Tryko Holdings, LLC v. City of Harrisburg, No. 19cv906

• Court: United States District Courts. 3th Circuit. United States District Court of Middle District of Pennsylvania
• Writing for the Court: Hon. John E. Jones III, District Judge
• Citation: 429 F.Supp.3d 12
• Parties: TRYKO HOLDINGS, LLC, on behalf of itself and all others similarly situated, Plaintiff, v. CITY OF HARRISBURG and Mayor Eric Papenfuse, Defendants.
• Decision Date: 16 December 2019
• Docket Number: No. 19cv906

429 F.Supp.3d 12

TRYKO HOLDINGS, LLC, on behalf of itself and all others similarly situated, Plaintiff,
v.
CITY OF HARRISBURG and Mayor Eric Papenfuse, Defendants.

No. 19cv906

United States District Court, M.D. Pennsylvania.

Filed December 16, 2019

429 F.Supp.3d 14

Patrick Howard, Saltz, Mongeluzzi, Barrett & Bendesky, P.C., Philadelphia, PA, for Plaintiff.

Elizabeth Kramer, Frank J. Lavery, Jr., Lavery Law, Harrisburg, PA, Josh Autry, Morgan & Morgan, Lexington, KY, for Defendants.

MEMORANDUM

Hon. John E. Jones III, District Judge

429 F.Supp.3d 15

Plaintiff Tryko Holdings, LLC brought the above-captioned action on its own behalf and on behalf of all others similarly situated seeking declarative and injunctive relief against Defendants the City of Harrisburg and its Mayor, Eric Papenfuse. Presently pending before the Court is Defendants' Motion to Dismiss Plaintiff's Complaint, (Doc. 1) (the "Motion"). (Doc. 8). The Motion has been fully briefed, (Docs. 16, 19, 24), and is ripe for disposition. For the reasons that follow, the Motion shall be granted.

I. BACKGROUND

In accordance with the standard of review applicable to a motion to dismiss, the following facts are derived from Plaintiff's complaint and viewed in the light most favorable to it.¹

A. The Incinerator Sale

Since 1972, the City of Harrisburg (the "City") owned an incinerator, which it had to close in 2003 due to environmental and fiscal challenges. (Doc. 19-1, at ¶ 22). The City attempted to retrofit the incinerator, but the contractor it had hired for the job went bankrupt. (Id. ). The failed retrofitting project sunk the City into more than $300 million of debt. (Id. at ¶ 23). The City issued bonds to raise money, but it began missing payments in 2009. (Id. at ¶ 23). In 2010, Pennsylvania's Department of Community and Economic Development declared the City a "financially distressed municipality" under Act 47. (Id. ).

In 2011, the Commonwealth of Pennsylvania produced a bailout plan for the City, which the Harrisburg City Council rejected. (Id. at ¶ 24). Ultimately, in 2012, the Commonwealth Court placed the City in receivership, (id. at ¶ 25), and the Receiver, General William E. Lynch, formulated the "Harrisburg Strong Plan" (the "Plan") to guide the City's financial recovery. (Id. ). The Plan required the City to sell its incinerator to the Lancaster County Solid Waste Management Authority ("Lancaster") for $129.9 million. (Id. at ¶ 26). As part of the arrangement, however, the City guaranteed to provide Lancaster with 35,000 tons of trash to process per year, for 20 years, at a cost of $190 per ton. (Id. at ¶¶ 26–27). In effect, the City committed to providing Lancaster with $133 million of debt service over 20 years. (Id. ).

The incinerator sale precipitated two municipal actions relevant to the instant litigation. First, in July 2013, the Harrisburg City Council raised the City's waste collection and disposal rates to offset the City's debt service to Lancaster. (Id. at ¶ 29). The City promulgated its new waste collection rates in a document entitled "Commercial Volume Rate Effective April 1, 2015." (Id. at ¶ 33). Second, on February 9, 2015, the City's Mayor, Eric Papenfuse (the "Mayor"), announced in a letter to the City's businesses that the City—rather than private haulers—would assume all municipal waste and recycling collection duties within the City. (Id. at ¶¶ 30, 32). The Mayor's letter explained that the City would be doing so "as a result of the sale of the Harrisburg Incinerator to Lancaster County Solid Waste Authority[ ] and the trash volume requirements placed upon the City by the conditions of the sale...." (Id. ¶ 31). The City then made agreements

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with private waste haulers to keep them from collecting waste within the City. (Id. at ¶ 37).

