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Atlantic Coast Demolition & Recycling, Inc. v. Board of Chosen Freeholders of Atl. County

ELR Citation: 28 ELR 21004
Nos. Nos. 93-2669 (JEI), 94-3244 (JEI), 988 F. Supp. 486/(D.N.J., 12/18/1997) Exercise of federal jurisdiction over state contract dispute

The court assumes jurisdiction over a state contract dispute between a county waste authority and an in-state waste facility operator to protect and effectuate an injunction that the court has jurisdiction over. In a related case, the Third Circuit held that New Jersey's flow-control laws governing the disposal of locally generated waste violated the dormant U.S. Commerce Clause, affirmed an injunction of enforcement, and ordered that the injunction become effective immediately. Prior to the Third Circuit's decision, a county waste authority entered a long-term contract, which contained an unconditional payment obligation, to dispose of its waste at an in-state facility. The instate facility operator instituted a state court action to determine whether the injunction operates to abrogate the remaining executory portions of the contract. The court first notes that before the state contract issues are decided, it must first be determined whether or not the Third Circuit's decision and injunction relate back in time to retroactively void the contract. In order to determine the retroactive effect, a court must interpret whether the injunction mandates abrogation of contracts that, if entered into today, would be clearly illegal, and decide whether a modification of the injunction is appropriate. These are purely questions of federal law, and, if a state court were to undertake the analysis it would threaten the district court's jurisdiction over and effectuation of the injunction against the state flow-control law.

The court next holds that U.S. Supreme Court precedent requires that it exercise jurisdiction over the federal issues raised in this case. To avoid the problem of having a state court issue an interpretation that conflicts with the district court's understanding of the injunction, it is incumbent upon the district court, to whom the effectuation of the injunction has been entrusted, to clarify the proper mandate of the Third Circuit's injunction. The court further holds that it has the power to assume jurisdiction of the case under the Anti-Injunction Act and the All Writs Act. Pursuant to the relitigation exception to the Anti-Injunction Act, it is well-established that a federal court may enjoin a state proceeding where the result of the state court litigation may eviscerate the effect of a federal court's order, or would render doubtful the rights of parties effected by the federal injunction. The court is also permitted to remove the state proceeding to federal court under the All Writs Act because there is an actual existing ruling (i.e., a temporary restraining order issued by a state court) directly implicating the district court's ability and duty to properly determine the retroactivity issues that must be decided before the analysis can proceed to an examination of the state contract issues. If, after deciding the crucial federal retroactivity issues, the court finds that the contract is not rendered null and void, the court will then remand that portion of the case back to state court for adjudication of the state contract issues.

[Decisions related to this litigation are published at 25 ELR 20620, 26 ELR 20256 and 20721, and 27 ELR 20111 and 21099.]

Counsel for Plaintiffs
Stephen P. Sinisi
Sinisi, Van Dam, Sproviero & Sokolich
Two Sears Dr., Paramus NJ 07653
(201) 599-1600

Counsel for Defendants
Steven A. Kunzman
Bivona, Cohen, Kunzman, Coley, Yospin, Bernstein & Di-Francesco
15 Mountain Blvd., Warren NJ 07059
(908) 757-7800