WASTE MANAGEMENT OF THE DESERT INC v. PALM SPRINGS RECYCLING CENTER INC (1992)

OPINION

INTRODUCTION

Palm Springs Recycling Center, Inc. (defendant) has appealed from a judgment in favor of the City of Rancho Mirage (City) and Waste Management of the Desert, Inc. (Waste Management) (collectively plaintiffs), which judgment, in part, permanently enjoins defendant from engaging in any of the following acts:

(1) placing or maintaining bins or other collection receptacles within City for the purpose of collecting recyclable materials;

(2) collecting recyclable materials within City or removing recyclable materials from City;  and

(3) unlawfully and wrongfully interfering in any other way with the exclusive franchise agreement between Waste Management and City (the Agreement).

Defendant named plaintiffs as cross-defendants in a cross-complaint in which defendant sought (1) an injunction to enjoin Waste Management from providing recycling services to residents of City at less than cost and to enjoin City from enforcing or implementing chapter No. 8.12 of the City's Code ¹ and the Agreement as they related to recycling and recyclable materials;  (2) judicial declarations that the City's enforcement of the Ordinance constitutes a taking of defendant's property without just compensation, and that the Agreement was void and unenforceable;  and (3) a writ of mandate to compel City to refrain from enforcing the Ordinance.   Defendant also requests attorneys' fees in its cross-complaint pursuant to Business and Professions Code section 16750 and under the private attorney general theory pursuant to Code of Civil Procedure section 1021.5.   In the same judgment, the trial court also granted judgment in favor of plaintiffs as cross-defendants.²

In its briefs, defendant urges that (1) state statutory law does not authorize City to enforce the Ordinance which, through City's interpretation of the Ordinance, excludes defendant from the business of purchasing recyclable materials;  (2) City's entry into the Agreement is an arbitrary and unreasonable exercise of City's general police powers;  (3) the terms and implementation of the Agreement and City's enforcement of the Ordinance against defendant's recycling activities effect a condemnation of defendant's property without just compensation;  (4) the Agreement is void and unenforceable under California's Unfair Practices Act;  and (5) by entering into the Agreement, City and Waste Management have created an unlawful combination to prevent competition and have violated federal and state statutory law and common law antitrust principles relating to unfair trade and business practices, illegal restraint on trade, and certain type monopolies.   Defendant asks that we reverse the judgment in its entirety, including that portion in favor of plaintiffs on the causes of action contained in defendant's cross-complaint, which causes of action defendant contends involve only questions of law.³

FACTS

On March 15, 1990, City and Waste Management entered into the Agreement, which provides for the collection and disposal of residential and commercial refuse within the corporate limits of City.  (Agreement, art. II, § 2.01.)

The Agreement consists of two parts, a “Refuse Collection Agreement” and a “Recycling Agreement.”   These two Agreements make a clear distinction between “solid municipal wastes” on the one hand (see Refuse Collection Agreement, art. XX, § 20.01) and “curbside recyclable materials” and “commercial recyclable materials” which have been separated or segregated from “the usual and customary types of household and commercial garbage, trash and refuse.”  (Cf., Refuse Collection Agreement, art. XX, § 20.01 with Recycling Agreement, § 2, subds. (A)(1), (A)(2), (C)(1), (C)(2).)   The Refuse Collection Agreement provides, among other things, that Waste Management is to collect and dispose of residential and commercial refuse within City's boundaries, and that it has the exclusive right and privilege to collect, receive, transport, segregate, recycle and dispose of such refuse, and to charge the fee then in effect for such services.

The Recycling Agreement provides, among other things, that Waste Management must collect and remove all recyclable materials which are segregated and placed in separate recycling containers, the source of which are commercial establishments, that as compensation for providing recycling services at no additional cost to City and its residents, Waste Management is authorized to keep all revenue from the sale of recyclable materials, except that if the recycling program becomes self-sufficient, Waste Management shall split any revenue, in excess of the costs, with City, on a 50–50 basis, and that as to commercial customers, Waste Management is required to credit back to each such customer a fixed percentage of the revenue received by Waste Management from the sale of recyclable materials collected from that business.   These percentages vary from 25 to 33 percent, depending upon the type of recyclable material involved.

