by Michael Lowrey
Got a new article out on a lawsuit about Charlotte’s policy of favoring its incumbent contractor for extra garbage collections at apartment and condo complexes. It’s a big deal, and the case could go before the N.C. Supreme Court. The article in full:
RALEIGH — The N.C. Court of Appeals recently delivered a mixed verdict to Charlotte in its dispute with Cedar Greene Apartments over garbage collection. The apartment complex wanted to hire — at lower cost — a vendor other than the city-approved company that provides trash collection services for apartment complexes in the city.
Charlotte’s refusal to reimburse the apartment complex for use of an outside vendor led to the lawsuit. A trial court favored the apartment complex and the outside vendor, but the appeals court reversed much of the trial court’s ruling. The court’s majority would allow the case to return to the trial court to resolve other issues, but a dissenting opinion at the appellate level could lead the case to the N.C. Supreme Court.
If the city prevails, it could limit the incentive for business owners to seek bids from service providers that compete with those approved by municipal governments.
The city of Charlotte contracts with Republic Services Inc. for garbage collection at apartment complexes, condominiums, and trailer parks in the city. Each multifamily complex qualifies for a set number of collections per week based on the ratio of residential units to dumpsters. If a complex wants collections beyond the number allowed by the city’s formula, it must contract with a private waste hauler for additional pickups.
The Cedar Greene Apartments wanted to provide its tenants with additional pickups, and pursued a contract with O’Leary Group Waste Systems for this service; O’Leary offered the apartment complex a lower rate than Republic for extra collections.
O’Leary’s bid, however, contained an important condition: It was contingent on receiving the same treatment as Republic at the city’s garbage dump. Charlotte imposes a $27 per apartment unit fee for garbage disposal, which covers both primary and any supplemental collections. Per its agreement with the city, Republic is reimbursed at the city dump for all collections from apartments and condos within the city, including additional collections arranged with outside contractors.
The city refused to reimburse O’Leary for any additional collections it might perform at apartments in the city.
State law gives local governments a great deal of discretion to operate public enterprises so long as they don’t discriminate or act in an arbitrary manner. O’Leary and Cedar Greene went to court, contending that Charlotte’s policies were discriminatory and violated state law.
Superior Court Judge H. William Constangy ruled in favor of the apartment complex and O’Leary. The city then brought the matter before the court of appeals. In its appeal, Charlotte contended that O’Leary shouldn’t be allowed to challenge the city’s refusal to reimburse the fees.
“The City maintains that the anti-discrimination principle embodied in N.C. Gen. Stat. § 160A-314 as enunciated under our case law protects only customers of public enterprise services, not service providers, and therefore, O’Leary lacks standing to maintain a discrimination claim under the substantive law of this statute,” wrote Judge Doug McCullough for the appeals court.
McCullough noted that existing case law had established that cities “may not discriminate in the distribution of services or the setting of rates.” But O’Leary did not qualify for those protections because it was not a customer of the city.
The appeals court concluded that Cedar Greene had standing to challenge the policy, but could not show that Charlotte’s policy discriminated against it. McCullough wrote, “we fail to see how the City’s reimbursement policy treats Cedar Greene differently from other multi-family complexes in the provision of solid waste disposal services.”
Judge Ann Marie Calabria dissented from the majority holding, finding that O’Leary had standing to challenge the city’s policy. She found that the protections in state law could extend to service providers.
“The law does not explicitly limit discrimination solely to customers, but instead provides guidelines that different rates must be justified by a difference in the class of service,” Calabria wrote. Charlotte had not done that.
“The City … has admitted that the solid waste disposal service provided, whether by Republic, O’Leary, or another disposal service, is effectively the same,” Calabria wrote. “The identity of the provider does not indicate a different class of service. However, in refusing to pay any provider other than Republic, the city effectively subjects multi-family complexes to pay elevated rates for their solid waste disposal.”
Court of Appeals rulings are binding interpretations of state law unless overruled by the N.C. Supreme Court. Because of Calabria’s dissent, the high court is required to hear an appeal if O’Leary seeks it.
The case is Cedar Greene, LLC v City of Charlotte, (12-212).