### FI LED U.S. COURT O F APP EALS ELEVENTH CIRCUIT A ugu st 16 , 2 005 THO MAS K. KAH N CL ERK [PUBLIS H] IN THE UN ITED STATES COURT OF APPEALS FO R T HE EL EV EN TH CIRC UI T

____ ____ ____ _ N o. 04- 1303 5

____ ____ ____ _ D.C. Dock etNo. 0 3- 80 00 3- CV-KLR SOUTHERN WASTE SYSTEMS, LLC., Plaintiff-Appellee,
ve rs us CITY OF DELRAY BEACH, FLORIDA, WASTE MANAGEMENT INC. OF FLORIDA, D ef en dants -Appe llants , BFI WASTE SYSTEMS OF NORTH AMERICA, INC., D ef en dant.

____ ____ ____ Appeal f rom the United State s District Court fo r the S outhe rnD istri ct

of F lor ida

____ ____ ____ (A ug us t 16, 200 5) Be fo re BI RC H , CA RN E S an d H IL L , Ci rc uit Jud ge s.2

HI LL , C ircuit Judg e: So uth er n W as te S y ste m s, L L C s ue d th e Ci ty of D el ray Be ac h , F lor ida

and W as te Mana ge m en t I nc . of F lor ida se ek ing both ade cl ar at or y j udgm en t tha t a contractual agree m ent betwee n the defendants was unconstit ution al and an inj unc tio n a ga ins t i ts e nf

or ce m en t. T he dis tr ic t c ourt e nte re d sum m ar y j udgm en t fo r pla int if

f an d th is a

ppe al f oll ow ed
. I. In200 1, the Ci ty

of D el ray Be ac h, F lor ida

( the “ Ci ty ”) iss ue d ar eque st f or pr opos al s, se ek ing asin gle c ontra ct or to pr ovi de c om

pr eh en siv e w as te c oll ec tio n se rv ic es w ith in the Ci ty . T he r eque st p ro vid ed that the suc ce ssf

ul b idd er w oul d becom e the exclusive provider of residential waste collection services, r esidential
w as te r ec y cl ing se rv ic es , and c om m er ci al w as te c oll ec tio n se rv ic es thr ough out the Ci ty . T he a gr ee m en t w as to have an in iti al te rm of f ive y ears . So uth er n W as te S y ste m s, L L C ( “ SW S” ), w hic h is in the bus ine ss o f
co lle ct ing and d isp osi ng o f co nstru ct ionand d em oli tio n de br is ( “ C& D ”) in Fl or ida , la ck ed

the c ap ac ity

to pr ovi de the f

ull r an ge of

se rv ic es spe ci fi ed

in the pr opos al and d id n ot s ubm it a bid
. F ive w as te c om panie s, inc lud ing BF I W as te Sy ste m s of

N orth A m er ic a, I nc . ( “ BF I” ) – anon -F lor ida c or por at ion– di d su

bm it bid s. F oll ow ing apub lic he ar ing , the Ci ty aw ar de d th e co ntr ac t t o B FI , the low es tSW S also asked for decla ratory and injunctive re lief for

violation of the Equal Protec tion 1 Clause and sought damag es under 42 U.S.C. § 1983. At oral a rgument, SW S disavowed any intention to argue that the pur chase of B FI by 2 WM, an in-state waste ha uler, tra nsformed the initial selection of an out-of -state bidder

into a selec tion of a loca l bidder. 3 bidd er, and, as pre viou sly noted, an out-of-state corporation. SW S concedes that loc al f irm s e nj oy ed

no p re fe re nc e or

a dvanta ge in the bid din g and s el ec tio n pr oc es s. T he Ci ty and B FI e nte re d in to a

c ontra ct that pr ovi de d th at

BF I w oul d be the e xc lus ive w as te haule r in the Ci ty . T he c ontra ct f urthe r pr ovi de d th at , w hil e the Ci ty w oul d se t the r at es f

