Plaintiffs' Brief in Support of Permanent Injunction

Case 3:11-cv-03200-O Document 68
Filed 04/23/12
Page 1 of 57 PageID 1407
IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION
NATIONAL SOLID WASTES MANAGEMENT ASSOCIATION, BLUEBONNET WASTE CONTROL, INC., IESI TX CORPORATION, REPUBLIC WASTE SERVICES OF TEXAS, LTD, ALLIED WASTE SYSTEMS, INC., CAMELOT LANDFILL TX, LP, WASTE MANAGEMENT OF TEXAS, INC., WM RECYCLE AMERICA, LLC, AND BUSINESSES AGAINST FLOW CONTROL, Plaintiffs, v. THE CITY OF DALLAS, MIKE RAWLINGS, PAULINE MEDRANO, TENNELL ATKINS, DWAINE CARAWAY, MONICA ALONZO, CAROLYN DAVIS, JERRY ALLEN, LINDA KOOP, AND ANGELA HUNT, Defendants.
CIVIL ACTION NO. 3:11-cv-03200-O
PLAINTIFFS BRIEF IN SUPPORT OF PERMANENT INJUNCTION
Filed 04/23/12
TABLE OF CONTENTS
Table of Authorities..................................................................................................................iii I. Introduction .......................................................................................................................... 1 II. Arguments and Authorities .............................................................................................. 3 A. The Ordinance is unconstitutional and illegal. ............................................................... 3 1. a. b. The Ordinance unconstitutionally impairs Plaintiffs contract rights...................... 3 The record establishes that the Ordinance substantially impairs Franchisee contract rights. .......................................................................................... 3 As the Court has recognized and concluded under a hard look, the record establishes that there is no legitimate justification for impairing the Franchisees contract rights.................................................................................. 5 As the Court has recognized and concluded, the record does not establish that the Ordinance is reasonable and necessary to achieve even the pretextual purposes advanced by the City. ....................................................... 6 The record for determining if a permanent injunction should be issued is identical to the record developed for the preliminary injunction decision. ......................................................................................................................... 7 Because the Ordinance alters vested rights to financially benefit the City, it violates the due course of law clause of the Texas Constitution............................... 8 The Ordinance is unconstitutionally vague under the federal Due Process Clause and violates the Texas Due Course of Law Clause by granting the Director unbridled discretion in its enforcement.................................................. 14 a. The federal void-for-vagueness doctrine and the Texas unbridled discretion doctrine invalidate penal laws that can be enforced arbitrarily and discriminatorily. .............................................................................. 14 The Ordinance neither defines solely recyclable material, processing, generated, or found nor limits the Directors authority to define those phrases and words......................................................... 16 The absence of explicit standards for understanding the wording of the Ordinance and the Directors disregard of that wording has already led to arbitrary and discriminatory application........................................................... 18
c.
d.
2. 3.
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4. a. b. 5.
The Ordinance is preempted because it criminalizes the recycling of materials and loads that are recyclable under state law. ......................................... 26 State law prefers recycling over landfilling, defines what is recyclable, and prevents cities from treating recyclable material as solid waste. ................ 26 The Ordinance conflicts with state law by requiring materials and loads that are recyclable under state law to be landfilled. ............................................. 29 The Ordinance violates the City Charter because it was passed without providing Franchisees notice and a hearing. ............................................................. 37
B. A permanent injunction is necessary to prevent irreparable injury. ......................... 41 C. A permanent injunction will prevent injury to Plaintiffs that outweighs any damage to the City. ........................................................................................................... 43 D. A permanent injunction will not disserve the public interest. ................................... 44 III. Conclusion ........................................................................................................................ 46
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TABLE OF AUTHORITIES
Federal Cases A.A. ex rel. Betenbaugh v. Needville Indep. Sch. District, 611 F.3d 248 (5th Cir. 2010) ......................................................................................4142 ADT Sec. Servs., Inc. v. Lisle-Woodridge Fire Prot. Dist., 672 F.3d 492 (7th Cir. 2012) ............................................................................................42 Bank One v. Guttau, 190 F.3d 844 (8th Cir. 1999) ............................................................................................45 Chamber of Commerce of U.S. v. Edmondson, 594 F.3d 742 (10th Cir. 2010) ..........................................................................................45 Doran v. Salem Inn, Inc., 422 U.S. 922 (1975)...........................................................................................................43 Giovanni Carandola, Ltd. v. Bason, 303 F.3d 507 (4th Cir. 2002) ............................................................................................44 Goldberg v. Kelly, 397 U.S. 254 (1970)...........................................................................................................39 Hill v. Colorado, 530 U.S. 703 (2000)...........................................................................................................15 JWJ Indus., Inc. v. Oswego Cnty., 795 F. Supp. 2d 211 (N.D.N.Y. 2011) ......................................................................15, 25 Kolender v. Lawson, 461 U.S. 352 (1983).....................................................................................................14, 15 Kucharek v. Hanaway, 902 F.2d 513 (7th Cir. 1990) ............................................................................................15 La. Seafood Mgmt. Council, Inc. v. Foster, 917 F. Supp. 439 (E.D. La. 1996) ....................................................................................42 Lindquist v. City of Pasadena, 669 F.3d 225 (5th Cir. 2012) ............................................................................................15
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Morales v. Trans World Airlines, Inc., 504 U.S. 374 (1992)...........................................................................................................42 N.J. Retail Merchants Assn v. Sidamon-Eristoff, 669 F.3d 374 (3d Cir. 2012) .............................................................................................45 Nelson v. Univ. of Tex. at Dallas, 535 F.3d 318 (5th Cir. 2010) ............................................................................................41 OConnor v. Smith, 427 F. Appx 359, 367 (5th Cir. 2011) ........................................................................3, 41 ODonnell Const. Co. v. District of Columbia, 963 F.2d 420 (D.C. Cir. 1992)..........................................................................................44 Six Kingdom Enters., LLC v. City of El Paso, No. EP-10-CV-485-KC, 2011 WL 65864 (W.D. Tex. Jan. 10, 2011) ............................44 VRC LLC v. City of Dallas, 460 F.3d 607 (5th Cir. 2006) ..............................................................................................3 Villas at Parkside Partners v. City of Farmers Branch, 577 F. Supp. 2d 858 (N.D. Tex. 2008) ............................................................................42 State Cases Cabells v. City of Nacogdoches, 288 S.W.2d 154 (Tex. Civ. App.Beaumont 1956, writ refd n.r.e.) ........................30 Cent. Power & Light Co. v. City of San Juan, 962 S.W.2d 602 (Tex. App.Corpus Christi 1998, pet. dismd w.o.j.) ..............37, 40 City of Brookside Village v. Comeau, 633 S.W.2d 790 (Tex. 1982).............................................................................................37 City of Houston v. Bates, No. 14-10-00542-CV, 2011 WL 3585612 (Tex. App.Houston [14th Dist.] Aug. 16, 2011, pet. filed Nov. 30, 2011) ........................................................................30 City of Houston v. Houston City St. Ry. Co., 83 Tex. 548 (1892) ............................................................................................................10
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City of Wichita Falls v. Abell, 566 S.W.2d 336 (Tex. 1978).......................................................................................29, 35 Coffee City v. Thompson, 535 S.W.2d 758 (Tex. Civ. App.Tyler 1976, writ refd n.r.e.).................................15 Crossman v. City of Galveston, 247 S.W. 810 (Tex. 1923) .................................................................................................15 Dallas Merchants & Concessionaires Assn v. City of Dallas, 852 S.W.2d 489 (Tex. 1993).............................................................................................29 Foster v. City of Waco, 255 S.W. 1104 (Tex. 1923) ...................................................................................37, 38, 40 Johnson v. City of Dallas, 702 S.W.2d 291 (Tex. App.Dallas 1985, writ refd n.r.e.) .................................30, 33 Robinson v. Crown Cork & Seal Co., 335 S.W.3d 126 (Tex. 2010).......................................................................................1112 Spann v. City of Dallas, 235 S.W. 513 (Tex. 1921) .................................................................................................15 State v. Chacon, 273 S.W.3d 375 (Tex. App.San Antonio 2008, no pet.)...........................................30 Tex. Power & Light Co. v. City of Garland, 431 S.W.2d 511 (Tex. 1968).............................................................8, 9, 10, 11, 12, 13, 14 Tex. River Barges v. City of San Antonio, 21 S.W.3d 347 (Tex. App.San Antonio 2000, pet. denied) ...............................3738 Willman v. City of Corsicana, 213 S.W.2d 155 (Tex. Civ. App.Waco 1948), affd, 216 S.W.2d 175 (Tex. 1949)..............................................................................37, 40 Statutes and Regulations 30 Tex. Admin. Code 328 ..................................................................................................28, 35 30 Tex. Admin. Code 328.2(3) ..........................................................................................28, 34
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30 Tex. Admin. Code 328.2(3)(A)...........................................................................................34 30 Tex. Admin. Code 328.2(3)(A)(C) ...................................................................................29 30 Tex. Admin. Code 328.2(3)(B) ...........................................................................................34 30 Tex. Admin. Code 328.2(3)(C) ...........................................................................................34 30 Tex. Admin. Code 328.4(d) ................................................................................................28 30 Tex. Admin. Code 328.4(d)(f) ..........................................................................................36 30 Tex. Admin. Code 328.4(f) .................................................................................................36 30 Tex. Admin. Code 328.8(e).................................................................................................28 30 Tex. Admin. Code 328.8(e)(1), (11)(J) ...............................................................................32 30 Tex. Admin. Code 330 ........................................................................................................28 30 Tex. Admin. Code 330.3(122) ......................................................................................27, 32 30 Tex. Admin. Code 330.635(b)(3)........................................................................................46 30 Tex. Admin. Code 332 ........................................................................................................28 30 Tex. Admin. Code 332.3(b)(c)........................................................................................32 30 Tex. Admin. Code 332.74(b)(2)(B) ....................................................................................32 Tex. Const. art. I, 17 .................................................................................................................10 Tex. Const. art. I, 19 ...................................................................................................8, 9, 10, 14 Tex. Const. art. XI, 5...........................................................................................................26, 29 Tex. Health & Safety Code 361.002(a) ...................................................................................26 Tex. Health & Safety Code 361.011(a)(b) ............................................................................26 Tex. Health & Safety Code 361.022(b).............................................................................26, 36
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Tex. Health & Safety Code 361.022(d)...................................................................................27 Tex. Health & Safety Code 361.421(5) ...................................................................................27 Tex. Health & Safety Code 363.006(a) ...................................................................................27 Tex. Health & Safety Code 363.006(b)...................................................................................27 Tex. Util. Code 11.001 et seq. .................................................................................................14
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I. INTRODUCTION
Plaintiffs request that the current preliminary injunction be converted to a permanent injunction. As discussed below, all of the elements of a permanent
injunction are satisfied: (1) the Flow Control Ordinance (the Ordinance) adopted by the Dallas City Council on September 28, 2011, and scheduled to take effect January 2, 2012, is unconstitutional and illegal;1 (2) failure to prevent enforcement of the Ordinance will result in irreparable injury; (3) the injury to Plaintiffs is greater than any to the Defendants; and (4) a permanent injunction will not disserve the public interest. The facts of this case are well established in the record and discussed in the Courts Order of January 31, 2012 (ECF No. 53). Nevertheless, a summary may be helpful for context. Although the City of Dallas (the City) both regulates and competes with Plaintiffs in the solid waste disposal business, until the City Council adopted the Ordinance, by a 9-6 vote, oversight of the hauling and disposal of commercial waste and recyclables by the City was minimal.2 Selection of a waste disposal site was always left to the hauler.3 The Citys lack of regulation and oversight was unsurprising given that waste disposal is extensively regulated at the state level. The 2007 franchise
agreements between the City and the Franchisee Plaintiffs confirmed the Franchisees right to engage in the businesses of removing, transporting, processing, and also
1 The Courts January 31, 2012, Order refers to a September 16, 2011 date for passage of the Ordinance. The vote was taken on September 28, but the Ordinance was not to become effective until January 2, 2012. See Pls. Ex. 1 (Flow Control Ordinance) (ECF No. 1-1) at 7. 2 Pls. Ex. 27 (Nix Dep.) at 128:12 130:4, 130:22 131:24. 3 Id. at 133:24 134:14, 227:19 228:2.
