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Green Solutions Recycling, LLC v. Refuse, Inc.

United States District Court, D. Nevada

March 27, 2017




         I. SUMMARY

         Plaintiff Green Solutions Recycling, LLC (“GSR”) initiates this action against the City of Reno (“the City”) and three Nevada companies,[1] alleging that Defendants entered into an exclusive franchise agreement limiting competition and fixing prices for the collection of recyclable materials, thereby restraining trade in violation of both federal and state law. (ECF No. 1.) The Court ordered GSR to show cause as to why the Court has subject matter jurisdiction over the federal claims, given that the allegations appear to involve a local dispute among the City and Nevada companies and does not implicate interstate commerce. (ECF No. 35.) The Court has reviewed GSR’s response (“Plaintiff’s Response”) (ECF No. 38), as well as Defendants’ response and joinder (ECF Nos. 45, 46).[2] The Court finds that GSR has satisfied the Court’s Order - Defendants’ alleged conduct under GSR’s theory as explained in GSR’s Response implicates interstate commerce. Accordingly, the Court will address the pending motions.

         Before the Court are Plaintiff’s Motion for Preliminary Injunction (“Plaintiff’s Motion”) (ECF No. 2) and Defendants’ Motion to Dismiss (“Defendants’ Motion”) (ECF No. 15). Because the Court will grant Defendants’ Motion, the Court denies Plaintiff’s Motion as moot.


         The following facts are taken primarily from the Complaint.

         NRS § 268.081 permits local governments to displace or limit competition of certain services, including the collection and disposal of waste, but not the collection of “recyclable materials.” (ECF No. 1 at 3.) On November 7, 2012, the City entered into an Exclusive Service Area Franchise Agreement for Commercial Solid Waste and Recycle Materials with Defendant RDC (“Franchise Agreement”).[3] (ECF No. 1 at 4.) The City did not have the statutory authority under NRS § 268.081 to enter into the Franchise Agreement with respect to “the collection or purchase of recycle material.” (Id.) In April 2016, WMN communicated with one of GSR’s customers about the Franchise Agreement and the fact that only WMN was permitted to haul recycling containers. (Id.) Shortly thereafter, the City accused GSR of operating in violation of the Franchise Agreement. (Id.) According to GSR, Defendants have attempted to interfere and destroy its business by preventing GSR from “seeking or servicing clients for the collection of recyclable material.[4]” (Id.) Based on these allegations, GSR asserts claims for violation of Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1 (“the Act”) and the Commerce Clause of the United States Constitution, and two state law claims. (Id. at 5-7.)


         A court may dismiss a plaintiff’s complaint for “failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). A properly pleaded complaint must provide “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does not require detailed factual allegations, it demands more than “labels and conclusions” or a “formulaic recitation of the elements of a cause of action.” Ashcroft v. Iqbal, 556 US 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). “Factual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. Thus, “[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570).

         In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply when considering motions to dismiss. First, a district court must accept as true all well-pleaded factual allegations in the complaint; however, legal conclusions are not entitled to the assumption of truth. Id. at 678-79. Mere recitals of the elements of a cause of action, supported only by conclusory statements, do not suffice. Id. at 678. Second, a district court must consider whether the factual allegations in the complaint allege a plausible claim for relief. Id. at 679. A claim is facially plausible when the plaintiff’s complaint alleges facts that allow a court to draw a reasonable inference that the defendant is liable for the alleged misconduct. Id. at 678. Where the complaint fails to “permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - but it has not ‘shown’ - ‘that the pleader is entitled to relief.’” Id. at 679 (quoting Fed. R. Civ. P. 8(a)(2)) (alteration omitted). When the claims in a complaint have not crossed the line from conceivable to plausible, the complaint must be dismissed. Twombly, 550 U.S. at 570. A complaint must contain either direct or inferential allegations concerning “all the material elements necessary to sustain recovery under some viable legal theory.” Id. at 562 (quoting Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1106 (7th Cir. 1984)).


         A. Claims Against WMN and Refuse

         Plaintiff’s claims are based on the contention that the Franchise Agreement covers the collection of recycle materials that is not within the statutory definition of “waste.” (ECF No. 20 at 5-7.) The Franchise Agreement is between the City and RDC. (ECF No. 1 at 4.) Plaintiff fails to assert specific allegations as to WMN and Refuse, but generally lump them together with the other Defendants. Plaintiff argues that Refuse and RDN are wholly owned subsidiaries of WMN and Plaintiff names them because of the lack of information as to which employees or agents of these companies has engaged in the activities alleged in the Complaint. (ECF No. 20 at 4.) However, these Defendants have their own corporate identity, and the Complaint does not assert any allegations to support proceeding on an alter ego theory. Moreover, the Complaint contains only conclusory allegations as to WM and Refuse, which are not sufficient for the Court to reasonably infer more than a mere possibility of misconduct with respect to these two Defendants. The Court agrees with WMN and Refuse that the Complaint fails to state a claim against them. Claims against WMN and Refuse will be dismissed without prejudice and with leave to amend.

         B. First Claim for Relief: ...

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