including the City of Detroit and Mayor Coleman A. Young. Plaintiffs allege that defendants conspired to violate the antitrust and racketeering laws by excluding competition, illegally fixing the price of sludge hauling, monopolizing the sludge hauling industry and imposing illegal overcharges.

Counts I and II of the complaints allege violations of the federal antitrust laws, 15 U.S.C. §§ 1 & 2, by all defendants.

Counts III through VII of the complaints allege RICO violations, 18 U.S.C. §§ 1961-68. Count III alleges RICO violations by defendants Detroit, Beckham, Ferrantino, Bowers, Cusenza, Valentini, Tomyn, Carson, Michigan Disposal, Wayne Disposal, Wolverine and Wolverine-Detroit through the enterprise Vista Disposal. Count IV alleges a RICO conspiracy by the same defendants named in Count III and again pertains to the enterprise Vista Disposal. Count V alleges violations of RICO by defendants Detroit and Beckham through the enterprise Detroit Water and Sewerage Department "DWSD". Count VI alleges violations of RICO by defendants Ferrantino, Bowers, Cusenza, Valentini, Tomyn, Carson, Vista Disposal, Michigan Disposal, Wayne Disposal, Wolverine and Wolverine-Detroit through the enterprises Vista Disposal, Michigan Disposal, Wayne Disposal, Wolverine, Wolverine-Detroit and Vista/Wolverine. Count VII alleges RICO conspiracy violations by the same defendants named in Count VI and again pertains to the enterprises named in Count VI.

Count VIII alleges a breach of fiduciary duty by Young pursuant to 28 U.S.C. § 959.

Defendant Detroit, pursuant to Fed. R.Civ.P. 12(b)(6) and 12(c), filed a motion to dismiss Counts I through V of the complaints December 11, 1990. Defendant Young, pursuant to Fed.R.Civ.P. 12(c), filed a motion to dismiss Counts I, II and VIII of the complaints December 11, 1990. Defendants Allevato, Carson, Valentini and Wayne Disposal, Inc.,² pursuant to Fed. R.Civ.P. 12(b)(6) and 12(c), filed a motion to dismiss Counts III, IV, VI and VII of the complaints December 11, 1990.³ Defendant Beckham, pursuant to Fed.R.Civ.P. 12(c), filed a motion to dismiss Counts I through V of the complaints December 26, 1990. Oakland filed responses in which Macomb concurred, and the various defendants filed replies and concurrences.

This matter was referred to Magistrate Judge Paul J. Komives. In his October 10, 1991 report and recommendation, the magistrate judge proposed granting Detroit's motion to dismiss the RICO claims against it and denying all other motions for dismissal. The Allevato Defendants filed their objections October 23, 1991. Detroit and Young filed their objections October 28, 1991. Oakland filed its objection October 24, 1991. Macomb filed its concurrence in Oakland's objections, and the remaining defendants filed their concurrences in the objections of Young, Detroit and the Allevato Defendants. Oakland filed responses to Young's, Detroit's and the Allevato Defendants' objections. The Allevato Defendants filed a reply to Oakland's response.

This court reviewed the matter de novo pursuant to 28 U.S.C. § 636(b)(1)(B). Because this court disagrees with some of the magistrate judge's recommendations, this court will issue a complete opinion on this matter.

STANDARD OF REVIEW

Upon a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) or 12(c), all allegations in the complaint are to be accepted as true and construed in favor of the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974); United States v. Mississippi, 380 U.S. 128, 143, 85 S.Ct. 808, 816, 13 L.Ed.2d 717 (1965).

The court's inquiry is limited to whether the challenged pleadings set forth allegations sufficient to make out the elements of a right to relief. Windsor v. The Tennessean, 719 F.2d 155, 158 (6th Cir. 1983), cert. denied, 469 U.S. 826, 105 S.Ct. 105, 83 L.Ed.2d 50 (1984); Great Lakes Steel v. Deggendorf, 716 F.2d 1101, 1105 (6th Cir.1983). The complaint should not be dismissed unless it appears without doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Lee v. Western Reserve Psychiatric Habilitation Ctr., 747 F.2d 1062, 1065 (6th Cir.1984).

