In the
United States Court of Appeals
For the Seventh Circuit
No. 10-2568
A CTIVE D ISPOSAL, INC., et al.,
Plaintiffs-Appellants,
v.
C ITY OF D ARIEN, et al.,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 09 C 2930—Matthew F. Kennelly, Judge.
A RGUED JANUARY 7, 2011—D ECIDED M ARCH 14, 2011
Before M ANION and W ILLIAMS, Circuit Judges, and
C LEVERT, District Judge.
M ANION, Circuit Judge. Plaintiffs sued several munici-
palities claiming the municipalities’ exclusive contracts
for trash disposal violate federal antitrust law. The
district court held that the contracts fell within the
Hon. Charles N. Clevert, Jr., Chief Judge of the Eastern
District of Wisconsin, is sitting by designation.
2 No. 10-2568
state-action exception to antitrust law and dismissed
the complaint. The state-action doctrine allows munici-
palities to engage in conduct that would otherwise
violate antitrust law when the conduct is authorized by
the state under a policy to displace competition. Plain-
tiffs appeal. Because the state-action doctrine applies to
the municipalities’ contracts for trash disposal, we affirm.
I.
In some communities across Illinois, when a person or
business needs a dumpster for a spring cleaning or for
bigger construction jobs, they can’t just open the Yellow
Pages and find the best deal. Instead, they have to use a
specific company with which the municipality has an
exclusive contract. While these contracts often have a
financial benefit for the municipality, they also im-
pose a cost on consumers who would prefer a different,
probably less expensive, trash hauler. The contracts
also prevent other trash haulers from competing in
these markets. Plaintiffs are made up of two groups:
trash haulers who want to compete for business, and
businesses that wish to hire a cheaper trash hauler. In
this case, their interest is limited to the removal of waste
that is placed in large roll-off dumpsters. With their
aligned interests, plaintiffs sued the defendant munici-
palities, claiming that their exclusive contracts run afoul
of federal antitrust law.
The municipalities moved to dismiss the complaint,
arguing that exclusive contracts for waste removal
are permissible under the state-action doctrine, which
No. 10-2568 3
exempts states from federal antitrust law. Parker v. Brown,
317 U.S. 341, 350-51 (1943). The doctrine stems from the
fact that the Sherman Antitrust Act, 15 U.S.C. §§ 1,
et seq., does not apply to sovereign entities. Over the
years, the doctrine has been logically extended
to shield municipalities from antitrust law when
the municipality’s actions are “authorized by the State
pursuant to state policy to displace competition with
regulation or monopoly public service.” Town of Hallie
v. City of Eau Clair, 471 U.S. 34, 39 (1985) (quotation omit-
ted); LaSalle Nat. Bank v. DuPage County, 777 F.2d 377, 380-
81 (7th Cir. 1985).
Here, the parties’ dispute centers on whether Illinois
has given its municipalities the authority to contract for
the collection and disposition of waste. Illinois has an
entire Act devoted to the powers of its municipalities,
including their authority over waste. Among the pro-
visions, one is titled “Contracts”; it empowers municipali-
ties to make contracts “relating to the collection and
final disposition, . . . of garbage, refuse and ashes.” 65
ILCS 5/11-19-1(a).1 The municipalities argued and the
district court found that this statute authorizes the chal-
lenged contracts and that anti-competitive consequences
are the natural and foreseeable result of such a contract.
Thus, the district court held that the state-action doctrine
applied and dismissed plaintiffs’ complaint. They appeal.
1
For much of the opinion, we cite to one part of the Illinois
statutes, specifically 65 ILCS 5/11-19-1, et seq. Further refer-
ences will cite to each part with the Act as § 1 and so forth.
4 No. 10-2568
II.
We review the granting of a motion to dismiss de novo
and affirm if the complaint does not include facts that
state a plausible claim for relief. Justice v. Town of Cicero,
577 F.3d 768, 771 (7th Cir. 2009). Our analysis rests on
the complaint, and we construe it in the light most favor-
able to the plaintiffs, accepting as true all well-pleaded
facts alleged and drawing all permissible inferences in
their favor. Id.