Under the Agreement, Waste Management is given the exclusive right “to collect, receive, transport, segregate, recycle and dispose of any and all refuse and bulky items generated by or within the City or under its jurisdiction, and to charge the fee then in effect for such services” (Refuse Collection Agreement, art. XX, § 20.02, subd. 2) and is given identical exclusive rights as to recyclable materials.  (Recycling Agreement, § 1.)

On May 20, 1991, City and Waste Management filed a complaint for injunctive relief against defendant.   The complaint alleges the existence of, and incorporates by reference, the Agreement, and further alleges that City has adopted the Ordinance.

The complaint then alleges that “8. Beginning sometime in 1990 and thereafter, [defendant had] been sending trucks into [City] on a regular basis to collect recyclable material from large commercial customers in violation of the rights of Plaintiffs under the exclusive franchise agreement and in violation of Rancho Mirage Ordinance No. 8.12.010.

“9. Plaintiffs are informed and believe and based thereon allege that [defendant is] continuing to actively solicit new customers in the City of Rancho Mirage in violation of the rights of Plaintiffs, and unless enjoined and restrained, ․ will continue [its] solicitation of customers and will accelerate [its] efforts in this regard.

“10. On March 20, 1991, and on other occasions, Plaintiffs made written demands upon [defendant] to cease and desist from [its] unlawful activities and any further interference with Plaintiffs' rights under the exclusive franchise agreement.  [Defendant has] failed and refused to comply with Plaintiffs' demands.

“11. At all times herein mentioned, [defendant has] been fully informed of Plaintiffs' contractual rights under the exclusive franchise agreement and [has] had full knowledge of Rancho Mirage Municipal Ordinance No. 8.12.010.   Despite this knowledge, [defendant has] wilfully interfered with Plaintiffs' contractual rights and [has] wilfully violated Ordinance No. 8.12.010.

“12. [Defendant's] wrongful conduct, unless and until enjoined and restrained by order of this Court, will cause irreparable injury to Plaintiffs in that, among other things, Plaintiff Waste Management will be deprived of its exclusive contractual rights, it will lose customers and revenues to which it is legally entitled, the ability of Plaintiff Waste Management to perform its contractual obligations will be impaired, the ability of Plaintiff Rancho Mirage to meet its obligations under state law will be impaired, and the rights of the City of Rancho Mirage and its residents to receive the benefits of its contract with Plaintiff Waste Management will be jeopardized.”

Defendant answered the complaint, admitting that it had been sending trucks into City on a regular basis to collect recyclable materials from commercial customers, and that it was continuing to solicit new customers within City's boundaries.   It denied engaging in illegal activities, and denied interfering with plaintiffs' rights under the Agreement.   It asserted numerous affirmative defenses, including that (1) City had acted in excess of its police power by enacting the Ordinance and by entering into the Agreement;  (2) City was preempted by overriding state policy from enforcing the Ordinance or entering into the Agreement;  (3) the Agreement was illegal pursuant to Business and Professions Code sections 16600 et seq. and 17000 et seq.;  (4) the Ordinance and the Agreement, as interpreted and applied, constituted an invalid taking of property in violation of the Fifth Amendment of the United States Constitution;  and (5) the Agreement was void and against public policy as a combination or agreement in restraint of trade.

Defendant also cross-complained against plaintiffs, asserting basically the same allegations stated in its affirmative defenses to the complaint and seeking the relief noted in the Introduction to this opinion.

Plaintiffs answered the cross-complaint, and alleged the following affirmative defenses:  (1) that the cross-complaint failed to state facts sufficient to state a cause of action, under which affirmative defense plaintiffs asserted:  (a) the Ordinance and Agreement were authorized by the California Integrated Waste Management Act of 1989 (Act), Public Resources Code, section 40000 et seq.⁴ and that execution of the Agreement and enforcement of the Ordinance against defendant were valid exercises of City's police power;  and (b) City was entitled to certain exemptions and immunities as to the allegations that City violated certain federal or state statutes or common law prohibitions against unlawful business practices, illegal restraint on trade, unfair trade practices and formation of illegal monopolies or combinations to injure competition;  (2) the cross-complaint was barred by the statute of limitations;  and (3) the cross-complaint was barred by the doctrine of laches.

