L & H SANITATION, INC., Frank Fiore, Chester D. Johns d/b/a
Heber Springs Sanitation, W.R. Brown d/b/a Brown
Bag, Raymond Goff, Carl and Kerry
Philamee, Leon Lackey and
Merford Bell, Appellants,
v.
LAKE CITY SANITATION, INC., H.G. Smith, Richie A. Lee,
Richard L. Johnston, Harold R. Verser, Joel
Pilkington, Raymond E. Robus, John E.
Evans, Newton Burl Parish, and
J.C. Hawkins, Appellees.
No. 84-1516.
United States Court of Appeals,
Eighth Circuit.
Submitted Nov. 14, 1984.
Decided Aug. 9, 1985.
Merl Barns, Little Rock, Ark., for appellants.
Patrick James, Little Rock, Ark., for appellees.
Before McMILLIAN, Circuit Judge, BRIGHT, Senior Circuit Judge, and BOWMAN, Circuit Judge.
McMILLIAN, Circuit Judge.
L & H Sanitation, Inc., Frank Fiore, Chester D. Johns d/b/a Heber Springs Sanitation, W.R. Brown d/b/a Brown Bag, Raymond Goff, Carl and Kerry Philamee, Leon Lackey, and Merford Bell appeal from a final order entered in the District Court1 for the Eastern District of Arkansas dismissing their antitrust and civil rights claims. L & H Sanitation, Inc. v. Lake City Sanitation, Inc.,
The following statement of facts is largely based upon the statement of facts set forth in the district court's 1984 order, as reported in
In late fall 1981, the city and county officials discussed contracting for solid waste disposal with officials of appellee Lake City Sanitation, Inc. (Lake City), a private corporation engaged in the business of solid waste disposal. This meeting was apparently held at the request of Lake City. Lake City submitted a proposal to city officials. The city's Finance and Budget Committee studied the landfill problem and apparently favored the franchise solution proposed by Lake City, but recommended that the city should award the franchise after soliсiting bids. On December 8, 1981, the city council by resolution authorized the mayor and the city clerk to solicit and accept bids and to enter into a franchise contract. A notice for bids was placed in a local newspaper on December 9, 1981.
Only Lake City and appellant L & H Sanitation submitted bids for the city solid waste disposal franchise. The mayor and the city attorney opened and studied the bids. L & H Sanitation's bid was the lower bid. However, the city attorney was reluctant to accept the L & H Sanitation bid because it was сonditioned upon the city's permitting L & H Sanitation to use the existing city landfill until L & H Sanitation's landfill site was approved by government environmental protection agencies. As noted above, pollution problems caused by the existing city landfill had prompted the city to investigate solid waste disposal alternatives. Lake City's bid was essentially a price list of available services and involved the use of Lake City's own landfills.
The city rejected both bids and decided not to make any immediate decision. On January 6, 1982, there was a meeting of city officials and a representative from the Department of Pollution Control. Lake City officials were invited and did attend the meeting. However, officials from L & H Sanitation were not invited and, when they appeared, were asked to leave the meeting. At this meeting the city awarded the solid waste disposal franchise to Lake City. Lake City accepted an additional modification giving city residents the option of hauling their own solid waste to Lake City's landfill at no charge.
On February 9, 1982, the city cоuncil passed Ordinance No. 406 creating a solid waste franchise for the city, awarding the franchise to Lake City and making violation of the ordinance a criminal misdemeanor.
In August 1982 appellants filed this action in federal district court, alleging federal antitrust and civil rights violations. Appellant L & H Sanitation is the unsuccessful bidder; appellant W.R. Brown is a city resident and a commercial user of solid waste disposal services; appellant Frank Fiore is a city resident and a residential user of solid wаste disposal services; the other appellants are also city residents who provided solid waste disposal services before Ordinance No. 406 was passed. Appellee Lake City is the successful bidder; the other named appellees are the mayor and city council members. Appellants claimed that the city's award of the exclusive solid waste disposal franchise to Lake City was a "sweetheart deal" and the result of a conspiracy between the city and Lаke City in restraint of trade and to create a monopoly in violation of Secs. 1, 2 of the Sherman Antitrust Act, 15 U.S.C. Secs. 1, 2. Appellants also alleged common law conspiracy to restrain trade, intentional interference with contractual relations, and due process and equal protection violations.
ANTITRUST CLAIMS
In a comprehensive memorandum opinion, the district court dismissed appellants' antitrust claims, finding that appellees were shielded from antitrust liability for the city's award of the exсlusive solid waste disposal franchise to Lake City by the state action immunity doctrine. L & H Sanitation, Inc. v. Lake City Sanitation, Inc., No. B-C-82-93, slip op. at 2-8 (E.D.Ark. Oct. 19, 1983), citing Parker v. Brown,
The application of the state action immunity doctrine to anticompetitive municipal conduct was recently discussed by the Supreme Court in Town of Hallie v. City of Eau Claire, --- U.S. ----,
The starting point in any analysis involving the state action doctrine is the reasoning of Parker v. Brown. In Parker, relying on principles of federalism and state sovereignty, the Court refused to construe the Sherman Act as applying to the anticompetitive conduct of a State acting through its legislature. Rather, it ruled that the Sherman Act was intended to prohibit private restraints on trade, and it refused to infer an intent to "nullify a state's control over its officers and agents" in activities directed by the legislature.