A.
On appeal, plaintiffs argue that the municipalities’
power to make “exclusive” contracts for waste removal
arises not as the district court found under § 1, but under
§ 5. Section 5 is titled “Method of Disposition”; it gives
municipalities the authority to prescribe an exclusive
method for disposing of trash and lists several acceptable
methods, including dumping it in a landfill. Pertinent
here, it provides that such a method can be enacted
despite the effect it has on competition, and it states
that “[m]aterial that is intended or collected to be
recycled is not garbage, refuse or ashes.” 65 ILCS 5/11-19-5.
Plaintiffs argue that since § 5 states that the method may
be “exclusive” and that competition will be displaced,
the municipalities’ authority to enter into exclusive con-
tracts comes from § 5, and not § 1. And since § 5 is
limited to disposing of garbage, refuse, and ashes, the
municipality does not have the power to make con-
tracts concerning recyclables, because “[m]aterial that is
intended or collected to be recycled is not garbage,
refuse, or ashes.” Id.
No. 10-2568 5
To address plaintiffs’ argument, the first issue is
which section authorizes municipalities to create exclu-
sive contracts for the collection and disposition of
waste. Looking at the text of § 5, it does not appear that
it gives municipalities the power to contract. For one,
the text of § 5 does not deal with contracts. It deals with
the power to prescribe exclusive methods of disposing
of garbage:
Any municipality may provide by ordinance that
such method or methods shall be the exclusive
method or methods for the disposition of garbage,
refuse and ashes to be allowed within that munici-
pality.
65 ILCS 5/11-19-5. The term “exclusive” in that sentence
does not refer to contracts or dealings, but to the method
of disposal. Moreover, while a statute’s title does not
define its meaning, it is relevant. United States v. Chemtco,
274 F.3d 1154, 1159 (7th Cir. 2001). And here, § 5’s text
accords with its title: “Method of Disposition.”
Similarly, the title of § 1 “Contracts” mirrors its text,
which grants municipalities the power to make
contracts for the collection and disposition of garbage,
refuse, and ashes. In fact, § 1 is the only part of the entire
Act that mentions contracts. The fact that § 1 does not use
the term “exclusive” is irrelevant to whether it gives
municipalities the authority to enter into an exclusive
contract—after all an exclusive contract is merely a
subset of the power to contract. Moreover, this reading
is buttressed by the fact that for thirty-five years Illinois
courts have read § 1 as providing municipalities the
6 No. 10-2568
authority to form contracts. E.g., Urban Products Interna-
tional, Ltd. v. National Disposal Service, 336 N.E.2d 138,
143 (Ill Ct. App. 1975) (citing 11-19-1); City of Decatur v.
Waste Hauling, Inc., 509 N.E.2d 716, 719 (Ill. Ct. App.
1987) (citing 11-19-1). In contrast, plaintiffs have not cited
to a single Illinois case that suggests the power to make
these sorts of contracts falls under § 5. Thus, we are
satisfied that the municipalities’ authority to enter into
these contracts comes from § 1.
Plaintiffs’ other argument is that whatever authority
municipalities have to make contracts under § 1, it does
not include the power to make exclusive contracts
when recyclables are involved. Plaintiffs claim that
recyclables are being placed in the roll-off dumpsters;
therefore, the municipalities cannot make exclusive
contracts for the roll-offs’ removal. Again, their argu-
ment hangs on § 5. They argue that under the canon
of statutory construction in pari materia, the broad grant
of power in § 1 to contract for the collection or final
disposition of “garbage, refuse and ashes” is circum-
scribed by the language in § 5 that “[m]aterial that is
intended or collected to be recycled is not garbage,
refuse or ashes.” 65 ILCS 5/11-19-5. That canon of inter-
pretation simply means that we interpret statutes
dealing with the same subject (here, trash) “with refer-
ence to one another to give them harmonious effect.”