After reading the parties' points and authorities, taking judicial notice of the materials of which it was requested to take such notice, conducting a hearing and listening to oral argument, the trial court granted plaintiffs' application for a preliminary injunction.   The parties having previously stipulated that the court's determination of such application should be deemed the final determination in the action for the purpose of entering a final judgment, the court then entered judgment in favor of plaintiffs both on their complaint and on defendant's cross-complaint.   Notably, although defendant had asked for declaratory relief in the second, fourth and fifth causes of action of the cross-complaint, the judgment does not include any judicial declaration of the rights and duties of the parties.   Further, the trial court issued no statement of decision, none of the parties having requested such.

DISCUSSION

A. Introduction

The three key premises upon which City bases its assertion that it may validly prevent defendant from engaging in such activities are that (1) solid waste, as defined in section 40191, includes any waste material capable of being recycled;  (2) the ownership of recyclable materials is irrelevant because City has the right to control all solid waste handling within its boundaries, which handling includes the processing of solid wastes, and which processing is defined as including the recycling of solid waste, regardless of private ownership interest in the recyclable components of such waste (§ 40172);  and (3) both City's general police powers and the Act allow it to regulate the collection, transportation and disposal of solid waste within it boundaries, even to the extent of granting an exclusive franchise agreement for this purpose and interpreting and applying existing legislation so as to make it illegal for anyone, other than the exclusive franchisee, to engage in such activities within its boundaries.

Defendant contends that (1) under a proper interpretation of the Act, the Agreement and the Ordinance, recyclable materials are not solid waste subject to such control;  (2) the owners of such materials are free to contract with defendant for its pickup and removal;  and (3) the Agreement and the Ordinance, as interpreted by City and Waste Management and enforced against defendant, violate various laws related to free enterprise.

We conclude that until ownership of the recyclable materials has been surrendered to City or its authorized recycling agent (agent) at a designated recycling collection location (collection location), the owner of such material may retain it or dispose of it as he, she or it chooses, e.g., by donating or selling it to whomever he, she or it wishes, including a non-City-franchised private recycling enterprise.

We further conclude that although City, in the exercise of its police powers, may regulate the collection and distribution of solid waste, including discarded recyclables, so as to protect the public's health, safety, and welfare, neither the health and safety concerns nor the economic concerns expressed by City as the rationale for its entry into the Agreement and for its enforcement of the Ordinance against defendant can justify City's interpretation of the Ordinance as totally prohibiting the operation of non-City-franchised private and otherwise lawful recyclable collection businesses in the City, and in effect also prohibiting those businesses operating within its boundaries from selling their recyclable materials to such recycling enterprises.

Because we hold that the Ordinance may not be interpreted to apply to the collection and removal of nondiscarded recyclable materials, which have not become garbage, rubbish or refuse, and because the Agreement may not be legally interpreted to give Waste Management the exclusive right to collect and remove such recyclables, the ownership of which has not been surrendered by the owners of the recyclable materials to City's agent, defendant's declaratory relief causes of action in its cross-complaint alleging illegal restraint of trade, unlawful monopoly, unfair business practices and City's taking of defendant's property without just compensation must fail.

B. Plaintiffs' Complaint

1. The City's Interpretation of the Provisions of City's Ordinance, and City's Enforcement of The Ordinance As So Interpreted, Are Not Authorized By the Act

 The Act was added to the Public Resources Code in 1989, and became effective January 1, 1990.  (Stats.1989, ch. 1095, § 22 and Stats.1989, ch. 1092, § 2.)   One of the legislative concerns which prompted its adoption was, and is, that “Over 90 percent of California's solid waste currently is disposed of in landfills, some of which pose a threat to groundwater, air quality, and public health.”  (§ 40000, subd. (b).)  The purpose of the Act “is to reduce, recycle, and reuse solid waste generated in the state to the maximum extent feasible to conserve water, energy and other natural resources, to protect air and water quality, to improve regulation of existing solid waste landfills, to ensure that new solid waste landfills are environmentally sound, to improve permitting procedures for solid waste management facilities, and to specify the responsibilities of local governments to develop and implement integrated waste management programs.”  (§ 40052.)