or w as te c oll ec tio n, BF I w oul d di re ct ly bil l and
co lle ct paym en t f

ro m the Ci ty ’ s r es ide nts , and the n tr an sm it a 5% f ranc his e fe e to the City
. The C ity

codified the contract by

m unicipal ordin ance. Som etim e later , a

custom er to whom

SW S supplied C&D re m oval services
w as c ite d f

or vio la tin g th e or din an ce , and S W S fi le d th is a ct iona ga ins t the Ci ty
an d B FI c ha lle ngi ng the or din an ce and the und er ly ing a gr ee m en t be tw ee n th e Ci ty
an d B FI . S W S as ke d th e co urt t o de cl ar e that the e xc lus ive f ranc his e vio la te d th e Co m m er ce Cl au se of

the U nit ed

S ta te s C onst itu tio n and t o e nj oinit s e nf or ce m en t as to C & D . A ft er

W as te Mana ge m en t I nc . of F lor ida ( “ W M” ) pur ch as ed

vari ous 1
as se ts o f BF I an d a ssum ed BF I’ s r igh ts and o bli ga tio ns unde r the c ontra ct and
or din an ce , it

w as sub sti tut ed

a s ade fe ndant. 24

T he dis tr ic t c ourt gr an te d part ia l sum m ar y j udgm en t t o S W S on i ts c la im f or inj unc tiv e an d de cl ar at or y r el ie f, hol din g th at

the e xc lus ive f

ranc his e ag re em en t vio la te d th e Co m

m er ce Cl au se . A ft er

asti pul at ed

dis m iss al of

S W S’ s r em ai nin g claim s and the City ’ s counterclaim , the c ourt entered final j udgm ent and enjoined
en fo rcem en t o f th e p or ti on s o f th e ag reem en t an d o rd in an ce p ert ai ni ng to C&D. W e re vie wthi s gr an t of

sum m ar y j udgm en t de nov o. P en ningto n v . Ci tyof H unt sv ille , 26 1 F .3d12 62 , 12 65 (11 Cir . 20 01 ). th II. The C omm erce Clause of the United States Constitu tion em powers Co ngr es s to r eg ulate c om m er ce a m ong the state s inor de r to p ro m ote the f re e fl ow o f g o o d s an ds e rv i c e s a c r o s s s t a t e l i n e s . U. S
. C o n s t . Ar t . 1 , § 8 , c l
. 3
. C o n v e r s e l y, the Co m m er ce Cl au se a lso f

or bid s astate or

m uni ci pa lity

f ro m im pe din g th e fl ow of goo ds and s er

vic es a cr oss state bor de rs , or f ro m f av or ing in- state e co nom ic in te res ts at t he ex pe ns e o f ou t-o f-s ta te eco no m ic in te res ts . Ore go n Was te Sys., In c. v . D ep art

m en t of E nv tl. Q ual ity , 511 U . S. 93, 98 ( 1994 ). T his “ dor m an t” sid e of th e Co m m erce Cla us e p ro hi bi ts st at es or c it ie s fr om “ ad va nc in g t he ir o wn com m ercia l interests by

curtailing the m ovem ent of articles of com m erce , e ither into o r out of the state.” H
. P
. H ood & Son s, I

nc . v . D u M

ond , 336 U . S. 525 , 535 (1 949)
. T hus, if

state or m uni ci pa l r eg ulatio ns d isc ri m inate a ga ins t ou t- of -s ta teEv e n r e gulatio ns that do no t di sc ri min ate on the ir fa c e a g a ins t inte rs tate c omm e rc e mus t 3 regulate eve n-hande dly

and impose only

incidental burde ns on interstate c ommerce . Pike v
. Bruce Church, I

nc. , 397 U.S. 137 (1970). As the district c ourt held that the City ’s ordinanc e unconstitutionally

discriminates ag ainst non-selec ted waste hauler s, it did notrea ch this second step in its review of the ordinanc e. A local pr ivate contr actor constructe d the proc essingfac ility , agree ing to ope rate it for 4 five year s, after