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selecting the disposal site for solid waste.4 What had been longstanding custom thus became a 20-year contractual commitment, with Franchisees committing to pay a new franchise fee. Franchisees relied on these rights by operating disposal businesses and hauling waste to these privately owned landfills. Four years later, by requiring in the Ordinance that all commercial waste in the City be sent to City-owned and operated facilities for disposal,5 the City sought to pull back on its franchise commitments, and to reverse longstanding practices the City had recognized and endorsed. But for the preliminary injunction issued by this Court, the Ordinance would have caused the wholesale elimination of a line of business engaged in by Plaintiffs, increased costs for the disposal of commercial waste, and diverted millions of dollars of revenue ($15$18 million a year) from private parties to the City. Order (ECF No. 53) at 1618. Defendants passed the Ordinance notwithstanding the admitted absence of any existing problem with the handling of commercial solid wastes in the City or any need to impose such harsh results in order to advance aspirational solid waste management goals. Instead, the purpose of the Ordinance was to shift millions of dollars of revenue into the Citys coffers.
4 5
Pls. Exs. 1014. The Ordinance requires all waste to be taken either to the Bachman Transfer Station or the McCommas Bluff landfill. Pls. Ex. 1 (Flow Control Ordinance) (ECF No. 1-1) at 3. Bachman Transfer Station is not a disposal facility where waste is ultimately buried, but merely a place where waste may be deposited before it is transferred by the City to McCommas Bluff to be landfilled. Thus, throughout the brief Plaintiffs refer to the Ordinances requirement that all waste ultimately be sent to McCommas Bluff landfill.
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II. ARGUMENTS AND AUTHORITIES

A. The Ordinance is unconstitutional and illegal. 6 As explained below, Plaintiffs have established the first prerequisite for a permanent injunction success on the merits because the Ordinance: (1) unconstitutionally impairs their contract rights; (2) violates the Due Course of Law Clause of the Texas Constitution; (3) is unconstitutionally vague; (4) is preempted by state law; and (5) was enacted in violation of the City Charter. In conjunction with the remaining elements for a permanent injunction that are satisfied here (as discussed later), each of these failings provides an independent basis for a permanent injunction. 1. The Ordinance unconstitutionally impairs Plaintiffs contract rights.
This Court has determined, based on the record before it at the preliminary injunction hearing, that Plaintiffs have established a substantial likelihood of success on the merits of their Contract Clause claim. Order (ECF No. 53) at 29. By agreement of the parties, that record is unchanged. That unchanged record establishes a Contract Clause violation. a. The record establishes that the Ordinance substantially impairs Franchisee contract rights.
Under the franchise agreements, Franchisees have the right to choose where to dispose of solid waste. As the Court correctly noted, the franchise agreements are not limited to hauling solid waste, but also give Franchisees the right to engage in disposal, and the only restriction they place on where solid waste can be disposed of is
A permanent injunction requires showing (1) success on the merits; (2) that a failure to grant the injunction will result in irreparable injury; (3) that said injury outweighs any damage that the injunction will cause the opposing party; and (4) that the injunction will not disserve the public interest. OConnor v. Smith, 427 F. Appx 359, 365 (5th Cir. 2011) (citing VRC LLC v. City of Dallas, 460 F.3d 607, 611 (5th Cir. 2006)).
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that it be at an authorized facility. Order (ECF No. 53) at 12, 14, 32. The Court also correctly concluded, as a matter of ordinary understanding, in the context of the franchise agreements, and based on past course of dealings, that the parties intended that phrase to mean any facility permitted by the state for the disposal of solid waste, inside or outside the City limits. Order (ECF No. 53) at 12. 7 By restricting where the Franchisees could dispose of solid waste, the Ordinance impairs that contract right. The Court looked past whether depriving a party of an existing contract right, by itself, necessarily represents a substantial impairment, undertook a more detailed analysis, and found substantial impairment. As the Court noted, the Citys regulation of private solid waste activities has always been minimal when compared to state regulation and, therefore, the Franchisees reasonable expectation when entering the franchise agreements was that there would be little, if any, regulatory involvement by the City in their activities. Order (ECF No. 53) at 14. The franchise agreements do reserve the Citys right to exercise its police power. But the Court correctly noted that such regulation must be both necessary and lawful. Order (ECF No. 53) at 15. The Franchisees did not agree that the City could modify their contracts for any reason at any time. They agreed only that their contract rights could be modified by police power regulation as necessary and lawful. That limiting
The Court also addressed whether the franchise agreements were void ab initio, because they surrendered an essential attribute of the Citys sovereignty. If they did there would be no contract, and, therefore, nothing to impair. (The City cannot seriously be contending that the franchise agreements it developed and drafted contain such a fundamental defect. If in fact they do, Plaintiffs are entitled to refunds of the significant franchise fees they have paid since 2007.) Finding that a city need not be in the solid waste business at all, the Court concluded that a city could, of course, regulate private solid waste activity and that the City had done so here through the franchise agreements. The agreements then were the exercise of the police power, not a surrender of that power, and they were not void from their inception.
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condition negated any implication that the franchise agreements gave the City a regulatory free hand to eliminate contract rights. Any later regulation that denied rights affirmed in the franchise agreements would constitute a substantial impairment of the contract if the regulation was proven unnecessary or unlawful as established in this matter because the Ordinance was intended to advance the Citys proprietary interests. Finally, the Court found the financial impact associated with the Ordinance sufficient to create a substantial impairment of the Franchisees rights. Order (ECF No. 53) at 16. Enforcement of the Ordinance would eliminate a whole line of business, cause a loss of revenue to certain of the Franchisees by diverting to the City revenue otherwise associated with the Franchisees disposal activities,8 and significantly increase operating costs for the Franchisees. Pls. Ex. 31 (Stefkovich Dep.) at 43:26; Pls. Ex. 41 (Branch Decl.) (ECF No. 24) at 6. b. As the Court has recognized and concluded under a hard look, the City had no legitimate justification for impairing the Franchisees contract rights.
The Court, presented with overwhelming support in the record, found that: (1) (2) (3) The Ordinance was enacted to raise revenue to benefit the city generally; Revenue raising was the actual purpose of the Ordinance; and Revenue raising was not a significant and legitimate reason to impair contract rights.
Order (ECF No. 53) at 18, 19, 20.

8
The Court assumed that the diversion of even a small percentage of disposal fees that would otherwise go to Franchisees represents a substantial impairment. The record is undisputed that the actual number, annually, for just two Franchisees is more than $13 million, as determined by Plaintiffs expert Douglas Branch. Pls. Ex. 41 (Branch Decl.) (ECF No. 24) at 6 & Ex. 2. Page 5
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The Court determined that none of the other purposes claimed by the City was significant and legitimate so as to justify the Ordinance. Order (ECF No. 53) at 23. The Court recognized that in the context of an impairment claim, which requires a hard look at proffered purposes, the legislation must be intended to remedy a problem, not simply facilitate future aspirational goals. As the Court found, the record evidence indicates that the Ordinance was not intended to remedy any existing solid-waste problem in Dallas. Order (ECF No. 43) at 21. In short, there was no legitimate justification for the Ordinances substantial impairment of the Franchisees contract rights. c. As the Court has recognized and concluded, the record does not establish that the Ordinance is reasonable and necessary to achieve even the pretextual purposes advanced by the City.
The Court went on to find that the Ordinance also is not reasonably necessary to achieve any of the Citys asserted non-financial objectives. Order (ECF No. 53) at 23. This determination establishes a Contract Clause violation, independent of the determination that the Citys purported objectives were not legitimate and significant so as to justify the Ordinance. As the Court found, based on a hard look at the record, including statements by the Director of Sanitation Services, a city consultant, and a solid waste management plan the City submitted to the State of Texas, the Ordinance is not necessary to: (1) (2) (3) (4) (5) Address illegal dumping issues; Increase the rate of recycling; Achieve long term goals regarding waste disposal in the City; Facilitate data development; or Implement green technology.
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Order (ECF No. 53) at 2728.
These conclusions also are well supported in the
Declaration of Nat Egosi, who reviewed all of these asserted justifications from the perspective of an engineer and executive with experience and expertise in the development and implementation of recycling technologies. Pls. Ex. 40 (Egosi Decl.) (ECF No. 24). Moreover, as the Court noted, each of those goals should have been known to the City when it developed its franchise system in 2007, yet the City was content at that time to allow Franchisees to continue to decide where to dispose of waste. Order (ECF No. 53) at 28. Nothing in the record suggests any change in circumstances warranting contract-impairing regulation now that was not necessary then. Finally, nothing in the record suggests the City considered less drastic, alternative means of achieving its goals. Order (ECF No. 53) at 28. As the Court notes, failure to do so renders the Ordinance unconstitutional under the Contract Clause. d. The record for determining if a permanent injunction should be issued is identical to the record developed for the preliminary injunction decision.
The parties have agreed to submit the case for final decision based on the same record on which the Court granted the preliminary injunction. Scheduling Order (ECF No. 62) at 2. There have been no intervening changes in the law. What was a probable violation of the Contract Clause is now established. The preliminary injunction should therefore be made permanent.
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2.
Because the Ordinance alters vested rights to financially benefit the City, it violates the Due Course of Law Clause of the Texas Constitution.