The Act specifies that the responsibility for solid waste management is shared between the state and local governments (§ 40001), and that “Each county, city, district or other local governmental agency which provides solid waste handling services shall provide for those services, including, but not limited to, source reduction, recycling, composting activities, and the collection, transfer and disposal of solid waste within or without the territory subject to its solid waste handling jurisdiction.”  (§ 40057.)   Solid waste handling services are to be provided for by one or any combination of the local agency itself, another local agency, or a solid waste enterprise.  (§ 40058.)

The Act also provides that:

“(a) Notwithstanding any other provision of law, each county, city, district, or other local governmental agency may determine all of the following:

“(1) Aspects of solid waste handling which are of local concern, including, but not limited to, frequency of collection, means of collection and transportation, level of services, charges and fees, and nature, location and extent of providing solid waste handling services.

“(2) Whether the services are to be provided by means of nonexclusive franchise, contract, license, permit or otherwise, either with or without competitive bidding, or if, in the opinion of its governing body, the public health, safety, and well-being so require, by partially exclusive or wholly exclusive franchise, contract, license, permit or otherwise, either with or without competitive bidding.   The authority to provide solid waste handling services may be granted under terms and conditions prescribed by the governing body of the local government agency by resolution or ordinance.

“(b) Nothing in this division modifies or abrogates in any manner either of the following:

“(1) Any franchise previously granted or extended by any county or other local governmental agency.

“(2) Any contract, license, or any permit to collect solid waste previously granted or extended by a city, county, or a city and county.”  (§ 40059.)   (Emphasis added.)

“ ‘Recycle’ or ‘recycling’ means the process of collecting, sorting, cleansing, treating, and reconstituting materials that would otherwise become solid waste, and returning them to the economic mainstream in the form of raw material for new, reused or reconstituted products which meet the quality standards necessary to be used in the marketplace․”  (§ 40180, emphasis added.)

“Authorized recycling agent” is defined as “a person that a local governing body or private commercial entity authorizes or contracts with to collect its recyclable waste material.   An authorized recycling agency may be a municipal collection service, private refuse hauler, private recycling enterprise, or private nonprofit corporation or association.”  (§ 40105, emphasis added.)

Section 41951 concerns recyclable materials which are segregated for pickup at a designated collection location:

“Unless otherwise provided by contract, paper, glass, cardboard, plastics, used motor oil, ferrous metal, aluminum, and other waste materials, which have been segregated from other waste materials, and placed at the designated collection location, shall not be removed by anyone other than the authorized recycling agent.”  (Emphasis added.)

“Designated recycling collection location” is defined as “the place where an authorized recycling agent has contracted with either the local governing body or a private entity to pick up recyclable material segregated from other waste material,” and “includes, but is not limited to, ․ the service alley of a commercial enterprise.”  (§ 40120.)

Section 41952 provides that nothing in Chapter 9 of the Act, which chapter defines unlawful acts, “limits the right of any person to donate, sell or otherwise dispose of his or her recyclable materials.”

When the statutory scheme is considered as a whole, it is apparent that City is incorrect in its contention that the Act authorizes it, through its agent, and by the methods provided in section 40059, to act as the exclusive “handler” of all solid waste (which it defines as including undiscarded recyclable materials) within its borders, regardless of private ownership interests in such recyclable materials.

 First, nothing becomes solid waste subject to “handling” by City or its agent until it has been discarded.  (§ 40191.)   Any recyclable which, if discarded, could be considered solid waste, nonetheless, until it has been discarded, belongs to its owner, who may do with it as he, she or it wishes.  (§ 41952.)   The owner of such recyclable may transfer ownership of such recyclable material to City or City's designated franchisee, the intent to so transfer ownership being manifested by placing such recyclable materials at a place where the authorized recycling agent has contracted with the public entity to pick up recyclable materials, including the service alley of a commercial enterprise.   Once such recyclable has been placed at the agreed-upon location, ownership is transferred to the agent and it is illegal for anyone except the local entity or its agent to remove it.