I. COUNTS I & II

Counts I and II of the complaints allege violations of federal antitrust law, 15 U.S.C. §§ 1 & 2, by all defendants. Detroit, Young and Beckham filed motions to dismiss asserting that the Local Government Antitrust Act "LGAA", 15 U.S.C. §§ 34-36, should be applied to bar Macomb's complaint and should be applied retroactively to bar Oakland's complaint. Detroit, Young and Beckham assert that the LGAA bars Macomb's claims because Macomb's complaint was filed after the effective date of the LGAA. Defendants also assert that the LGAA should be applied retroactively to bar Oakland's antitrust damage claims.

Oakland and Macomb argue that defendants cannot meet the burden of demonstrating that the LGAA should be retroactively applied. Plaintiffs contend that defendants were not acting within their governmental authority and that the LGAA does not immunize criminal or unauthorized activity. In addition, plaintiffs contend that the stage of litigation and unavailability of alternative relief favors continued prosecution of their claims, and a treble damage award against defendants would not harm Detroit or its taxpayers. Finally, plaintiffs challenge the constitutionality of the LGAA's retroactivity provision as an unlawful delegation of legislative power to the judiciary.

The LGAA provides in relevant part:

(a) Prohibition in general. No damages, interest on damages, costs, or attorney's fees may be recovered under 15 U.S.C. §§ 15, 15a or 15c from any local government, or official or employee thereof acting in an official capacity.

(b) Preconditions for attachment of prohibition; prima facie evidence for nonapplication of prohibition. Subsection (a) shall not apply to cases commenced before the effective date of this Act unless the defendant establishes and the court determines, in light of all the circumstances, including the stage of litigation and the availability of alternative relief under the Clayton Act, that it would be inequitable not to apply this subsection to a pending case. In consideration of this section, existence of a jury verdict, district court judgment, or any stage of litigation subsequent thereto, shall be deemed to be prima facie evidence that subsection (a) shall not apply.

15 U.S.C. § 35.

At the outset, it appears that the LGAA's retroactivity provision is constitutional. Congress has wide latitude in making civil, as opposed to criminal, statutes retroactive. The constitution only prohibits, without qualification, ex post facto criminal legislation. See Calder v. Bull, 3 U.S. (3 Dall.) 386, 1 L.Ed. 648 (1798). "The mere fact that a statute applies to a civil action retrospectively does not render it unconstitutional." Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 554, 69 S.Ct. 1221, 1229, 93 L.Ed. 1528 (1949). This court agrees with the few courts that have considered this issue and holds that the LGAA retroactivity provision is constitutional. See, e.g., Miami Int'l Realty Co. v. Town of Mt. Crested Butte, 607 F.Supp. 448, 451 & n. 1 (D.Colo.1985); Jefferson Disposal Co. v. Parish of Jefferson, 603 F.Supp. 1125, 1137 (E.D.La.1985).

The effective date of the LGAA was September 24, 1984. Macomb's complaint was filed November 19, 1984. Because Detroit is a local government as defined in 15 U.S.C. § 34(1)(A), Counts I and II of Macomb's complaint are barred as to Detroit.⁴ Further, Macomb's complaint explicitly states that "Young and Beckham each performed the acts alleged above in their official capacities as agents and officers of Detroit."⁵ All allegations in the complaint are to be accepted as true. Scheuer, 416 U.S. at 238, 94 S.Ct. at 1687; United States v. Mississippi, 380 U.S. 128, 143, 85 S.Ct. 808, 816, 13 L.Ed.2d 717 (1965). Because Macomb has affirmatively pleaded that Young and Beckham have acted in an official capacity, Counts I and II of Macomb's complaint are barred as to Young and Beckham.

Oakland's complaint was filed March 8, 1984, well before the effective date of the LGAA. Therefore, section 35(a) does not...