plaintiffs' brief in support of permanent injunction

8/2/2019 Plaintiffs' Brief in Support of Permanent Injunction

1/57

IN THE UNITED STATES DISTRICT COURTFOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

NATIONAL SOLID WASTES MANAGEMENT ASSOCIATION,BLUEBONNET WASTE CONTROL, INC.,IESI TX CORPORATION, REPUBLICWASTE SERVICES OF TEXAS, LTD,ALLIED WASTE SYSTEMS, INC.,CAMELOT LANDFILL TX, LP, WASTEMANAGEMENT OF TEXAS, INC., WMRECYCLE AMERICA, LLC, ANDBUSINESSES AGAINST FLOW

CONTROL,

Plaintiffs,

v.

THE CITY OF DALLAS, MIKERAWLINGS, PAULINE MEDRANO,TENNELL ATKINS, DWAINECARAWAY, MONICA ALONZO,CAROLYN DAVIS, JERRY ALLEN,

LINDA KOOP, AND ANGELA HUNT,

Defendants.

CIVIL ACTION NO.

3:11-cv-03200-O

PLAINTIFFSBRIEFINSUPPORTOFPERMANENTINJUNCTION

Case 3:11-cv-03200-O Document 68 Filed 04/23/12 Page 1 of 57 PageID 1407


2/57

i

TABLE OF CONTENTS

Table of Authorities..................................................................................................................iii

I. Introduction .......................................................................................................................... 1

II. Arguments and Authorities .............................................................................................. 3

A. The Ordinance is unconstitutional and illegal. ............................................................... 3

1. The Ordinance unconstitutionally impairs Plaintiffs contract rights...................... 3

a. The record establishes that the Ordinance substantially impairsFranchisee contract rights. .......................................................................................... 3

b. As the Court has recognized and concluded under a hard look, therecord establishes that there is no legitimate justification for impairing

the Franchisees contract rights.................................................................................. 5

c. As the Court has recognized and concluded, the record does notestablish that the Ordinance is reasonable and necessary to achieve eventhe pretextual purposes advanced by the City. ....................................................... 6

d. The record for determining if a permanent injunction should be issuedis identical to the record developed for the preliminary injunctiondecision. ......................................................................................................................... 7

2. Because the Ordinance alters vested rights to financially benefit the City, it

violates the due course of law clause of the Texas Constitution............................... 8

3. The Ordinance is unconstitutionally vague under the federal Due ProcessClause and violates the Texas Due Course of Law Clause by granting theDirector unbridled discretion in its enforcement.................................................. 14

a. The federal void-for-vagueness doctrine and the Texas unbridleddiscretion doctrine invalidate penal laws that can be enforcedarbitrarily and discriminatorily. .............................................................................. 14

b. The Ordinance neither defines solely recyclable material,

processing, generated, or found nor limits the Directorsauthority to define those phrases and words......................................................... 16

c. The absence of explicit standards for understanding the wording of theOrdinance and the Directors disregard of that wording has already ledto arbitrary and discriminatory application........................................................... 18



3/57

ii

4. The Ordinance is preempted because it criminalizes the recycling ofmaterials and loads that are recyclable under state law. ......................................... 26

a. State law prefers recycling over landfilling, defines what is recyclable,

and prevents cities from treating recyclable material as solid waste................. 26

b. The Ordinance conflicts with state law by requiring materials and loadsthat are recyclable under state law to be landfilled. ............................................. 29

5. The Ordinance violates the City Charter because it was passed withoutproviding Franchisees notice and a hearing. ............................................................. 37

B. A permanent injunction is necessary to prevent irreparable injury. ......................... 41

C. A permanent injunction will prevent injury to Plaintiffs that outweighs any

damage to the City. ........................................................................................................... 43

D. A permanent injunction will not disserve the public interest. ................................... 44

III. Conclusion........................................................................................................................ 46



4/57

iii

TABLE OF AUTHORITIES

Federal Cases

A.A. ex rel. Betenbaugh v. Needville Indep. Sch. District,611 F.3d 248 (5th Cir. 2010)......................................................................................4142

ADT Sec. Servs., Inc. v. Lisle-Woodridge Fire Prot. Dist.,672 F.3d 492 (7th Cir. 2012)............................................................................................42

Bank One v. Guttau,190 F.3d 844 (8th Cir. 1999)............................................................................................45

Chamber of Commerce of U.S. v. Edmondson,594 F.3d 742 (10th Cir. 2010)..........................................................................................45

Doran v. Salem Inn, Inc.,422 U.S. 922 (1975)...........................................................................................................43

Giovanni Carandola, Ltd. v. Bason,303 F.3d 507 (4th Cir. 2002)............................................................................................44

Goldberg v. Kelly,397 U.S. 254 (1970)...........................................................................................................39

Hill v. Colorado,530 U.S. 703 (2000)...........................................................................................................15

JWJ Indus., Inc. v. Oswego Cnty.,795 F. Supp. 2d 211 (N.D.N.Y. 2011) ......................................................................15, 25

Kolender v. Lawson,461U.S. 352 (1983).....................................................................................................14, 15

Kucharek v. Hanaway,902 F.2d 513 (7th Cir. 1990)............................................................................................15

La. Seafood Mgmt. Council, Inc. v. Foster,917 F. Supp. 439 (E.D. La. 1996) ....................................................................................42

Lindquist v. City of Pasadena,669 F.3d 225 (5th Cir. 2012)............................................................................................15



5/57

iv

Morales v. Trans World Airlines, Inc.,504 U.S. 374 (1992)...........................................................................................................42

N.J. Retail Merchants Assn v. Sidamon-Eristoff,

669 F.3d 374 (3d Cir. 2012) .............................................................................................45

Nelson v. Univ. of Tex. at Dallas,535 F.3d 318 (5th Cir. 2010)............................................................................................41

OConnor v. Smith,427 F. Appx 359, 367 (5th Cir. 2011) ........................................................................3, 41

ODonnell Const. Co. v. District of Columbia,963 F.2d 420 (D.C. Cir. 1992)..........................................................................................44

Six Kingdom Enters., LLC v. City of El Paso,No. EP-10-CV-485-KC, 2011 WL 65864 (W.D. Tex. Jan. 10, 2011)............................44

VRC LLC v. City of Dallas,460 F.3d 607 (5th Cir. 2006)..............................................................................................3

Villas at Parkside Partners v. City of Farmers Branch,577 F. Supp. 2d 858 (N.D. Tex. 2008)............................................................................42

State Cases

Cabells v. City of Nacogdoches,288 S.W.2d 154 (Tex. Civ. App.Beaumont 1956, writ refd n.r.e.)........................30

Cent. Power & Light Co. v. City of San Juan,962 S.W.2d 602 (Tex. App.Corpus Christi 1998, pet. dismd w.o.j.) ..............37, 40

City of Brookside Village v. Comeau,633 S.W.2d 790 (Tex. 1982).............................................................................................37

City of Houston v. Bates,No. 14-10-00542-CV, 2011 WL 3585612 (Tex. App.Houston [14th Dist.]Aug. 16, 2011, pet. filed Nov. 30, 2011)........................................................................30

City of Houston v. Houston City St. Ry. Co.,83 Tex. 548 (1892) ............................................................................................................10



6/57

v

City of Wichita Falls v. Abell,566 S.W.2d 336 (Tex. 1978).......................................................................................29, 35

Coffee City v. Thompson,

535 S.W.2d 758 (Tex. Civ. App.Tyler 1976, writ refd n.r.e.).................................15

Crossman v. City of Galveston,247 S.W. 810 (Tex. 1923) .................................................................................................15

Dallas Merchants & Concessionaires Assn v. City of Dallas,852 S.W.2d 489 (Tex. 1993).............................................................................................29

Foster v. City of Waco,255 S.W. 1104 (Tex. 1923) ...................................................................................37, 38, 40

Johnson v. City of Dallas,702 S.W.2d 291 (Tex. App.Dallas 1985, writ refd n.r.e.) .................................30, 33

Robinson v. Crown Cork & Seal Co.,335 S.W.3d 126 (Tex. 2010).......................................................................................1112

Spann v. City of Dallas,235 S.W. 513 (Tex. 1921) .................................................................................................15

State v. Chacon,273 S.W.3d 375 (Tex. App.San Antonio 2008, no pet.)...........................................30