which the town would buy it for $1. Duringthose five year s, the contra ctor rec eived the pr ocessingfee s, at a c erta in level guara nteed by the town. 5 com panies in favor of local ones, they offend this dorm ant side of the Com m erce Clause. 3 Inthi s c as e, S W S cl ai m s th at the Ci ty ’ s or din an ce vio la te s th e dor m an t Co m m er ce Cl au se be ca

use it aw ar ds the e xc lus ive r igh t t o c oll ec t w as te in the Ci ty to o ne c om

pany , the re by

e xc lud ing all oth er

c om panie s – b othint er state and i n tr a s t a t e –

f r o m w a s t e c o l l e c t i o n . S WS r e l i e s f o r th i s c l a i m o nth e S up r e me Co urt’ s de ci sio n in C & A Carbon e, Inc. v. Town of Clarkstown , 511 U . S. 383 (1994). In that case, the Court struck down a m unicipal ordin ance that aw arded exclusive rights to process all town solid waste to a single, privately owned local transfer station. 511 U.S . at 391. T he ordinance m andated that all waste haulers 4 in the town transport their waste to the local station for processing. T he Court held that such an arr angem ent constitu ted a “ forced business transaction” that
unc onst itu tio na lly

f av or ed the loc al pr oc es sor , the re by dis cr im inatin g a ga ins t ou tof -s ta te in te res ts . Id

. a t 39 1- 92.6

Fo llo w ing Ca rbon e , w aste haulers ar oundthe country challenged m

unicipal
w as te c oll ec tio n a gr ee m en ts tha t aw ar de d e xc lus ive r igh ts t o c oll ec t w as te to one hauler, arguing that th eir exclusivity constitu tes a forc ed busin ess transaction that of fen ds th e Co m

m erce Cla us e. Non e was su cces sf ul
. See H oul ton Ci tiz en s’ Co ali tio n v . T

ow n of H oul ton , 175 F . 3d 1 78 ( 1 Ci r. 199 9) ; USA Re cycling, I nc. v . st To wn of B aby lon , 66 F
. 3d 1 272 (2 d C ir
. 199 5) ; B ark er San ita tio n v . Ci tyof Ne bras ka Ci ty , N o. 4:02CV3330, slip op. At 14-22 (D . N eb. N ov. 4, 2003); W ast e Management of Alam eda County, Inc. v. Biagini W aste Reduction Sys. Inc. , 74 Cal . Rpt r. 2d67 6 (C a. Ct . App . 19 98 ). Se e als o H arv ey& H

arv ey , I nc . v . Co unt

y of Chester , 68 F. 3d 78 8, 807 (3d Cir. 1995 ) (dorm ant Com m erce Clause inquiry shou ld f oc us “ on the de sig na tio n pr oc es s, on the r ea sona ble ne ss o f the dur at ionof the de sig na tio n and o n th e pr ac tic al li ke lih ood of [ de sig na tio n of

] an ou t- of

-s ta te facility ”). T hese courts all agree d that there is nothi ng inh erently discrim inatory in the awar d of an exclusive waste hauling contract. As the Se cond Circuit noted in U SA R ec yc lin g : Fo r nin ety

y ears , it ha s be ense ttl ed

lawthat garb ag e co lle ct ionand di sp os al is a co re fu nc ti on of l oc al go ve rn m en t i n t he Uni te d S ta te s. A t the ir opt ion , c iti es m ay

pr ovi de garb ag e pic k- up t o th ei r ci tiz en s dir ec tly
. . . O r the y

m ay r el y on a c los el y r eg ulate d pr ivate m ar

ke t t o provide tho se services.
. . . [W ] e re j ect the plaintiffs’ contention thatThe c ontrac t did not specify wher e B FI

was to proc ess or dispose of the waste. 5 7 the Carbon e decision fashio ned from the “ dorm ant” Com

