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From Antitrust Law Daily, April 12, 2019

Summary judgment in RICO case involving public corruption in post-Katrina New Orleans reversed

By Robert B. Barnett Jr., J.D.

After a federal district court granted summary judgment to owners of a landfill in a suit in which Waste Management accused them in a RICO suit of bribing the New Orleans mayor in post-Katrina to shut down Waste Management’s landfill, a split Fifth Circuit reversed the decision, ruling that sufficient circumstantial evidence existed that the bribe caused the shutdown, and that the jury should have been sent the case.

A split Fifth Circuit has reversed a Louisiana federal court’s grant of summary judgment in a RICO case involving allegations by Waste Management that one of its competitors bribed the mayor of New Orleans to close Waste Management’s landfill after Hurricane Katrina in order to increase their profits, ruling that circumstantial evidence that the bribes caused the shutdown created issues of fact for the jury to resolve. Among the circumstantial evidence was the mayor’s conviction for public bribery in an unrelated case (he went to prison for 10 years) and a guilty plea by a former wildlife commissioner that he accepted bribes from the defendants to assist the mayor in closing this landfill. The dissent, on the other hand, would have affirmed the lower court on the ground that "zero evidence of causation" existed (Waste Management of Louisiana, LLC v. River Birch, Inc., April 10, 2019, Davis, W.).

Hurricane Katrina created an urgent need for landfill space in which to dump the extensive waste the hurricane created. New Orleans Mayor Ray Nagin declared a state of emergency, which was renewed 15 times. Meanwhile, Waste Management proposed a landfill on Chef Menteur Highway. Reflecting the dire need for landfill space, the mayor short-cutted the approval process and issued an executive order authorizing the landfill. Those who lived near the landfill were not happy. Shortly after being re-elected, Mayor Nagin announced in a court affidavit in a suit not involving Waste Management that he was not renewing his executive order, thus shutting down the landfill site. Shortly before that announcement, however, Mayor Nagin had given every indication of extending the executive order.

Waste Management filed its RICO suit, initially alleging that the defendants—River Birch, Albert J. Ward, Jr., Frederick R. Heebe, and Highway 90, LLC (together, d River Birch)—had bribed Henry Mouton, a former state wildlife commissioner, to influence Mayor Nagin to shut the landfill. The court granted River Birch’s motion to dismiss, ruling that Waste Management’s complaint failed to allege how Mouton’s conduct was the but for and proximate cause of Mayor Nagin’s decision. Waste Management refiled, this time claiming Mouton’s lobbying and River Birch’s $20,000 contribution to Mayor Nagin’s re-election campaign led to the closing. The district court dismissed the claims against Mouton but allowed the claims against Mayor Nagin to continue. In its third complaint, Waste Management reasserted in greater detail its contention that River Birch, Mouton, and Nagin engaged in a scheme to shut down the landfill. This time, the district court granted summary judgment to River Birch on the RICO claim, concluding that Waste Management’s evidence was "far too speculative and conclusory to permit a reasonable trier of fact to find the requisite causal connection." Waste Management appealed both the dismissal of the Mouton claims and the grant of summary judgment on the RICO claim to the Fifth Circuit.

Mouton claims. The Fifth Circuit first vacated the lower court’s dismissal of the Mouton claims, finding that the complaint alleged a plausible claim of Mouton’s involvement. The pleadings alleged a well-orchestrated campaign to influence the process to benefit River Birch, which included Mouton’s guilty plea to accepting bribes from River Birch to assist Mayor Nagin in shutting down the Chef Menteur landfill.

RICO claims. Waste Management’s RICO claim asserted as a predicate act that River Birch bribed the mayor by giving him $20,000 in illegal campaign contributions. The court concluded that this allegation satisfied RICO predicate act requirement, which included under the Louisiana definition of bribery that the River Birch group have the specific intent to commit bribery.

A RICO plaintiff must also establish both "but for cause" and "proximate cause." Under this analysis, Waste Management must demonstrate that the campaign contributions to the mayor led directly to the landfill shutdown. Turning to the evidence, the court found sufficient causation in several pieces of circumstantial evidence. First, Mouton admitted receiving bribes to use his official position to help the River Birch group influence public officials to shut down the landfill. Mouton’s efforts included falsely reporting environmental concerns about the landfill to state and federal agencies. Second, the $20,000 in campaign contributions were made in four separate $5,000 contributions, not in their names but in the names of four shell corporations that they owned. These contributions violated state law, which prohibits a party from making contributions in someone else’s name. Also, why make the contributions secretly, if not with the intent of hiding the real purpose? Third, Mouton and Birch River recruited plaintiffs living near the site to file a suit, secretly financed by Birch River, to close the landfill for environmental reasons (an unrelated environmental impact study had determined that the site was clean). Fourth, Mayor Nagin was convicted of public bribery in an unrelated case. Fifth, the mayor reversed himself on whether to close the landfill right after receiving a letter from Ward, one of the defendants, reminding the mayor of their campaign contribution. Sixth, the mayor announced the landfill’s favorable environmental testing results just two weeks before closing the landfill for environmental concerns. Seventh, the individual in charge of the debris cleanup testified that he was shocked at the abrupt closure and that he supported its continuing to be open. His understanding was the site would remain open for as long he needed it for the cleanup; and then suddenly it wasn’t.

Summary judgment. The court acknowledged that the evidence could support a verdict either way. Under such circumstances, the court said, the case is "tailor-made for a trial, not summary judgment." Accordingly, it vacated the district court’s judgment and remanded for further proceedings.

Dissent. The dissent expressed a belief that the Supreme Court had completely altered the lower courts’ understanding of summary judgments. Admitting the case "certainly smells fishy," the dissent nevertheless found a perfectly innocent explanation for the mayor’s decision: he wanted to get the political heat off of him that was coming from the landfill’s neighbors.

The dissent then interpreted Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986), to require that Waste Management, in its efforts to establish causation, produce evidence that excludes the possibility that the mayor was motivated by politics rather than bribes (it’s an interpretation that the majority explicitly rejected in its opinion). Matsushita, the dissent said, stands for the proposition that a court cannot give the jury two theories and then ask it to choose between them. Waste Management had an obligation to establish its theory and to eliminate the other one. This, the dissent ruled, Waste Management failed to do. As a result, based on the circumstantial evidence, the facts looked trashy but in the end Waste Management failed to create a jury question because it failed to exclude the possibility that the mayor was motivated by political reasons.

This case is No. 18-30139.

Attorneys: Patrick A. Talley, Jr. (Phelps Dunbar, LLP) for Waste Management of Louisiana, LLC. Thomas More Flanagan (Flanagan Partners, LLP) for River Birch, Inc. and Highway 90, LLC.

Companies: Waste Management of Louisiana, LLC; River Birch, Inc.; Highway 90, LLC

MainStory: TopStory RICO LouisianaNews MississippiNews TexasNews

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