The same findings and analysis that establish a violation of the federal Contract Clause also establish a violation of the Due Course of Law Clause of the Texas Constitution.9 Under that clause, when a Texas city contractually submits itself to competition with a private party through granting a franchise, the city cannot retract franchise rights in order to benefit itself financially as a competitor, except through actions that have a real and substantial relationship to a legitimate police power purpose and do not interfere with private franchisees rights beyond what is necessary in the circumstances. Tex. Power & Light Co. v. City of Garland, 431 S.W.2d 511, 517 (Tex. 1968). In City of Garland, the Texas Supreme Court ruled that a city had unlawfully denied a franchised electric utility the right to serve a new apartment complex, because the city had done so in order to assure that its own competing utility service would have the benefit of that customers business. In voiding the critical sections of the ordinance on which the city grounded its action, the Court chose words that speak directly to the present case: Obviously these provisions have for their purpose the elimination of the Company as a competitor beyond its existing lines. They accord preferments ousting the Company from exercising rights in an area granted by its franchise. These things the City cannot do. Essential franchise rights cannot be taken under a pretense of regulation designed to gain a competitive advantage to the
Article I, 19 of the Texas Constitution provides that No citizen of this State shall be deprived of life, liberty, property, privileges or immunities, or in any manner disfranchised, except by the due course of the law of the land.
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City acting in its proprietary capacity. The City has no right to barter with the police power. When the City authorized the extension of the franchise it contractually submitted itself to competition. Conversely, the Company received rights protected by Article I, 19 of the Texas Constitution. The right to use the present and future streets of the City of Garland cannot now be altered by legislation, unless the ordinance provisions listed above have a reasonable relationship to the protection of the public health, safety, morals or welfare. [The relevant ordinance provisions] are destructive of franchise rights rather than regulatory in nature; therefore, they are void. 431 S.W.2d at 518 (internal citations omitted). The Flow Control Ordinance suffers from these same deficiencies, as review of the City of Garland decision and comparison to the facts here confirms. In 1915, the City of Garland granted a 50-year non-exclusive franchise to Texas Power & Light Co. (TP&L) to use the streets and public places to construct and operate power lines for the purpose of supplying electricity to Garland and its inhabitants. Later Garland built its own electric plant and began supplying electricity to many residents. Garland passed a 1949 ordinance requiring TP&L to apply for a permit before extending any of its services, specifying several grounds on which a permit might be denied, including grounds that served to protect the citys competing utility business. In 1964, Garland extended TP&Ls original franchise to 1990. A year later, TP&L applied for a permit to extend an existing line to serve a proposed new apartment complex. The apartment project developer preferred TP&Ls service over municipal electric service. Garland denied the application, offering as reasons only that Garland has always intended to serve this area and that the permit would require construction of a new 1500 foot line. Id. at 513. A trial court enjoined Garland from enforcing its
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permit requirement in these circumstances.
The court of appeals reversed.
The
Supreme Court reversed that decision and affirmed the injunction against Garland. The Court held that the sections of the Garland ordinance on which Garland relied to deny TP&L a permit violated Article I, 19 and were void, insofar as they authorized denial to protect or advance the citys interest as a competing provider of electric service, without demonstration of a valid police power justification. Id. at 518. Garland argued that a separate provision of the Texas Constitution Article I, 17 reserved to a city the unilateral right to revoke franchise rights it had granted, and, therefore, authorized its refusal of TP&Ls request.10 The Court found that this argument had been rejected as far back as City of Houston v. Houston City St. Ry. Co., 83 Tex. 548 (1892). On the contrary, a franchise binds a Texas city contractually (although a city may not surrender or contract away its police or governmental powers). City of Garland, 431 S.W.2d at 517. The Due Course of Law Clause restricts a citys discretion to retract franchise rights, once granted, and prohibits full or even partial ouster of the right to provide service granted by a franchise. Id. Rather than conferring discretion to retract franchise rights, Article I, 17 preserves a citys right to exercise reasonable control and regulation over franchise holders. Id. This distinction between ouster of franchise rights (prohibited) and reasonable control and regulation (preserved) is the true meaning arising from the interrelation of Article 1, 17 and Article 1, 19. Id. The distinction serves to protect the contractual rights of the private enterprise from
10
Article I, 17 prohibits the taking of property for public use without adequate compensation, and includes the statement that all privileges and franchises granted by the Legislature, or created under its authority shall be subject to the control thereof. Page 10
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arbitrary and unreasonable alteration by legislation, unless the statute or ordinance directly promotes the general health, safety, and welfare of the public. Id. This
distinction, for purposes of the Texas Constitution, mirrors the distinction this Court has drawn between lawful, necessary exercises of the police power, Order (ECF No. 53) at 15, which the City has reserved under its franchise agreements, and the elimination, or ouster, of Franchisees ability to participate in a whole line of business, the disposal line of business. Order (ECF No. 53) at 16 (quoting the deposition of Republic witness Nick Stefkovich, Pls. Ex. 31 (Stefkovich Dep.) at 43:26). The Supreme Courts analysis next required it to determine whether the relevant sections of the Garland ordinance qualify as an exercise of the police power directly promoting legitimate concerns of the government. City of Garland, 431 S.W.2d at 517 18. To make that determination, the Supreme Court borrowed a standard that it found had been well stated by a sister state court, under which a franchise is properly subjected to police power regulation when that power is exercised to: directly promote the general health, safety, welfare or morals . . . ; the means adopted to accomplish the legislative purpose must be suitable to the end in view, must be impartial in operation, must have a real and substantial relation to such purpose and must not interfere with private rights beyond the necessities of the situation. Id. at 517 (citations omitted). That standard mandates a level of scrutiny that is at least as exacting as required under the Contract Clause.11
11
That such limitations on the police power exist was recently confirmed by Justice Willett in a concurring opinion when he noted that the police power: is cabined by something contrarian and Texan: distrust of intrusive government and a belief that the police power is justified only by urgency, not expediency. That is, there Page 11
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The Supreme Court then applied that standard to the sections of the Garland ordinance authorizing denial of a permit by reason of competitive interference with the Citys electrical service. Id. at 518. The Court found these provisions were aimed directly at the advancement of the Citys economic and proprietary interests and not an exercise of the police power. Id. Thus, the legal standard was not met, the offending sections of the Garland ordinance were void and denial of the permit improper.12 Id. That analysis applies equally here. Like Garlands franchise to TP&L, when the City entered into the 2007 franchises with Plaintiffs it contractually submitted itself to economic competition with the Franchisees, including competition in providing solid waste disposal services to Dallas businesses. Id. at 518.13 Like Garlands action, the
must exist a societal peril that makes collective action imperative: The police power is founded in public necessity, and only public necessity can justify its exercise. Robinson v. Crown Cork & Seal Co., 335 S.W.3d 126, 163 (Tex. 2010) (Willett, J., concurring) (citing Spann v. City of Dallas, 235 S.W. 513, 515 (Tex. 1921)). 12 The Texas Supreme Court went on to examine other provisions of the ordinance, cited by Garland, which prohibited duplication of municipal electric facilities. The Court found that these, too, were void because they do not state a reasonable standard aimed at protecting the safety or welfare of the public and placed no control on the citys discretion, distinguishing them from valid regulatory requirements like an electrical safety code. City of Garland, 431 S.W.2d at 518. 13 As this Court has recognized, the franchise agreements affirm the Franchisees longstanding and ongoing right to dispose of solid waste collected within the City at any location (inside or outside the City) legally authorized to operate as a disposal facility. Order (ECF No. 53) at 10, 13. Ample evidence supports this conclusion, including evidence noted by the Court previously, Pls. Exs. 1014 (Franchise Agreement provisions), each at 1, 3, 4(d), 6(a); Pls. Ex. 7 (Dallas City Code) (ECF No. 7) at 18-29(5); Pls. Ex. 27 (Nix Dep.) at 134:1718, 137:1317, 227:19 228:2; Pls. Ex. 28 (Lantrip Dep.) at 30:15 31:5; Pls. Ex. 29 (McCord Dep.) at 42:921, and other evidence. See Pls. Ex. 31 (Stefkovich Dep.) at 36:24 37:8, 39:20 41:10, 91:920, 95:1215, 97:18 (city defines collection [service] to include the activity of disposal, the franchise and the prevailing practice provided for disposal at the haulers discretion; the agreement does not say that it is exclusively in the city, nor . . . outside of the city. And clearly the prevailing practice has been both in and out of the city); Pls. Ex. 34 (Stefkovich Decl.) (ECF No. 24) at 5, 7, 8 (explaining Republic understanding of right to select disposal sites, including its own landfills outside of Dallas, under Franchise Agreement, and reliance thereon); Pls. Ex. 38 (Lantrip Decl.) (ECF No. 24) at 915 (same for Waste Management). This right necessarily placed the Citys disposal operations at McCommas into competition with Franchisees, as is evident in the fact that the $15$18 million in annual disposal fees that the City sought to generate through the Ordinance consist very largely of PLAINTIFFS BRIEF IN SUPPORT OF PERMANENT INJUNCTION Page 12
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Ordinance is aimed directly at the advancement of the Citys economic and proprietary interests by requiring all Dallas businesses to purchase the Citys disposal services at the McCommas Bluff Landfill. Id.14 Like Garlands permit denial, but much more dramatically, the Ordinance would oust Franchisees from exercising rights affirmed by their franchises, namely, the right to dispose of solid waste collected within the City at any legally authorized location, including locations outside the City. Order (ECF No. 53) at 14. It would revoke Franchisees ability to compete for the disposal business of any Dallas commercial customer, in order to seize for itself the $15 $18 million in disposal revenue earned by Franchisees operating in competition with the City in the past and today. Like Garlands permit denial, the Ordinance serves no valid police power purpose, as the Court already has found and as to which the record is unchanged.15 The Ordinance therefore is destructive of franchise rights rather than
revenues currently received by Plaintiff Franchisees landfill operations. Pls. Ex. 41 (Branch Decl.) (ECF No. 24) at 6 (estimating $13.3 million annual disposal fee revenue to be lost by two Plaintiff landfill owner/operators under the Ordinance). 14 The Courts preliminary conclusion that the Ordinance was enacted as a revenue-raising measure, merely . . . for the financial benefit of the City, Order (ECF No. 53) at 19, was well-grounded in what is now an unchanged evidentiary record, beginning with the Mayors emphatic statement to the City Council that the Ordinance is a business revenue issue and echoed by others. See Pls. Ex. 3 (9/28/11 City Council meeting); see also Pls. Ex. 1 (Flow Control Ordinance) (ECF No. 1-1); Pls. Ex. 2 (Southwest Oak Cliff Investment Fund resolution). The evidence that the revenue targeted by the Ordinance was not needed to finance the Citys solid waste program and services, but would be used to support unrelated economic development in Southeast Oak Cliff and otherwise increase the Citys general fund, confirms that the Ordinance was aimed at advancement of the Citys economic and proprietary interests, like the action invalidated in City of Garland. Pls. Ex. 15 (Once-Weekly Service for Garbage and Recycling) at 42; Pls. Ex. 16 (Sanitation Services Proposed FY10 Budget) at 11; Pls. Ex. 17 (Sanitation Services Proposed FY11 Budget); Pls. Ex. 18 (The Green Path for Dallas Trash) at 19; Pls. Ex. 27 (Nix Dep.) at 35:16 36:14, 39:23 40: 4. 15 The Court concluded both that none of the purported non-financial purposes of the Ordinance is a significant and legitimate public purpose, Order (ECF No. 53) at 2123, and that the Ordinance is not reasonably necessary to achieve its non-financial goals. Order (ECF No. 53) at 23. Either of these conclusions negates the existence of a police power justification sufficient to sustain the Ordinance under the Due Course of Law Clause. PLAINTIFFS BRIEF IN SUPPORT OF PERMANENT INJUNCTION Page 13
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regulatory in nature, City of Garland, 431 S.W.2d at 518, and violates Article I, 19 of the Texas Constitution. Standing perhaps as a rare example of a city overreaching while acting in competition with its franchisees, the Garland case remains good law.16 If the Due
Course of Law Clause prohibited Garlands competitively-motivated denial of a franchisees right to serve a single new customer, it surely condemns the Citys action to eliminate Franchisees ability to participate in a whole line of business, the disposal line of business. See Order (ECF No. 53) at 16. Because the Ordinance seriously constricts Plaintiffs franchise rights in order to advance the Citys interests as a competing provider of disposal service, and does so without police power justification or necessity, it violates the Due Course of Law Clause of the Texas Constitution. 3. The Ordinance is unconstitutionally vague under the federal Due Process Clause and violates the Texas Due Course of Law Clause because it grants the Director unbridled discretion in its enforcement. a. The federal void-for-vagueness doctrine and the Texas unbridled discretion doctrine invalidate penal laws that can be enforced arbitrarily and discriminatorily.
