Waste Management of Alameda County, Inc. v. Biagini Waste Reduction Systems, Inc.

• Citation: 74 Cal.Rptr.2d 676,63 Cal.App.4th 1488
• Decision Date: 21 April 1998
• Docket Number: No. A077664,A077664
• Court: California Court of Appeals
• Parties: , 98 Cal. Daily Op. Serv. 3846 WASTE MANAGEMENT OF ALAMEDA COUNTY, INC., Plaintiff and Respondent, v. BIAGINI WASTE REDUCTION SYSTEMS, INC., Defendant and Appellant.

Page 676

74 Cal.Rptr.2d 676

63 Cal.App.4th 1488, 98 Cal. Daily Op. Serv. 3846

WASTE MANAGEMENT OF ALAMEDA COUNTY, INC., Plaintiff and Respondent, v. BIAGINI WASTE REDUCTION SYSTEMS, INC., Defendant and Appellant.

No. A077664.

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

April 21, 1998.

Certified for Partial Publication. ^*

Joseph L. Casalnuovo, Steefel, Levitt & Weiss, Barry W. Lee, Kevin D. Reese, San Francisco, for Defendant and Appellant.

Otis & Hogan, J. Morrow Otis, Patrick J. Hogan, Duane W. Dresser, San Francisco, Crosby, Heafey, Roach & May, John Smith, Ezra Hendon, Oakland, for Plaintiff and Respondent.

SWAGER, Associate Justice.

We conclude in this appeal that the trial court did not err by issuing a preliminary injunction in favor of respondent based upon the terms of a constitutionally valid exclusive franchise waste collection ordinance, and affirm the judgment.

STATEMENT OF FACTS AND PROCEDURAL HISTORY

Pursuant to statutory authority granted by the California Integrated Waste Management Act of 1989, the City of Oakland enacted an "Ordinance Amending in its Entirety Chapter 6, Article 4, of the Oakland Municipal Code, for Recycling and Solid Waste Disposal" (hereafter ordinance) in July of 1995 to create an exclusive franchise for collection and disposal of solid waste. (Pub. Res.Code, § 40000 et seq.) ¹ According to the provisions of the ordinance, only the "solid waste and yard waste collector" (hereafter collector) franchised by the city is entitled to collect from single family dwellings or transport upon city streets any "solid waste," with enumerated exceptions. A companion ordinance authorized the city manager to negotiate and enter into an exclusive franchise agreement with respondent to act as collector of solid waste, in exchange for payment by respondent of monthly franchise fees and "city fees."

A "Franchise Agreement for Solid Waste and Yard Waste Collection and Disposal Services" (hereafter agreement) between the city and respondent was executed on December 31, 1995. Paragraph 3.5 of the agreement granted respondent the franchise and right to collect, transport and process solid waste within the city in accordance with the provisions of the ordinance between December 1, 1995, and December 31, 2010. The franchise thus conferred upon respondent by the ordinance and agreement was "exclusive," except as to specified categories of materials, including "source separated recyclables," "construction debris" removed from the premises of a construction site by a licensed contractor, and solid waste hauled directly to a disposal facility or transfer station by the generator of the waste. ²

On September 25, 1996, respondent filed a complaint for damages and declaratory and The supporting declaration of William Johnson, president of respondent, stated that as consideration for the exclusive franchise rights granted by the agreement, respondent forgave an existing debt owed to it by the city in the amount of $19 million, and agreed to pay annual franchise fees in excess of $16 million. J. Morrow Otis, an attorney for respondent, declared that appellant had been given notice to "cease and desist" the alleged acts violative of the agreement, but no response had been received. Stephen McCaffery, an "outside salesman" hired by respondent to investigate violations of the exclusive franchise agreement, declared that in response to a report from respondent's operations department, in August of 1996 he observed a "debris collection box" left by appellant which was "filled with construction debris" at a demolition site on 98th Avenue. According to information received by McCaffery from "knowledgeable" personnel, the debris box was thereafter taken by appellant and "emptied at the Davis Street Transfer Station" owned and operated by respondent. McCaffery also observed and photographed collection and disposal of construction debris by appellant at other locations in Oakland. He was informed that the loads brought to the Davis Street Transfer Station were recorded as "solid waste," for which the customers were charged "solid waste disposal fees."

injunctive relief which alleged that appellant had contracted with others to collect and dispose of "construction debris generated within the City of Oakland" at specified locations in violation of the exclusive franchise provisions of the ordinance and agreement. An accompanying motion for preliminary injunction was supported by copies of the ordinance and agreement, along with declarations.

As part of its opposition to the motion for preliminary injunction, appellant filed evidentiary objections to respondent's declarations on grounds that the material in them lacked proper authentication, and consisted of inadmissible opinions, conclusions or hearsay evidence. The evidentiary objections were considered but not ruled upon by the trial court in the order granting the motion for preliminary injunction. The injunction commands appellant to refrain from collecting or disposing of any solid waste within the city in violation of the terms of the ordinance and agreement. This appeal followed.

