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From Antitrust Law Daily, April 2, 2014

Waste Management’s claims over post-Katrina corruption, anticompetitive tactics scaled back

By Jeffrey May, J.D.

Waste Management of Louisiana, LLC failed to adequately allege claims under the Louisiana Antitrust Law and the Louisiana Unfair Trade Practices and Consumer Protection Law (LUTPA) against landfill operators based on purported corruption and anticompetitive tactics with respect to the collection and disposal of debris following Hurricane Katrina. However, the federal district court in New Orleans denied a motion to dismiss one of Waste Management’s related claims under the Racketeer Influenced and Corrupt Organizations Act (Waste Management of Louisiana, LLC v. River Birch, Inc., March 31, 2014, Engelhardt, and K.).

Waste Management alleged that it “directly (and FEMA and the citizens of greater New Orleans as a necessary consequence) suffered injuries as a result of the corrupt and anticompetitive tactics employed by Defendants to satisfy their greed following the devastation of New Orleans caused by Hurricane Katrina.” The company contended that defending landfill operators bribed and conspired with public officials to eliminate competition from other New Orleans area landfills relative to the collection and disposal of debris from Hurricane Katrina and with respect to municipal waste disposal in Jefferson Parish.

The court ruled that the antitrust claims had to be dismissed pursuant to the Noerr-Pennington doctrine, which generally provides antitrust immunity for restraints that result from government petitioning. To the extent that Waste Management challenged conduct regarding construction and debris (C&D) waste after Hurricane Katrina, the antitrust claim was dismissed with prejudice. The claims regarding “C&D landfills” focused on the defending landfill operators’ efforts to convince former New Orleans Mayor Ray Nagin to withdraw the emergency authorization that temporarily allowed Waste Management’s Chef Menteur landfill to accept enhanced C&D waste after the storm. The defendants argued that the “sham exception” to the Noerr-Pennington doctrine was inapplicable because they accomplished their goal of the withdrawal of the emergency enhanced C&D authorization for the landfill.

The court also dismissed the antitrust claim related to municipal solid waste (MSW) disposal in Jefferson Parish; however, the plaintiff was granted a right to amend its complaint. This claim was based on the defendant landfill operators’ purported efforts to obtain an exclusive waste disposal contract and to bring about the early termination of Waste Management’s landfill contract. The plaintiff had already raised issues of misrepresentations by parish officials (allegedly at the defendants’ behest) to the Jefferson Parish Council regarding the defendants’ contract proposal, and the institution of an allegedly frivolous lawsuit seeking early termination of the plaintiff’s contract with the parish. In an amended complaint, Waste Management would be required to address the existence and applicability of a possible fraud or misrepresentation exception to the Noerr-Pennington doctrine.

RICO claims. In a separate opinion, the court denied a motion to dismiss one of Waste Management’s RICO claims and granted the motion without prejudice with respect to another RICO claim and a LUTPA claim.

Waste Management alleged that the defendant landfill operators made unlawful payments to former Jefferson Parish officials to induce the parish to “initiate sham litigation” against Waste Management in order to bring about the premature termination of its contract with the parish. As a result of this alleged conduct, a contract with defendant River Birch, Inc. became effective.

The defendants contended that Waste Management “has not suffered any damages because its contract with Jefferson Parish has not been terminated and is still in effect today.” However, the court concluded that the unnecessary legal expenses claimed by the plaintiff as a result of “baseless and improper legal challenges” constituted a legally compensable RICO injury.

Waste Management’s other RICO claim, which was based on the purported bribery of public officials that led to the withdrawal of the emergency authorization for its Chef Menteur landfill, was dismissed. The plaintiff alleged that because of the closure, it lost millions in projected net revenues and millions more from investments in the development of the landfill. Waste Management did not satisfy its pleading burden relative to causation. The plaintiff failed to adequately allege that the bribery of a public official—the alleged RICO predicate offense—was a “but for” and the “proximate cause” of the loss of the emergency authorization for the landfill, the court ruled.

LUTPA claim. The plaintiff’s LUTPA claim was dismissed on statute of limitations grounds. The court rejected Waste Management’s contention that the LUTPA claim was timely pursuant to the continuing tort doctrine. In order to allege a facially timely LUTPA claim, Waste Management had to amend its complaint to set forth facts reflecting that pertinent conduct by and/or attributable to the defendants continued into the year prior to the date the suit was filed.

The case is No. 11-2405.

Attorneys: Patrick A. Talley, Jr. (Phelps Dunbar, LLP) for Waste Management of Louisiana, LLC. Thomas M. 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 Antitrust RICO StateUnfairTradePractices LouisianaNews

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