Tex. Power & Light Co. v. City of Garland,431 S.W.2d 511 (Tex. 1968).............................................................8, 9, 10, 11, 12, 13, 14

Tex. River Barges v. City of San Antonio,21 S.W.3d 347 (Tex. App.San Antonio 2000, pet. denied)...............................3738

Willman v. City of Corsicana,213 S.W.2d 155 (Tex. Civ. App.Waco 1948),affd, 216 S.W.2d 175 (Tex. 1949)..............................................................................37, 40

Statutes and Regulations

30Tex. Admin. Code 328 ..................................................................................................28, 35

30Tex. Admin. Code 328.2(3) ..........................................................................................28, 34



7/57

vi

30 Tex. Admin. Code 328.2(3)(A)...........................................................................................34

30 Tex. Admin. Code 328.2(3)(A)(C) ...................................................................................29

30 Tex. Admin. Code 328.2(3)(B) ...........................................................................................34

30 Tex. Admin. Code 328.2(3)(C)...........................................................................................34

30 Tex. Admin. Code 328.4(d)................................................................................................28

30 Tex. Admin. Code 328.4(d)(f)..........................................................................................36

30 Tex. Admin. Code 328.4(f) .................................................................................................36

30 Tex. Admin. Code 328.8(e).................................................................................................28

30 Tex. Admin. Code 328.8(e)(1), (11)(J) ...............................................................................32

30 Tex. Admin. Code 330 ........................................................................................................28

30 Tex. Admin. Code 330.3(122) ......................................................................................27, 32

30 Tex. Admin. Code 330.635(b)(3)........................................................................................46

30 Tex. Admin. Code 332 ........................................................................................................28

30 Tex. Admin. Code 332.3(b)(c)........................................................................................32

30 Tex. Admin. Code 332.74(b)(2)(B) ....................................................................................32

Tex. Const. art. I, 17 .................................................................................................................10

Tex. Const. art. I, 19 ...................................................................................................8, 9, 10, 14

Tex. Const. art. XI, 5...........................................................................................................26, 29

Tex. Health & Safety Code 361.002(a)...................................................................................26

Tex. Health & Safety Code 361.011(a)(b) ............................................................................26

Tex. Health & Safety Code 361.022(b).............................................................................26, 36



8/57

vii

Tex. Health & Safety Code 361.022(d)...................................................................................27

Tex. Health & Safety Code 361.421(5)...................................................................................27

Tex. Health & Safety Code 363.006(a)...................................................................................27

Tex. Health & Safety Code 363.006(b)...................................................................................27

Tex. Util. Code 11.001 et seq. .................................................................................................14



9/57

PLAINTIFFS BRIEF IN SUPPORT OF PERMANENT INJUNCTION Page 1

I. INTRODUCTION

Plaintiffs request that the current preliminary injunction be converted to a

permanent injunction. As discussed below, all of the elements of a permanent

injunction are satisfied: (1) the Flow Control Ordinance (the Ordinance) adopted by

the Dallas City Council on September 28, 2011, and scheduled to take effect January 2,

2012, is unconstitutional and illegal;1 (2) failure to prevent enforcement of the

Ordinance will result in irreparable injury; (3) the injury to Plaintiffs is greater than any

to the Defendants; and (4) a permanent injunction will not disserve the public interest.

The facts of this case are well established in the record and discussed in the

Courts Order of January 31, 2012 (ECF No. 53). Nevertheless, a summary may be

helpful for context.

Although the City of Dallas (the City) both regulates and competes with

Plaintiffs in the solid waste disposal business, until the City Council adopted the

Ordinance, by a 9-6 vote, oversight of the hauling and disposal of commercial waste

and recyclables by the City was minimal.2 Selection of a waste disposal site was always

left to the hauler.3 The Citys lack of regulation and oversight was unsurprising given

that waste disposal is extensively regulated at the state level. The 2007 franchise

agreements between the City and the Franchisee Plaintiffs confirmed the Franchisees

right to engage in the businesses of removing, transporting, processing, and also

1 The Courts January 31, 2012, Order refers to a September 16, 2011 date for passage of theOrdinance. The vote was taken on September 28, but the Ordinance was not to become effective until

January 2, 2012. See Pls. Ex. 1 (Flow Control Ordinance) (ECF No. 1-1) at 7.2 Pls. Ex. 27 (Nix Dep.) at 128:12 130:4, 130:22 131:24.3 Id. at 133:24 134:14, 227:19 228:2.



10/57


selecting the disposal site for solid waste.4 What had been longstanding custom thus

became a 20-year contractual commitment, with Franchisees committing to pay a new

franchise fee. Franchisees relied on these rights by operating disposal businesses and

hauling waste to these privately owned landfills.

Four years later, by requiring in the Ordinance that all commercial waste in the

City be sent to City-owned and operated facilities for disposal,5 the City sought to pull

back on its franchise commitments, and to reverse longstanding practices the City had

recognized and endorsed. But for the preliminary injunction issued by this Court, the

Ordinance would have caused the wholesale elimination of a line of business engaged

in by Plaintiffs, increased costs for the disposal of commercial waste, and diverted

millions of dollars of revenue ($15$18 million a year) from private parties to the City.

Order (ECF No. 53) at 1618. Defendants passed the Ordinance notwithstanding the

admitted absence of any existing problem with the handling of commercial solid wastes

in the City or any need to impose such harsh results in order to advance aspirational

solid waste management goals. Instead, the purpose of the Ordinance was to shift

millions of dollars of revenue into the Citys coffers.

4 Pls. Exs. 1014.5 The Ordinance requires all waste to be taken either to the Bachman Transfer Station or theMcCommas Bluff landfill. Pls. Ex. 1 (Flow Control Ordinance) (ECF No. 1-1) at 3. Bachman TransferStation is not a disposal facility where waste is ultimately buried, but merely a place where waste may bedeposited before it is transferred by the City to McCommas Bluff to be landfilled. Thus, throughout thebrief Plaintiffs refer to the Ordinances requirement that all waste ultimately be sent to McCommas Blufflandfill.



11/57


II. ARGUMENTS AND AUTHORITIES

A. The Ordinance is unconstitutional and illegal. 6As explained below, Plaintiffs have established the first prerequisite for a

permanent injunction success on the merits because the Ordinance: (1)

unconstitutionally impairs their contract rights; (2) violates the Due Course of Law

Clause of the Texas Constitution; (3) is unconstitutionally vague; (4) is preempted by

state law; and (5) was enacted in violation of the City Charter. In conjunction with the

remaining elements for a permanent injunction that are satisfied here (as discussed

later), each of these failings provides an independent basis for a permanent injunction.

1. The Ordinance unconstitutionally impairs Plaintiffs contract rights.This Court has determined, based on the record before it at the preliminary

injunction hearing, that Plaintiffs have established a substantial likelihood of success

on the merits of their Contract Clause claim. Order (ECF No. 53) at 29. By agreement

of the parties, that record is unchanged. That unchanged record establishes a Contract

Clause violation.

a. The record establishes that the Ordinance substantially impairsFranchisee contract rights.

Under the franchise agreements, Franchisees have the right to choose where to

dispose of solid waste. As the Court correctly noted, the franchise agreements are not

limited to hauling solid waste, but also give Franchisees the right to engage in

disposal, and the only restriction they place on where solid waste can be disposed of is

6 A permanent injunction requires showing (1) success on the merits; (2) that a failure to grant theinjunction will result in irreparable injury; (3) that said injury outweighs any damage that the injunctionwill cause the opposing party; and (4) that the injunction will not disserve the public interest. OConnorv. Smith, 427 F. Appx 359, 365 (5th Cir. 2011) (citing VRC LLC v. City of Dallas, 460 F.3d 607, 611 (5th Cir.2006)).



12/57


that it be at an authorized facility. Order (ECF No. 53) at 12, 14, 32. The Court also

correctly concluded, as a matter of ordinary understanding, in the context of the

franchise agreements, and based on past course of dealings, that the parties intended

that phrase to mean any facility permitted by the state for the disposal of solid waste,

inside or outside the City limits. Order (ECF No. 53) at 12. 7

By restricting where the Franchisees could dispose of solid waste, the Ordinance

impairs that contract right. The Court looked past whether depriving a party of an

existing contract right, by itself, necessarily represents a substantial impairment,

undertook a more detailed analysis, and found substantial impairment. As the Court

noted, the Citys regulation of private solid waste activities has always been minimal

when compared to state regulation and, therefore, the Franchisees reasonable

expectation when entering the franchise agreements was that there would be little, if

any, regulatory involvement by the City in their activities. Order (ECF No. 53) at 14.

