MONTGOMERY — An attorney for Mobile’s Solid Waste Authority argued to a three-judge panel of the 11th Circuit Court of Appeals that as an arm of the state, the authority should have immunity against a $6 million federal court judgment awarded last year.
Bert Jordan also argued that the jury’s verdict following a breach of contract trial in U.S. District Court in Mobile should be vacated because the plaintiff, Waste Management Mobile Bay Environmental Center, does the majority of its business in Alabama and not in Mississippi, where it’s headquartered.
The appeal, brought by the city’s Solid Waste Authority, stems from a $6 million breach of contract verdict in favor of Waste Management in January 2015. A jury determined the authority owed Waste Management roughly $5 million for breach of contract related to the perceived failure of the authority to raise the rate it allowed Waste Management to charge the city as a tipping fee.
The jury set a higher tipping fee and, as a result of the judgment, the city was also ordered to dump yard waste at the landfill managed by Waste Management.
Waste Management Mobile Bay Environmental Center filed its lawsuit in the U.S. District Court in Mobile because its “nerve center” is in Madison, Mississippi, despite the bulk of its enterprise taking place in the Port City. Jordan told the panel that this fact presents a question about the court’s jurisdiction in the case.
Judge Frank Hull seemed to disagree with Jordan’s line of thought on this point, given the trial attorneys didn’t challenge jurisdiction before the judgment.
“Mississippi is what you admitted until you lost,” Hull told Jordan. “You don’t have to prove facts someone admits … Is that what you’d have us rule?”
Jaime Betbeze, an attorney for Waste Management, told the judges the issue was never raised at trial. In fact, he argued, the defendants affirmed the original court had jurisdiction.
“They admitted jurisdictional fact,” Betbeze said. “They were satisfied before trial that Madison, Mississippi, was the nerve center of operations.”
Betbeze asked the court would would happen if attorneys were allowed to admit a jurisdictional fact and take it back after two years of discovery and a trial.
“It would encourage gamesmanship the court would like to avoid,” he said.
Further, Betbeze argued precedent allows for the “nerve center” of operations to be a test of jurisdiction. He added that business activities are not used.
“The evidence has no power to controvert the stipulated fact,” Betbeze said.
In raising another jurisdiction issue, Jordan told the judges that the Solid Waste Authority was actually an arm of the state and therefore not “a citizen” and is therefore immune to litigation of this nature. He compared it to a university, or a board of health. Jordan argued city officials, outside of appointments, lack any control over how the authority operates because it was established by state law.
Betbeze argued that much like the other jurisdiction issue, the authority’s trial attorneys failed to bring this to the court’s attention over two years of preparation.
“It is absolutely clear-cut …,” Betbeze said. “Neither issue was brought to the court.”
When asked by Hull if the issue of immunity was raised during trial, Betbeze had an answer.
“It was never raised at trial because it has no basis in reality,” he said.
Betbeze added that state law allows the authority to “sue and be sued” and it’s clearly not an instrumentality and not an arm of the state.
“There’s no connection to the state whatsoever,” Betbeze said. “Other than the fact it’s a public corporation of the state and a citizen.”
Betbeze said neither argument for vacation of the verdict holds water.
“The court had jurisdiction for this case. The authority obviously recognized that by not bringing up it was an instrumentality of the state and by admitting [Waste Management] was a citizen of Mississippi.”
There has been no announced decision in the appeal. Despite the 2015 verdict that would force the city to send yard debris to Waste Management’s landfill, the city’s Executive Director of Finance Paul Wesch told Mobile City Council members in June the city would continue to send the trash to the Dirt Inc. landfill.
Wesch said sending the debris to Chastang, which was stipulated in the award, would cost the city $1.8 million per year because it is designed for regular household garbage. In comparison, dumping the yard trash at Dirt Inc. cost the city about $600,000, he said.
At the meeting councilors approved moving forward with this year’s payment to Dirt Inc.