 Notably, the statutory scheme makes it clear that a “private commercial entity” may contract with a person to collect “its recyclable waste material” and that that person then becomes an authorized recycling agent.  (§ 40105)  Such an entity may agree with the agent as to the collection location at which the agent is contractually required to pick up recyclable materials segregated from other waste materials.⁵  (§ 40120)  This obviously presupposes that recycling agents, other than the agent authorized by a city to pick up its recyclable materials, are free to pick up the recyclable materials owned by such entities.

 City nonetheless contends that section 40059 gives it the authority to enter into an exclusive franchise agreement with a private refuse hauler, such as Waste Management, and it additionally contends, through its interpretation of the Act and Ordinance, that it receives further authority to prohibit another private recycling enterprise, such as defendant, from engaging in the business of picking up, or providing bins for the depositing of recyclable materials from commercial customers who wish to sell their recyclable materials to it, rather than participating in City's recyclable collection program.   City reads more into the Act than is there.

Section 40059 gives City the right to determine all “[a]spects of solid waste handling which are of local concern, including, but not limited to, frequency of collection, means of collection and transportation, level of services, charges and fees, and nature, location and extent of providing solid waste handling services,” and “[w]hether the services are to be provided by means of nonexclusive franchise, contract, license, permit or otherwise, either with or without competitive bidding, or if, in the opinion of its governing body, the public health, safety, and well-being so require, by partially exclusive or wholly exclusive franchise, contract, license, permit or otherwise, either with or without competitive bidding.”  (Emphasis added.) ⁶

“Solid waste handling” is defined as “the collection, transportation, storage, transfer, or processing of solid wastes.”  (§ 40195.)  “Solid waste” is defined as “all putrescible and nonputrescible solid, semisolid, and liquid wastes, including garbage, trash, refuse, paper, rubbish, ashes, industrial wastes, demolition and construction wastes, abandoned vehicles and parts thereof, discarded home and industrial appliances, dewatered, treated, or chemically fixed sewage sludge which is not hazardous waste, manure, vegetable or animal solid and semisolid wastes, and other discarded solid and semisolid wastes.”  (§ 40191, subd. (a), emphasis added.) ⁷

It is clear from the above definition of solid waste, particularly when such definition is considered in light of the fact that individuals retain ownership interests in their recyclable materials (§ 41952), that only discarded waste materials become solid waste subject to “handling” as defined by section 40059.   Therefore, section 40059 only authorizes public entities to determine the aspects of solid waste handling services, and does not authorize City to determine with whom businesses may contract for the sale and pickup of their undiscarded recyclable materials.   City's argument that preventing it from regulating and controlling by an exclusive franchise the collection, removal and sale of all recyclable materials within its boundaries would interfere with its ability to comply with the state-imposed mandate of reducing and reporting the amount of solid waste dumped into landfills is not persuasive when applied to undiscarded recyclable materials, for until such materials are discarded, they do not become part of the flow of solid waste headed for landfills which City is required by the Act to reduce and report.   Further, nothing in this opinion would prevent City from imposing reporting requirements on recycling businesses such as defendant so as to document the amount of recyclable materials being collected within City's boundaries, in the event that such figures relate to City's duties under the Act.

2. The City's Entry into the Agreement and the Enforcement of City's Ordinance as to Defendant, Based on the City's Interpretation of the Act, Agreement and Ordinance Are Not a Valid Exercise of City's General Police Power

City also contends that its general police power allows it to regulate the business of recycling within its boundaries by entering into the Agreement with Waste Management, which grants Waste Management an exclusive franchise to purchase, collect, and transport recyclables to the exclusion of all other private recycling enterprises such as defendant.   City points to (1) economic reasons such as the exclusion of other recycling enterprises is necessary in order to make City's own solid waste program economically feasible and to enable it to comply with the Act by increasing recycling, and (2) general health and safety reasons, such as the need to make sure such enterprises carry worker's compensation and liability insurance and employ persons identifiable because of their uniforms.   Amici curiae for City also contend that regardless of private ownership interests in recyclable material, “[o]nce a business or individual sets its recyclable materials out for collection or contracts with a recycling collector for this purpose, the recyclables become subject to a city's regulations in order to protect public health and welfare.”  (Emphasis added.)