The franchise agreements do reserve the Citys right to exercise its police power.

But the Court correctly noted that such regulation must be both necessary and lawful.

Order (ECF No. 53) at 15. The Franchisees did not agree that the City could modify

their contracts for any reason at any time. They agreed only that their contract rights

could be modified by police power regulation as necessary and lawful. That limiting

7 The Court also addressed whether the franchise agreements were void ab initio, because theysurrendered an essential attribute of the Citys sovereignty. If they did there would be no contract, and,therefore, nothing to impair. (The City cannot seriously be contending that the franchise agreements itdeveloped and drafted contain such a fundamental defect. If in fact they do, Plaintiffs are entitled torefunds of the significant franchise fees they have paid since 2007.) Finding that a city need not be in thesolid waste business at all, the Court concluded that a city could, of course, regulate private solid wasteactivity and that the City had done so here through the franchise agreements. The agreements then werethe exercise of the police power, not a surrender of that power, and they were not void from theirinception.



13/57


condition negated any implication that the franchise agreements gave the City a

regulatory free hand to eliminate contract rights. Any later regulation that denied

rights affirmed in the franchise agreements would constitute a substantial impairment

of the contract if the regulation was proven unnecessary or unlawful as established in

this matter because the Ordinance was intended to advance the Citys proprietary

interests.

Finally, the Court found the financial impact associated with the Ordinance

sufficient to create a substantial impairment of the Franchisees rights. Order (ECF No.

53) at 16. Enforcement of the Ordinance would eliminate a whole line of business, cause

a loss of revenue to certain of the Franchisees by diverting to the City revenue otherwise

associated with the Franchisees disposal activities,8 and significantly increase operating

costs for the Franchisees. Pls. Ex. 31 (Stefkovich Dep.) at 43:26; Pls. Ex. 41 (Branch

Decl.) (ECF No. 24) at 6.

b.

As the Court has recognized and concluded under a hard look,the City had no legitimate justification for impairing theFranchisees contract rights.

The Court, presented with overwhelming support in the record, found that:

(1) The Ordinance was enacted to raise revenue tobenefit the city generally;

(2) Revenue raising was the actual purpose of theOrdinance; and

(3) Revenue raising was not a significant and legitimatereason to impair contract rights.

Order (ECF No. 53) at 18, 19, 20.

8 The Court assumed that the diversion of even a small percentage of disposal fees that wouldotherwise go to Franchisees represents a substantial impairment. The record is undisputed that the actualnumber, annually, for just two Franchisees is more than $13 million, as determined by Plaintiffs expertDouglas Branch. Pls. Ex. 41 (Branch Decl.) (ECF No. 24) at 6 & Ex. 2.



14/57


The Court determined that none of the other purposes claimed by the City was

significant and legitimate so as to justify the Ordinance. Order (ECF No. 53) at 23.

The Court recognized that in the context of an impairment claim, which requires a hard

look at proffered purposes, the legislation must be intended to remedy a problem, not

simply facilitate future aspirational goals. As the Court found, the record evidence

indicates that the Ordinance was not intended to remedy any existing solid-waste

problem in Dallas. Order (ECF No. 43) at 21.

In short, there was no legitimate justification for the Ordinances substantial

impairment of the Franchisees contract rights.

c. As the Court has recognized and concluded, the record does notestablish that the Ordinance is reasonable and necessary toachieve even the pretextual purposes advanced by the City.

The Court went on to find that the Ordinance also is not reasonably necessary to

achieve any of the Citys asserted non-financial objectives. Order (ECF No. 53) at 23.

This determination establishes a Contract Clause violation, independent of the

determination that the Citys purported objectives were not legitimate and significant so

as to justify the Ordinance. As the Court found, based on a hard look at the record,

including statements by the Director of Sanitation Services, a city consultant, and a solid

waste management plan the City submitted to the State of Texas, the Ordinance is not

necessary to:

(1) Address illegal dumping issues;(2) Increase the rate of recycling;(3) Achieve long term goals regarding waste disposal in

the City;(4) Facilitate data development; or(5) Implement green technology.



15/57


Order (ECF No. 53) at 2728. These conclusions also are well supported in the

Declaration of Nat Egosi, who reviewed all of these asserted justifications from the

perspective of an engineer and executive with experience and expertise in the

development and implementation of recycling technologies. Pls. Ex. 40 (Egosi Decl.)

(ECF No. 24).

Moreover, as the Court noted, each of those goals should have been known to the

City when it developed its franchise system in 2007, yet the City was content at that

time to allow Franchisees to continue to decide where to dispose of waste. Order (ECF

No. 53) at 28. Nothing in the record suggests any change in circumstances warranting

contract-impairing regulation now that was not necessary then.

Finally, nothing in the record suggests the City considered less drastic,

alternative means of achieving its goals. Order (ECF No. 53) at 28. As the Court notes,

failure to do so renders the Ordinance unconstitutional under the Contract Clause.

d.

The record for determining if a permanent injunction should beissued is identical to the record developed for the preliminaryinjunction decision.

The parties have agreed to submit the case for final decision based on the same

record on which the Court granted the preliminary injunction. Scheduling Order (ECF

No. 62) at 2. There have been no intervening changes in the law. What was a probable

violation of the Contract Clause is now established. The preliminary injunction should

therefore be made permanent.



16/57


2. Because the Ordinance alters vested rights to financially benefit theCity, it violates the Due Course of Law Clause of the TexasConstitution.

The same findings and analysis that establish a violation of the federal Contract

Clause also establish a violation of the Due Course of Law Clause of the Texas

Constitution.9 Under that clause, when a Texas city contractually submits itself to

competition with a private party through granting a franchise, the city cannot retract

franchise rights in order to benefit itself financially as a competitor, except through

actions that have a real and substantial relationship to a legitimate police power

purpose and do not interfere with private franchisees rights beyond what is necessary

in the circumstances. Tex. Power & Light Co. v. City of Garland, 431 S.W.2d 511, 517 (Tex.

1968).

In City of Garland, the Texas Supreme Court ruled that a city had unlawfully

denied a franchised electric utility the right to serve a new apartment complex, because

the city had done so in order to assure that its own competing utility service would

have the benefit of that customers business. In voiding the critical sections of the

ordinance on which the city grounded its action, the Court chose words that speak

directly to the present case:

Obviously these provisions have for their purpose theelimination of the Company as a competitor beyond itsexisting lines. They accord preferments ousting the

Company from exercising rights in an area granted by itsfranchise. These things the City cannot do. Essentialfranchise rights cannot be taken under a pretense ofregulation designed to gain a competitive advantage to the

9 Article I, 19 of the Texas Constitution provides that No citizen of this State shall be deprived oflife, liberty, property, privileges or immunities, or in any manner disfranchised, except by the due courseof the law of the land.



17/57


City acting in its proprietary capacity. The City has no rightto barter with the police power. When the City authorizedthe extension of the franchise it contractually submitted itselfto competition. Conversely, the Company received rightsprotected by Article I, 19 of the Texas Constitution. Theright to use the present and future streets of the City of

Garland cannot now be altered by legislation, unless theordinance provisions listed above have a reasonablerelationship to the protection of the public health, safety,morals or welfare. [The relevant ordinance provisions] aredestructive of franchise rights rather than regulatory innature; therefore, they are void.

431 S.W.2d at 518 (internal citations omitted). The Flow Control Ordinance suffers from

these same deficiencies, as review of the City of Garland decision and comparison to the

facts here confirms.

