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cp08-10-1993 Closed Meeting c0 CLOSED MEETING HUTCHINSON CITY COUNCIL TUESDAY, AUGUST 10, 1993 6:30 P.M. Attorney Morgan Godfrey will be making a presentation regarding the status of the Junker litigation. 0 ARNOLD & MCDOWELL ATTORNEYS AT LAw 5881 CEDAR LAKE ROAD MINNEAPOLIS, MINNESOTA 55416-1492 (612) 545 -9000 MV TOLL FREE 800- 343 -4343 FAR (612) 345-1193 July 27, 1993 Gary D. Plotz Hutchinson City Administrator Hutchinson City Hall 37 Washington Avenue West Hutchinson, MN 55350 Re: Junker Sanitary Service, Inc Court File No. C9 -92 -24534 Marshall and Associates File Our File No. 3188 -92212 Dear Gary: OF COUN3XL NILLLM W. CAMERON RAYMOND C. LALLIER SOI SOUTH FOURTH STREET PRINCETON, MINNESOTA 53371 (612) 389-2214 PAX (612) 389-5306 101 PARE PLACE HUTCHINSON. MINNESOTA 55350 (612) 581-1515 FAx (612) SBT!G� v. City of Hutchinson No. 105219.002 VZD . As required by court order, Junker has filed its Amended Complaint and a copy of the Amended Complaint is enclosed. I would ask that you pass along a copy of this correspondence as well as the Amended Complaint to the council in the next council packet for their review and information. I have had an extensive meeting with representatives of the League Trust in an effort to convince them that the defense of this matter should be assumed by the League Trust and that the city should be relieved of that expense. To date, I have not heard from the League Trust regarding the results of our meeting and I will keep the City Council advised of any developments. Thank you. Best regards. Very truly yours, ARNOLD & McDOWELL I'D 11 G. Barry Ande on GBA /pb 0 Enclosure 'CERTIFIED AS A CIVIL TRIAL SPECIALIST BY THE MINNESOTA STATE BAH ASSOCIATION "CERTIFIED AS A REAL PROPERTY LAW SPECIALIST BY THE MINNESOTA STATE BAR ASSOCIATION DAVID B. ARNOLD GARY D. UCDOWELL STEVEN A. ANDERSON • O. BARRY ANDERSON' STEVEN S. HOGE LAURA K.PRETLAND DAVID A. BEUEOOEMANN PAUL D. DOVE" JOSEPH M. PAIEMENT JAMES UTLEY RICHARD O. NtGEE CATHRYN D. REHER OINA M. BRANDT ARNOLD & MCDOWELL ATTORNEYS AT LAw 5881 CEDAR LAKE ROAD MINNEAPOLIS, MINNESOTA 55416-1492 (612) 545 -9000 MV TOLL FREE 800- 343 -4343 FAR (612) 345-1193 July 27, 1993 Gary D. Plotz Hutchinson City Administrator Hutchinson City Hall 37 Washington Avenue West Hutchinson, MN 55350 Re: Junker Sanitary Service, Inc Court File No. C9 -92 -24534 Marshall and Associates File Our File No. 3188 -92212 Dear Gary: OF COUN3XL NILLLM W. CAMERON RAYMOND C. LALLIER SOI SOUTH FOURTH STREET PRINCETON, MINNESOTA 53371 (612) 389-2214 PAX (612) 389-5306 101 PARE PLACE HUTCHINSON. MINNESOTA 55350 (612) 581-1515 FAx (612) SBT!G� v. City of Hutchinson No. 105219.002 VZD . As required by court order, Junker has filed its Amended Complaint and a copy of the Amended Complaint is enclosed. I would ask that you pass along a copy of this correspondence as well as the Amended Complaint to the council in the next council packet for their review and information. I have had an extensive meeting with representatives of the League Trust in an effort to convince them that the defense of this matter should be assumed by the League Trust and that the city should be relieved of that expense. To date, I have not heard from the League Trust regarding the results of our meeting and I will keep the City Council advised of any developments. Thank you. Best regards. Very truly yours, ARNOLD & McDOWELL I'D 11 G. Barry Ande on GBA /pb 0 Enclosure 'CERTIFIED AS A CIVIL TRIAL SPECIALIST BY THE MINNESOTA STATE BAH ASSOCIATION "CERTIFIED AS A REAL PROPERTY LAW SPECIALIST BY THE MINNESOTA STATE BAR ASSOCIATION Marshall and Associates, P.A. Attorneys at Law ACorw s: Joseph B. Mars/au Morgan �dgey Anita 1. lehJ' Richard M. Schnllz ** *Also admined in California "Also admitted in Wisconsin July 21, 1993 Mr. Barry Anderson Hutchinson City Attorney 101 Park Place Hutchinson, MN 55350 Hden on, Heim Pabn Loren Hoocc�/��g Deborah A. McCoBow Debra l Tamer 2` ,627282 rb p ``9�S1 Yl Sl Zll��� RE: Junker Sanitary Service, Inc. v. City of Hutchinson Court File No. C9 -92 -24534 Our File No. 105219.002 Dear Mr. Anderson: Pursuant to your request I have enclosed a copy of the Amended Complaint for your review. 0 We are in the process of filing for a continuance in order to conduct additional discovery. It appears trial will not be until at least December 14, 1993, at the earliest. I will notify you when a date has been set. Morgan will be in touch with you soon. Very truly yours, MARSHALL AND ASSOCIATES, P.A. Deborah McCollow Paralegal DM /pkh Enclosure 105219.002 \L -008 i (612) 784 -0890 9501 Lexington Avenue North PAY (612) 784 -4393 Circle Pines, Minnesota 55014 0 0 STATE OF MINNESOTA COUNTY OF MCLEOD Junker Sanitary Services, Inc., 10. Other Civil Municipal Law Constitutional Law DISTRICT COURT FIRST JUDICIAL DISTRICT Court File No.: C9 -92 -24534 Plaintiff, VS. AMENDED COMPLAINT City of Hutchinson, a municipal corporation, Defendant. Plaintiff, Junker Sanitary Services, Inc. ("Junker"), for its complaint against defendant City of Hutchinson ('City" or "Hutchinson "), states and alleges as follows: PARTIES AND VENUE 1. Junker is a Minnesota corporation with its principal place of business in Stillwater, Minnesota. Junker is in the business of providing residential and commercial garbage and refuse pickup service to a variety of communities, businesses and individuals. From 1980 to 1992, Junker provided exclusive commercial and residential garbage and refuse pickup service to Hutchinson pursuant to a contract between the parties. 