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Huish Detergents, Inc. v. Warren County, Ky.

Citation: 30 ELR 20595
No. No. 98-5566, 214 F.3d 707/50 ERC 1617/(6th Cir., 05/31/2000)

The court holds that a lower court improperly dismissed a laundry detergent manufacturer's claim that an exclusive franchise agreement between a county and a solid waste handler violated the dormant U.S. Commerce Clause. The agreement gave the waste handler the exclusive right to collect and process all municipal solid waste in the county. It also required that all residential, commercial, and industrial entities that generate municipal solid waste in the county must use the waste handler and gave the handler the ability to set fees. The county passed an ordinance executing the agreement and incorporating its provisions by reference. A laundry detergent manufacturer subsequently challenged the ordinance.

The court first holds that the manufacturer has standing to challenge the ordinance. The manufacturer alleged an actual injury as a result of the ordinance and agreement in that it was forced to pay more for waste disposal than it would have if it contracted with an out-of-state disposal company. The fact that the manufacturer is not a member of the waste industry does not undermine the causal connection between the challenged scheme and the manufacturer's injury. Moreover, the manufacturer's injury can be redressed by a favorable result. In addition, the manufacturer's interest falls within the zone of interests protected by the Commerce Clause. The manufacturer seeks to protect its right to contract with a company that can transport its waste for out-of-state processing. In making this claim, the manufacturer is asserting its individual right as a consumer to purchase waste processing and disposal services across state boundaries, an interest that falls squarely within the zone of interest protected by the Commerce Clause.

The court next holds that the county's requirement that all municipal waste collected by the handler be processed at a single transfer station in the county is not shielded from Commerce Clause scrutiny by the market participant exemption. The county was not acting in a proprietary capacity in forcing all municipal waste to flow through the city's transfer station. The county was not purchasing the processing services with public funds, nor was it selling its own processing services. By effectively forcing all city residents to purchase the processing services directly from the handler, the county's actions far exceeded that which a private entity could accomplish on the free market. In addition, the county did not act as a market participant in prohibiting out-of-state waste because the county neither bought nor sold disposal services with taxpayer funds. Similarly, the county was using its regulatory power, not its proprietary purchasing power, when it granted the waste handler an exclusive right to collect and process the county's municipal waste. The court, therefore, erred in dismissing the manufacturer's claims under Fed. R. Civ. P. 12(b)(6).

Counsel for Appellant
Walter M. Jones
Wyatt, Tarrant & Combs
Citizens Plaza
Louisville KY 40202
(502) 589-5235

Counsel for Appellees
Dennis J. Conniff
Brown, Todd & Heyburn
400 W. Market St., 32d Fl., Louisville KY 40202
(502) 589-5400

Joined by Batchelder, J.; Clay, J., concurs separately