In 1915, the City of Garland granted a 50-year non-exclusive franchise to Texas

Power & Light Co. (TP&L) to use the streets and public places to construct and

operate power lines for the purpose of supplying electricity to Garland and its

inhabitants. Later Garland built its own electric plant and began supplying electricity to

many residents. Garland passed a 1949 ordinance requiring TP&L to apply for a permit

before extending any of its services, specifying several grounds on which a permit

might be denied, including grounds that served to protect the citys competing utility

business. In 1964, Garland extended TP&Ls original franchise to 1990. A year later,

TP&L applied for a permit to extend an existing line to serve a proposed new apartment

complex. The apartment project developer preferred TP&Ls service over municipal

electric service. Garland denied the application, offering as reasons only that Garland

has always intended to serve this area and that the permit would require construction

of a new 1500 foot line. Id. at 513. A trial court enjoined Garland from enforcing its



18/57


permit requirement in these circumstances. The court of appeals reversed. The

Supreme Court reversed that decision and affirmed the injunction against Garland. The

Court held that the sections of the Garland ordinance on which Garland relied to deny

TP&L a permit violated Article I, 19 and were void, insofar as they authorized denial

to protect or advance the citys interest as a competing provider of electric service,

without demonstration of a valid police power justification. Id. at 518.

Garland argued that a separate provision of the Texas Constitution Article I,

17 reserved to a city the unilateral right to revoke franchise rights it had granted,

and, therefore, authorized its refusal of TP&Ls request.10 The Court found that this

argument had been rejected as far back as City of Houston v. Houston City St. Ry. Co. , 83

Tex. 548 (1892). On the contrary, a franchise binds a Texas city contractually (although

a city may not surrender or contract away its police or governmental powers). City of

Garland, 431 S.W.2d at 517. The Due Course of Law Clause restricts a citys discretion to

retract franchise rights, once granted, and prohibits full or even partial ouster of the

right to provide service granted by a franchise. Id. Rather than conferring discretion

to retract franchise rights, Article I, 17 preserves a citys right to exercise reasonable

control and regulation over franchise holders. Id. This distinction between ouster of

franchise rights (prohibited) and reasonable control and regulation (preserved) is the

true meaning arising from the interrelation of Article 1, 17 and Article 1, 19. Id.

The distinction serves to protect the contractual rights of the private enterprise from

10 Article I, 17 prohibits the taking of property for public use without adequate compensation, andincludes the statement that all privileges and franchises granted by the Legislature, or created under itsauthority shall be subject to the control thereof.



19/57


arbitrary and unreasonable alteration by legislation, unless the statute or ordinance

directly promotes the general health, safety, and welfare of the public. Id. This

distinction, for purposes of the Texas Constitution, mirrors the distinction this Court

has drawn between lawful, necessary exercises of the police power, Order (ECF No. 53)

at 15, which the City has reserved under its franchise agreements, and the elimination,

or ouster, of Franchisees ability to participate in a whole line of business, the disposal

line of business. Order (ECF No. 53) at 16 (quoting the deposition of Republic witness

Nick Stefkovich, Pls. Ex. 31 (Stefkovich Dep.) at 43:26).

The Supreme Courts analysis next required it to determine whether the relevant

sections of the Garland ordinance qualify as an exercise of the police power directly

promoting legitimate concerns of the government. City of Garland, 431 S.W.2d at 517

18. To make that determination, the Supreme Court borrowed a standard that it found

had been well stated by a sister state court, under which a franchise is properly

subjected to police power regulation when that power is exercised to:

directly promote the general health, safety, welfare ormorals . . . ; the means adopted to accomplish the legislativepurpose must be suitable to the end in view, must beimpartial in operation, must have a real and substantialrelation to such purpose and must not interfere with privaterights beyond the necessities of the situation.

Id. at 517 (citations omitted). That standard mandates a level of scrutiny that is at least

as exacting as required under the Contract Clause.11

11 That such limitations on the police power exist was recently confirmed by Justice Willett in aconcurring opinion when he noted that the police power:

is cabined by something contrarian and Texan: distrust of intrusive government and abelief that the police power is justified only by urgency, not expediency. That is, there



20/57


The Supreme Court then applied that standard to the sections of the Garland

ordinance authorizing denial of a permit by reason of competitive interference with

the Citys electrical service. Id. at 518. The Court found these provisions were aimed

directly at the advancement of the Citys economic and proprietary interests and

not an exercise of the police power. Id. Thus, the legal standard was not met, the

offending sections of the Garland ordinance were void and denial of the permit

improper.12 Id.

That analysis applies equally here. Like Garlands franchise to TP&L, when the

City entered into the 2007 franchises with Plaintiffs it contractually submitted itself to

economic competition with the Franchisees, including competition in providing solid

waste disposal services to Dallas businesses. Id. at 518.13 Like Garlands action, the

must exist a societal peril that makes collective action imperative: The police power isfounded in public necessity, and only public necessity can justify its exercise.

Robinson v. Crown Cork & Seal Co., 335 S.W.3d 126, 163 (Tex. 2010) (Willett, J., concurring) (citing Spann v.

City of Dallas, 235 S.W. 513, 515 (Tex. 1921)).12 The Texas Supreme Court went on to examine other provisions of the ordinance, cited byGarland, which prohibited duplication of municipal electric facilities. The Court found that these, too,were void because they do not state a reasonable standard aimed at protecting the safety or welfare ofthe public and placed no control on the citys discretion, distinguishing them from valid regulatoryrequirements like an electrical safety code. City of Garland, 431 S.W.2d at 518.13 As this Court has recognized, the franchise agreements affirm the Franchisees longstanding andongoing right to dispose of solid waste collected within the City at any location (inside or outside theCity) legally authorized to operate as a disposal facility. Order (ECF No. 53) at 10, 13. Ample evidencesupports this conclusion, including evidence noted by the Court previously, Pls. Exs. 1014 (FranchiseAgreement provisions), each at 1, 3, 4(d), 6(a); Pls. Ex. 7 (Dallas City Code) (ECF No. 7) at 18-29(5);Pls. Ex. 27 (Nix Dep.) at 134:1718, 137:1317, 227:19 228:2; Pls. Ex. 28 (Lantrip Dep.) at 30:15 31:5; Pls.Ex. 29 (McCord Dep.) at 42:921, and other evidence. See Pls. Ex. 31 (Stefkovich Dep.) at 36:24 37:8,

39:20 41:10, 91:920, 95:1215, 97:18 (city defines collection [service] to include the activity ofdisposal, the franchise and the prevailing practice provided for disposal at the haulers discretion; theagreement does not say that it is exclusively in the city, nor . . . outside of the city. And clearly theprevailing practice has been both in and out of the city); Pls. Ex. 34 (Stefkovich Decl.) (ECF No. 24) at 5, 7, 8 (explaining Republic understanding of right to select disposal sites, including its own landfillsoutside of Dallas, under Franchise Agreement, and reliance thereon); Pls. Ex. 38 (Lantrip Decl.) (ECF No.24) at 915 (same for Waste Management). This right necessarily placed the Citys disposal operationsat McCommas into competition with Franchisees, as is evident in the fact that the $15$18 million inannual disposal fees that the City sought to generate through the Ordinance consist very largely of



21/57


Ordinance is aimed directly at the advancement of the Citys economic and

proprietary interests by requiring all Dallas businesses to purchase the Citys

disposal services at the McCommas Bluff Landfill. Id.14 Like Garlands permit denial,

but much more dramatically, the Ordinance would oust Franchisees from exercising

rights affirmed by their franchises, namely, the right to dispose of solid waste collected

within the City at any legally authorized location, including locations outside the City.

