Legal Lode: Do'h-nation

Court rejects argument that a take-away is a give-away.

With access to a plentiful water supply from a nearby canal, two Los Angeles speculators, William Kerckoff and Jacob Mansar, bought some 3,000 acres of land in the heart of the San Joaquin Valley in 1900, hoping to transform the barren land into farming country. The area was then known as Collis, honoring Collis P. Huntington, the president of the Southern Pacific Railroad, which, 10 years earlier, had built a water tank there to service locomotives along its newly constructed line to Fresno.

Ballyhooing the region’s potential bounty, Kerckoff and Mansar coaxed Scandinavians and Germans to abandon settlements in the Midwest and set down new roots in central California. In 1906, the area was renamed “Kerman” — coined from the first three letters of each promoter’s last name — and was officially incorporated 40 years later as a city.

Since 1992, Louis and Karen Lopez have operated a recycling center in Kerman, buying and selling aluminum, glass, plastic, copper wire, newspaper, cardboard, refrigerators, stoves, televisions and e-waste. Their only city business license is for the recycling center. They have never applied for any state, county or local licenses for collecting or transporting solid waste or recyclables. Their pick-ups from residences, business and schools are free.

The Lopezes have no written contracts for hauling away recyclables. The scrap metal business operates on an all-cash basis. They keep next to no records of their pick-ups or annual recycling tonnages.

In 2008, the city adopted an ordinance aimed at attaining state-mandated diversion rates for recyclables. The measure required city officials to sign an exclusive contract with a hauler of solid waste, recyclables, green waste and demolition debris, and prohibited any competing hauler from collecting such materials. When the city issued a request for proposals for the new exclusive franchise, the Lopezes did not respond.

The city awarded the franchise to Mid-Valley Disposal Services. When Mid-Valley notified the city manager that the Lopezes were picking up recyclables from Kerman businesses, the city directed them to stop.

The Lopezes filed suit against the city in federal district court. They sought an order declaring the city ordinance unconstitutional and invalid to the extent it prevented them from collecting and transporting recyclable materials from businesses and residences.

The complaint also requested an injunction allowing them “to continue collecting recyclables from clients within the [city] where such recyclables are donated to Plaintiffs … or otherwise removed from the customer’s property before being discarded by customer.”

To support their claim, the Lopezes contended that the ordinance was overbroad, unauthorized by state law, exceeded the city’s police powers, violated due process and interfered with contracts. In any event, they said, the recyclables they collect are not waste, but are instead “donations” from the owners of the materials.

For its part, the city argued that the ordinance was a clearly constitutional exercise of police power and authorized by state law. With no key facts in dispute, both parties moved for a summary ruling in their favor.

The magistrate judge granted the city’s motion for judgment and dismissed the complaint. “Because providing comprehensive collection and disposal of waste in an efficient and economically sound manner is an obvious constitutional exercise of a municipality’s police powers and is authorized by state law, Plaintiffs’ multi-pronged attack on municipal authorization of exclusive waste removal contracts is unconvincing,” she wrote.

As for the “donation” theory, the judge declared, “If a Kerman resident diverts recyclables to Plaintiffs, it is not making a noncommercial donation or a gift, [the resident] is diverting recyclables to a commercial enterprise competing with … the holder of an exclusive franchise … .”

[Lopez v. City of Kerman, No. 1:09-CV-00491-SMS (E.D.Cal., Sept. 14, 2010)]

Barry Shanoff is a Rockville, Md., attorney and general counsel of the Solid Waste Association of North America.

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

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