657771 EXHIBIT A 2. Hutchinson is an incorporated municipality under Minnesota law which is required to comply with public contracting statutes and bidding rules. 3. Venue is proper in this court pursuant to Minn. Stat. § 542.09 as the defendant resides in this district and the cause of action or some part thereof arose in this district. SUMMARY 4. This is an action to prohibit Hutchinson from unilaterally and improperly refusing to deal with Junket, its commercial and residential garbage and refuse carrier for the past 12 years, and for damages. Hutchinson made it clear, through its actions and words that it would not continue its relationship and that, upon the expiration of Junker's contract, it would contract with others for service. Hutchinson, in fact, contracted with others. The expiration of the contract, however, did not entitle Hutchinson to walk away from its obligations. Rather, pursuant to Minnesota law, Hutchinson should have continued to deal with Junker on the basis of and according to the terms of the contract until the City had successfully "organized collection" under Minn. Stat. § 115A.94, including the time limits and negotiation requirements in that statute. Hutchinson attempted to bypass those obligations by relying on a facially invalid special law that was passed in the closing moments of the 1992 legislative session. Junker has suffered damages as a direct and proximate result of that violation. This action also seeks damages caused Junker as a direct and proximate result of Hutchinson's breach of its contract with Junker, all as is described with more particularity below. 657771 2 0 FACTUAL BACKGROUND THE EXISTING CONTRACT WITH TUNKER 5. The City is empowered by statute to enact ordinances and is obligated by law to comply with the terms of the ordinances it enacts. Pursuant to that authority, Hutchinson, in or prior to 1980, enacted Ordinance Section 225.05 which provided, in part, that "All garbage and refuse accumulated in the municipality shall be collected, conveyed, and disposed of through the legal authorized agent, the City collection contractor ... . (emphasis added.) 6. Based on this ordinance Hutchinson was obligated to hire one (and only one) contractor to be the legal authorized agent to provide both commercial and residential garbage and refuse service within the city limits. • 7. Junker was the legal authorized agent and had been providing commercial and residential garbage and refuse service within the city limits for the past 12 years in accordance with the terms of the city ordinance and the July 1, 1980 Exclusive Service Agreement. 8. Junker's contract expired according to its terms on June 30, 1992. At that time, however, there was not in place another contract or other lawful arrangement to replace Junket to provide residential and /or commercial garbage and refuse services. No contract was in place for, among other reasons, the City's dilatory behavior. Junker approached Hutchinson many months before the contract was to expire in an effort to negotiate a new arrangement. The City refused to negotiate and made it clear through its words and actions that it did not want to deal with Junker. The City's attitude was not 657771 Kl based on any good or lawful reason but rather was based on its reaction to a preexisting lawsuit between the parties. 9. Junker was ready, willing, and able to continue to perform both residential and commercial garbage and refuse hauling services. STATUTORY ORGANIZED COLLECTION 10. Hutchinson determined to implement a system of exclusive garbage and refuse services with a single provider. The existing arrangement between Junker and Hutchinson constitutes "organized collection" within the meaning of the Minnesota Waste Management Act, Minn. Stat. § 115A.94, subd. 1, which defines "organized collection" as "a system for collecting solid waste in which a specified collector, or a member of an organization of collectors, is authorized to collect from a defined geographic service area or areas some or all of the solid waste that is released by generators for colIection." 0 11. Junker's contract, Hutchinson's prior ordinance and Minn. Stat. § 115A.94 all apply to both residential and commercial garbage and refuse services. 