Order (ECF No. 53) at 14. It would revoke Franchisees ability to compete for the

disposal business of any Dallas commercial customer, in order to seize for itself the $15

$18 million in disposal revenue earned by Franchisees operating in competition with

the City in the past and today. Like Garlands permit denial, the Ordinance serves no

valid police power purpose, as the Court already has found and as to which the record

is unchanged.15 The Ordinance therefore is destructive of franchise rights rather than

revenues currently received by Plaintiff Franchisees landfill operations. Pls. Ex. 41 (Branch Decl.) (ECFNo. 24) at 6 (estimating $13.3 million annual disposal fee revenue to be lost by two Plaintiff landfillowner/operators under the Ordinance).14 The Courts preliminary conclusion that the Ordinance was enacted as a revenue-raisingmeasure, merely . . . for the financial benefit of the City, Order (ECF No. 53) at 19, was well-groundedin what is now an unchanged evidentiary record, beginning with the Mayors emphatic statement to theCity Council that the Ordinance is a business revenue issue and echoed by others. See Pls. Ex. 3(9/28/11 City Council meeting); see also Pls. Ex. 1 (Flow Control Ordinance) (ECF No. 1-1); Pls. Ex. 2(Southwest Oak Cliff Investment Fund resolution). The evidence that the revenue targeted by theOrdinance was not needed to finance the Citys solid waste program and services, but would be used tosupport unrelated economic development in Southeast Oak Cliff and otherwise increase the Citysgeneral fund, confirms that the Ordinance was aimed at advancement of the Citys economic and

proprietary interests, like the action invalidated in City of Garland. Pls. Ex. 15 (Once-Weekly Service forGarbage and Recycling) at 42; Pls. Ex. 16 (Sanitation Services Proposed FY10 Budget) at 11; Pls. Ex. 17(Sanitation Services Proposed FY11 Budget); Pls. Ex. 18 (The Green Path for Dallas Trash) at 19; Pls. Ex.27 (Nix Dep.) at 35:16 36:14, 39:23 40: 4.15 The Court concluded both that none of the purported non-financial purposes of the Ordinance isa significant and legitimate public purpose, Order (ECF No. 53) at 2123, and that the Ordinance is notreasonably necessary to achieve its non-financial goals. Order (ECF No. 53) at 23. Either of theseconclusions negates the existence of a police power justification sufficient to sustain the Ordinance underthe Due Course of Law Clause.



22/57


regulatory in nature, City of Garland, 431 S.W.2dat 518, and violates Article I, 19 of

the Texas Constitution.

Standing perhaps as a rare example of a city overreaching while acting in

competition with its franchisees, the Garland case remains good law.16 If the Due

Course of Law Clause prohibited Garlands competitively-motivated denial of a

franchisees right to serve a single new customer, it surely condemns the Citys action to

eliminate Franchisees ability to participate in a whole line of business, the disposal

line of business. See Order (ECF No. 53) at 16. Because the Ordinance seriously

constricts Plaintiffs franchise rights in order to advance the Citys interests as a

competing provider of disposal service, and does so without police power justification

or necessity, it violates the Due Course of Law Clause of the Texas Constitution.

3. The Ordinance is unconstitutionally vague under the federal DueProcess Clause and violates the Texas Due Course of Law Clausebecause it grants the Director unbridled discretion in its enforcement.

a. The federal void-for-vagueness doctrine and the Texasunbridled discretion doctrine invalidate penal lawsthat can be enforced arbitrarily and discriminatorily.

A penal law, such as the Ordinance, is impermissibly vague under the federal

Due Process Clause if either of the following conditions exists:

(1) A person of ordinary intelligence cannot reasonablydetermine what conduct is prohibited; or

(2) The law encourages enforcement in an ad hoc and

subjective way because its application is not limitedby explicit standards.

16 In 1975, not long after City of Garland, Texas enacted the Public Utility Regulatory Act and createdthe Public Utility Commission, replacing what had been exclusively municipal electric utility regulationwith a comprehensive regulatory scheme that eliminated any likely occasion to apply City of Garland in itsoriginal context. See Tex. Util. Code 11.001 et seq.



23/57


Kolender v. Lawson, 461U.S. 352, 35758 (1983);17Hill v. Colorado, 530 U.S. 703, 732 (2000)

(A statute can be impermissibly vague for either of two independent reasons);JWJ

Indus., Inc. v. Oswego Cnty., 795 F. Supp. 2d 211, 215 (N.D.N.Y. 2011) (Indeed, statutes

must provide explicit standards for those who apply them to avoid resolution on an ad

hoc and subjective basis, with the attendant dangers of arbitrary and discriminatory

application.). The Texas Due Course of Law Clause includes the second federal test for

establishing impermissible vagueness, described in Texas as unbridled discretion. See

Lindquist v. City of Pasadena, 669 F.3d 225, 237 (5th Cir. 2012) for its characterization of

Spann v. City of Dallas, 235 S.W. 513, 517 (Tex. 1921), which makes clear that leaving

interpretation of an ordinance to the arbitrary discretion of a city official makes the

ordinance void.18

The plain language of the Ordinance is clear enough, for it largely uses phrases

and words that have commonly understood meanings in the solid waste business. But

what the Ordinance appears to give with one hand it takes away with the other,

because the actual as-applied meaning of phrases and words central to the Ordinance,

namely solely recyclable material, processing, generated, and found, is left to

the unguided and thus unbridled discretion of the Director of Sanitation Services, Mary

17 Kolendernotes that of the two grounds the second is the more important, in part because it allowsa non-legislative department of government to determine what is a crime. Kolender, 461 U.S. at 35859; seealso Kucharek v. Hanaway, 902 F. 2d 513, 518 (7th Cir. 1990) (Posner, J.) (primary modern purpose of void-for-vagueness doctrine is to limit prosecutorial discretion). That exact concern exists in this case becausethe Ordinance allows the Citys Director of Sanitation to define what is a crime on a subjective and ad hocbasis.18 To like effect, see Crossman v. City of Galveston, 247 S.W. 810, 815 (Tex. 1923), and Coffee City v.Thompson, 535 S.W.2d 758, 763 (Tex. Civ. App.Tyler 1976, writ refd n.r.e.).



24/57


Nix.19 Her interpretations to date demonstrate that she claims the right to and will

define terms on an ad hoc and subjective basis to produce what in her view is the best

financial outcome for the City. Because the structure of the Ordinance allows the

Director to make compliance a constantly moving target in the interests of advancing

the Citys revenue-raising objectives, and because she has already done so, the

Ordinance is unconstitutional under both the federal and Texas Constitutions.

b. The Ordinance neither defines solely recyclable material,processing, generated, or found nor limits the Directorsauthority to define those phrases and words.

The Dallas City Code includes Chapter 18, which is entitled Municipal Solid

Waste. The Ordinance is codified in Section 18-10 of that Chapter. Among the most

important terms for determining the application of the Ordinance are: (1) solely

recyclable material and within that phrase the term recyclable material, because

such material is exempted from the Ordinance; (2) processing, because that activity is

not expressly prohibited outside the City with respect to solid waste generated in the

City;20 and (3) generated or found, because those words establish, in the first

19 The only guidance provided to Ms. Nix regarding her application of the Ordinance is her general

authority to supervise and administer her department and its programs. Pls. Ex. 1 (Flow ControlOrdinance) (ECF No. 1-1); Dallas City Code 2-139. Ms. Nix testified that the section gave her broadauthority. Pls. Ex. 27 (Nix Dep.) at 51:17 54:21. This unbridled discretion stands in stark contrast to hermore limited authority in administering franchise agreements where her discretion cannot be inconsistentwith Article IV of Chapter 18 or state or federal law, and must be necessary to effect the policy of ArticleIV. Pls. Ex. 7 (Dallas City Code) (ECF No. 7) at 18-30(a).20 Section 18-10(a)(1)(B) defines an offense as disposing of solid waste generated in Dallas at otherthan a City-owned and operated facility, but does not provide that processing such waste at a non-City-owned and operated facility is illegal. Pls. Ex. 1 (Flow Control Ordinance) (ECF No. 1-1).



25/57


instance, what solid waste is subject to the Ordinance.21 Each term is either undefined

or defined in a manner that gives unbridled discretion to Ms. Nix.

The term recyclable material is defined in Section 18-2 (39) as:

Any material or product designated in writing by the Director ofSanitation as being suitable for reuse and/or recycling.

The phrase solely recyclable material is completely undefined and used only once in

Chapter 18 in Section 18-10(a)(1)(B), which is part of the Ordinance.

The word processing is not defined in Chapter 18, but it is mentioned several

times. It appears in the definition of solid waste services in Section 18-29(5), and it is

used repeatedly in Section 18-10, and in Section 18-31. In all instances, it is clear from

context that processing is an activity different than disposal, Pls. Ex. 27 (Nix Dep.) at

125:12 126:25, and, in general, related to recycling.

The words generated and found are not defined in Chapter 18 and are used

but once in Chapter 18 in Section 18-10(a)(1)(B).

Section 18-10(a)(1)(B)(ii) provides a defense to prosecution under the Ordinance

if solid waste generated or found in the City and not disposed of at a City-owned and

operated facility is composed solely of recyclable material.

