Original Author: Pullen, Mark
Date of Material: 12/14/1995
Reviewed Date: 06/25/2021
MTAS was asked about the legality of a garbage contract by city with one company.
To: Sid Hemsley
From: Mark Pullen
Re: garbage contract
After a bit of research here is the answer on your garbage question. The facts, as I understand them, are as follows. The City has a contract with a firm to provide solid waste pick up. As part of this contract it subsidizes the pick up of solid waste from businesses in the community. Another solid waste firm has alleged that this subsidy essentially freezes it out of the market thus violating its right to equal protection under the law pursuant to the Fourteenth Amendment to the Constitution. I must admit that I really liked this argument. I believe that it is entirely spurious, for reasons that will follow, but it is quite novel.
Probably the closest case on point is Hoagy Wrecker Service, Inc. v. City of Fort Wayne, 776 F.Supp. 1350 (N.D. Ind. 1991). In that case a tow truck operator who was not awarded a city contract contested the decision claiming that he had been denied equal protection. The court firmly rejected his reasoning. I pointed out that the central tenet of the equal protection clause was to prevent official conduct which resulted in discrimination based on race and to meet this a municipality must enforce its laws in a rational and nonarbitrary fashion. When the plaintiffs do not belong to a vulnerable group or do not allege the infringement of a fundamental right, then they must show that the city acted with "sheer senselessness" in order to show a denial of equal protection. The court further pointed out that municipalities have broad freedom to deal with whom it chooses on such terms as it chooses and that in the absence of discriminatory design purchasing decisions are not subject to judicial review.
Another good analysis of equal protection is found in Riveria Diaz v. Puerto Rico Telephone Co., 724 F.Supp 1069 (D. Puerto Rico 1989). The court said that a "Plaintiff's equal protection challenge can succeed only if he shows the existence of a legislative classification not rationally related to a legitimate public end." Indeed, in some cases discriminatory behavior has been allowed to stand if it fit some public purpose. This is demonstrated in a number of cases in which "Buy American" clauses have been upheld or even when contracts have been restricted to residents of individual states. This is demonstrated in Smith Setzer & Sons v. South Carolina Procurement Review Panel, 20 F.3d 1311 (4th Cir. 1994). In that case a North Carolina company challenged a statute of the State of South Carolina that governmental entities in that state must purchase from South Carolina vendors as long as their bid did not exceed a bid from an out of state vendor by a certain percentage. The court highlighted the proposition that if no subject race or class is involved and a fundamental right is not impacted then the defendant only has to prove it acted on a "rational basis" in drawing up a classification. As long as the rationality is a least debatable, the statute will stand. In this case the court found that the state had a rational purpose in trying to return money from the state treasury into the local economy.
Applying these cases to the facts at hand, I believe that the argument that the City's solid waste contract denies the aggrieved party equal protection simply fails:
1. There is no suspect classification. The city board made no decision to award the contract to one group over the another based on who they where nor did they set up legislative classifications. They bid it out to the lowest bidder. The complainants had just as much chance to compete as anybody else, they just lost. They are not members of any suspect race or class thus they have no grounds to claim denial of equal protection because the city made a choice between competitors, Coyne-Delaney v. Capital Development Board of the State of Illinois, 616 F.2d 341 (7th Cir. 1980).
2. Assuming, arguendo, that the contract awarded by the city does create a de facto class among those equally situated. Then, as the cases indicate, we only have to show the city acted rationally in creating this class. I don't think that is hard at all. By subsidizing commercial pick up, the city is trying to relieve local business of some of the strain of these costs and thus encourage its growth and vitality. I think this surely is rationally related to a legitimate government purpose of ensuring jobs for citizens.
3. There is no discrimination. The city has not said that the complainants can not pick up in the city they just made it cheaper for someone else to do it. That is simply market forces. If we accept their argument, then any time conditions make it cheaper for one competitor to operate over another then we have an equal protection claim. You can imagine the chaos in the courts.
Please find enclosed the cases I have cited and also, which reiterates the broad powers governmental entities have in entering into contracts.