There is, however, a basic restriction on the City's exercise of its police power:  “ ‘To justify the State in ․ interposing its authority in behalf of the public, it must appear, first, that the interests of the public ․ require such interference;  and, second, that the means are reasonably necessary for the accomplishment of the purpose, and not unduly oppressive upon individuals.’ ”  (Goldblatt v. Town of Hempstead (1962) 369 U.S. 590, 594–595, 82 S.Ct. 987, 990, 8 L.Ed.2d 130, 134, quoting Lawton v. Steele (1894) 152 U.S. 133, 137, 14 S.Ct. 499, 501, 38 L.Ed. 385, 388.)   This restriction on the exercise of police power is particularly relevant in determining whether regulation or prohibition (the two most common means of exercising police power) is the appropriate exercise of police power.

Here, City uses its police power to act in the interests of the public health, safety and welfare to justify interpreting the Agreement, the Act and Ordinance to apply to recyclable materials which, as discussed above, are not included in the definition of solid waste.   This use of the police power results in totally prohibiting private recycling enterprises, other than Waste Management, from engaging in the business of collecting and transporting recyclable materials within City's borders.  “However laudable its purpose, the exercise of police power may not extend to total prohibition of activity not otherwise unlawful.  [Citations.]  Courts are especially sensitive to infringements upon constitutional rights under the guise of exercise of police power.  [Citation.]”  (People ex rel. Younger v. County of El Dorado (1979) 96 Cal.App.3d 403, 406, 157 Cal.Rptr. 815.) ⁸  “The police power ‘cannot extend beyond the necessities of the case and be made a cloak to destroy constitutional rights as to the inviolateness of private property.’   [Citation.]”  (Scrutton v. County of Sacramento (1969) 275 Cal.App.2d 412, 421, 79 Cal.Rptr. 872.)

For example, in LaFranchi v. City of Santa Rosa (1937) 8 Cal.2d 331, 65 P.2d 1301, the City of Santa Rosa, pursuant to its police power, adopted an ordinance which made it unlawful for any person to sell, offer for sale, distribute or have in his or her possession for sale or distribution within the city's limits, any milk intended for human consumption which had been pasteurized outside the city's corporate limits.   LaFranchi, a dairyman who pasteurized his milk at a plant approximately five miles outside the city's limits, sued to test the validity of the ordinance.

The California Supreme Court held that the ordinance was void because it conflicted with state law on the sale of milk which had been pasteurized and graded in accordance with state law.   It also held that the ordinance was void because its purpose was to exclude milk which had not been pasteurized within the city's limits from the local market, i.e., its purpose was to erect a tariff barrier against such milk, and as such the ordinance was not reasonably related to a proper legislative objective.  (Id. at p. 336, 65 P.2d 1301.)   A city may not take the position that there are a sufficient number of businesses dealing with a particular good or service and exclude all others;  “[s]uch a position is unreasonable, ․ arbitrary, capricious and discriminatory.   It unlawfully curtails [the excluded businesses'] common law right to engage in a lawful business [so long as they have] fully complied with the requirements of the state and city.   This the city cannot lawfully do.”   (Id. at p. 338, 65 P.2d 1301, quoting Sheffield Farms Co. v. Seaman (1935) 114 N.J.L. 455, 177 A. 372.)

The ordinance held invalid in LaFranchi had no reasonable relation to any proper subject of the police power, given the fact that the conditions under which the excluded milk was treated, and the quality of the milk itself, were already regulated by state law.   However, even when the matter affected by city ordinance is not already being regulated by the state, an ordinance which prohibits a lawful business, rather than merely regulating it, is an invalid exercise of the police power.