The provisions just described, taken together, effectively grant the Director

unbridled discretion to define what conduct the Ordinance penalizes. Ms. Nix

confirmed in deposition testimony that she was not limited in any way in how she

defined recyclable material and there was nothing in Chapter 18 that prevented her

21 Section 18-10(a)(1)(B) makes the Ordinance applicable only to solid waste generated, found orcollected inside the city. Presumably any waste collected inside the city would necessarily have to befound or generated in the city meaning the words generated and found determine what solid wasteis subject to the Ordinance. Pls. Ex. 1 (Flow Control Ordinance) (ECF No. 1-1).



26/57


from changing at any time (presumably without notice to or input from anybody) her

understanding of that phrase. Pls. Ex. 27 (Nix Dep.) at 15558. The significance of that

term to the meaning of the phrase solely recyclable material and its inter-relationship

with the words processing, generated, and found, leave the Director effectively

free to apply key terms subjectively on an ad hoc basis and to change her mind on a

whim. Such unbridled discretion violates the federal and Texas Constitutions.

c. The absence of explicit standards for understanding the wordingof the Ordinance and the Directors disregard of that wording hasalready led to arbitrary and discriminatory application.

A plain reading of the phrase solely recyclable material, giving the word

solely its ordinary and natural meaning, leads unavoidably to the conclusion that

solid waste generated or found in the City containing any non-recyclable material

must be sent to a City-owned and operated facility. Because collected recyclable

material inevitably includes some non-recyclable content, the plain and surprising

meaning of the Ordinance as written was to eliminate private recycling of material

generated in Dallas. Ms. Nix could not have been more clear at a November 14, 2011

meeting with Franchisees that this was precisely the Citys view solely recyclable

meant 100% recyclable.22 Then, in an administrative directive she issued on December

22 Confirming this point are the following pertinent excerpts from questions and answers at theNovember 14, 2011, meeting (cited by the page numbers in the footer of each page in the transcript at Pls.

Ex. 20):

Unknown speaker: What percentage would you consider solely recyclable? Is there10%? There is no load - - every load has some degree of some type of trash in it. Thereis no such thing as a load coming in that is 100% cardboard or anything else. There isgoing to be the banana peel in it. There is going to be the half-eaten hotdog, orwhatever, in it. So where is the line drawn there?

Ms. Nix: We consider 100% solely recyclable.



27/57


15, 2011 (Administrative Directive), Pls. Ex. 8 (Sanitation Services Directive on Flow

Control), only a month later and after she and counsel had reviewed Plaintiffs

complaint and preliminary injunction brief and had the opportunity to recognize the

vulnerability of an ordinance creating a City monopoly on recycling, Ms. Nix reversed

course. Pls. Ex. 27 (Nix Dep.) at 167:8 168:4. In the Administrative Directive, solely

Pls. Ex. 20, Transcript of Nov. 14, 2011, Solid Waste Haulers Meeting (Nov. 14Meeting) at 11:19-20 12:21-25, 1-3.

Unknown speaker: If I brought a load of material to my facility, I dumped, and therewas 20% trash in there after we sorted it all out, now, that 20% is loaded in a roll off box

and it is brought to McCommas.

Ms. Nix: If you bring it to your facility and unload it, then you will be in violation of theOrdinance.Id. at 13:18-24 14:25.

Unknown speaker: . . . so I think your assumption that it has to be 100% or nothing iswrong. Does anybody disagree with me?

Ms. Nix: Okay. Heres what is. We are not going to have a, is this right or wrong. Imhere to tell you what the Ordinance is about and you can say I dont like that, but thatsnot what this forum is . . . .

Id. at 14:25 15:1-6.

Unknown speaker: . . . [h]ave you been very clear in those business meetings to thebusiness community that if they had a banana peel in their recycling load that thatwould now be deemed trash and have to go to landfill?

Ms. Nix: Ive talked to - - for every group we have talked to, weve told them solelyrecyclable loads. And they have said does it mean 100%? And the answer is yes.Id. at 17:23-2 18:3-6.

Unknown speaker: Sometimes you dont [know] until the load is on the ground at yourrecycle facility, if there is any contamination in it or not. So you dump the load, you find5% contamination. Are you suppose to load the whole thing back up and take it to

McCommas, or what are we suppose to do?

Ms. Nix: Yes.

Unknown speaker: Absolutely?

Ms. Nix: Next question.Id. at 28:24-25, 1-7.



28/57


recyclable material now meant a load that contained no more than 10% by volume or

weight of non-recyclable material, and up to an additional 4% by volume or weight of

tramp material. Pls. Ex. 8 (Sanitation Services Directive on Flow Control). Ms. Nix

did not discuss in the directive the reason for her extraordinary change in position or

explain how it was consistent with the Ordinance or any existing definitions in Chapter

18 of the Dallas City Code. Id.

Plaintiffs assume that the Directors about face was motivated by the Citys

belated recognition that the plain meaning of the Ordinance as initially declared by the

Director would have the unintended effect of eliminating all recycling in the City. 23

While Ms. Nixs rejection of the plain meaning of the Ordinance makes the Ordinance

less onerous, it also confirms she is not constrained in any way regarding how she

understands and applies this penal law. She has testified there is nothing in the

Ordinance that prevents her from changing her mind again. Pls. Ex. 27 (Nix Dep.) at

158:24. She is right. Having once interpreted the Ordinance for convenience, nothing

in it stops her from reinstating her initial position, short of an injunction against its

enforcement.

In the Administrative Directive, the Director also for the first time provided a

description of what the City considers recyclable material. See Pls. Ex. 8; Pls. Ex. 27

(Nix. Dep.) at 155:22 156:5. Ms. Nix could not explain why the term had never before

been defined, and as discussed infra at pages 31 to 33 her definition conflicts with state

23 Plaintiffs argued in their preliminary injunction brief that one effect of the phrase solelyrecyclable material would be to end virtually all recycling in the city because the City does not itselfoperate any recycling facilities. See Plaintiffs Brief in Support of Their Application for a PreliminaryInjunction (ECF No. 6) at 5.



29/57


law. Id. She added that nothing in the Ordinance led her to her definition and that she

could define it any way she wanted, so long as it was in harmony with the practice,

whatever that might mean. Id. at 157:419.

Ms. Nix also noted the definition in the Administrative Directive is subject to

change on an ad hoc basis. Id. at 182:1117, 183:920. For instance, according to the

Director, her department is currently considering whether off-spec or discarded

product, certain materials generated by printing companies, and organic material

should be treated as recyclable material even though not identified as such in her

directive. Id. at 183:21 184:17, 194:25 195:9. Additionally, Ms. Nix is considering

whether scrap metal dealers should be subject to the Ordinance, although by its terms

there can be no dispute that they are. Pls. Ex. 20 (Nov. 14 Meeting) at 19:919.24 Ms.

Nix has no plan to generally publicize any changes she might make to the

Administrative Directives definition of recyclable material and does not intend to

provide any structure for receiving input from the regulated community before making

a decision. Pls. Ex. 27 (Nix Dep.) at 183:820, 187:823, 188:110.

Ms. Nix has also exhibited an arbitrary approach to interpreting the reach of the

Ordinance. By its terms, the Ordinance only requires that solid waste generated,

collected or found in the City be disposed of at a City landfill.25 It does not on its face

require that such waste be processed only at City facilities, suggesting the two words,

which are used in the disjunctive in Chapter 18 of the Dallas City Code, describe

24 Citations to the transcript of the November 14, 2011 meeting (Pls. Ex. 20) are to the page numbersin the footer of each page of the transcript.25 See footnote 21, supra.



30/57


different activities. That distinction is consistent with the fact that processing as

typically understood in the solid waste industry refers to some form of recycling or

reuse procedure, an understanding confirmed by the context in which that word is used

in Chapter 18. Ms. Nix agreed that the two words have different meanings, and

describe different activities. Id. at 125:11 126:9.

The Director nonetheless reads the Ordinance to mean what it doesnt say.

According to her, the intent of the city council in adopting the Ordinance was to require

all solid waste generated, found or collected in the City to go to a City-owned and

operated facility, even for processing. Id at 172:6 173:17. She freely admitted that her

view did not square with the plain wording of the Ordinance and that she might have

to issue a clarification in order to achieve the intent of the city council to get all of

that waste. Id. at 172:6 173:17. This is another example of Ms. Nix choosing to

disregard the plain wording of the Ordinance to rewrite what the city council adopted.