People v. McCarty, 858 N.E.2d 15, 31 (Ill. 2006).
Reading the language in § 5 the way plaintiffs urge
does not create a harmonious effect within the Act’s sub-
sections; instead, it presents an uncertain and confused
No. 10-2568 7
statutory scheme. After authorizing municipalities to
enter into contracts for the disposal of “garbage, refuse,
and ashes” in § 1, the legislature defined each of these
terms in § 2, which is titled “Definitions.” Under plain-
tiffs’ theory, the language in § 5 would redefine those
definitions by excluding recyclables from the definition
of “garbage, refuse, and ashes.” When the Illinois legisla-
ture intended to exclude a waste product from “garbage,
refuse, and ashes,” it expressly stated that exemption
in § 2’s definitions. Specifically, after defining refuse, the
legislature expressly stated:
but refuse does not mean earth and wastes from
building operations, nor shall it include solid
wastes resulting from industrial processes and manu-
facturing operations such as food processing wastes,
boiler-house cinders, lumber, scraps and shavings.2
Had Illinois intended to also exempt recyclables from
the definition of “garbage, refuse, and ashes,” it could
have easily done so in the definitions section. Yet it
did not, and this negates plaintiffs’ argument that § 5
modifies § 2’s definition and the power granted muni-
cipalities in § 1. See United States v. Davis, 471 F.3d 783,
787 (7th Cir. 2006) (noting the legislature has made it
clear that if it wants to make a specific point in the
law, it knows how to).
2
Plaintiffs have not alleged in the complaint, or argued here
or below, that the municipalities have made contracts for the
removal of waste that is exempted under § 2 and thus
beyond the municipalities’ power to contract. And our opinion
in no way speaks to such contracts.
8 No. 10-2568
Not only does that cut against plaintiffs’ argument, but
also reading the statutes the way plaintiffs urge would
render some of the language in § 2 superfluous. Refuse
includes such items as “paper,” “cartons,” “boxes,”
“metals,” “tin cans,” “metal furniture,” and “glass.” Id.
All of these things are what we would commonly think
of as “recyclables,” but they are clearly considered
refuse under § 2. Thus, plaintiffs’ reading would either
lead to confusion about what constitutes refuse or it
would render superfluous the delineation of “paper,”
“glass,” and other such items in the definition of refuse.
Connecticut Nat. Bank v. Germain, 503 U.S. 249, 253 (1992)
(“[C]ourts should disfavor interpretations of statutes
that render language superfluous.”).
Moreover, the statutory scheme makes sense when the
line “[m]aterial that is intended or collected to be
recycled is not garbage, refuse or ashes” is read in
context of § 5. Municipalities can enact ordinances
that provide for exclusive methods for disposing of
garbage, refuse, and ashes. For example, they can require
that it only be put in a landfill or incinerated. The same
cannot be done with recyclables. They are different. Once
certain categories of disposables are designated as
recyclables, they are not meant to be put into landfills, and
under § 5 a municipality does not have the power to
prescribe an exclusive means for disposing of them.
Rather, Illinois has a complex system under the Illinois
Environmental Protection Agency that deals with recy-
No. 10-2568 9
cling.3 See 415 ILCS 15/1, et seq. (West Supp. 2010); Id. 20/1,
et seq. (West Supp. 2010). Given the subject matter of § 5
and the broad authority of Illinois’s Environmental Pro-
tection Agency over recycling programs, the line
“[m]aterial that is intended or collected to be recycled
is not garbage, refuse or ashes” makes sense in the
context of § 5. Dolan v. Postal Ser., 546 U.S. 481, 486 (2006)
(“Interpretation of a word or phrase depends upon
reading the whole statutory text, considering the pur-
pose and context of the statute.”).
