St. Louis County acted lawfully and “pursuant to its constitutional powers” when it established trash-collection districts, County Counselor Pat Redington told the Missouri Supreme Court last week.
The state Supreme Court heard oral arguments May 10 in St. Louis County’s appeal of a lower court ruling awarding roughly $1.16 million to three waste haulers over the establishment of trash-collection districts. The judges took the case under submission following roughly 40 minutes of oral arguments.
Redington represented St. Louis County, while Jane Dueker of Stinson Morrison Hecker LLP represented the trash haulers.
County Circuit Court Judge Barbara Wallace last September ordered the county to pay a total of $1,159,903.90 to American Eagle Waste, Meridian Waste and Waste Management in their suit alleging the county failed to provide the state-required two years’ written notice it was establishing eight trash districts in unincorporated areas.
The three haulers were outbid in 2008 for contracts to provide exclusive service to trash-district residents.
Wallace awarded $261,086.65 to American Eagle Waste; $99,224.20 to Meridian and $799,593.05 to Waste Management.
She ruled in September 2010 that the county breached an implied contract with the haulers by not providing two years’ written notice as required by state statute. Wallace decided in January 2011 the three haulers were entitled to damages.
Redington last week said the notification statute is not applicable to the county because of its charter status.
“…The argument that was first raised by St. Louis County 14 days after this petition was filed and has been maintained by St. Louis County throughout trial and that is that Article 6, Section 18(c) of the Missouri Constitution vests legislative authority, with respect to waste collection, in St. Louis County,” Redington said.
The Missouri Constitution states in Article 6, Section 18(c) that a county’s charter “may provide for the vesting and exercise of legislative power pertaining to any and all services and functions of any municipality or political subdivision, except school districts, in the part of the county outside incorporated cities.”
The court broadly stated, according to Redington, the county had to comply with this statute, notwithstanding that the county had not yet filed a response to the haulers’ claim that they were not given the required two years’ notice before the county established its trash-collection districts.
Because the county has the right to control municipal trash collection, Redington contended that doing so is a “constitutional grant of authority to the county.”
“That means that the General Assembly has no authority to aggregate that power, not permanently, not for a two-year period,” she said.
The issue, according to Redington, deals with how a service or good is acquired, but it does not take away the right to get that good.
“If the state statute said not just that you have to competitively bid it, but you can’t do it for two years that would be getting closer to what we have here,” she said. “Here we have a municipal function which clearly the county had the authority to regulate.”
Redington argued county policies supersede statewide policies, creating a “meaningful grant of authority.”
“It’s not charter versus General Assembly. It’s Constitution versus General Assembly,” she said, “and the question is, does the general assembly have authority to override the Constitution, which had said St. Louis County you can take care of this? No, clearly it does not.”
Citing Wallace’s ruling the county breached an implied contract with the haulers by not providing two years’ written notice, Redington said an implied contract prevents unjust enrichment.
“Really, all it’s saying is that the county violated the state statute and so we want some money because of that …,” she said. “No services were given by the haulers in this case. No money was given by them. There’s nothing to discord or return to them, which has always been the case in implied contract cases.”
Additionally, the county argues in its brief that the haulers “chose not to seek preliminary injunctive relief to stop program implementation.” Injunctive relief is what the haulers could have sought and there “were plenty of avenues of relief available,” according to Redington, if they believed the statute applied.
Redington said the “simple straightforward argument” of the county’s constitutional authority should control this case because it is the easiest, but for “many policy reasons.”
“One, the court needs to correct the misstep that happened here when the Eastern District (of the Missouri Court of Appeals) permitted this suit to go forward,” she said.
Redington also argued that resolving the case on this issue will end the litigation and “copy cat litigation” that is out there.
“If this court starts looking at the implied contract or if this court resolves the case by agreeing with the county that there was no admissible evidence of any kind of damages to the trial, that’s fine for the county as far as this claim goes,” she said, “but, one, it might permit the haulers to resurrect their federal due process claim, which was dismissed by the federal court as not being right.
She continued, “Two, it won’t get rid of the copy cat case, which is pending, nor, will it stop other haulers from filing suit if they feel that this is a profitable thing for them to do.”
Five suits have been brought against the county related to the establishment of trash-collection districts, including the one the county is appealing. The county has prevailed in three of the suits and the so-called “copy-cat” suit is pending.
That suit was filed against the county by Environmental Trash Co. Inc. in 2011.
Dueker, who represents the trash haulers, told the Supreme Court that while the phrase “implied contract” may have been used, there has “never been any doubt” that the haulers have been suing under the notification statute.
“(The county) had two choices, wait or contract. They were forced, by statute, to contract with us,” Dueker said. “It wasn’t directory because there’s a consequence because if you don’t wait the two years, you have to pay the haulers.”
