City of Camarillo v. Spadys Disposal Service

Opinion

STONE, P. J. This is an appeal from a judgment granting a preliminary injunction against the appellant enjoining it from hauling waste in the City of Camarillo.

Facts

The city manager for the City of Camarillo (hereinafter referred to as City) refused to renew the appellant’s solid waste hauling permit which expired December 31, 1981. The City refused to renew the appellant’s permit because it had concluded that Camarillo could not support more than one disposal company. Furthermore, the city council found that Camarillo would be adversely affected by the granting of an additional contract or permit for rubbish collection. The appellant continued to haul garbage within the city limits after its permit to do so had expired. The respondent filed a motion for preliminary injunction which was granted.

Analysis

The sole issue raised on appeal is whether or not the City’s act of refusing to grant waste-hauling permits to more than one company is violative of the “Sherman Antitrust Act” (15 U.S.C. § 1). States and municipalities are treated differently under the Sherman Act than nongovernmental persons and entities. While the language of 15 United States Code section 1 prohibits “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce . . .,” it is well accepted that states and municipalities may engage in monopolistic practice when acting for the benefit of the public.

The policy of permitting monopoly for the public benefit was first articulated in Parker v. Brown (1943) 317 U.S. 341 [87 L.Ed. 315, 63 S.Ct. 307]. Speaking for the Supreme Court, Chief Justice Stone stated that local governmental restraint of trade was to be condoned when “. . . upon a consideration of all relevant facts and circumstances it appears that the matter is one which may appropriately be regulated in the interest of the safety, health and well-being of local communities, and which, because of its local [1030]character and the practical difficulties involved, may never be adequately dealt with by Congress.” (Id. at p. 362 [87 L.Ed. at p. 332].) The regulation of garbage collection in small communities is classically the category of trade restraint to which the Parker v. Brown exception was intended to be applied.

The appellant points out that local government does not possess unlimited power to restrain trade under a general public well-being theory. To support its proposition the appellant cites Lafayette v. Louisiana Power & Light Co. (1978) 435 U.S. 389 [55 L.Ed.2d 364, 98 S.Ct. 1123]. In Lafayette the Supreme Court stated: “Plainly petitioners are in error in arguing that Parker held that all governmental entities, whether state agencies or subdivisions of a State, are, simply by reason of their status as such, exempt from anti-trust laws.” (Id., at p. 408 [55 L.Ed.2d at p. 380].) The court then went on to formulate a two-pronged test to determine if state action may be properly excluded from the Sherman Antitrust Act. The first level of the test requires an analysis of whether or not the restraint on trade imposed is, “one clearly articulated and affirmatively expressed as state policy.” (P. 410 [55 L.Ed.2d p. 381].) The second level of the test then focuses on the question of whether or not the policy is, “actively supervised by the [state itself].” (Ibid.)