Competitive Sledge, The

Local governments that initiated residential curbside recycling as a joint municipal service did not illegally interfere with a pre-existing private recycling business, according to a ruling by the Supreme Court of Iowa. [Crippen v. City of Cedar Rapids, et al., No. 135/98-1801, Oct. 11, 2000]

In 1989, the plaintiffs launched HMR Home and Business Recyclers, which offered commercial and residential curbside recycling services in the cities of Cedar Rapids and Marion. Back then, HMR was the sole provider of this service in these communities, and did not begin charging its customers until 1991.

Cedar Rapids informally began its own recycling program in 1991, sending trucks into neighborhoods and setting up drop-off sites for residents. Eventually, Cedar Rapids and Marion passed ordinances creating curbside recycling in residential areas and levying assessments on all affected dwellings, regardless of whether residents used the cities' recycling services. Marion includes the assessment in its monthly fee for waste disposal, while Cedar Rapids lists the recycling fee separately on its waste disposal bills.

HMR filed suit against the cities, alleging that the defendants had unlawfully caused the company to lose business, and asked for damages and an injunction. After considering legal arguments from both sides, the trial court dismissed the case.

On appeal, the Iowa high court agreed point-by-point with the trial judge that HMR was not entitled to recover from the defendants. First, the cities' recycling services are a "city enterprise" that, by law, may compete with private business and are a "legitimate component of the defendants' solid waste collection and disposal system," the court said. Next, the services are exempt from the antimonopoly provisions of state law. In addition, the assessments do not violate constitutional or statutory limits on city tax levies.

Finally, on a critical issue - whether the defendants' ordinances establishing curbside recycling deprived HMR of its customer contracts in violation of constitutional protections - the justices again sided with the cities.

Under both the federal and Iowa constitutions, private property cannot be taken for public use without "just compensation." Thus, the question is whether HMR's loss of business is a protected private property interest. No, said the Iowa court.

For one thing, "the cities [did not take] possession of any tangible property of HMR" or physically invade HMR property or render its assets totally worthless. For another, noted the justices, the cities did not block HMR from contracting with city residents and have not forced residents to break their contracts, which, in any event, are terminable at will by either party.

"The property that HMR asserts has been taken is ... simply its economic loss resulting from the defendants' legal competition," the opinion stated.

Given that HMR had no exclusive authority to provide curbside recycling services to the cities' residents, the state supreme court held that the company had no constitutionally protected right to be free from legitimate governmental competition.