12. Due to the unequal bargaining power that a city may exert over a garbage hauler, the Minnesota legislature has determined that municipalities must engage in a prescnbed negotiation process before organizing collection or, in this case, reorganizing collection at the expiration of the existing contract, whether with Junker or another vendor. Such a requirement is intended to protect the existing hauler's economic rights against arbitrary interference by government officials and assures a level playing field. 657771 2 0 • 13. To accomplish its purpose, the statute obligates the City to engage in a 180 -day process to secure a new contract for solid waste disposal services whether with Junker or another vendor. Minn. Stat. § 115A.94. 14. Since the City's existing organized collection applies equally to residential and commercial garbage and refuse services, Minn. Stat. § 115A.94 requires that any subsequent organized collection comply with the statute equally as to both residential and commercial garbage and refuse services. 15. The process of organizing collection allows the City to contract with a vendor to "collect ... some or all of the solid waste that is released by generators for collection." Minn. Stat. § 115A.94, subd. 1. The term "generator" is statutorily defined to mean "any person who generates waste." Minn. Stat. § 115A.03, subd. 12. "Person" includes "any ... public or private corporation, any partnership, firm, association, or other organization ..." Minn. Stat. § 115A.03, subd. 23 and § 116.06, subd. 8. The statute goes on to prohibit a city from contracting with, changing a contract with, or otherwise modify its arrangement except by complying with the 180 day negotiation and bidding process specified by statute. Minn. Stat. § 1155.94, subd. 4. THE CITY'S ATTEMPTS TO CIRCUMVENT THE ORGANIZED COLLECTION STATUTE 16. The City failed to commence that process in time to have a new contract in place by June 30, 1992. Junker was ready, willing and able to provide services during the interim period at the same level and cost of service as provided under the Exclusive Services Agreement. 657771 5 17. The City determined, for no good reason, that it no longer desired to deal with Junker and, in the process, has caused Junker's legal and equitable rights to be significantly impaired, including trying to avoid the operation of the organized collection statute. THE SPECIAL LEGISLATION 18. Absent some authority not provided in the general legislation, city ordinance or the contract, the City's failure to commence the process of organizing collection in a timely fashion obligated it to continue its relationship with Junker until the provisions of Section 115A.94 have been complied with. 19. At the end of the 1992 legislative session, an amendment was attached to the Waste Management Act which purports to allow a city fitting the description of Hutchinson (without specifically naming Hutchinson) to contract with any vendor for the interim period without regard to the statutory requirements. 1992 Minn. Laws, Ch. 593, Art. 1, § 45 (enacted April 27, 1992). 20. That amendment was sponsored by Senator Bernhagen, who represents the Hutchinson District in the legislation. This statute provides: 657771 Sec. 45. [INTERIM ORGANIZED SOLID WASTE COLLECTION.] (a) A city with a population, according to the 1990 federal census, of more than 10,000 and less than 12,000 that, before the effective date of this section, has begun the process of organizing solid waste collection under Minnesota Statutes, section 115A.94, and that is a party to an exclusive contract for collection of solid waste that will expire before the new organized collection system will be effective, may: (1) negotiate an extension of the existing exclusive contract to the date the new organized collection system will be effective; 0 (2) negotiate one or more separate waste collection contracts for the period between the expiration of the existing exclusive contract and the date the new organized collection system will be effective; or (3) otherwise negotiate, with or without competitive bids, an interim waste collection system that may not be extended beyond the date the new organized collection system will be effective. (b) This section does not affect the applicability of Minnesota Statutes, section 115A.94, to the city's new organized collection system. (the "Interim Services" statute.) Under the Interim Services statute, therefore, Hutchinson can ignore Junker and the statutory waiting period and contract with other vendors for the interim period. The Interim Services statute was passed with no committee discussion and was slipped into the conference committee proposal at the very end of the process. Very little discussion was had about that bill. 21. The Interim Services Statute applies to only Hutchinson and to no other city. 22. Pursuant to the authority purportedly granted by the legislature, Hutchinson solicited bids for interim services pursuant to a Request for Proposal ( "RFP "). An interim services contract was awarded to someone other than Junker ( "Interim Services Contract"). 