Glenwillow Landfill v. City of Akron, Ohio

• Decision Date: 19 December 1979
• Docket Number: Civ. A. No. C78-65A,C78-1733A.
• Citation: 485 F. Supp. 671
• Parties: GLENWILLOW LANDFILL, INC., et al., Plaintiffs, v. CITY OF AKRON, OHIO, et al., Defendants. HYBUD EQUIPMENT CORPORATION et al., Plaintiffs, v. CITY OF AKRON, OHIO, et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

485 F. Supp. 671

GLENWILLOW LANDFILL, INC., et al., Plaintiffs, v. CITY OF AKRON, OHIO, et al., Defendants.

HYBUD EQUIPMENT CORPORATION et al., Plaintiffs, v. CITY OF AKRON, OHIO, et al., Defendants.

Civ. A. Nos. C78-65A, C78-1733A.

United States District Court, N. D. Ohio, E. D.

December 19, 1979.

COPYRIGHT MATERIAL OMITTED

William C. Brashares, Steven R. Schaars, Washington, D. C., Joseph E. Abdenour, John L. Wolfe, Akron, Ohio, Francis X. Beytagh, Toledo, Ohio, for plaintiffs.

James L. Bickett, Akron, Ohio, Eben G. Crawford, William H. Baughman, Jr., Cleveland, Ohio, Steven J. Schwartz, Asst. Pros. Atty., Akron, Ohio, for defendants.

MEMORANDUM OPINION AND ORDER

CONTIE, District Judge.

In December 1976, the City of Akron, Summit County, and the Ohio Water Development Authority (OWDA) entered into a cooperative agreement to enable the OWDA to sell $46,000,000 worth of revenue bonds so the City could develop a recycle energy system. To fulfill its obligations under the agreement, the City enacted Ordinance No. 846-1976. The plaintiffs in these two cases allege that certain covenants of the cooperative agreement and the ordinance are illegal because: they deprive plaintiffs of due process of law under the fourteenth amendment;¹ they take property in violation of the fifth amendment to the United States Constitution as applied to the states through the fourteenth amendment; they restrain interstate commerce in violation of Article I, section 8 of the Constitution; they violate Article 18, section 3 of the Ohio Constitution; and they violate sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1-2. The plaintiffs seek declaratory and injunctive relief, and an award of attorney's fees.

The Court has jurisdiction of the action under 28 U.S.C. §§ 1331, 1337 and 2201. The parties ask the Court to exercise pendent jurisdiction over the state law claim. Venue is proper in this district under 28 U.S.C. § 1391(b), 15 U.S.C. §§ 15, 22. The Court duly heard testimony and received exhibits on May 14, 15, 16, 17, and 18, 1979. The following shall constitute the Court's findings of fact and conclusions of law in accordance with Rule 52, Federal Rules of Civil Procedure.

I. FACTS

The parties have stipulated to the great proportion of the relevant facts.² Paragraphs 1 through 50 and 90 through 92 of the pre-trial stipulation are incorporated herein as Appendix A. The remaining portion of the stipulation, paragraphs 51 through 89 and part of paragraph 5, is incorporated herein as Appendix B.³ The stipulation entered into at trial, paragraphs 4 through 13 of the Ohio Water Development Authority's proposed findings of fact, is incorporated herein as Appendix C. In addition the Court finds the following facts:⁴

1. The city built the RES to solve its solid waste disposal problem. A number of factors, including Ohio Edison's desire to stop generating steam for the downtown business district, caused the city to decide the RES was the best alternative available to solve the waste disposal problem.

2. The underwriters decided it was necessary to assure a supply of waste to the RES in order to market the revenue bonds. After learning this the city and the OWDA concluded that it would be necessary to require that all waste collected within the city limits would be taken to the RES.

A. Sherman Act

When both constitutional and statutory violations are alleged it is preferable for the Court to consider the statutory questions first, thus avoiding advisory opinions on constitutional issues if possible. Ashwander v. Tennessee Valley Authority, 297 U.S. 288, 346-47, 56 S.Ct. 466, 80 L.Ed. 688 (1936) (Brandeis, J., concurring). This Court will, therefore, first consider the alleged antitrust violations.

Initially the Court must consider whether the plaintiffs have standing to challenge the covenants and the ordinance on anti-trust grounds. The defendants argue that the plaintiffs lack standing to attack the legality of the covenants because the covenants by themselves have no force or effect and cause the plaintiffs no injury in fact. See Warth v. Seldin, 422 U.S. 490, 498-99, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975); Simon v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26, 38, 96 S.Ct. 1917, 48 L.Ed.2d 450 (1976). But the plaintiffs' anti-trust claims include allegations of conspiracy.