She can make such a choice because the Ordinance lacks both a definition of

processing and any limitation on the Directors authority to interpret and apply the

Ordinance; it even lacks a requirement that she use the ordinary trade meanings of the

key phrases and words.26

The same omission with respect to the words generated or found has forced

Ms. Nix to concede she does not know how the Ordinance applies to the non-recyclable

portion of materials brought into Dallas for recycling. At the November 14, 2011,

26 If the Ordinance did require that all solid waste generated in Dallas be processed at a City-ownedfacility, that requirement would impair Plaintiffs rights under the Franchise Agreements, just as thedisposal requirement does, contrary to the federal Contract Clause and Texas Due Course of Law Clause.



31/57


meeting, she suggested that because such material was not originally generated in

Dallas, it was not subject to the Ordinance and could be disposed of outside the City.

Pls. Ex. 20 (Nov. 14 Meeting) at 28:1116. When asked if such residue was nevertheless

found in the City, she said she would have to get an attorney to interpret that one to

be honest with you. Id. at 28:2023. Her inability to provide guidance results once

more from the absence of explicit standards defining the words generated or found

and the absence of any limit on how she can apply the Ordinance, which represent

constitutionally fatal shortcomings in a penal statute.

Ms. Nix has similarly taken inconsistent positions on how to deal with recyclable

material that leaves the City (which even Ms. Nix confirms is legal) but turns out to

have more than 10% non-recyclable material or more than an additional 4% tramp

material (and, therefore, is not solely recyclable) when it reaches a processing facility

outside the City. Pls. Ex. 27 (Nix Dep.) at 196:19 198:7. At her deposition, she testified

that such material must be returned to Dallas. Id. That conclusion is at odds with the

command of Chapter 18 that the chapter (of which the Ordinance is part) applies only

to territory within the city. Pls. Ex. 7 (Dallas City Code) (ECF No. 7) at 18-1. It is

also inconsistent with Ms. Nixs understanding that solid waste is generated when

sorted. Pls. Ex. 20 (Nov. 14 Meeting) at 26:17-20 27:2125, 1-12. If solid waste is

generated when sorted, then any non-recyclable residue from recycling outside of the

City was not generated in Dallas and certainly is not found in the City and should not

be subject to the Ordinance. These contradictory positions result once more from the



32/57


absence of explicit standards defining the term generated and the absence of any

limits on how the Director can apply the Ordinance.

Finally, the absence of explicit standards for understanding the term solely

recyclable material and how and when that determination is to be made allows

discriminatory and self-interested application of the Ordinance. The City engages in

the collection of residential recyclable material that is transported for processing to a

facility in the City of Garland. Ms. Nix has made it clear repeatedly that the City would

strictly and vigorously enforce the Ordinance against private haulers. Pls. Ex. 20 (Nov.

14 Meeting) at 5:720; Pls. Ex. 27 (Nix Dep.) at 201:16 202:13. She has made it equally

clear that the City will not hold its own trucks transporting residential recyclable

material to Garland to the same standard: How we handle our operations is not

pertinent to the Ordinance. Pls. Ex. 20 (Nov. 14 Meeting) at 31:215.

At her deposition, Ms. Nix was still unwilling to concede that the City was

subject to the Ordinance. She suggested that it was the intent of the City to operate

its collection services as if the Ordinance applied. Pls. Ex. 27 (Nix Dep.) at 196:617.

She indicated, however, that at most the City would monitor its possible need to

comply by visiting the Garland facility two or maybe three times a year. Id. at 196:25

197:14. She even refused to confirm that if those visits identified a load of material with

more than 10% non-recyclable material or more than an additional 4% tramp material

that the solid waste would have to be reloaded and taken to the Citys landfill for

disposal. As Ms. Nix carefully explained: If it were to be compliant with the

Ordinance in this guidance, yes. Id. at 197:25 198:7. There is nothing in the



33/57


Ordinance that exempts the City from its operation. Ms. Nix is again disregarding the

plain language of the Ordinance in an ad hoc and subjective way because she believes,

understandably, that the Ordinance gives her the right to do so.

Far less egregious manipulation of the application of a flow-control ordinance

has caused a federal court to find the law unconstitutionally vague. In JWJ Industries,

Inc. v. Oswego County, 795 F. Supp. 2d 211 (N.D.N.Y. 2011), the issue was the application

of a flow-control ordinance to the residue from out-of-county construction and

demolition waste (C&D waste) brought to a JWJ facility, which was in the county, for

recycling. The countys flow-control ordinance outlawed importing and exporting

waste and required all in-county waste to be delivered to a county solid waste facility.

Id. at 216. The county initially advised the court that out-of-county C&D waste could be

processed by JWJ and that residue could be transported out of the county for disposal.

Id. at 218. A year or so later the county reversed positions and advised the court that

residue from C&D waste had to be disposed of at county facilities. Id. In concluding

that this change in position established the county ordinance was unconstitutionally

vague on its face and as applied the court noted:

A well-crafted statute is meant to avoid and prevent the type of arbitraryand confusing interpretation displayed by the County in this matter. . . .Scrutiny of the letters and directives from the County and its director ofsolid wastes reveals that not only does the Flow Control Law in questionauthorize and encourage arbitrary and discriminatory enforcement, sucharbitrary enforcement is manifest here.

Id. As demonstrated above, the same is true of the Dallas Flow Control Ordinance.



34/57


4. The Ordinance is preempted because it criminalizes the recycling ofmaterials and loads that are recyclable under state law.

The Ordinance unlawfully restricts recycling in direct conflict with state law by

criminalizing conduct that state law promotes: sending recyclable material loads to a

recycling facility. In many instances, the Ordinance instead requires that these

recyclable materials be disposed of at the City landfill. Pls. Ex. 1 (Flow Control

Ordinance) (ECF No. 1-1) at 3 (new Sec. 18-10(a)(1)(B)). Because it is inconsistent with

state law, the Ordinance violates Article XI, 5 of the Texas Constitution and may not

be enforced.

a. State law prefers recycling over landfilling, defines what isrecyclable, and prevents cities from treating recyclable materialas solid waste.

The Texas Legislature enacted the Solid Waste Disposal Act (SWDA) to

safeguard the health, welfare, and physical property of the people and to protect the

environment by controlling the management of solid waste. Tex. Health & Safety Code

361.002(a) (West 2010) (emphasis added). To that end, the SWDA provides that it is

the states public policy that reuse or recycling of waste is to be preferred over

land disposal. Id. 361.022(b).

The Texas Commission on Environmental Quality (TCEQ) has broad

jurisdiction over municipal solid waste disposal and recycling policy and must

accomplish the purposes of the SWDA by controlling all aspects of the management of

municipal solid waste. Id. 361.011(a)(b) (emphasis added). In controlling the

management of municipal solid waste, state law requires the TCEQ to consider the



35/57


Legislatures preference for recycling when implement[ing] public policy concerning

municipal solid waste management. Id. 361.022(d).

Texas state law advances the states policy to promote recycling and limit

landfilling in a number of concrete ways relevant here:

(i) First, the Legislature categorically excluded recyclable materials from a citys

statutory authority to regulate the disposal of solid waste. See id. 363.006(b) (Materials

that are separated or recovered from solid waste for reuse or recycling by the generator,

by a private person under contract with the generator, or by a collector of solid waste or

recovered materials are not subject to this chapter.) (emphasis added). To make matters

doubly clear, the Legislature mandated that statutory provisions granting a city

authority over solid waste d[o] not prohibit or limit a person from extracting or using

materials that the person generates or legally collects or acquires for recycling or

resale. Id. 363.006(a).

(ii) Second, the Legislature and the TCEQ define recyclable material very

broadly and expressly exclude recyclable material from the definition of solid waste.

See id. 361.421(5) (Recyclable material means material that has been recovered or

diverted from the solid waste stream for purposes of reuse, recycling, or reclamation, a

substantial portion of which is consistently used in the manufacture of products which

may otherwise be produced using raw or virgin materials.); 30 Tex. Admin. Code

330.3(122) (Recyclable material is not solid waste). The TCEQ monitors the

statewide recycling rate of a vast range of materials that are recyclable under the states

definition, including but not limited to food waste, glass, leather and hides,



36/57


metal, paper and paperboard, plastic, rubber, textiles and apparel, wood,

and yard debris. Id. 328.8(e).

