Laidlaw Waste Systems, Inc. v. Bay Cities Services, Inc.

• Decision Date: 13 March 1996
• Docket Number: No. D019887,D019887
• Citation: 43 Cal.App.4th 630,50 Cal.Rptr.2d 824
• Court: California Court of Appeals Court of Appeals
• Parties: , 107 Ed. Law Rep. 906, 96 Cal. Daily Op. Serv. 1786, 96 Daily Journal D.A.R. 2949 LAIDLAW WASTE SYSTEMS, INC., Plaintiff and Appellant, v. BAY CITIES SERVICES, INC., Defendant and Respondent.

Page 824

50 Cal.Rptr.2d 824

43 Cal.App.4th 630, 107 Ed. Law Rep. 906,

96 Cal. Daily Op. Serv. 1786,

96 Daily Journal D.A.R. 2949

LAIDLAW WASTE SYSTEMS, INC., Plaintiff and Appellant, v. BAY CITIES SERVICES, INC., Defendant and Respondent.

No. D019887.

Court of Appeal, Fourth District, Division 1, California.

March 13, 1996.

Post, Kirby, Noonan & Sweat, Charles T. Hoge and Terri A. Perez, San Diego, for Plaintiff and Appellant.

Anton N. Handal and Laurie L. Largent, San Diego, for Defendant and Respondent.

Lloyd M. Harmon, Jr., County Counsel, Diane Bardsley, Chief Deputy County Counsel and William Dean Smith, Deputy County Counsel, as Amicus Curiae on behalf of Defendant and Respondent.

KREMER, Presiding Justice.

In this appeal we are asked to decide whether school districts within the City of Chula Vista (the City) are bound to honor an exclusive franchise for trash hauling awarded by the City to plaintiff Laidlaw Waste Systems, Inc. (Laidlaw). We conclude the school districts, as state agencies, are immune from the City's trash collection regulations and are therefore free to independently contract with other trash haulers pursuant to the competitive bidding provisions of Public Contracts Code section 20111.

FACTUAL AND PROCEDURAL BACKGROUND

Laidlaw and defendant Bay Cities Services, Inc. (Bay Cities) submitted the issue presented in this appeal to the trial court for decision based on stipulated facts, including the following.

The City is a "chartered" city within the meaning of California Constitution article XI, and is authorized to make and enforce all laws with respect to municipal affairs subject only to the express limitations contained it its charter.

In August 1982, the City awarded Laidlaw an exclusive franchise for hauling trash in the City. The Chula Vista Elementary School District has 25 locations and the Sweetwater Union High School District (Sweetwater) has 13 locations in the City.

In September 1989, Laidlaw agreed with the City to allow a competitor, Edco Disposal Corporation (Edco), ¹ to provide trash hauling services to four Sweetwater locations under an existing contract between Sweetwater and Edco. In April 1990, the Chula Vista Elementary School District In July 1992, the City issued cease and desist orders to Bay Cities and Edco, whose franchise exception had expired. On August 10, 1992, Bay Cities began providing trash hauling services to the Chula Vista Elementary School District locations at the latter's request, despite protests from the City and Laidlaw. On August 13, 1992, Laidlaw filed the instant action seeking injunctive and declaratory relief and damages. After Edco withdrew from servicing the Sweetwater locations in the City on June 30, 1993, Bay Cities was awarded a contract to haul trash at 11 Sweetwater locations in the City.

opened bids for a trash collection contract, and awarded the contract to Bay Cities in December 1991. Thereafter, Bay Cities and the Chula Vista Elementary School District entered into negotiations with the City for an exception to Laidlaw's exclusive franchise. The negotiations were unsuccessful.

Laidlaw and Bay Cities stipulated that Laidlaw was a proper party plaintiff, and that the school districts were not necessary parties. The parties further stipulated to withdraw, without prejudice, all claims in the action except their claims for declaratory and injunctive relief. ² In the concluding paragraph of their stipulated facts, the parties agreed "the matter would proceed principally with the trial of the legal issue whether the schools are bound by the authority of the Chula Vista City Council to honor the exclusive franchise awarded to LAIDLAW; or conversely, whether the schools are free to independently put trash service out to bid for haulers not approved by the City Council to haul at school locations."

After hearing oral argument on the legal issue presented for trial, the court ruled in favor of Bay Cities, and judgment was entered accordingly. ³

DISCUSSION

I. Standard of Review

Because the issue presented in this case is a question of law based on undisputed facts, the standard of review on appeal is independent or de novo review. (People v. Louis (1986) 42 Cal.3d 969, 985, 232 Cal.Rptr. 110, 728 P.2d 180; McMillin-BCED/Miramar Ranch North v. County of San Diego (1995) 31 Cal.App.4th 545, 553, 37 Cal.Rptr.2d 472.)