In sum, transposing the language from § 5 to the rest
of the Act does not alleviate ambiguity; instead, it would
either render certain language superfluous or create
anomalies and unexplained distinctions in the way
refuse is defined. In contrast, reading the language
“[m]aterial that is intended or collected to be recycled
is not garbage, refuse or ashes” within the context of the
§ 5—and confined to § 5—Illinois’s statutory scheme
remains clear. Thus, we reject plaintiffs’ argument that
the language in § 5 should be read to modify the rest of
the Act.
3
The precise interplay between the Act and the statutes
governing the Environmental Protection Agency and its
authority over municipalities is beyond the questions
presented here, and nothing in our opinion should be read to
express an opinion on it. The issue has not been briefed.
10 No. 10-2568
B.
The next issue is whether the state-action doctrine
shields the municipalities from antitrust law when they
create monopolies for the collection and disposition of
garbage, refuse, and ashes under § 1. We look to the
statute and ask two questions: first, whether it
authorizes the challenged conduct; second, whether the
anti-competitive effects are a foreseeable result of the
authorization. LaSalle Nat. Bank, 777 F.2d at 381. If the
answers to both questions are yes, then the state
intended the municipalities’ “action to be immune from
antitrust challenge.” Unity Ventures v. Cty. of Lake, 841
F.2d 770, 777 (7th Cir. 1988).
Section 1 authorizes municipalities to contract for the
collection and disposition of garbage, refuse, and ashes.
The remaining question is whether the state authorized
these contracts under a policy “ ‘to displace competition
with regulation or monopoly public service.’ ” Town of
Hallie, 471 U.S. at 39 (quoting Lafayette v. La. Power & Light
Co., 435 U.S. 389, 413 (1978)). In this context, legislatures
aren’t required to articulate how competition will
be displaced. Id. at 42-43. All that matters is whether
“the anti-competitive effects would logically result
from the authority to regulate.” Campbell v. City of Chicago,
823 F.2d 1182, 1184 (7th Cir. 1987).
Waste and its regulation, like sewer services, remain
a traditional area of local concern. Consumers Co. v. City
of Chicago, 313 Ill. 408, 413-14 (1924). Often municipalities
use a single hauler for the collection of trash. Id. at
413. In the context of municipal powers, it is generally
understood that the authority to contract contemplates
No. 10-2568 11
the power to create exclusive contracts. Southern Dis-
posal, Inc. v. Tex. Waste Mgmt., 161 F.3d 1259, 1263 (10th Cir.
1998) (noting “although the enabling statute does not
explicitly authorize exclusive contracts, such agree-
ments are ‘a foreseeable result’ of the general statutory
authorization to contract”); LaSalle Nat. Bank, 777 F.2d at
381-82 (finding the statute authorized exclusive con-
tracts when it provided that the counties “may enter into
and perform contracts . . . with any municipal[ity]”). Thus,
when the legislature provides that municipalities may
contract for the collection and disposition of trash,
those contracts will often be exclusive, a monopoly will
be created, and anti-competitive effects will necessarily
follow. See Springs Ambulance Serv., Inc. v. City of Rancho,
745 F.2d 1270, 1273 (9th Cir. 1984); Tal v. Hogan, 453
F.3d 1244, 1259 (10th Cir. 2006) (authority to make con-
tracts has foreseeable anti-competitive effect). There-
fore, we hold that the anti-competitive effects are a fore-
seeable result of Illinois’s authorization for municipal-
ities to make contracts for the collection and disposition
of garbage, refuse, and ashes. Accordingly, the state-
action doctrine applies.
III.
In sum, we reject plaintiffs’ arguments that § 5 controls
the Illinois municipalities’ power to contract for the
collection and disposition of garbage, refuse, and ashes.
We also reject plaintiffs’ argument that the same section
circumscribes the definitions of “garbage, refuse,
and ashes” as those terms are used in § 1 and § 2.
12 No. 10-2568
Further, we find that the state-action doctrine applies to
the municipalities’ power to make exclusive contracts
for the collection and disposition of garbage, refuse, and
ashes. Therefore, the judgment of the district court
is A FFIRMED.
3-14-11