A penal law, such as the Ordinance, is impermissibly vague under the federal Due Process Clause if either of the following conditions exists: (1) (2) A person of ordinary intelligence cannot reasonably determine what conduct is prohibited; or The law encourages enforcement in an ad hoc and subjective way because its application is not limited by explicit standards.
In 1975, not long after City of Garland, Texas enacted the Public Utility Regulatory Act and created the Public Utility Commission, replacing what had been exclusively municipal electric utility regulation with a comprehensive regulatory scheme that eliminated any likely occasion to apply City of Garland in its original context. See Tex. Util. Code 11.001 et seq.
16
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Kolender v. Lawson, 461 U.S. 352, 35758 (1983);17 Hill v. Colorado, 530 U.S. 703, 732 (2000) (A statute can be impermissibly vague for either of two independent reasons); JWJ Indus., Inc. v. Oswego Cnty., 795 F. Supp. 2d 211, 215 (N.D.N.Y. 2011) (Indeed, statutes must provide explicit standards for those who apply them to avoid resolution on an ad hoc and subjective basis, with the attendant dangers of arbitrary and discriminatory application.). The Texas Due Course of Law Clause includes the second federal test for establishing impermissible vagueness, described in Texas as unbridled discretion. See Lindquist v. City of Pasadena, 669 F.3d 225, 237 (5th Cir. 2012) for its characterization of Spann v. City of Dallas, 235 S.W. 513, 517 (Tex. 1921), which makes clear that leaving interpretation of an ordinance to the arbitrary discretion of a city official makes the ordinance void.18 The plain language of the Ordinance is clear enough, for it largely uses phrases and words that have commonly understood meanings in the solid waste business. But what the Ordinance appears to give with one hand it takes away with the other, because the actual as-applied meaning of phrases and words central to the Ordinance, namely solely recyclable material, processing, generated, and found, is left to the unguided and thus unbridled discretion of the Director of Sanitation Services, Mary
Kolender notes that of the two grounds the second is the more important, in part because it allows a non-legislative department of government to determine what is a crime. Kolender, 461 U.S. at 35859; see also Kucharek v. Hanaway, 902 F. 2d 513, 518 (7th Cir. 1990) (Posner, J.) (primary modern purpose of voidfor-vagueness doctrine is to limit prosecutorial discretion). That exact concern exists in this case because the Ordinance allows the Citys Director of Sanitation to define what is a crime on a subjective and ad hoc basis. 18 To like effect, see Crossman v. City of Galveston, 247 S.W. 810, 815 (Tex. 1923), and Coffee City v. Thompson, 535 S.W.2d 758, 763 (Tex. Civ. App.Tyler 1976, writ refd n.r.e.).
17
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Nix.19 Her interpretations to date demonstrate that she claims the right to and will define terms on an ad hoc and subjective basis to produce what in her view is the best financial outcome for the City. Because the structure of the Ordinance allows the Director to make compliance a constantly moving target in the interests of advancing the Citys revenue-raising objectives, and because she has already done so, the Ordinance is unconstitutional under both the federal and Texas Constitutions. b. The Ordinance neither defines solely recyclable material, processing, generated, or found nor limits the Directors authority to define those phrases and words.
The Dallas City Code includes Chapter 18, which is entitled Municipal Solid Waste. The Ordinance is codified in Section 18-10 of that Chapter. Among the most important terms for determining the application of the Ordinance are: (1) solely recyclable material and within that phrase the term recyclable material, because such material is exempted from the Ordinance; (2) processing, because that activity is not expressly prohibited outside the City with respect to solid waste generated in the City;20 and (3) generated or found, because those words establish, in the first
The only guidance provided to Ms. Nix regarding her application of the Ordinance is her general authority to supervise and administer her department and its programs. Pls. Ex. 1 (Flow Control Ordinance) (ECF No. 1-1); Dallas City Code 2-139. Ms. Nix testified that the section gave her broad authority. Pls. Ex. 27 (Nix Dep.) at 51:17 54:21. This unbridled discretion stands in stark contrast to her more limited authority in administering franchise agreements where her discretion cannot be inconsistent with Article IV of Chapter 18 or state or federal law, and must be necessary to effect the policy of Article IV. Pls. Ex. 7 (Dallas City Code) (ECF No. 7) at 18-30(a). 20 Section 18-10(a)(1)(B) defines an offense as disposing of solid waste generated in Dallas at other than a City-owned and operated facility, but does not provide that processing such waste at a nonCity-owned and operated facility is illegal. Pls. Ex. 1 (Flow Control Ordinance) (ECF No. 1-1).
19
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instance, what solid waste is subject to the Ordinance.21 Each term is either undefined or defined in a manner that gives unbridled discretion to Ms. Nix. The term recyclable material is defined in Section 18-2 (39) as: Any material or product designated in writing by the Director of Sanitation as being suitable for reuse and/or recycling. The phrase solely recyclable material is completely undefined and used only once in Chapter 18 in Section 18-10(a)(1)(B), which is part of the Ordinance. The word processing is not defined in Chapter 18, but it is mentioned several times. It appears in the definition of solid waste services in Section 18-29(5), and it is used repeatedly in Section 18-10, and in Section 18-31. In all instances, it is clear from context that processing is an activity different than disposal, Pls. Ex. 27 (Nix Dep.) at 125:12 126:25, and, in general, related to recycling. The words generated and found are not defined in Chapter 18 and are used but once in Chapter 18 in Section 18-10(a)(1)(B). Section 18-10(a)(1)(B)(ii) provides a defense to prosecution under the Ordinance if solid waste generated or found in the City and not disposed of at a City-owned and operated facility is composed solely of recyclable material. The provisions just described, taken together, effectively grant the Director unbridled discretion to define what conduct the Ordinance penalizes. Ms. Nix
confirmed in deposition testimony that she was not limited in any way in how she defined recyclable material and there was nothing in Chapter 18 that prevented her
21
Section 18-10(a)(1)(B) makes the Ordinance applicable only to solid waste generated, found or collected inside the city. Presumably any waste collected inside the city would necessarily have to be found or generated in the city meaning the words generated and found determine what solid waste is subject to the Ordinance. Pls. Ex. 1 (Flow Control Ordinance) (ECF No. 1-1). Page 17
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from changing at any time (presumably without notice to or input from anybody) her understanding of that phrase. Pls. Ex. 27 (Nix Dep.) at 15558. The significance of that term to the meaning of the phrase solely recyclable material and its inter-relationship with the words processing, generated, and found, leave the Director effectively free to apply key terms subjectively on an ad hoc basis and to change her mind on a whim. Such unbridled discretion violates the federal and Texas Constitutions. c. The absence of explicit standards for understanding the wording of the Ordinance and the Directors disregard of that wording has already led to arbitrary and discriminatory application.
A plain reading of the phrase solely recyclable material, giving the word solely its ordinary and natural meaning, leads unavoidably to the conclusion that solid waste generated or found in the City containing any non-recyclable material must be sent to a City-owned and operated facility. Because collected recyclable
material inevitably includes some non-recyclable content, the plain and surprising meaning of the Ordinance as written was to eliminate private recycling of material generated in Dallas. Ms. Nix could not have been more clear at a November 14, 2011 meeting with Franchisees that this was precisely the Citys view solely recyclable meant 100% recyclable.22 Then, in an administrative directive she issued on December
22
Confirming this point are the following pertinent excerpts from questions and answers at the November 14, 2011, meeting (cited by the page numbers in the footer of each page in the transcript at Pls. Ex. 20): Unknown speaker: What percentage would you consider solely recyclable? Is there 10%? There is no load - - every load has some degree of some type of trash in it. There is no such thing as a load coming in that is 100% cardboard or anything else. There is going to be the banana peel in it. There is going to be the half-eaten hotdog, or whatever, in it. So where is the line drawn there? Ms. Nix: We consider 100% solely recyclable.
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15, 2011 (Administrative Directive), Pls. Ex. 8 (Sanitation Services Directive on Flow Control), only a month later and after she and counsel had reviewed Plaintiffs complaint and preliminary injunction brief and had the opportunity to recognize the vulnerability of an ordinance creating a City monopoly on recycling, Ms. Nix reversed course. Pls. Ex. 27 (Nix Dep.) at 167:8 168:4. In the Administrative Directive, solely
Pls. Ex. 20, Transcript of Nov. 14, 2011, Solid Waste Haulers Meeting (Nov. 14 Meeting) at 11:19-20 12:21-25, 1-3. Unknown speaker: If I brought a load of material to my facility, I dumped, and there was 20% trash in there after we sorted it all out, now, that 20% is loaded in a roll off box and it is brought to McCommas. Ms. Nix: If you bring it to your facility and unload it, then you will be in violation of the Ordinance. Id. at 13:18-24 14:25. Unknown speaker: . . . so I think your assumption that it has to be 100% or nothing is wrong. Does anybody disagree with me? Ms. Nix: Okay. Heres what is. We are not going to have a, is this right or wrong. Im here to tell you what the Ordinance is about and you can say I dont like that, but thats not what this forum is . . . . Id. at 14:25 15:1-6. Unknown speaker: . . . [h]ave you been very clear in those business meetings to the business community that if they had a banana peel in their recycling load that that would now be deemed trash and have to go to landfill? Ms. Nix: Ive talked to - - for every group we have talked to, weve told them solely recyclable loads. And they have said does it mean 100%? And the answer is yes. Id. at 17:23-2 18:3-6. Unknown speaker: Sometimes you dont [know] until the load is on the ground at your recycle facility, if there is any contamination in it or not. So you dump the load, you find 5% contamination. Are you suppose to load the whole thing back up and take it to McCommas, or what are we suppose to do? Ms. Nix: Yes. Unknown speaker: Absolutely? Ms. Nix: Next question. Id. at 28:24-25, 1-7.