II. Immunity of School Districts from Local Waste Management Ordinances

We begin our discussion by noting that "[s]chool districts are agencies of the state for the local operation of the state school system. [Citations.]" (Hall v. City of Taft (1956) 47 Cal.2d 177, 181, 302 P.2d 574.) "The Legislature's power over the public school system has been described as exclusive, plenary, absolute, entire, and comprehensive, subject only to constitutional constraints.... The Legislature has the power to create, abolish, divide, merge, or alter the boundaries of school districts.... The state is the beneficial owner of all school properties and local districts hold title as trustee for the state.... School moneys belong to the state and the apportionment of funds to a school district does not give the district a proprietary interest in the funds...." (Hayes v. Commission on State Mandates (1992) 11 Cal.App.4th 1564, 1579, fn. 5, 15 Cal.Rptr.2d 547.) Accordingly, "[t]he public schools of this state are a matter of statewide rather than local or municipal concern...." (Hall v. City of Taft, supra, 47 Cal.2d at p. 179, 302 P.2d 574.)

State agencies, including school districts, enjoy immunity from local regulation unless the state, through statute or provision of the California Constitution, has consented to waive such immunity. (Del Norte Disposal, Inc. v. Department of Corrections (1994) 26 Cal.App.4th 1009, 1012-1013, 31 Cal.Rptr.2d 746.) The Del Norte court noted "Because the 'state's immunity from local regulations is merely an extension of the concept of sovereign immunity' [citation], the consent to waive the immunity must be stated in 'express words' [citation] in a statute [citation]." (Id. at p. 1013, 31 Cal.Rptr.2d 746.)

Thus, the Supreme Court in Hall held that when the state (acting through a school district) "engages in such sovereign activities as the construction and maintenance of its buildings, as differentiated from enacting laws for the conduct of the public at large, it is not subject to local regulations unless the Constitution says it is or the Legislature has consented to such regulation." (Hall v. City of Taft, supra, 47 Cal.2d at p. 183, 302 P.2d 574.) In a case more directly on point, City of Santa Ana v. Board of Education (1967) 255 Cal.App.2d 178, 62 Cal.Rptr. 863, relying on Hall, concluded a school district was not subject to local garbage collection regulations because neither the state Constitution nor the Legislature had consented to such regulation. (Id. at p. 180, 62 Cal.Rptr. 863.)

Laidlaw is unable to point to any express statutory or constitutional waiver of the immunity school districts enjoy from local waste management regulations. Laidlaw contends PUBLIC RESOURCES CODE SECTION 40059⁴ authorizes cities to issue exclusive trash hauling franchises which are binding on all local entities, and that City of Santa Ana would have been decided differently if section 40059 had been in effect when it was decided. We disagree.

Section 40059 is part of the California Integrated Waste Management Act of 1989 (the Act). (§§ 40000, 40050 et seq.) Section 40001, subdivision (a) provides: "The Legislature declares that the responsibility for solid waste management is a shared responsibility between the state and local governments."

Section 40059, subdivision (a) provides:

"Notwithstanding any other provision of law, each county, city, district, or other local governmental agency may determine all of the following: [p] (1) Aspects of solid waste handling which are of local concern, including, but not limited to, frequency of collection, means of collection and transportation, level of services, charges and fees, and nature, location, and extent of providing solid waste handling services. [p] (2) Whether the services are to be provided by means of a nonexclusive franchise, contract, license, permit, or otherwise, either with or without competitive bidding, or if, in the opinion of its governing body, the public health, safety, and well-being so require, by partially exclusive or wholly exclusive franchise, contract, license, permit, or otherwise, either with or without competitive bidding. The authority to provide solid waste handling services may be granted under terms and conditions prescribed by the governing body of the local governmental agency by resolution or ordinance."

Del Norte Disposal, Inc. v. Department of Corrections, supra, 26 Cal.App.4th 1009, 31 Cal.Rptr.2d 746, held a state prison was exempt from local ordinances giving the plaintiff trash hauler an exclusive franchise for solid waste disposal in the area where the prison was located. Del Norte rejected the argument that section 40059 constitutes legislative consent to local regulation of state agencies with respect to waste management.

The Del Norte court noted there is no language in section 40059 or elsewhere in the Act "that explicitly grants localities control over state facilities. Indeed, the Act most closely resembles the legislation which Hall found did not make state property amenable to local regulation. No one section expressly transfers authority over solid waste at state facilities to local authorities. Section 40059, heavily relied on by appellants, only grants authority to local governments over matters of 'local concern.' (§ 40059, subd. (a).) Under existing law, state prisons are matters of state, not local, concern. Moreover, the entire statutory scheme divides the subject of waste management between state and local governments. [Citation.] Certainly, an enactment which emphasizes a divided...