Under the Sherman Act an agreement in restraint of trade is illegal. Proof of the actual effect on commerce caused by the conspiracy is not always required to establish a violation of the statute. E. g., United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129 (1940). The cooperative agreement is arguably evidence of an illegal conspiracy in restraint of trade which may be illegal under the Sherman Act without proof of its actual effects. Therefore the Court does not believe that the plaintiffs must show injury in fact caused by the covenants to raise the Sherman Act claims. Furthermore, the enforcement of the ordinance will subject the plaintiffs who collect solid waste within the city to potential criminal penalties if they violate its terms. If injury in fact was a requirement to assert the Sherman Act claims the waste collectors would still have standing to challenge the defendants' agreement under the Sherman Act: they were injured by the ordinance that was enacted pursuant to the covenants of the cooperative agreement.⁵

Regarding the substance of the plaintiffs' antitrust claims, the defendants argue that their conduct is exempt from the operation of the Sherman Act under Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), and its progeny. In Parker a California raisin grower challenged the California prorate program under the Sherman Act.⁶ The Supreme Court assumed that the program would violate the Sherman Act if it was organized and made effective solely by an agreement between private parties. The act, however, derived its force and effect from the legislative command of the state. The Supreme Court found

nothing in the language of the Sherman Act or in its history which suggests that its purpose was to restrain a state or its officers or agents from activities directed by its legislature. In a dual system of government in which under the Constitution, the states are sovereign, save only as Congress may constitutionally subtract from their authority, an unexpressed purpose to nullify a state's control over its officers and agents is not lightly to be attributed to Congress.

Id. at 350-51, 63 S.Ct. at 313. Thus, the Court decided that the administration of the California act was not covered by the Sherman Act.

The defendants argue that their conduct is similarly protected for two reasons, first because of the powers granted to the OWDA which make it the state agency with power over waste disposal facilities, and second because of the home-rule powers granted to the City of Akron under state law.

Section 6121.02 of the Ohio Revised Code creates the OWDA.⁷ The OWDA's powers with respect to waste disposal facilities are set out in section 6123.03 of the Ohio Revised Code:

It is hereby declared to be the public policy of the state through the operations of the Ohio water development authority . . . to provide for the comfort, health, safety, and general welfare of all employees and other inhabitants of the state and for the conservation of the land, air and water resources of the state through efficient and proper methods of disposal salvage and reuse of or recovery of resources from solid wastes thereby eliminating or decreasing accident and health hazards including rodent and insect sectors of disease, public nuisance and the adverse effect on land values caused thereby and the scenic blight marring the landscape, and to assist in the financing of solid waste facilities . .. In furtherance of such public policy, the Ohio water development authority . . may make loans and grants to governmental agencies for the acquisition or construction of solid waste facilities by such governmental agencies . . . and may issue solid waste revenue bonds of this state payable solely from revenues, to pay the cost of such projects.

The defendants contend that the powers granted to the OWDA within its sphere of authority are comparable to the power granted to the Supreme Court of Arizona over the practice of law, and that their actions should be accorded the immunity recognized in Bates v. State Bar of Arizona, 433 U.S. 350, 359-63, 97 S.Ct. 2691, 53 L.Ed.2d 810 (1977).

In Bates the Supreme Court held that enforcement of the state supreme court's disciplinary rule which prohibited attorneys from advertising in newspapers and other media was exempt from the Sherman Act under the doctrine of Parker v. Brown, supra. The Court isolated three factors in reaching its conclusion. First, the Court noted that the defendant in Bates was the state and not a private party.⁸ Second, the Court found that the state of Arizona had an interest in protecting the public that was intimately connected to its regulation of the activities of the bar. Finally, the Court saw in the disciplinary rules a clear articulation of the state's policy with regard to professional behavior, and active supervision and review of the state policy by the responsible state agency. 433 U.S. 361-62, 97 S.Ct. 2691.

The Court will assume arguendo that if private parties entered into the covenants contained in the cooperative agreement and attempted to carry out the terms of the challenged ordinance their actions would violate the Sherman Act. Examining the factors outlined by the Supreme Court in Bates, the Court first finds the OWDA is a state agency and that its power to determine state policy concerning the issuance of state revenue bonds for facilities like the RES is supreme. Second, the Court determines that the state has a legitimate interest in promoting safe and sanitary methods of solid waste disposal; the state's concerns, and their...