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recyclable material now meant a load that contained no more than 10% by volume or weight of non-recyclable material, and up to an additional 4% by volume or weight of tramp material. Pls. Ex. 8 (Sanitation Services Directive on Flow Control). Ms. Nix did not discuss in the directive the reason for her extraordinary change in position or explain how it was consistent with the Ordinance or any existing definitions in Chapter 18 of the Dallas City Code. Id. Plaintiffs assume that the Directors about face was motivated by the Citys belated recognition that the plain meaning of the Ordinance as initially declared by the Director would have the unintended effect of eliminating all recycling in the City.23 While Ms. Nixs rejection of the plain meaning of the Ordinance makes the Ordinance less onerous, it also confirms she is not constrained in any way regarding how she understands and applies this penal law. She has testified there is nothing in the
Ordinance that prevents her from changing her mind again. Pls. Ex. 27 (Nix Dep.) at 158:24. She is right. Having once interpreted the Ordinance for convenience, nothing in it stops her from reinstating her initial position, short of an injunction against its enforcement. In the Administrative Directive, the Director also for the first time provided a description of what the City considers recyclable material. See Pls. Ex. 8; Pls. Ex. 27 (Nix. Dep.) at 155:22 156:5. Ms. Nix could not explain why the term had never before been defined, and as discussed infra at pages 31 to 33 her definition conflicts with state
23
Plaintiffs argued in their preliminary injunction brief that one effect of the phrase solely recyclable material would be to end virtually all recycling in the city because the City does not itself operate any recycling facilities. See Plaintiffs Brief in Support of Their Application for a Preliminary Injunction (ECF No. 6) at 5. Page 20
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law. Id. She added that nothing in the Ordinance led her to her definition and that she could define it any way she wanted, so long as it was in harmony with the practice, whatever that might mean. Id. at 157:419. Ms. Nix also noted the definition in the Administrative Directive is subject to change on an ad hoc basis. Id. at 182:1117, 183:920. For instance, according to the Director, her department is currently considering whether off-spec or discarded product, certain materials generated by printing companies, and organic material should be treated as recyclable material even though not identified as such in her directive. Id. at 183:21 184:17, 194:25 195:9. Additionally, Ms. Nix is considering whether scrap metal dealers should be subject to the Ordinance, although by its terms there can be no dispute that they are. Pls. Ex. 20 (Nov. 14 Meeting) at 19:919.24 Ms. Nix has no plan to generally publicize any changes she might make to the Administrative Directives definition of recyclable material and does not intend to provide any structure for receiving input from the regulated community before making a decision. Pls. Ex. 27 (Nix Dep.) at 183:820, 187:823, 188:110. Ms. Nix has also exhibited an arbitrary approach to interpreting the reach of the Ordinance. By its terms, the Ordinance only requires that solid waste generated,
collected or found in the City be disposed of at a City landfill.25 It does not on its face require that such waste be processed only at City facilities, suggesting the two words, which are used in the disjunctive in Chapter 18 of the Dallas City Code, describe
Citations to the transcript of the November 14, 2011 meeting (Pls. Ex. 20) are to the page numbers in the footer of each page of the transcript. 25 See footnote 21, supra.
24
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different activities. That distinction is consistent with the fact that processing as typically understood in the solid waste industry refers to some form of recycling or reuse procedure, an understanding confirmed by the context in which that word is used in Chapter 18. Ms. Nix agreed that the two words have different meanings, and describe different activities. Id. at 125:11 126:9. The Director nonetheless reads the Ordinance to mean what it doesnt say. According to her, the intent of the city council in adopting the Ordinance was to require all solid waste generated, found or collected in the City to go to a City-owned and operated facility, even for processing. Id at 172:6 173:17. She freely admitted that her view did not square with the plain wording of the Ordinance and that she might have to issue a clarification in order to achieve the intent of the city council to get all of that waste. Id. at 172:6 173:17. This is another example of Ms. Nix choosing to disregard the plain wording of the Ordinance to rewrite what the city council adopted. She can make such a choice because the Ordinance lacks both a definition of processing and any limitation on the Directors authority to interpret and apply the Ordinance; it even lacks a requirement that she use the ordinary trade meanings of the key phrases and words.26 The same omission with respect to the words generated or found has forced Ms. Nix to concede she does not know how the Ordinance applies to the non-recyclable portion of materials brought into Dallas for recycling. At the November 14, 2011,
26
If the Ordinance did require that all solid waste generated in Dallas be processed at a City-owned facility, that requirement would impair Plaintiffs rights under the Franchise Agreements, just as the disposal requirement does, contrary to the federal Contract Clause and Texas Due Course of Law Clause. Page 22
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meeting, she suggested that because such material was not originally generated in Dallas, it was not subject to the Ordinance and could be disposed of outside the City. Pls. Ex. 20 (Nov. 14 Meeting) at 28:1116. When asked if such residue was nevertheless found in the City, she said she would have to get an attorney to interpret that one to be honest with you. Id. at 28:2023. Her inability to provide guidance results once more from the absence of explicit standards defining the words generated or found and the absence of any limit on how she can apply the Ordinance, which represent constitutionally fatal shortcomings in a penal statute. Ms. Nix has similarly taken inconsistent positions on how to deal with recyclable material that leaves the City (which even Ms. Nix confirms is legal) but turns out to have more than 10% non-recyclable material or more than an additional 4% tramp material (and, therefore, is not solely recyclable) when it reaches a processing facility outside the City. Pls. Ex. 27 (Nix Dep.) at 196:19 198:7. At her deposition, she testified that such material must be returned to Dallas. Id. That conclusion is at odds with the command of Chapter 18 that the chapter (of which the Ordinance is part) applies only to territory within the city. Pls. Ex. 7 (Dallas City Code) (ECF No. 7) at 18-1. It is also inconsistent with Ms. Nixs understanding that solid waste is generated when sorted. Pls. Ex. 20 (Nov. 14 Meeting) at 26:17-20 27:2125, 1-12. If solid waste is generated when sorted, then any non-recyclable residue from recycling outside of the City was not generated in Dallas and certainly is not found in the City and should not be subject to the Ordinance. These contradictory positions result once more from the
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absence of explicit standards defining the term generated and the absence of any limits on how the Director can apply the Ordinance. Finally, the absence of explicit standards for understanding the term solely recyclable material and how and when that determination is to be made allows discriminatory and self-interested application of the Ordinance. The City engages in the collection of residential recyclable material that is transported for processing to a facility in the City of Garland. Ms. Nix has made it clear repeatedly that the City would strictly and vigorously enforce the Ordinance against private haulers. Pls. Ex. 20 (Nov. 14 Meeting) at 5:720; Pls. Ex. 27 (Nix Dep.) at 201:16 202:13. She has made it equally clear that the City will not hold its own trucks transporting residential recyclable material to Garland to the same standard: How we handle our operations is not pertinent to the Ordinance. Pls. Ex. 20 (Nov. 14 Meeting) at 31:215. At her deposition, Ms. Nix was still unwilling to concede that the City was subject to the Ordinance. She suggested that it was the intent of the City to operate its collection services as if the Ordinance applied. Pls. Ex. 27 (Nix Dep.) at 196:617. She indicated, however, that at most the City would monitor its possible need to comply by visiting the Garland facility two or maybe three times a year. Id. at 196:25 197:14. She even refused to confirm that if those visits identified a load of material with more than 10% non-recyclable material or more than an additional 4% tramp material that the solid waste would have to be reloaded and taken to the Citys landfill for disposal. As Ms. Nix carefully explained: If it were to be compliant with the There is nothing in the
Ordinance in this guidance, yes.
Id. at 197:25 198:7.
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Ordinance that exempts the City from its operation. Ms. Nix is again disregarding the plain language of the Ordinance in an ad hoc and subjective way because she believes, understandably, that the Ordinance gives her the right to do so. Far less egregious manipulation of the application of a flow-control ordinance has caused a federal court to find the law unconstitutionally vague. In JWJ Industries, Inc. v. Oswego County, 795 F. Supp. 2d 211 (N.D.N.Y. 2011), the issue was the application of a flow-control ordinance to the residue from out-of-county construction and demolition waste (C&D waste) brought to a JWJ facility, which was in the county, for recycling. The countys flow-control ordinance outlawed importing and exporting
waste and required all in-county waste to be delivered to a county solid waste facility. Id. at 216. The county initially advised the court that out-of-county C&D waste could be processed by JWJ and that residue could be transported out of the county for disposal. Id. at 218. A year or so later the county reversed positions and advised the court that residue from C&D waste had to be disposed of at county facilities. Id. In concluding that this change in position established the county ordinance was unconstitutionally vague on its face and as applied the court noted: A well-crafted statute is meant to avoid and prevent the type of arbitrary and confusing interpretation displayed by the County in this matter. . . . Scrutiny of the letters and directives from the County and its director of solid wastes reveals that not only does the Flow Control Law in question authorize and encourage arbitrary and discriminatory enforcement, such arbitrary enforcement is manifest here. Id. As demonstrated above, the same is true of the Dallas Flow Control Ordinance.
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4.
The Ordinance is preempted because it criminalizes the recycling of materials and loads that are recyclable under state law.
The Ordinance unlawfully restricts recycling in direct conflict with state law by criminalizing conduct that state law promotes: sending recyclable material loads to a recycling facility. In many instances, the Ordinance instead requires that these Pls. Ex. 1 (Flow Control
recyclable materials be disposed of at the City landfill.
Ordinance) (ECF No. 1-1) at 3 (new Sec. 18-10(a)(1)(B)). Because it is inconsistent with state law, the Ordinance violates Article XI, 5 of the Texas Constitution and may not be enforced. a. State law prefers recycling over landfilling, defines what is recyclable, and prevents cities from treating recyclable material as solid waste.
