Franchise Flip-Flop

CAN JUDGES ever resemble filmmakers? A movie company sometimes screens versions of the same story with different endings, and then reacts to test audience responses by altering the final cut. Here's how that scenario played out in the Idaho courts.

Teresa and David Plummer moved to Fruitland, Idaho, to start a garbage hauling service after the city assured them that it would be legal for them to do so. After the Plummers arrived, Hardin Sanitation, which had been the only collection business in the area, asked the city council for an exclusive franchise. The city, without competitive bidding, passed an ordinance giving Hardin a 10-year franchise and preventing any other business from collecting garbage.

The Plummers brought suit in state court to declare the ordinance invalid and prevent its enforcement. The trial judge ruled in favor of the city, finding that the ordinance was a permissible exercise of the city's power. On appeal, the Idaho Supreme Court reversed the lower court decision, holding that municipalities could not grant exclusive solid waste franchises because state law did not give them the power to do so. [See related story, “Franchise Fracas,” Waste Age, Aug. 2003, p.16]

The decision created an uproar. Local governments joined with haulers in expressing shock and dismay over the ruling, which upended long-standing practices in Idaho. The public and private sectors considered going to the legislature for clarification, but instead opted for a judicial fix.

The city filed a petition for rehearing, calling the court's attention to the figurative 800-pound gorilla that the judges apparently overlooked or ignored. The Idaho Constitution allows a local government to “make and enforce, within its limits, all such local police, sanitary and other regulations [that] are not in conflict with … the general laws.”

After agreeing to reconsider its decision and hearing arguments by both sides, the court acknowledged that the city was exercising “constitutionally granted police power.” This was an about-face from the earlier stage where the court declared that the city must prove that its franchise power was derived from state law. “[A]n ordinance passed by a municipality … to regulate the collection of solid waste within its city limits is an exercise of police power,” noted the court. The legal turnabout meant the Plummers now had to show that granting a franchise conflicted with state law.

The Plummers had based their case on the theory that franchises amounted to unreasonable restraints on commerce and prohibited monopolies. “Idaho law precludes these arguments,” the court replied. Cities are exempt from state antitrust laws if they are “properly exercising police power in regulating the collection of solid waste,” the opinion said.

To its credit, the court ultimately conceded that its first decision was wrong. In sum, the state law allowing cities to operate solid waste collection systems “though not specifically authorizing exclusive [collection] franchises, do[es] not prohibit [them] either,” the court said.

On with the show!

[Plummer v. City of Fruitland, 2004 WL 385005 (Idaho, 2004)]

The legal editor welcomes comments from readers. Contact Barry Shanoff via e-mail: [email protected].

The columnist is aRockville, Md., attorney and serves as general counsel of the Solid Waste Association of North America.