FOR MANY YEARS, solid waste collected in the Alexandria, La., area was dumped at a landfill leased and operated by the city. In the early 1980s, state environmental authorities began to enforce new landfill standards and ordered the city to upgrade its facility or close it by January 1986.
With no equipment or resources to haul the waste to another acceptable site and no funds to properly close the landfill, the city was in a bind. The state, however, offered the city a reprieve: It would allow the landfill to operate past the deadline if the city hired a waste management firm to operate and close the landfill under state regulations.
The city found only one company interested in or capable of doing the work. In February 1986, the city council passed an emergency measure approving an operating contract with Houston-based Waste Management Inc. (WM). Immediately thereafter, the state granted a closure extension. Under the contract, the city paid WM a flat monthly fee of $18,750. In return, the company provided all of the equipment and personnel needed to operate and maintain the landfill, and eventually closed the site in 1990 in accord with regulatory standards.
Two years later, the company filed a lawsuit against a former employee and a disposal contractor for damages arising from the alleged misuse of WM's commercial customer information. The defendants' response included a claim against the city of Alexandria seeking return of all money paid by the defendants during the time that WM operated the landfill. The case eventually grew into a certified class action by all landfill customers who paid WM to deposit waste from 1986 until the site closed.
The trial court declared the contract between the city and WM lawful for only 60 days and void thereafter. The judgment awarded the class members nearly $1.8 million plus interest and attorneys fees based on the profit illegally acquired by WM under an invalid contract. WM's original claim for damages evaporated.
On appeal, WM sought reversal of the entire judgment. For their part, the class claimants asked the appellate court to find the contract void from the outset and to increase the award to an amount reflecting all WM revenue. The Louisiana Court of Appeal addressed two issues: the validity and duration of the contract, and the effect of public bid laws.
The appellate court upheld the lower court's findings that the city properly observed the formalities for passing an emergency ordinance. The appellate panel also agreed with the trial judge that the contract was not a franchise, which, under the city charter, could not be granted by emergency ordinance.
The appeals court, however, disagreed with the lower court by holding that an emergency ordinance, effective for only 60 days, does not preclude a contract for a term greater than 60 days. “A 60-day contract … would not have been an effective response to the emergency,” the opinion said. Finally, public bids were not required for operating services and landfill closure, which was not a “public work.” The judgment was reversed, and the case was dismissed.
[Waste Management of Central Louisiana v. Beall, No. 03-1710 (La.App.Cir.3) Aug. 4, 2004.]
The legal editor welcomes comments from readers. Contact Barry Shanoff via e-mail: [email protected].
The columnist is a Rockville, Md., attorney and serves as general counsel of the Solid Waste Association of North America.