The Texas Legislature enacted the Solid Waste Disposal Act (SWDA) to safeguard the health, welfare, and physical property of the people and to protect the environment by controlling the management of solid waste. Tex. Health & Safety Code 361.002(a) (West 2010) (emphasis added). To that end, the SWDA provides that it is the states public policy that reuse or recycling of waste is to be preferred over land disposal. Id. 361.022(b). The Texas Commission on Environmental Quality (TCEQ) has broad jurisdiction over municipal solid waste disposal and recycling policy and must accomplish the purposes of the SWDA by controlling all aspects of the management of municipal solid waste. Id. 361.011(a)(b) (emphasis added). In controlling the
management of municipal solid waste, state law requires the TCEQ to consider the
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Legislatures preference for recycling when implement[ing] public policy concerning municipal solid waste management. Id. 361.022(d). Texas state law advances the states policy to promote recycling and limit landfilling in a number of concrete ways relevant here: (i) First, the Legislature categorically excluded recyclable materials from a citys statutory authority to regulate the disposal of solid waste. See id. 363.006(b) (Materials that are separated or recovered from solid waste for reuse or recycling by the generator, by a private person under contract with the generator, or by a collector of solid waste or recovered materials are not subject to this chapter.) (emphasis added). To make matters doubly clear, the Legislature mandated that statutory provisions granting a city authority over solid waste d[o] not prohibit or limit a person from extracting or using materials that the person generates or legally collects or acquires for recycling or resale. Id. 363.006(a). (ii) Second, the Legislature and the TCEQ define recyclable material very broadly and expressly exclude recyclable material from the definition of solid waste. See id. 361.421(5) (Recyclable material means material that has been recovered or diverted from the solid waste stream for purposes of reuse, recycling, or reclamation, a substantial portion of which is consistently used in the manufacture of products which may otherwise be produced using raw or virgin materials.); 30 Tex. Admin. Code 330.3(122) (Recyclable material is not solid waste). The TCEQ monitors the
statewide recycling rate of a vast range of materials that are recyclable under the states definition, including but not limited to food waste, glass, leather and hides,
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metal, paper and paperboard, plastic, rubber, textiles and apparel, wood, and yard debris. Id. 328.8(e). (iii) Third, the TCEQ regulates solid waste and recyclable materials under different administrative regimes. Compare id. 330 (municipal solid waste) with 328 (waste minimization and recycling) and 332 (composting). In separating these
regimes, the TCEQ provides significant latitude for the amount of non-recyclable content that may be present in recyclable material as it is collected and presented for processing. Specifically, the TCEQ exempts recycling facilities from registration and permitting requirements applicable to municipal solid waste facilities provided that they process recyclable material that contains no more than incidental amounts of non-recyclable waste. See id. 328.4(d). The TCEQ defines incidental amounts as non-recyclable waste that accompanies recyclable materials despite reasonable efforts to maintain source-separation and that is no more than 10% by volume or scale weight of each incoming load, and averages no more than 5% of the total scale weight or volume of all materials received in the last six-month period. Id. 328.2(3). The TCEQ also allows for non-recyclable content in recyclable loads in a second, important way. It recognizes a distinct set of exemptions for non-recyclable
components that are integral to recyclable material. Id. 328.2(3). These exempt components are effectively treated as within the definition of recyclable material because they fall outside the definition of incidental amounts and thus do not count against the percentage limits. These exempt components include: (1) materials
intertwined with consumer products being recycled; (2) materials damaged during
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recycling; and (3) materials intertwined with construction materials being recycled. Id. 328.2(3)(A)(C). For convenience, these three exemptions will be referred to as integrated and damaged materials. Thus, under state law, a recycling facility that does not hold a solid waste disposal permit is authorized to receive a load composed of up to 10% incidental materials, plus an unlimited amount of integrated and damaged materials. The states detailed regulations reflect its desire to allow loads containing recyclable materials to go to a recycling facility, even if such loads contain as much as 10% incidental material, plus another 10%, 20%, or even a greater percentage of integrated and damaged materials. b. The Ordinance conflicts with state law by requiring materials and loads that are recyclable under state law to be landfilled.
A home-rule city is constitutionally barred from adopting an ordinance that is inconsistent with the Constitution of the State, or of the general laws enacted by the Legislature of [Texas]. Tex. Const. art. XI, 5. When an ordinance attempts to regulate a subject matter preempted by a state statute, it is rendered unenforceable to the extent it conflicts with the state statute. Dallas Merchants & Concessionaires Assn v. City of Dallas, 852 S.W.2d 489, 491 (Tex. 1993) (finding that a Dallas ordinance concerning the location of alcohol-related businesses was preempted to the extent it conflicts with the [Texas Alcoholic Beverages Code]); see City of Wichita Falls v. Abell, 566 S.W.2d 336, 339 (Tex. 1978) (stating that a city ordinance is preempted when it makes illegal that which is legal under the laws of [Texas]). The Ordinance is
unenforceable because it conflicts with Texas state law governing recycling by requiring, on pain of criminal penalty, that certain recyclable materials and loads be
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buried at the McCommas Bluff landfill instead of taken to recycling or composting facilities as authorized by state law.27 (1) As written, the Ordinance directly conflicts with the state regulatory scheme governing recycling. The Ordinance renders illegal the disposal of any waste generated, found, or collected inside the city at any location other than at a City-owned and operated facility for disposal unless, inter alia, the waste is composed solely of recyclable material. Pls. Ex. 1 (Flow Control Ordinance) (ECF No. 1-1) at 4 (emphasis added). Because it is virtually impossible for a load of recyclable material to be completely free of non-recyclable solid waste, the Ordinance as written would effectively require that all recyclable materials generated, found, or collected inside Dallas be ultimately disposed of at the McCommas Bluff landfill where they would be buried and not recycled. Pls. Ex. 35 (Losa Decl.) (ECF No. 24) at 510, 13; Pls. Ex. 36 (Brown Decl.) (ECF No. 24) at 11.
Texas courts have invalidated municipal ordinances covering a variety of topics on grounds that the ordinances conflicted with state law. See, e.g., City of Houston v. Bates, No. 14-10-00542-CV, 2011 WL 3585612, at *78 (Tex. App.Houston [14th Dist.] Aug. 16, 2011, pet. filed Nov. 30, 2011) (mem. op.) (holding that the City of Houstons ordinance limiting lump sum payments of accumulated vacation and sick leave to retiring firefighters was contrary to state statutes governing firefighter compensation and was therefore preempted); State v. Chacon, 273 S.W.3d 375, 38081 (Tex. App.San Antonio 2008, no pet.) (holding that the enforcement provision in a San Antonio ordinance regulating sexually-oriented businesses which punished violations as a class C misdemeanor conflicted with and was preempted by state enabling legislation permitting municipalities to regulate SOBs that punished violations as a class A misdemeanor); Johnson v. City of Dallas, 702 S.W.2d 291, 292 (Tex. App.Dallas 1985, writ refd n.r.e.) (holding that a Dallas ordinance allowing the city to suspend a taxi license based on the presence of a theft conviction within five years of the license holders application was much more restrictive than, and therefore preempted by, state law allowing suspensions only when the past conviction directly relates to the duties and responsibilities of the licensed occupation); Cabells v. City of Nacogdoches, 288 S.W.2d 154, 159 (Tex. Civ. App.Beaumont 1956, writ refd n.r.e.) (holding that the City of Nacogdoches ordinance requiring milk sold in the city to contain at least 4% milk fat was preempted by a state law governing the grades and labels of milk and that defined milk as containing not less then 3 1/4% of milk fat).
27
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As previously noted at pages 18 to 19, speaking at the November 14, 2011, meeting with Franchisees, Ms. Nix confirmed that the words solely recyclable in the Ordinance meant 100 percent recyclable, and would require a load containing 99% recyclable materials and only 1% solid waste to go to the landfill. Pls. Ex. 20 (Nov. 14 Meeting) at 13:16, 15:13, 18:21 19:6, 29:24 30:5; Pls. Ex. 35 (Losa Decl.) (ECF No. 24) at 7. This 100 percent position conflicts with the state regulatory scheme that allows loads with up to 10% incidental material and an unlimited amount of integrated and damaged material to be processed at a recycling facility. On those bases alone, the Ordinance is preempted by state law. (2) Even as reinterpreted by the City, the Ordinance irreconcilably conflicts with the state regulatory scheme governing recycling. The Administrative Directive issued by Ms. Nix after this lawsuit was filed provides that a load containing recyclable materials (as defined by the City) will qualify as containing solely recyclable material and will therefore be exempt from the flow control requirements of the Ordinance if no more than 14 percent of the load comprises incidental and/or tramp material as defined in the directive. See Pls. Ex. 8 (Sanitation Services Directive on Flow Control); Pls. Ex. 27 (Nix Dep.) at 188:1118. Even if the Court were to consider the Administrative Directive instead of the plain terms of the Ordinance, the Administrative Directive conflicts with state law for at least four reasons. (i) First, the Administrative Directive defines recyclable material more narrowly than state law. Consequently, the Ordinance treats as solid waste certain materials that the State defines as recyclable, and requires loads of such materials to
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go to the landfill. The City directive defines recyclable materials as glass, leather, metal (ferrous/nonferrous metal) and metal appliances, paper/paperboard, plastic, rubber, textile, wood, yard trimmings, concrete and asphalt pavement (rubble), brick, asphalt shingles, batteries, tires, and used oil. Pls. Ex. 8 (Sanitation Services Directive on Flow Control). The State definition is much broader in providing that recyclable material is material that has been recovered or diverted from the nonhazardous waste stream for purposes of reuse, recycling, or reclamation, a substantial portion of which is consistently used in the manufacture of products that may otherwise be produced using raw or virgin materials. 30 Tex. Admin. Code 330.3(122). The Citys attempt to exclusively define recyclable materials conflicts with the States intent to allow the recycling of any material that can be reused or reclaimed and makes criminal what the State allows. The Citys constriction of the States general definition is not minor. For
example, two important materials food waste and other organic materials are not included in Ms. Nixs construct of recyclable materials. Yet both are expressly recognized by the TCEQ as categories of materials that may be recovered or diverted for recycling, see 30 Tex. Admin. Code 328.8(e)(1), (11)(J), and are authorized to be recycled at composting facilities, see 30 Tex. Admin. Code 332.3(b)(c) (relating to registration and notification), 332.74(b)(2)(B) (relating to labeling). Dallas businesses, such as Wal-Mart, rely on this state law to recycle food waste and organic materials. Pls. Ex. 35 (Losa Decl.) (ECF No. 24) at 24. The City would make that a crime, for the Ordinance would require loads of food waste to go to the landfill.
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When questioned about organic and food wastes, Ms. Nix conceded that, contrary to state law, the directive requires that they be landfilled: Q. Did you consider including organic material suitable for composting in your definition of recyclable materials? Were -- were giving that some consideration now. But it is not in there. So as of right now your understanding of your directive is that organics such as food material that could otherwise go to composting would have to go to the landfill? Yes.
A. Q.
A.
Pls. Ex. 27 (Nix Dep.) at 194:25 195:9. In short, the Ordinance (and its implementing directive) treats state-defined recyclable materials as non-recyclable solid waste that must be landfilled, on pain of criminal penalty. It would be hard to imagine a more direct conflict with state law. See Johnson, 702 S.W.2d at 292 (holding Dallas ordinance governing taxi license suspensions preempted because it was much more restrictive than state law). (ii) Second, in determining whether a load contains too much nonrecyclable material to go to a recycling facility, the City directive takes a different, much more restrictive approach than state law, causing a load to reach the cap on nonrecyclable content more readily than under state law. As a result, loads that could go to a
recycling facility under state law must go to the landfill under the Citys approach. The Administrative Directive initially defines incidental non-recyclable waste similarly to state law as [n]on-recyclable waste that accompanies recyclable material despite reasonable efforts to maintain source-separation and that is no more than 10%
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by volume or scale weight. Compare Pls. Ex. 8 with 30 Tex. Admin. Code 328.2(3). But the Administrative Directive, unlike state law, fails to recognize two of the three exemptions from the 10% cap on incidental materials for integrated and damaged materials. Compare Pls. Ex. 8 (Sanitation Services Directive on Flow Control) with 30 Tex. Admin. Code 328.2(3)(A)(C). And, unlike state law, the directive provides only a limited 4% exemption for tramp material, (which it also defines differently than state law). Compare Pls. Ex. 8 (Sanitation Services Directive on Flow Control) with 30 Tex. Admin. Code 328.2(3)(C). The following table details these distinctions:
Materials Non-recyclable components of white goods [i.e. appliances], whole computers, whole automobiles, or other manufactured items for which dismantling and separation of recyclable from non-recyclable components by the generator are impractical, such as insulation or electronic components in white goods. See 30 Tex. Admin. Code 328.2(3)(A). Source-separated recyclable material rendered unmarketable by damage during collection, unloading, and sorting, such as broken recyclable glass. See 30 Tex. Admin. Code 328.2(3)(B). Non-recyclable components that are integral to recyclable material such as glass from recyclable metal windows; nails and roofing felt attached to recyclable shingles; nails and sheetrock attached to recyclable lumber generated through the demotion of buildings; and pallets and packaging materials. See 30 Tex. Admin. Code 328.2(3)(C). Nonrecyclable, incidental materials. City Directive May count toward the 10% cap on incidental materials. Texas Law Definitions No weight or volume limit and do not count toward the 10% incidental waste limit. See 30 Tex. Admin. Code 328.2(3)(A).
