The state-action doctrine applies to municipalities’ contracts for trash collection and disposal that create monopolies.
“Waste and its regulation, like sewer services, remain a traditional area of local concern. Consumers Co. v. City of Chicago, 313 Ill. 408, 413-14 (1924). Often municipalities use a single hauler for the collection of trash. Id. at 413. In the context of municipal powers, it is generally understood that the authority to contract contemplates the power to create exclusive contracts. Southern Disposal, Inc. v. Tex. Waste Mgmt., 161 F.3d 1259, 1263 (10th Cir. 1998) (noting ‘although the enabling statute does not explicitly authorize exclusive contracts, such agreements are “a foreseeable result” of the general statutory authorization to contract’); LaSalle Nat. Bank, 777 F.2d at 381-82 (finding the statute authorized exclusive contracts when it provided that the counties ‘may enter into and perform contracts . . . with any municipal[ity]’). Thus, when the legislature provides that municipalities may contract for the collection and disposition of trash, those contracts will often be exclusive, a monopoly will be created, and anti-competitive effects will necessarily follow. See Springs Ambulance Serv., Inc. v. City of Rancho, 745 F.2d 1270, 1273 (9th Cir. 1984); Tal v. Hogan, 453 F.3d 1244, 1259 (10th Cir. 2006) (authority to make contracts has foreseeable anti-competitive effect). Therefore, we hold that the anti-competitive effects are a foreseeable result of Illinois’s authorization for municipalities to make contracts for the collection and disposition of garbage, refuse, and ashes. Accordingly, the state-action doctrine applies.”
10-2568 Active Disposal, Inc., v. City of Darien
Appeal from the United States District Court for the Northern District of Illinois, Kennelly, J., Manion, J.