September 16, 1993
I didn't forget you yesterday; after we talked, I couldn't locate some material I thought important to your questions.
1. Can the city charge garbage collection service recipients a garbage collection fee even if they do not use the service?
2. Can the city require garbage collection recipients to use only city garbage collection service?
The answer to question 1 is yes. The answer to question 2 is, not clear, but probably no.
Attached is a Hamilton County Criminal Court case involving the City of Soddy-Daisy. The case includes:
- Motion for Summary Judgment.
- Memorandum in Support of the City's Motion for Summary Judgment
- Memorandum in Opposition to the City's Motion for Summary Judgment.
- Supporting exhibits to all of the above, including the city's ordinances in question.
Under Section 8-409, 8-410, and 8-411 Soddy-Daisy residents and commercial businesses were charged a garbage collection fee. Section 8-415 made it an offense for a person not to pay the garbage collection fee (which the city passed on my advice that it would withstand legal challenge). However, note that Section 8-412 permits a resident to exempt himself from the payment of the garbage collection fee upon showing proof that he has a current contract with a person or entity properly licensed and permitted to collect garbage or waste disposal. We will return to that provision when we consider Question 2.
Certain residents (one of whom operated a business within the city subject to the garbage collection fee) refused to pay the garbage collection fee. The court upheld the fee and Section 8-415 which made it an offense not to pay the fee. In my opinion, that ruling was consistent with the law.
The Soddy-Daisy case was a trial court decision; technically it is not "law." However, the case gives you an idea of the issues to argue and how a similar ordinance in your city might fare.
This question is more difficult. As noted above, the City of Soddy-Daisy didn't require that residents and businesses receive garbage collection services exclusively from the city. There is considerable legal authority for the proposition that a city can provide exclusive garbage collection service. Some of that authority is cited in the Memorandum in Support of the City's motion for Summary Judgment, pages 2--3. However, the Court's Judgment never reached that question; it didn't have to.
But that authority is subject to question under the Sherman Antitrust Act.
The U.S. Supreme Court has held that the Sherman Antitrust Act applies to municipalities because, unlike states, they are not sovereign entities. [Lafayette v. Louisiana Power Co., 435 U.S. 389 (1978); Community Communications Co., Inc. v. City of Boulder, 455 U.S. 40 (1982).] However, the same Court has declared that a municipality can cloak itself in the state's immunity from the Sherman Antitrust Act by demonstrating that its anticompetitive activity was authorized by the state "pursuant to state policy to displace competition with regulation or monopoly public service." [Town of Hallie v. City of Eau Claire, 105 S. Ct. 1713 (1985).]
The state authority can be somewhat nebulous. In Town of Hallie, the Court said that in proving that a state policy to displace completion exists, the municipality need not point to a specific detailed legislative authorization. It need show only that it acted pursuant to a "clearly articulated and affirmatively...expressed state policy." It is not even necessary for the legislation to expressly state that it expects the city to engage in conduct that would have an anticompetitive effect. It is only necessary that the anticompetitive effect would be a logical outcome and foreseeable consequence of the authority to regulate. In Town of Hallie, a city had a monopoly on the delivery of water services, even in outlying areas, arising from a state statute that permitted, but did not mandate, that outcome. However, the Court reasoned that it was foreseeable that such permissive legislation would be used by a municipality with an anticompetitive effect.
Unfortunately, there is nothing in general state law or the City Charter that appears to represent even nebulous state policy to displace completion in garbage collection by municipalities in general, or the City in particular. In two or three cases involving municipal monopolies in garbage services the federal courts have held that the municipality did not violate the Sherman Antitrust Act. However, in each of those cases, there was at least some state statutory language that logically and forseeably would lead to the anticompetitive outcome in question. [G. Fruge Junk Co. v. City of Oakland, 637 F. Supp. 422 (N.D. Calif. 1986); Savage v. Waste Management, Inc., 623 F. Supp. 1505 (D.C.S.C. 1985); Hybud Equipment Corp. v. City of Akron, 742 F.2d 949 (1984).] The same is true of cases involving allegations of violations by municipalities of the Sherman Antitrust Act in other areas.
In fact, it appears to me that the Tennessee Solid Waste Disposal Act, found at Tennessee Code Annotated, section 68-211-101, kicks the solid waste problem to the counties. It is difficult for me to see how cities can argue that the Act contemplates a municipal monopoly over solid waste collection, unless the regional solid waste plan calls for that foreseeable and logical outcome.
For that reason, I suspect that the city regulation making the city the exclusive garbage collector is on shaky ground. However, that may not be true if the city amended its charter to provide the city exclusive authority to be the garbage collector. It is not clear under Town of Hallie whether a charter provision rises to the level of a clearly articulated and affirmatively...expressed state policy. Arguably it does so at least with respect to the municipality in question because a charter is part of the state law for that municipality.
It is worthwhile to note that under the Local Antitrust Act of 1984, no damages, interest on damages, costs or attorneys fees can be recovered under the antitrust laws from any local government or official or employee acting in an official capacity. Apparently, however, a successful plaintiff would be entitled to injunctive relief against a city and attorneys fees arising from obtaining the injunction. That information may or may not play a part in the question of whether the city wants to go ahead with a regulation making the city the exclusive garbage collector.
If I can help you further in this or any other matter, please let me know.
Sidney D. Hemsley
Senior Law Consultant