Called tramp materials. Limited to 4% by weight or volume of materials of a load.
No weight or volume limit and do not count toward the 10% incidental waste limit. See 30 Tex. Admin. Code 328.2(3)(B). Called tramp materials. No weight or volume limit and do not count toward the 10% incidental waste limit. See 30 Tex. Admin. Code 328.2(3)(C).
May count toward the 10% cap on incidental materials.
Count toward the 10% cap on incidental materials.
Count toward the 10% cap on incidental materials.
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The Administrative Directive, therefore, limits both definitionally and numerically the amount of non-recyclable content permitted within a load that may go to a recycling facility, inconsistent with, and, therefore, contrary to, state law. This divergence between the Administrative Directive and state law has realworld significance. By eliminating two of the states three exemptions, and capping the third, the directive impermissibly requires that materials within these exemptions be counted against the percentage cap for incidental materials. The result is that all loads containing more than 14% (and possibly loads containing much less) of the integrated and damaged materials exempted under state law from the 10% cap for incidental materials must go to a landfill under the Administrative Directive, even though state law allows such loads to be recycled. The City must not be allowed to criminalize the recycling of countless loads that are recyclable under state law. City of Wichita Falls, 566 S.W.2d at 339. During her deposition, Ms. Nix conceded that the directive is not intended to mirror completely [30 Tex. Admin. Code ] 328, Pls. Ex. 27 (Nix Dep.) at 246:714, and is not consistent with every description that the state may have in [its] definition. Id. at 243:1523. She testified that the Citys definition of incidental amounts of nonrecyclable waste is not consistent with the state law definition, see id. at 246:1520, and admitted that the Citys definition of incidental and tramp materials is simply different than the states definition. Id. at 247:8 248:6. By the Citys own admission, then, the Ordinance conflicts with state laws treatment of the scope of incidental
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materials that may be included within loads of recyclable materials. The upshot is a significant reduction in recycling. For that reason, the Ordinance is preempted. (iii) Third, unlike state law, the Ordinance provides no mechanism for requesting alternative compliance with the states incidental materials
requirements. Under state law, a recycling facility that cannot meet the regulatory requirements relating to incidental amounts of non-recyclable materials may apply for permission from the TCEQ to engage in alternative compliance. 30 Tex. Admin. Code 328.4(d)(f). If granted, such an exemption allows the facility to receive loads with more than 10% incidental waste without obtaining a permit to operate as a solidwaste facility. Id. State law sets forth a detailed list of factors for the TCEQ to consider when evaluating an application for alternative compliance. Id. 328.4(f). Neither the Ordinance nor the Administrative Directive provides for any means of alternative compliance; they simply effect a blanket ban on the hauling of loads to recycling facilities that contain more than the Citys strict percentage cap of incidental waste. That omission constitutes yet another conflict between state law and the Citys regulatory regime. (iv) Fourth, in addition to the conflicts with specific provisions of state law, the net effect of the Ordinance and the Administrative Directive will be to reduce recycling in favor of additional landfilling. That outcome is contrary to the statutory requirement and state policy that recycling be preferred over landfilling and resource recovery. Tex. Health & Safety Code 361.022(b)(2) (West 2010). The Ordinance is therefore not
acceptable local regulation because it is not ancillary to and in harmony with the
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general scope and purpose of the state enactment. City of Brookside Village v. Comeau, 633 S.W.2d 790, 796 (Tex. 1982). 5. The Ordinance violates the City Charter because it was passed without providing Franchisees notice and a hearing.
The City violated its own Charter when it enacted the Ordinance without providing franchisee-plaintiffs with notice and a hearing. The entire Ordinance is
therefore void, and the City must be permanently enjoined from enforcing it. The charter of [a] city is its constitution and [a] city can exercise only such powers that are expressly granted by [the] charter, [] those which may be reasonably implied from the powers granted, or those that are incidental to the purpose for which the corporation was created. Willman v. City of Corsicana, 213 S.W.2d 155, 157 (Tex. Civ. App.Waco 1948), affd, 216 S.W.2d 175 (Tex. 1949); Foster v. City of Waco, 255 S.W. 1104, 110506 (Tex. 1923); Tex. River Barges v. City of San Antonio, 21 S.W.3d 347, 354 (Tex. App.San Antonio 2000, pet. denied); Cent. Power & Light Co. v. City of San Juan, 962 S.W.2d 602, 612 (Tex. App.Corpus Christi 1998, pet. dismd w.o.j.). A city must respect the express provisions of the charter in instances where they are applicable. Cent. Power & Light, 962 S.W.2d at 612. Consequently, the City [cannot] perform a governmental function in any manner contrary to the express provisions of its charter. Willman, 213 S.W.2d at 157. Indeed, a charters grant of power will be strictly construed, and if any fair, substantial and reasonable doubt exists as to any power, it is to be resolved against the corporation and the power denied. Tex. River Barges, 21 S.W.3d at 35455 (quotations
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omitted). All acts beyond the scope of the powers granted are void. Foster, 255 S.W. at 110506. Here, the Citys Charter mandates that [t]he city council shall provide for a fair hearing to any . . . business entity enjoying a public service franchise in the City of Dallas, prior to the change in the rates, rules, or regulations applicable to such franchise. Pls. Ex. 9 (City of Dallas Charter) (ECF 7-1), Ch. XIV, 7 (emphasis added). Before the Ordinance, Franchisees were authorized to dispose of solid waste at any federal and state licensed and permitted facility. See Pls. Exs. 1014 (franchise
agreements, each at 4(d); Pls. Ex. 27 (Nix Dep.) at 227:19 228:2. The Ordinance plainly imposes a new rul[e] or regulatio[n] applicable to such franchise by requiring all Franchisees to haul waste to the McCommas Bluff landfill, on pain of criminal penalty. Pls. Ex. 27 (Nix. Dep.) at 227:518. The City simply did not comply with the Charters requirement to provide a fair hearing to any . . . business entity that holds a franchise prior to changing the rules or regulations that govern such franchises. Ms. Nix admitted in her deposition that the City did not provide a specific dedicated hearing for holders of solid waste collection franchises for the purpose of considering the effect of the flow control ordinance on those franchises, nor did it hold a hearing for the purpose of taking testimony or evidence from those franchisees affected by the flow control ordinance. Pls. Ex. 27 (Nix. Dep.) at 224:1121. Regular public meetings held by the Council do not satisfy the Charters requirement to provide a fair hearing to any business entity enjoying a public service
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franchise. Especially when strictly construed against the City, as Texas law requires, the Charter requires an adjudicative hearing where a franchisees rights are considered and the Franchisee has a right to produce testimony and evidence about the effect of the proposed change on its franchise. The franchise agreement confirms that this type of hearing is contemplated by the Charter. It expressly provides that the franchise is subject to the applicable provisions of Chapter XIV of the Dallas City Charter. See Pls. Exs. 1014 (franchise agreements, each at 12(u)). And the franchise sets forth
procedures [that] shall apply to any hearing held in connection with any action taken by the Council in connection with [the franchise]. Id. 12(n). The franchise agreement then mandates that the hearing shall afford the franchisee rudimentary due process, id. 12(n)(2), a phrase that quintessentially invokes adjudicative, not legislative, procedures. See Goldberg v. Kelly, 397 U.S. 254, 26771 (1970) (using the phrase
rudimentary due process in seminal due process case to refer to adjudicative procedures required before deprivation of rights). Indeed, the agreement sets out
specific rules for choosing a decisionmaker and establishing procedures for the hearing. See Pls. Exs. 1014 (franchise agreements, each at 12(n)(1)(2)). Moreover, the
franchise agreement itself recognizes the difference between hearings on the one hand and meetings, where due-process rights are absent, on the other. The
agreement addresses City/Franchisee Meetings in a separate subsection from Hearings, providing that [t]he Franchisee shall meet with the . . . Council at reasonable times to discuss any aspect of the [Franchise], without mentioning the procedures that accompany Hearings. Compare id. 12(e) with 12(n).
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It is undisputed that the City did not hold an adjudicative hearing for the purpose of considering how the proposed Ordinance would affect Franchisees and hearing testimony from Franchisees. The legislative meetings open to the entire public at which any citizen may speak for mere minutes do not meet the Charters requirements. This was no mere technical default: the Charter requires a dedicated hearing to protect Franchisees before their Franchises are affected. The required
hearings serve a specific and entirely different purpose than the ordinary public meetings for the benefit of citizens who do not hold franchises from the City. The City had no authority to act without first granting the fair hearing required by the Charter. Foster, 255 S.W. at 110506; Willman, 213 S.W.2d at 157; Cent. Power & Light Co., 962 S.W.2d at 612. Indeed, by failing to provide Franchisees a hearing to contest the proposed rules and regulations governing the franchisees, the City acted contrary to an express provision in the City Charter. Id. Time and again, the Texas Supreme Court has held that a citys action in violation of the procedures prescribed in its Charter is void ab initio. E.g., Willman, 213 S.W.2d at 16061 (holding that [s]ince the city prescribed in its charter the manner in which the power granted should be performed, such method must be followed, and citys failure to follow express provisions in passing the ordinance rendered it void); Foster, 255 S.W. at 1105 (Since the charter of the city has specially provided for [how the city may incur debts and] . . . the notes and contract were not executed in substantial compliance with [those methods], they are void.). The Citys Ordinance is likewise void and must be enjoined.
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B.