However, Redington said the haulers pleaded “implied contract” as a cause of action.
“The trial court denied our motion to dismiss because she said we had breached an implied contract without any evidence in the record,” she said. “A summary judgment was entered because she said there was a breach of an implied contract. So I don’t know how we go through all that, get judgment on implied contract, and then get up to the supreme court and say, ‘Well, maybe it wasn’t implied contract, maybe it was something else.'”
Part of the problem with the appellate court ruling, Redington said, is the “blithe assertion that statewide policy can overrule the county’s” charter authority.
The notification statute, “says it’s about preventing the county from regulating trash collection, a matter of environmental regulation for two years. If that’s not what it is, it does not come within the expressed title of the bill or the subject enacted in that bill, and that, I would like to really point out, is something that the haulers have conceded,” Redington said.
“They have not raised a single, substantive argument in response to that,” she said. “In fact, they argued throughout their brief that this doesn’t have anything to do with the health aspects of trash, that it only has to do with market regulations. That’s giving up the argument.”
Dueker said she believes is very clear is that the issue at hand was “a market regulation relating to trash.”
“We do submit that picking up trash is a municipal function,” she said, “and for example, the ordinance they passed in 2006, which is the subject of this lawsuit, did many things like force recycling, once a week pickup, bulky trash (pickup) twice a year.”
In their appeal brief, the haulers contend, “If the county wanted to enter the trash-hauling market before the mandated two years expired, it was required to hire the existing haulers and pay them what they would have received had they continued to provide the service. It is undisputed that the county never complied with this law.”
The trash haulers also contend “the county was put on notice that the new amendment could be considered a market regulation of statewide concern that would trump the county’s assertion of charter power.”
Dueker contended that public policy for “the state at large, not just the county” needs to be analyzed.
“The state of Missouri, the Legislature, said this is a policy that is statewide,” Dueker said. “That’s why it overrides their authority. Now, whether they also have an additional municipal issue in notice can be analyzed separately, but, this was a statewide policy. This law was in effect in 1988.”
Dueker also said for the county to say the first time it could file a lawsuit was to “raise it in the answer” is “completely disingenuous.”
“Why didn’t you file the lawsuit on the day in Jackson County, for example? They were arguing their charter authority and they came in the day the law was effective, which was within the statute of limitations, and said ‘This law, our charter authority, supersedes this law.'”
Redington said she has not seen a case where raising a constitutional affirmative defense in the first answer filed to the petition is not timely.
“I think that’s ludicrous,” Redington said. “The cases that were cited in support of the hauler’s argument were cases where the defendant raised it on the day of trial. They cited a case, I believe, where the defendant first raised it on appeal. This was raised in the first answer. You don’t get any more timely than that.”
Dueker said she believes the court of appeals was “very clear” in its decision and that the judge had a “final judgment.”
“They exercised jurisdiction and said in judicial economy, and because this is a dispositive motion and that it would prevent my clients from re-litigating the issue,” she said. “We’re going to go ahead and give the reasoning. And what the court did, they didn’t say that we find that the county violated the law, we say the county, the law applies to the county, and the charter authority does not stand in that way.”
In its appeal, the county also is disputing the amount of damages owed the haulers.
During a trial May 31, 2011, the plaintiffs called C. Eric Ficken, a certified public accountant and certified valuation analyst who is certified in financial forensics, as an expert witness. Ficken testified that American Eagle was damaged in the amount of $5,221,733; Meridian Waste was damaged in the amount of $1,984,484 and Waste Management was damaged in the amount of $15,991,861.
But those figures, which totaled roughly $23.2 million, were based on what the haulers would have billed or invoiced to customers, and not on the revenue they would have actually received.
Wallace disagreed with the haulers’ contention they were owed $32.1 million and awarded them roughly $1.16 million.
Redington contends the trial court erred in granting judgment for the haulers “because haulers failed to provide any evidence to support a claim for either restitution or damages in that the testimony and exhibits all were provided by a hired accountant who relied only on hearsay data that was not reasonably reliable so that the testimony and exhibits should have been excluded ”
The haulers filed the suit in May 2008.
County Circuit Court Judge Steven Goldman dismissed the case the next month, but the plaintiffs appealed the decision, first to the Eastern District of the Missouri Court of Appeals and then to the state Supreme Court.
Both courts refused to review the ruling. The case returned in July 2008 to the Court of Appeals, which in October 2008 reversed and remanded Goldman’s original decision. The suit went to U.S. District Court in 2009 with the addition of federal claims by the haulers, and a trial tentatively was set until Judge Charles Shaw sent the case back to the county circuit court in March 2010.