23. By order of this court dated July 10, 1992, the Interim Services Statute was declared to be unconstitutional. THE NEW ORDINANCE 24. Furthermore, the interim services RFP applies only to residential garbage and refuse hauling services. Hutchinson has repudiated its obligation to allow Junker or any other exclusive hauler to continue to provide commercial garbage and refuse services. The City intends to allow "open hauling" of commercial garbage and refuse. 657771 7 25. In that regard, Hutchinson passed a new ordinance, No. 92 -57, which repeals the prior ordinance, and purports to grant licensing rights to haulers of commercial and residential garbage and refuse services separately as of July 1, 1992. 26. Junker received notice of the new ordinance on June 15, 1992. The notice purports to require that a license application be submitted before 5:OOp.m. on June 17, 1992. 27. Pursuant to this court's order dated July 10, 1992, the Court determined that the ordinance could not be implemented as of July 1, 1992. The RFP and the Interim Services Contract are rendered void as a result of the foregoing. 28. Junker has a significant investment in equipment and facilities in Hutchinson, much of which was rendered worthless or of significantly less value as a direct and proximate result of the City's action. COUNT 1 i 29. Junker incorporates, restates and realleges paragraphs 1 -28 of this Amended Complaint as if fully set forth herein. 30. As a direct and proximate result of the foregoing, Junker has suffered damages in an amount to be determined at trial. COUNT 2 31. Junker incorporates, restates and realleges paragraphs 1 -30 of this Amended Complaint as if fully set forth herein. 32. Hutchinson is legally obligated by statute to include in any proposal to organize collection the right to provide exclusive commercial (as well as residential) garbage and refuse services and must engage in the statutorily- mandated negotiation process. That 657771 Q • s process could not be completed until October 1, 1992. Hutchinson has repudiated that obligation through enacting Ordinance No. 92 -57 which purports to grant licensing rights separately to residential and commercial haulers as of July 1, 1992. 33. Ordinance No. 92 -57 conflicts with and is superseded by the organized collection statute to the extent that Ordinance No. 92 -57 purports to negate the statutory requirements. 34. As a direct and proximate result of the foregoing, Junker will suffer damages in an amount to be established at trial. COUNT 3 35. Junker incorporates, restates and realleges paragraphs 1 -30 of this Amended Complaint as if fully set forth herein. 36. Hutchinson has breached the Exclusive Service Agreement in various ways, including, without limitation, by permitting 3M to haul its own garbage and refuse. 37. This court, on or about February 7, 1992, issued its Findings of Fact, Conclusions of Law, and Order for Judgment, determining, among other matters, that Hutchinson had breached the exclusivity provisions of the Exclusive Service Agreement. The court determined that Junker had sustained damages in the amount of $166,500 as a direct and proximate result of this breach by means of the 3M- McKimm contract. These damages were for the period of time through November 1, 1991. 38. For the period of time from November 1, 1991 through June 30, 1992, Hutchinson continued to breach the exclusivity provisions of the Exclusive Service Agreement by virtue of its permitting the 3M- McKimm contract to exist. Pursuant to the 657771 0 doctrine of res 'udf icata. Hutchinson is barred and estopped from relitigating its liability pursuant to the exclusivity provision of the Exclusive Services Agreement. 39. As a direct and proximate result of this breach and other breaches of the Exclusive Services Agreement, Junker has sustained damages in an amount to be determined at trial. WHEREFORE, plaintiff, Junker Sanitary Services, Inc., respectfully prays the Court for entry of judgment against defendant as set forth in all counts above and that the court grant plaintiff the following relief: 1. For judgment in favor of Junker in an amount to be determined at trial; 2. Awarding plaintiff all costs and disbursements of suit, including reasonable attorney's fees; and 3. Awarding plaintiff such other and further relief as the Court deems just and 0 equitable. DATED: April 16, 1993. BRIGGS AND MORGAN 657771 By �C. John A- Vairns #14096 Margardf K. Savage #96003 2400 IDS Center 80 South Eighth Street Minneapolis, MN 55402 (612) 334 -8400 ATTORNEYS FOR PLAINTIFF JUNKER SANITARY SERVICES, INC. 10 • ACKNOWLEDGMENT 0 The undersigned hereby acknowledges that costs, disbursements and reasonable attorney and witness fees may be awarded pursuant to Minn. Stat. § 549.21, subd. 2, to the party against whom the allegations in this pleading are asserted. 657771 11