Municipalities, on the other hand, are not beyond the reach of the antitrust laws by virtue of their status because they are not themselves sovereign. Rather, to obtain exemption, municipalities must demonstrate that their anticompetitive activities were authorized by the State "pursuant to state policy to displace competition with regulation or monopoly public service."
The determination that a municipality's activities constitute state action is not a purely formalistic inquiry; the State may not validate a municipality's anticompetitive conduct simply by declaring it to be lawful. On the оther hand, in proving that a state policy to displace competition exists, the municipality need not "be able to point to a specific, detailed legislative authorization" in order to assert a successful Parker defense to an antitrust suit. Rather, City of Lafayette [v. Louisiana Power & Light Co.,
....
... In California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., [
... [T]he requirement of active state suрervision serves essentially an evidentiary function: it is one way of ensuring that the actor is engaging in the challenged conduct pursuant to state policy. In Midcal, we stated that the active state supervision requirement was necessary to prevent a State from circumventing the Sherman Act's proscriptions "by casting ... a gauzy cloak of state involvement over what is essentially a private price-fixing arrangement." Where a private party is engaging in the anticompetitive activity, therе is a real danger that he is acting to further his own interests, rather than the governmental interests of the State. Where the actor is a municipality, there is little or no danger that it is involved in a private price-fixing arrangement.... Once it is clear that state authorization exists, there is no need to require the State to supervise actively the municipality's execution of what is a properly delegated function.
Accord Scott v. City of Sioux City,
As noted by the district court, the Arkansas legislature has clearly authorized the challenged municipal activity, the regulation of solid waste management and disposal. The Arkansas legislature in 1971 specifically required municipalities to develop solid waste management plans and authorized municipalities to provide for solid waste disposal and to enter into agreements to provide solid waste management systems. Ark.Stat.Ann. Sec. 82-2705 (1976 repl. & Supp.1983) (Arkansas Solid Waste Management Act).2 The legislature affirmatively granted municipalities the comprehensive and specific authority necessary for effective solid waste management, including the authority to enter into contracts for solid waste disposal, id. Sec. 82-2713, and to regulate solid waste management by ordinance, id. Sec. 82-2719(c).
The Arkansas Solid Waste Management Act does not expressly grant municipalities the power to grant exclusive solid waste disposal franchises. However, we agree with the district court that the legislative intent to displace competition can be inferred from the statutory scheme because it is a "necessary and reasonable consequence of engaging in the authorized activity." Gold Cross Ambulance v. City of Kansas City,
In sum, we hold that the state action immunity doctrine is applicable to the city's award of the exclusive solid waste disposal franchise to Lake City. This holding makes any discussion of the question of Lake City's immunity under the Noerr-Pennington doctrine unnecessary. See United Mine Workers v. Pennington,
CONSTITUTIONAL CLAIMS
As noted above, appellants in their complaint alleged that Ordinance No. 406 prevented them from engaging in the lawful business of solid waste disposal and as a result deprived them of a property interest in violation of the due process and equal protection clauses of the fourteenth amendment. The district court dismissed, holding thаt the city council members had absolute legislative immunity and that Lake City was protected by the Noerr-Pennington doctrine, slip op. at 9-12, and that appellants had failed to state a claim with respect to the bidding process,
To the extent that appellants alleged that Ordinance No. 406 deprived them of substantive due process by restricting their right to contract for or provide solid waste disposal services, the district court correctly rejected that contention. The ordinance survives the rational basis test: the ordinance was designed to accomplish a legitimate government purpose, the protection of public health and safety, and there is a rational relationship between the regulation of solid waste disposal and the protection of public health and safety. See Scott v. City of Sioux City,
A similar rational basis analysis disposes of appellants' equal protection claim because Ordinance No. 406 does not involve a fundamental right or a suspect class. See Gold Cross Ambulance v. City of Kansas City,
Analysis of appellants' procedural due process claim is more difficult. As noted by the district court, appellants are not challenging the city's failure to provide them with pre-deprivation procedural due prоcess--notice and an opportunity to be heard.
The district court held that "under Arkansas law governing competitive bidding on public contracts, the lowest responsible bidder in compliance with the bidding specifications and procedures has a legitimate expectation in being awarded the contract once the governmental body makes a decision to award the contract on which bids were solicited."