(iii) Third, the TCEQ regulates solid waste and recyclable materials under

different administrative regimes. Compare id. 330 (municipal solid waste) with 328

(waste minimization and recycling) and 332 (composting). In separating these

regimes, the TCEQ provides significant latitude for the amount of non-recyclable

content that may be present in recyclable material as it is collected and presented for

processing. Specifically, the TCEQ exempts recycling facilities from registration and

permitting requirements applicable to municipal solid waste facilities provided that

they process recyclable material that contains no more than incidental amounts of

non-recyclable waste. See id. 328.4(d). The TCEQ defines incidental amounts as

non-recyclable waste that accompanies recyclable materials despite reasonable efforts

to maintain source-separation and that is no more than 10% by volume or scale weight

of each incoming load, and averages no more than 5% of the total scale weight or

volume of all materials received in the last six-month period. Id. 328.2(3).

The TCEQ also allows for non-recyclable content in recyclable loads in a second,

important way. It recognizes a distinct set of exemptions for non-recyclable

components that are integral to recyclable material. Id. 328.2(3). These exempt

components are effectively treated as within the definition of recyclable material

because they fall outside the definition of incidental amounts and thus do not count

against the percentage limits. These exempt components include: (1) materials

intertwined with consumer products being recycled; (2) materials damaged during



37/57


recycling; and (3) materials intertwined with construction materials being recycled. Id.

328.2(3)(A)(C). For convenience, these three exemptions will be referred to as

integrated and damaged materials. Thus, under state law, a recycling facility that

does not hold a solid waste disposal permit is authorized to receive a load composed of

up to 10% incidental materials, plus an unlimited amount of integrated and

damaged materials. The states detailed regulations reflect its desire to allow loads

containing recyclable materials to go to a recycling facility, even if such loads contain as

much as 10% incidental material, plus another 10%, 20%, or even a greater percentage of

integrated and damaged materials.

b. The Ordinance conflicts with state law by requiring materialsand loads that are recyclable under state law to be landfilled.

A home-rule city is constitutionally barred from adopting an ordinance that is

inconsistent with the Constitution of the State, or of the general laws enacted by the

Legislature of [Texas]. Tex. Const. art. XI, 5. When an ordinance attempts to

regulate a subject matter preempted by a state statute, it is rendered unenforceable to

the extent it conflicts with the state statute. Dallas Merchants & Concessionaires Assn v.

City of Dallas, 852 S.W.2d 489, 491 (Tex. 1993) (finding that a Dallas ordinance

concerning the location of alcohol-related businesses was preempted to the extent it

conflicts with the [Texas Alcoholic Beverages Code]); see City of Wichita Falls v. Abell,

566 S.W.2d 336, 339 (Tex. 1978) (stating that a city ordinance is preempted when it

makes illegal that which is legal under the laws of [Texas]). The Ordinance is

unenforceable because it conflicts with Texas state law governing recycling by

requiring, on pain of criminal penalty, that certain recyclable materials and loads be



38/57


buried at the McCommas Bluff landfill instead of taken to recycling or composting

facilities as authorized by state law.27

(1) As written, the Ordinance directly conflicts with the stateregulatory scheme governing recycling.

The Ordinance renders illegal the disposal of any waste generated, found, or

collected inside the city at any location other than at a City-owned and operated

facility for disposal unless, inter alia, the waste is composed solely of recyclable

material. Pls. Ex. 1 (Flow Control Ordinance) (ECF No. 1-1) at 4 (emphasis added).

Because it is virtually impossible for a load of recyclable material to be completely free

of non-recyclable solid waste, the Ordinance as written would effectively require that

all recyclable materials generated, found, or collected inside Dallas be ultimately

disposed of at the McCommas Bluff landfill where they would be buried and not

recycled. Pls. Ex. 35 (Losa Decl.) (ECF No. 24) at 510, 13; Pls. Ex. 36 (Brown Decl.)

(ECF No. 24) at 11.

27 Texas courts have invalidated municipal ordinances covering a variety of topics on grounds thatthe ordinances conflicted with state law. See, e.g., City of Houston v. Bates, No. 14-10-00542-CV, 2011 WL3585612, at *78 (Tex. App.Houston [14th Dist.] Aug. 16, 2011, pet. filed Nov. 30, 2011) (mem. op.)(holding that the City of Houstons ordinance limiting lump sum payments of accumulated vacation andsick leave to retiring firefighters was contrary to state statutes governing firefighter compensation andwas therefore preempted); State v. Chacon, 273 S.W.3d 375, 38081 (Tex. App.San Antonio 2008, nopet.) (holding that the enforcement provision in a San Antonio ordinance regulating sexually-orientedbusinesses which punished violations as a class C misdemeanor conflicted with and was preempted bystate enabling legislation permitting municipalities to regulate SOBs that punished violations as a class A

misdemeanor);Johnson v. City of Dallas, 702 S.W.2d 291, 292 (Tex. App.Dallas 1985, writ refd n.r.e.)(holding that a Dallas ordinance allowing the city to suspend a taxi license based on the presence of atheft conviction within five years of the license holders application was much more restrictive than,and therefore preempted by, state law allowing suspensions only when the past conviction directlyrelates to the duties and responsibilities of the licensed occupation); Cabells v. City of Nacogdoches, 288S.W.2d 154, 159 (Tex. Civ. App.Beaumont 1956, writ refd n.r.e.) (holding that the City of Nacogdochesordinance requiring milk sold in the city to contain at least 4% milk fat was preempted by a state lawgoverning the grades and labels of milk and that defined milk as containing not less then 3 1/4% of milkfat).



39/57


As previously noted at pages 18 to 19, speaking at the November 14, 2011,

meeting with Franchisees, Ms. Nix confirmed that the words solely recyclable in the

Ordinance meant 100 percent recyclable, and would require a load containing 99%

recyclable materials and only 1% solid waste to go to the landfill. Pls. Ex. 20 (Nov. 14

Meeting) at 13:16, 15:13, 18:21 19:6, 29:24 30:5; Pls. Ex. 35 (Losa Decl.) (ECF No. 24)

at 7. This 100 percent position conflicts with the state regulatory scheme that allows

loads with up to 10% incidental material and an unlimited amount of integrated and

damaged material to be processed at a recycling facility. On those bases alone, the

Ordinance is preempted by state law.

(2) Even as reinterpreted by the City, the Ordinance irreconcilablyconflicts with the state regulatory scheme governing recycling.

The Administrative Directive issued by Ms. Nix after this lawsuit was filed

provides that a load containing recyclable materials (as defined by the City) will

qualify as containing solely recyclable material and will therefore be exempt from

the flow control requirements of the Ordinance

if no more than 14 percent of the

load comprises incidental and/or tramp material as defined in the directive. See Pls. Ex.

8 (Sanitation Services Directive on Flow Control); Pls. Ex. 27 (Nix Dep.) at 188:1118.

Even if the Court were to consider the Administrative Directive instead of the plain

terms of the Ordinance, the Administrative Directive conflicts with state law for at least

four reasons.

(i) First, the Administrative Directive defines recyclable material more

narrowly than state law. Consequently, the Ordinance treats as solid waste certain

materials that the State defines as recyclable, and requires loads of such materials to



40/57


go to the landfill. The City directive defines recyclable materials as glass, leather,

metal (ferrous/nonferrous metal) and metal appliances, paper/paperboard, plastic,

rubber, textile, wood, yard trimmings, concrete and asphalt pavement (rubble), brick,

asphalt shingles, batteries, tires, and used oil. Pls. Ex. 8 (Sanitation Services Directive

on Flow Control). The State definition is much broader in providing that recyclable

material is material that has been recovered or diverted from the nonhazardous waste

stream for purposes of reuse, recycling, or reclamation, a substantial portion of which is

consistently used in the manufacture of products that may otherwise be produced using

raw or virgin materials. 30 Tex. Admin. Code 330.3(122). The Citys attempt to

exclusively define recyclable materials conflicts with the States intent to allow the

recycling of any material that can be reused or reclaimed and makes criminal what the

State allows.

The Citys constriction of the States general definition is not minor. For

example, two important materia

plaintiffs' brief in support of permanent injunction

Documents