DISCUSSION

I.-III. ^**

IV. The Commerce Clause.

We proceed to appellant's constitutional challenges to the ordinance and agreement, the first being that the exclusive franchise arrangement violates the Commerce Clause. Appellant complains that by precluding any collection of garbage except by the "favored local contractor," the city has discriminated against out-of-state business to promote "local economic protectionism," thereby imposing an impermissible burden on interstate commerce.

The Commerce Clause grants to Congress the power to "regulate Commerce ... among the several States...." (U.S Const., art. I, § 8, cl. 3; Kilroy v. Superior Court (1997) 54 Cal.App.4th 793, 808, 63 Cal.Rptr.2d 390.) " '[T]he Commerce Clause was not merely an authorization to Congress to enact laws for the protection and encouragement of commerce among the States, but by its own force created an area of trade free from interference by the States. In short, the Commerce Clause even without implementing legislation by Congress is a limitation upon the power of the States....' (Freeman v. Hewit (1946) 329 U.S. 249, 252 [67 S.Ct. 274, 276, 91 L.Ed. 265]); see also Southern Pacific Co. v. Arizona (1945) 325 U.S. 761, 769, 65 S.Ct. 1515, 1520, 89 L.Ed. 1915...." (Barclays Bank Internat., Ltd. v. Franchise Tax Bd. (1992) 2 Cal.4th 708, 722, 8 Cal.Rptr.2d 31, 829 P.2d 279.) "In this respect, the commerce clause resembles the supremacy clause in that it, albeit indirectly, 'defines the relative powers of states and the federal government.' ( [San Diego Unified Port Dist. v. Gianturco (S.D.Cal.1978) 457 F.Supp. 283, 290, affd. 651 F.2d 1306, cert. den., 455 U.S. 1000, 102 S.Ct. 1631, 71 L.Ed.2d 866.] )" (Star-Kist Foods, Inc. v. County of Los Angeles (1986) 42 Cal.3d 1, 9, 227 Cal.Rptr. 391, 719 P.2d 987.)

The limitation on the power of the states to act, referred to as the "dormant" Commerce Clause doctrine, subjects local legislation to a two-pronged inquiry: First, if a state law or local regulation discriminates against interstate commerce in favor of local business or investment, it is per se invalid, save a narrow class of cases in which the municipality can demonstrate, under rigorous scrutiny, that it has no other means to advance a legitimate local interest. Second, nondiscriminatory regulations that impose only incidental effects on interstate commerce are subject to a less rigorous balancing test under which the law is valid unless the burden so imposed is clearly excessive when balanced against the intended local benefits. (Oregon Waste Systems, Inc. v. Department of Environmental Quality of Ore. (1994) 511 U.S. 93, 99, 114 S.Ct. 1345, 1349, 128 L.Ed.2d 13; Fort Gratiot Sanitary Landfill, Inc. v. Michigan Dept. of Natural Resources (1992) 504 U.S. 353, 359, 112 S.Ct. 2019, 2023, 119 L.Ed.2d 139; Hass v. Oregon State Bar (9th Cir.1989) 883 F.2d 1453, 1462.) " 'Not every exercise of state power with some impact on interstate commerce is invalid. A state statute must be upheld if it "regulates even-handedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental ... unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits." ' (Edgar v. [MITE] Corp. (1982) 457 U.S. 624, 640 [102 S.Ct. 2629, 2640, 73 L.Ed.2d 269, 282]; Minnesota v. Clover Leaf Creamery Co. (1981) 449 U.S. 456, 471 [101 S.Ct. 715, 727, 66 L.Ed.2d 659, 673]; Pike v. Bruce Church, Inc. (1970) 397 U.S. 137, 142 [90 S.Ct. 844, 847, 25 L.Ed.2d 174, 178].)" (Partee v. San Diego Chargers Football Co. (1983) 34 Cal.3d 378, 382, 194 Cal.Rptr. 367, 668 P.2d 674.)

A. Discrimination Against Interstate Commerce.

We must first determine whether the ordinance has a discriminatory impact upon interstate commerce, which in the context of a Commerce Clause analysis "means differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter." (Oregon Waste Systems, Inc. v. Department of Environmental Quality of Ore., supra, 511 U.S. at p. 99, 114 S.Ct. at p. 1349; Ben Oehrleins & Sons & Daughter v. Hennepin County (8th Cir.1997) 115 F.3d 1372, 1383; Sherwin-Williams v. City & County of San Francisco (N.D.Cal.1994) 857 F.Supp. 1355, 1365.) A law may discriminate against interstate commerce on its face, in its purpose, or in its effect. (Ben Oehrleins & Sons & Daughter v. Hennepin County, supra, at p. 1383.)

Appellant relies on the United States Supreme Court opinion in C & A Carbone, Inc. v. Clarkstown (1994) 511 U.S. 383, 114 S.Ct. 1677, 128 L.Ed.2d 399 (hereafter Carbone ) to argue that the ordinance directly and discriminatorily burdens interstate commerce. In Carbone, the court declared invalid a municipal "flow control ordinance" that required all private...