m erce clause a new , and un precedentedly swee ping , limitation o n local governm ent authorityto provid e basic sanitation services to local residents and bu sinesses, on an exclusiv e basis and financed by tax dol lars . Id
. at 127 5- 76. T he Co m m er ce Cl au se f

or bid s on ly the pr om oti on o f loc al e co nom ic int er es ts o ve r out -o f- state int er es ts. I t do es not f or bid e xc lus ive f

ranc his e ag re em en ts whe re by

ac ity se le ct s on e w as te haule r to p ro vid e ba sic w as te co lle ct ionse rv ic es to its c iti ze ns, so l ong as the bid din g pr oc es s is ope n to a ll, and the re is no r equir em en t tha t l oc al int er es ts b e favor ed in the pe rf

orm an ce of

the
co ntr ac t. A s th e Se co nd C ir cu it co nc lud ed in U SA R ec yc lin g: 5 T he re is no r ea son to a ssum e that by shi ft ing a ll hir ing of

garb ag e haulers into th e hands of one buy er, the flow of interstate com m erce w ill be r ed

uc ed , and the re by

bur de ne d. I n f

ac t, the ope n bi ddi ng pr oc es s us ed

by the T ow n to hir e a sin gle garb ag e haule r co uld readily result in the hiring o f an out-of-state gar bage hauler – which w oul d a ct ua lly shi ft aportio n of

the garb ag e co lle ct ionm ar ke t into interstate com

m erce . Id
. Indeed, in the instant case, the wa ste collection franchise w as not onl y open to o ut- of -s ta te c om

pe tit or s, but

it w as , in fa ct , aw ar de d to one . T he re is nothin g in the record to support the claim that the City ’ s actions cons tituted th e sort of “ local8

eco no m ic pro te ct io ni sm ” th atth e Co m m erce Cla us e fo rb id s. Ca rbon e , 511 U. S. at 390. W e agre e w ith the First Circuit that “ to the extent that in -state and out-ofstate bid de rs are a llo w ed

to co m pe te f re el y on a le ve l pl ay ing f

ile d, the re is no cause for constitu tional concern.” H oul ton , 175 F. 3d at 189
. The aw ard of an
ex cl usi ve w as te hauli ng c ontra ct to the lowbid de r af

te r a fa ir and o pe n bi ddi ng pr oc es s th at

ha s th e ef

fe ct of e xc lud ing a ll oth er s f

or the te rm of the a gr ee m en t do es no t, fo r th is reas on , off en d t he Co m

m erce Cla us e. Appare ntl y

r ec ogni zi ng this , S W S as se rt s th at it is not j ust the se le ct ionof
ane xc lus ive w as te haule r, but the f ai lur e to p ay

f or tho se e xc lus ive w as te hauli ng services w ith tax do llars that is the City ’ s constit ution al err or. SW S ar gues that the City m ay not const itutio nally

require its re sidents to use a single waste hauler unless itelim inates the waste hauling m arket entirely by providin g thos e services to i ts r es ide nts usi ng publ ic funds. SW S re asons th at because the City ’ s ordinance pr ovi de s th at

the c ontra ct or

bil l and c oll ec t paym en t f ro m Ci ty r es ide nts , the Ci ty ha s n oteli m in at edth e m ark etby usi ng pu bl ic fun ds to pa y forwast e co ll ect io n. Thus, S W S concludes, the City ’ s franchise ar rangem ent constitu tes a “ forced busin ess transaction” betwee n its residents andBFI /W M that excludes all other
wa ste haulers, ther eby

violatin g the Com

m erce Clause. T herefor e, the rea l que sti on i n th is c as e is whe the r the Ci ty ’ s de ci sio n to a llo wBF I/W M t o bi ll its9