Plaintiff Tryko Holdings, LLC ("Tryko" or "Plaintiff"), owns and operates multifamily apartment buildings within the City. (Id. at ¶ 1). Prior to the Harrisburg City Council's waste collection and disposal rate increase and the Mayor's letter, Plaintiff had been paying a private hauler $2,200 per month to remove its trash. (Id. at ¶ 34). Under the new rates, Plaintiff's costs rose by 340% per month for assertedly-identical services. (Id. at ¶ 38). On January 14, 2018, the City ordered Plaintiff to cease using its private trash hauler and pay the increased rates. (Id. at ¶ 70).

B. The Third-City Code and the City's Municipal Code

Under Pennsylvania law, the City of Harrisburg is considered a city of the third-class governed by Pennsylvania's Third-Class City Code. (Id. at ¶ 20). Relevant to the instant case, the Third-Class City Code provides that a third-class city's "[c]ouncil ... may prohibit accumulations of ashes, garbage, solid waste and other refuse materials upon private property, including the imposition and collection of reasonable fees and charges for the collection, removal and disposal." (Id. at ¶ 21 (emphasis omitted) (quoting 11 Pa.C.S. § 12409(a) (2016))).

In accordance therewith, in 1992, the City adopted several provisions governing waste management in its own local municipal code,² (see id. at ¶ 43), including a requirement that the City segregate the funds it collected in connection with waste management services from its other funds. (Doc. 19-2, lns. 783–91; see also Doc. 19-1 at ¶ 44). Under its local municipal code, the City could use these segregated funds only to:

[D]efray[ ] the expenses of the City in the operation, maintenance (including insurance), repair, alteration, inspection, and other ordinary expenses in relation to the disposal facility and for the making of usual renewals and replacements and ordinary improvements thereto in order to maintain adequate service, including any taxes lawfully imposed, payable by the City under other payment required to be paid under such lease or supplement.

(Doc. 19-2, lns. 785–91; Doc. 19-1 at ¶ 45).

In addition, the City's local municipal code provided that the City would collect all waste generated therein. (Doc. 19-2, lns. 418–23; see also Doc. 19-1 at ¶ 51). However, the same provision also empowered the Director of the Department of Public Works to exempt nonresidential properties from this general requirement. (Doc. 19-2, lns. 418–23; see also Doc. 19-1 at ¶ 51). The Director could do so based upon "the type, nature, or quantity of ... [nonresidential] waste or the necessity of more frequent collection than provided by the City...." (Doc. 19-2, lns. 419–21; see also Doc. 19-1 at ¶ 51). If granted an exemption, owners of nonresidential properties could contract with private waste haulers to provide waste management services instead of the City. (See Doc. 19-2, lns. 455–59; Doc. 19-1 at ¶ 53). Residential properties, including multifamily residential properties like the kind Plaintiff operated, were not given this allowance. (See Doc. 19-1 at ¶ 55, 57).

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On July 3, 2018, the City amended the waste management portion of its local municipal code. (See Doc. 19-2; Doc. 19 at 9). The amended provisions allowed "commercial" properties to petition the Director to waive the requirement that the City collect and dispose of their waste thereby allowing them to utilize a private trash hauler. (Doc. 19-2, lns. 452–551; see also Doc. 19 at 9). The amendment included within its definition of "commercial" any "apartment buildings with five or more individual domiciles...." (Doc. 19-2, lns. 96–100; see also Doc. 19 at 9). The July 3, 2018 amendments also removed the section of the municipal code that limited the ways the City was permitted to use funds collected in connection with its waste program. (Doc. 19-2, lns. 782–91).

On May 28, 2019, Plaintiff filed a Complaint in this Court raising three primary issues. In Count I, Plaintiff avers that Defendants violated the Commerce Clause of the United States Constitution by prohibiting private waste haulers from collecting and disposing of waste within the City. (Id. at ¶ 73–74). Plaintiff seeks damages, attorneys' fees, and declaratory and injunctive relief under 42 U.S.C. § 1983 and § 1988.³ (Id. at ¶¶ 78–80). In Count II, Plaintiff seeks a declaration that the City's increased rates for municipal waste collection and disposal services are unreasonable and thereby unlawful. (Id. ¶ 86). In Count II, Plaintiff also seeks equitable relief in the form of disgorgement. (Id. ). In Count III, Plaintiff raises an equal protection challenge premised upon the City's failure to allow multifamily residential properties to request a waiver under its local municipal trash collection regime. (See id. at ¶¶ 89–90).⁴ Plaintiff seeks damages, attorneys' fees, and declaratory and injunctive relief under 42 U.S.C. § 1983 and § 1988. (Id. at ¶¶ 93–95).

Defendants filed a Motion to Dismiss on June 24, 2019, (Doc. 8), and a brief in support thereof on July 22, 2019. (Doc. 16). Plaintiff filed a brief in opposition on August 26, 2019. (Doc 19). Defendants filed a Reply on October 9, 2019. (Doc. 24). For the reasons that follow, Defendants' Motion shall be granted in part and denied in part.

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