We disagree with the district court's analysis to the extent that the district court concluded that Parratt v. Taylor bars appellants' due process claim because of the availability of state post-deprivation remedies. See Begg v. Moffitt,
Parratt does not bar a Sec. 1983 action based on the assertion of a substantive constitutional right, rather than the right to have a deprivation accompanied by certain procеdural protections.... [S]ome governmental conduct violates due process no matter what types of procedural protections accompany the conduct. In such cases, those acting under color of state law violate a substantive constitutional right entirely separate from the right to procedural due process, and those injured may seek redress under the due process clause. In cases where the right asserted does not depend on the proсedural protections accorded the plaintiff, the availability of a postdeprivation hearing is no defense, since the constitutional violation exists independent of the procedures for redressing the deprivation that are available. By violating such substantive rights, the state actors deprive persons of constitutional rights irrespective of the procedures employed, and the constitutional violation is complete at the time of the deprivation.
Here, L & H Sanitation's claim of denial of due process was complete at the time the city arbitrarily made the award. The availability of state remedies should not bar L & H Sanitation's federal Sec. 1983 remedy for denial of the right to non-arbitrary government decision-making.
The above discussion assumed for purposes of analysis that L & H Sanitation had a protected property right under Arkansas law. However, as determined by the district court, "under Arkansas law governing competitive bidding on public contracts, the lowest responsible bidder in compliance with the bidding specifications and procedures has a legitimate expectation in being awarded the contract once the governmental body makes a decision to award the contract."
Whether L & H Sanitation did not know the city landfill would be closed and unavailable because the city improperly failed to inform L & H Sanitation of this or any other specification, and thus failed to comply with the law governing competitive bidding, is a distinct question which can be litigated in statе court. See, e.g., Walt Bennett Ford, Inc. v. Pulaski County Special School District,
The remaining appellants did not submit bids for the solid waste disposal franchise and therefоre cannot assert a protected property interest under Arkansas law as unsuccessful bidders. However, the remaining appellants would have standing as taxpayers under Arkansas law to challenge the bid award in state court. See Worth James Construction Co. v. Jacksonville Water Comm'n,
In sum, we hold the district court did not err in dismissing appellants' Sec. 1983 claim challenging the city's allegedly arbitrary award of the contract for failure to state a claim because neither L & H Sanitation nor any оf the remaining appellants had a protected property interest under Arkansas law.
Accordingly, the order of the district court is affirmed.
Notes
The Honorable G. Thomas Eisele, Chief Judge, United States District Court for the Eastern District of Arkansas
The Arkansas Solid Waste Management Act, Ark.Stat.Ann. Sec. 82-2701 et seq. (1976 repl.), provides in part:
82-2705. Municipal solid waste management systems.--(a) All municipalities shall develop a plan to provide a solid waste management system and shall adequately provide for the disposal of solid wastes generated or existing within the inсorporated limits of such municipality or in the area to be served thereby and in accordance with the rules, regulations, and orders of the Commission [or Department of Pollution Control and Ecology]. The governing body of the municipality may enter into agreements with a county or counties, with one or more other municipalities, with private persons or trusts, or with any combination thereof, to provide a solid waste management system or any part thereof for the municipality, but such agreеment shall not relieve the parties thereto of their responsibilities hereunder.
(b) The governing body of such municipality shall have the authority to levy and collect such fees and charges and require such licenses as may be appropriate to discharge its responsibility hereunder, and such fees, charges and licenses shall be based on a fee schedule as set forth in an ordinance.
(c) Municipalities may accept and disburse funds derived from grants from the Federal or State Govеrnments or from private sources or from moneys that may be appropriated from any available funds, for the installation and operation of a solid waste management system, or any part thereof.
(d) Municipalities are authorized to contract for the purchase of land, facilities, vehicles and machinery necessary to the installation and operation of a solid waste management system, either individually or as a party to a regional or county solid wastes authоrity.
(e) The governing body of a municipality shall have the right to establish policies for and enact laws concerning all phases of the operation of a solid waste management system including hours of operation, character and kind of wastes accepted at the disposal site, the separation of waste according to type by those generating same prior to collection, type of container for storage of wastes, prohibition of burning of wastes, prе-treatment of wastes, and such other rules as may be necessary or appropriate, so long as such laws, policies, and rules are not inconsistent with this Act [Secs. 82-2701-82-2712] or any rules, regulations, or orders of the Commission [or Department].
82-2713. Power of county and municipality.--Any county or municipality in this State is hereby authorized to own, acquire, construct, reconstruct, extend, equip, improve, operate, maintain, sell, lease, contract concerning, or otherwise deal in facilities of any nature necessary or desirable for the control, collection, removal, reduction, disposal, treatment or other handling of refuse (with each such undertaking by a county or municipality hereunder sometimes referred to herein as a "project").
82-2719. Rates and charges.--
....
(c) Counties and municipalities are hereby authorized to prescribe, by order or ordinance, reasonable rules and regulations necessary or appropriate to the control, collection, removal, reduction, disposal treatment and handling of refuse.