cu sto m er s di re ct ly

and r eb at e a fe e to the Ci ty tr an sf orm s an othe rw ise constitu tional exclusi ve wa ste hauling contract into an uncons titutio nal forced busi ne ss transa ct ion
. W e thi nk n ot. W e do n ot b el ie ve that the answ er to the que sti on whe the r the Ci ty ’ s e xc lus ive w as te hauli ng a gr ee m en t vi olate s th e Co m m er ce Cl au se li es in its ch oic e of bil lin g m ethod. The F irst Circuit has rea ched the sam e conclusion in rej ecting a sim ilar ch al le nge to ane xc lus ive m uni ci pa l w as te hauli ng a gr ee m en t tha t r equir es it s res id en ts to co nt ractin di vi du al ly w it h t he de si gn at edwast e h au le r. H oul ton , 175 F. 3d at 18 9. I n H

oul ton , the F ir st C ir cu it re co gni ze d th at the town’ s de ci sio n to re qui re it s r es ide nts to ind ivi dua lly c ontra ct f or w as te dis posa l a dde d an e le m en t of the f or ce d bu sin es s tr an sa ct ionpr es en t i n Ca rbon e . The c ourt, however , co m ple te ly r ej ec te d th e ide a that Carbon e requires the invalidation of such
ar range m en ts. T o so sug ge st, a cc or din g to the c ourt, str et ch es the log ic of the do rm an t Co m

m erce Cla us e to th e b reak in g p oi nt . Id
. at 188. Instead, the court
re as one d th at

the c or e pur

pose of the c lause is to p re ve nt e co nom ic pr ote ct ion ist pol ic ie s, and tha t the r el ev an t i nqui ry is w he the r the plan f

or the ir pr ovi sio n dis cr im inate s a ga ins t no n- loc al int er es ts. I n th at inquir y , the c ri tic al que sti on i s no t h ow was te haul in g s erv ic es are p ai d fo r, bu t h ow t he y are s el ect ed
. Id
. at

188
-10

89
. Se e als o Barker , N o. 4:0 2C V 3330 , sli p op . a t 14 -2 2; B iag ini , 74 C al
. Rp tr . 2d at68 2. We a g re e t h atth e c ri t i ca l i s s u e i s n o twh et h erd i re ct b i l l i n g b y BF I/ WM constitu tes a forc ed busin ess transaction, but whether the award of the contract dis cr im inate d inany

w ay a ga ins t no n- loc al int er es ts. T his m eans: [T ] hat when the Com

m erce Clause inquiry

focuses on a state or local plan th at c ulminate s inan aw ar d of an e xc lus ive c ontra ct

to one of se ve ra l a spi rants ( ac tua l or pot en tia l) , the pr oc es s by w hic h th e co ntr ac tor

is ch ose n a ssum es gr eat i m portanc e in d et er

m ini ng the p l an ’s c o n s t i tu t i o n a l i ty ve l no n . A ft er a ll, in- state int er es ts are not undu ly pam pe re d, nor

out -o f- state c om

pe tit or s un dul y

bur de ne d, when a m unicipalit y

aw ards an exclusive contract to a low bidder (f ro m w ha te ve r state or

r eg ion ) af

te r a fa ir and o pe n bi ddi ng p ro ce ss. Id
. at 188
. I na sm

uc h a s w e have pr ev iou sly de te rm ine d th at

the se le ct ionpr oc es s in this c as e did

not f av or loc al int er es ts, and i n f

ac t aw ar de d th e co ntr ac t t o an ou tof -s ta te co m

pa ny, w e h ol d t ha t i t d idno t o ffen d t he do rm an t Co m m erce Cla us e. III . Finding no discrim ination forbidden by the Com m erce Clause in the aw ard
orpe rfo rm an ce o f th e Ci ty’ s ex cl us iv e was te haul in g a gr eem en t wi th BFI/ W M, we sha ll re ve rs e the j udgm en t of the dis tr ic t c ourt, va cate the inj unc tio n, and r em an d fo r furthe r pr oc ee din gs n ot i nc onsi ste nt w iththi s op ini on. REVERSED, VACATED, an d R EMANDED.