A permanent injunction is necessary to prevent irreparable injury. In its January 31, 2012 Order, the Court concluded that a preliminary injunction
was necessary to prevent irreparable harm. Order (ECF No. 53) at 2931. The record is unchanged, and a permanent injunction is now warranted for the same reasons given by the Court. In the recent OConnor case, the Fifth Circuit affirmed a permanent injunction that barred the defendant from entering property to search for a shipwrecked vessel believed to be in a lake surrounded by the plaintiffs land. See OConnor v. Smith, 427 F. Appx 359, 367 (5th Cir. 2011). On the issue of irreparable injury, the court explained that a party in possession of premises may secure an injunction against a threatened trespasser, because the party is considered to have no adequate remedy at law. Id. at 367. In other words, it is not necessary for the party whose rights are violated to bring a series of lawsuits to attempt to collect damages after each specific violation occurs. That same principle supports injunctive relief when plaintiffs sue governmental entities that threaten to violate federal law. Nelson v. Univ. of Tex. at Dallas, 535 F.3d 318, 323 (5th Cir. 2010) (explaining that the Ex Parte Young doctrine allows federal courts to enjoin continuing violations of federal law by states). Likewise, Plaintiffs here cannot be required to bring a series of actions for a continuing violation of their constitutional rights. Avoidance of continuing violations is one reason that courts routinely find irreparable injury for constitutional and statutory violations. See A.A. ex rel. Betenbaugh v. Needville Indep. Sch. Dist., 611 F.3d 248, 271 (5th Cir. 2010) (permanent injunction
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granted against school district grooming rule that was invalid under the Texas Religious Freedom Restoration Act); ADT Sec. Servs., Inc. v. Lisle-Woodridge Fire Prot. Dist., 672 F.3d 492, 505 (7th Cir. 2012) (permanent injunction granted against ordinance which improperly displaced private market for fire alarm services and effectively established a local government monopoly over fire alarm transmission services). As this Court has previously recognized, [w]hen an alleged deprivation of a constitutional right is involved, most courts hold that no further showing of irreparable injury is necessary. Order (ECF No. 53) at 29 (quoting La. Seafood Mgmt. Council, Inc. v. Foster, 917 F. Supp. 439, 442 n.1 (E.D. La. 1996)). Irreparable injury also occurs if enforcement of an ordinance would yield fines and criminal penalties, which is unquestionably the case with the Ordinance. See Villas at Parkside Partners v. City of Farmers Branch, 577 F. Supp. 2d 858, 878 (N.D. Tex. 2008); Pls. Ex. 20 (Nov. 14 Meeting) at 4:5 5:20; Pls. Ex. 27 (Nix Dep.) at 200:24 202:13. Damages are not an adequate remedy for plaintiffs who must suffer prosecution and conviction under an unconstitutional ordinance; instead, the ordinance is properly enjoined. See Morales v. Trans World Airlines, Inc., 504 U.S. 374, 381 (1992) (there is no adequate remedy at law when penalties attach to continuing or repeated violations of the infirm law, and therefore an injunction is appropriate). Finally, as the evidence establishes, enforcement of the Ordinance would also work a substantial disruption and hardship on the Franchisees operations, such as destroying substantial portions of their businesses. See Order (ECF No. 53) at 31
(discussing how the Ordinance would effectively eliminate the disposal line of
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business). These considerations show irreparable injury. Doran v. Salem Inn, Inc., 422 U.S. 922, 932 (1975). C. A permanent injunction will prevent injury to Plaintiffs that outweighs any damage to the City. The threatened harm to Plaintiffs including the possibility of criminal penalties far outweighs any possible damage to the City from a permanent injunction. As the Court previously found from the evidence, the City is capable of accommodating the future disposal needs of city residents without enacting the Flow Control Ordinance. Order (ECF No. 53) at 31. The City cannot identify any problem that the Ordinance is necessary to correct, and in fact waste disposal will continue to be handled in the environmentally sound, cost efficient manner that it has been handled for years. Solid waste engineering expert Nat Egosi likewise testified that the
Ordinance would not lead to the building of any new recycling facility by the City; would not lead to any increase in recycling of solid waste found in the city; and is not necessary for any plausible heath, safety, or welfare purpose. Pls. Ex. 40 (Egosi Decl.) (ECF No. 24) at 1113. Therefore, an injunction against the Ordinance will not result in any damage to the City or its residents in these areas. In contrast, the potential injury to Plaintiffs is substantial. For two Plaintiffs alone, enforcement of the Ordinance would cause annual revenue losses of over $13 million if the City were allowed to divert private landfilling revenues to itself via the Ordinance. Pls. Ex. 41 (Branch Decl.) (ECF No. 24) at 6. Franchisees also would sustain substantial incremental costs if they are required to use the McCommas landfill exclusively, including costs for new trucks and to change routes, and increased mileage,
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labor, and maintenance costs. Pls. Ex. 41 (Branch Decl.) (ECF No. 24) at 7. Waste generators in the City i.e., its apartment residents and businesses would also see an increase in their own costs of waste disposal, because it is estimated that up to 85% of incremental costs caused by the Ordinance would be passed on to the generators. Pls. Ex. 41 (Branch Decl.) (ECF No. 24) at 79. Perversely, then, the Ordinance would make waste disposal in the City more expensive, and potentially encourage illegal dumping and other unsafe practices. Finally, the City cannot claim any injury from not receiving the funds expected to be raised by the Ordinance, when those funds could only be obtained in violation of the federal Contract Clause and Texas Due Course of Law Clause and through actions outside of the citys legitimate powers. D. A permanent injunction will not disserve the public interest. For essentially these same reasons, the public interest is not disserved by an injunction. Most fundamentally, there is no public interest in enforcing an
unconstitutional law. See ODonnell Const. Co. v. District of Columbia, 963 F.2d 420, 429 (D.C. Cir. 1992); Giovanni Carandola, Ltd. v. Bason, 303 F.3d 507, 521 (4th Cir. 2002). Moreover, the interests of the public necessarily overlap considerably with [the Citys] interests, Six Kingdom Enters., LLC v. City of El Paso, No. EP-10-CV-485-KC, 2011 WL 65864, at *10 (W.D. Tex. Jan. 10, 2011), and, therefore, where the City has no legitimate interest in enforcement of the Ordinance, neither does the public at large. In fact, because a permanent injunction will allow the Franchisees to continue serving the waste disposal needs of city businesses in a manner that is safe and that city businesses
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have expressed a preference for (by entering into contracts with the Franchisees), an injunction will serve the public interest and honor these existing contractual arrangements. See N.J. Retail Merchants Assn v. Sidamon-Eristoff, 669 F.3d 374, 389 (3d Cir. 2012) (the public interest is not served by the enforcement of an unconstitutional law); Chamber of Commerce of U.S. v. Edmondson, 594 F.3d 742, 771 (10th Cir. 2010) (explaining that there was no interest in enforcing a law that is likely constitutionally infirm); Bank One v. Guttau, 190 F.3d 844, 848 (8th Cir. 1999) (the public interest is served by enjoining an invalid law). The record also makes clear that the Ordinance is not necessary to accommodate the disposal needs of the Citys residents and was not enacted to address any existing public problem regarding waste disposal in the City. The Citys own Local Solid Waste Management Plan submitted to TCEQ admits that there are no new solid waste facilities or facilities expansions planned in the near future by the City, and thus the Ordinance cannot be justified as necessary for handling the future disposal needs of City residents. Pls. Ex. 19 (Local Solid Waste Management Plan) at 25. As to recycling, the Ordinance also fails to serve any public interest. The Citys own plan makes clear that there will be sufficient private sector recyclables processing capacity within the region through the planning period [i.e., through 2060], so the Ordinance cannot be justified as necessary to promote recycling. Id at 35. Finally, the state has made clear that the public interest is disserved by a flow control ordinance. The TCEQ mandates that local solid waste management plans, which the City has submitted to TCEQ (Pls. Ex. 19 (Local Solid Waste Management Plan)), shall not prohibit, in fact or by effect,
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importation or exportation of waste from one political jurisdiction to another. 30 Tex. Admin. Code 330.635(b)(3). Ms. Nix candidly admitted that the Ordinance is
inconsistent with that requirement. Pls. Ex. 27 (Nix Dep.) at 207:14 208:3. In short, the Ordinance does not achieve any significant and legitimate public purpose relating to the disposal of waste in a sound and proper manner.
III. CONCLUSION
As Plaintiffs have demonstrated, bare invocation of the police power is not enough to shield the Citys actions from scrutiny under the federal and Texas constitutions and its own charter. Blinded to legal barriers by the temptations of what appeared to be readily available revenue, the City enacted the Ordinance with little or no regard for contract rights, consistency with state law, or even appropriate definitions of key terms and guidance for implementation and enforcement. The Citys disregard of these protections from legislative overreaching produced an unlawful Ordinance whose enforcement should be enjoined permanently. Wherefore, based on the evidence of record and the arguments presented here and in support of Plaintiffs prior request for preliminary injunction, Plaintiffs request that the Court declare the Ordinance void and issue an Order that permanently enjoins Defendants from taking any action to enforce the Ordinance or any directive thereunder, as well as any action to implement City Council Resolution No. 112622, passed simultaneously with the Ordinance.
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Dated: April 23, 2012
Respectfully submitted,
THOMPSON & KNIGHT LLP
By: /s/James B. Harris James B. Harris State Bar No. 09065400 Stephen F. Fink State Bar No. 07013500 Brian W. Stoltz State Bar No. 24060668 1722 Routh Street, Suite 1500 Dallas, Texas 75201 (214) 969-1700 TELEPHONE NO. (214) 969-1751 FAX NO. Email: james.harris@tklaw.com ATTORNEYS FOR NATIONAL SOLID WASTES MANAGEMENT ASSOCIATION, BLUEBONNET WASTE CONTROL, INC., IESI TX CORPORATION, and BUSINESSES AGAINST FLOW CONTROL
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BAKER BOTTS L.L.P. By: /s/Aaron M. Streett (by permission) Aaron M. Streett State Bar No. 24037561 910 Louisiana Street Houston, Texas 77002 (713) 229-1855 TELEPHONE NO. (713) 229-7855 FAX NO. Ryan Bangert State Bar No. 24045446 2001 Ross Avenue Dallas, Texas 75201 (214) 953-6915 TELEPHONE NO. (214) 661-4915 FAX NO. ATTORNEYS FOR WASTE MANAGEMENT OF TEXAS, INC., and WM RECYCLE AMERICA, LLC
JACKSON WALKER L.L.P. By: /s/ Patrick R. Cowlishaw (by permission) Charles L. Chip Babcock Texas State Bar No. 01479500 Patrick R. Cowlishaw Texas State Bar No. 04932700 901 Main Street, Suite 6000 Dallas, Texas 75202 (214) 953-6000 TELEPHONE NO. (214) 953-5822 FAX NO. Email: pcowlishaw @jw.com ATTORNEYS FOR REPUBLIC WASTE SERVICES OF TEXAS, LTD., ALLIED WASTE SYSTEMS, INC., and CAMELOT LANDFILL TX, LP.
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Filed 04/23/12
CERTIFICATE OF SERVICE I hereby certify that on April 23, 2012, an electronic copy of the foregoing document was filed with the Clerk of Court for the U.S. District Court for the Northern District of Texas, using the Courts CM/ECF system. I further certify that all participants in the case are registered CM/ECF users and that service will be accomplished by the CM/ECF system.
/s/James B. Harris James B. Harris
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Plaintiffs&#39; Brief in Support of Permanent Injunction

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Case 3:11-cv-03200-O Document 68

Page 1 of 57 PageID 1407

CIVIL ACTION NO. 3:11-cv-03200-O