Antitrust Law Daily Wrap Up, ANTITRUST—D. Nev.: City of Reno recycling collector did not violate Sherman Act through franchise agreement, (Mar 28, 2017)

By E. Darius Sturmer, J.D.

The City of Reno, Nevada, and three Nevada companies would not have restrained trade in violation of the Sherman Act by allegedly entering into exclusive franchise agreements limiting competition and fixing prices for the collection of recyclable materials, the federal district court in Reno has ruled. The court determined that it did have subject matter jurisdiction for purposes of the federal antitrust and constitutional claims, but also found that the complaining recycling collection company failed to allege sufficient facts to entitle it to relief under the Act. Dismissal was granted as to the federal claims. A motion to dismiss a pair of state law claims was denied as moot (Green Solutions Recycling, LLC v. Refuse, Inc., March 27, 2017, Du, M.).

Franchise agreement. According to plaintiff Green Solutions Recycling (GSR), the city entered into an exclusive service-area franchise agreement for commercial solid waste and recycling materials with Reno Disposal Company (RDC), even though it lacked the statutory authority to do so. GSR cited Nevada Revised Statutes Sec. 268.081, which allowed local governments to displace or limit competition in certain services, including the collection and disposal of waste, but not the collection of recyclable materials.

Later, defendant Waste Management of Nevada (WMN) contacted one of GSR’s customers about the franchise agreement and asserted that only WMN was permitted to haul recycling containers. The city itself accused GSR of operating in violation of the franchise agreement, GSR alleged. The company complained that the conduct amounted to an attempt to interfere with and destroy its business by preventing it from "seeking or servicing clients for the collection of recyclable material."

Sufficiency of claims. To begin with, the court found that the factual assertions against two of the defendants—WMN and Refuse, Inc.—were too conclusory to support claims against them. GSR’s claims were based on the contention that the franchise agreement covered the collection of recyclable materials that were not within the statutory definition of waste, the court noted. That agreement was between the city and RDC alone. Rather than specific allegations as to WMN and Refuse, GSR generally lumped them together with the other defendants.

GSR’s argument that the recyclable materials were not "waste" within the statute’s meaning—and could not be subject to the franchise agreement without violating the Act—was unconvincing. The complaint did not allege that the franchise agreement displaced or limited competition over the collection of recyclable materials that were not discarded as waste. Rather, it alleged that the city lacked authority to enter into a franchise agreement with regard to the collection or purchase of recyclable material. "In other words," the court explained, "the complaint [did] not convey what GSR states in its opposition—‘that recyclable materials that are treated as waste [were] not in fact ‘recyclable materials’ but rather [were] ‘other waste’" pursuant to the statute.

The complaint made no distinction between recyclable materials that were discarded and recyclable materials that were sold. It did not even allege the nature of GSR’s business, what it purportedly collected, or how the materials it collected were not discarded but sold. Further, the complaint was devoid of any allegations to support GSR’s theory of liability, that the recyclable materials it collected were not waste under the Nevada law allowing the city to limit competition.

Commerce Clause. The company’s claim for violation of the dormant commerce clause was also insufficient, the court stated, because the complaint made no averment that the franchise agreement affected interstate commerce, let alone adversely. Therefore, that claim was also dismissed with leave to amend.

The case is No. 3:16-cv-00334-MMD-VPC.

Attorneys: John P. Sande IV (Sande Law Group) for Green Solutions Recycling, LLC. Mark G. Simons (Robison, Belaustegui, Sharp & Low) for Refuse Inc., Reno Disposal Co. Inc., and Waste Management of Nevada, Inc.

Companies: Green Solutions Recycling, LLC; Refuse Inc.; Reno Disposal Co., Inc.; Waste Management of Nevada, Inc.

Cases: Antitrust FranchisingDistribution NevadaNews