For example, in People ex rel. Younger v. County of El Dorado, supra, 96 Cal.App.3d 403, 157 Cal.Rptr. 815, the County of El Dorado adopted an ordinance making it unlawful to float, swim or travel, by artificial means, on a 20–mile section of the South Fork of the American River.   The State and representatives of commercial rafting organizations sued for a declaration that the ordinance was invalid.   The trial court found that the ordinance established a special-use area and sanitation and pollution control pursuant to Harbors and Navigation Code section 660, and entered judgment for the county.   On appeal by plaintiffs, the county claimed the ordinance was valid as a reasonable, nondiscriminatory exercise of its police powers.   The appellate court reversed and held that the ordinance, on its face, was an absolute prohibition against boating by the public.  “While obviously effective to eliminate pollution and sanitation problems, the ordinance goes too far.   The county contends use prohibition is the only way to eliminate pollution and sanitation problems.   But the logical extension of this hypothesis is the prohibition of all industry, agriculture, and even human habitation, the effect of which would be to eliminate pollution entirely.   The public has a right to use the river;  it has no right to pollute the river.   Reasonable regulation is in order;  use prohibition is not.   The problems of pollution and sanitation in our increasingly crowded state are difficult and complex, calling for imagination and sophisticated solutions.   But total prohibition of access is an impermissible solution.   The ordinance is invalid because it denies the constitutional right of the public to use of and access to a navigable stream.”  (Id. at p. 407, 157 Cal.Rptr. 815.)

 Here, City's entry into the Agreement, its interpretation of the Act, Agreement and Ordinance and its enforcement of the Ordinance as so interpreted infringes on distinct constitutional property rights:  the right of individuals and entities to labor in or earn a livelihood from any legitimate field of industry without unreasonable interference (Whitcomb v. Emerson (1941) 46 Cal.App.2d 263, 273–274, 115 P.2d 892), and the right to acquire, possess and protect property (Cal. Const., art. 1, § 1), which right includes all rights incidental thereto, including the right to dispose of the property in such innocent manner as the owner may choose.  (People v. Davenport (1937) 21 Cal.App.2d 292, 298, 69 P.2d 862.)   Thus, if it is lawful for a business to segregate its recyclable materials and dispose of them by sale or otherwise, it follows that it is lawful for a businessperson to purchase such materials, and to collect and convey them, subject only to the right of the state (or municipality) to impose such reasonable regulations on the acts of selling, purchasing, collection and conveyance as will protect the public health, safety, morals and general welfare.  (Whitcomb v. Emerson, supra, 46 Cal.App.2d 263, 275, 115 P.2d 892.)

Just as in People ex rel. Younger v. County of El Dorado, supra, 96 Cal.App.3d 403, 157 Cal.Rptr. 815, the City's interpretation and enforcement of the Act, Agreement and Ordinance undoubtedly are effective in helping City implement a comprehensive recycling program within its limits, but it completely precludes persons, other than Waste Management, from conducting a lawful recycling business in City.

Moreover, if such interpretation and enforcement were upheld, it would make it extremely inconvenient for the owners of recyclable materials located within City's boundaries to sell such materials to private enterprises other than Waste Management, given that such enterprises are forbidden from either picking up such materials within City's boundaries, or operating a center within its limits where such recyclable materials could be delivered.   Rather than go to the trouble of transporting such materials out of the City to sell them, the owners very well might decide it would be more expedient to simply put such materials in the service alley for pickup and forego seeking any monetary compensation for the materials, or to simply accept the percentage-of-value credit provided for in the Agreement against their trash bill.   This, in turn, as City admits, results in an economic benefit to City, in the form of the turnover of such valuable materials to City and/or City's agent, which eventually may result in the City splitting with Waste Management the profits from the sale of recycled materials on a 50/50 basis and, which therefore, may make City's solid waste handling program more economically feasible.

 It is clear that neither the state nor its subdivisions may use their police powers for the purpose of obtaining an economic advantage at the expense of private property ownership rights, or of one's right to engage in lawful employment because such rights may not be abrogated or imperiled by reason of public economy or convenience.   (Whitcomb v. Emerson, supra, 46 Cal.App.2d 263, 275, 115 P.2d 892, see also LaFranchi v. City of Santa Rosa, supra, 8 Cal.2d 331, 337–338, 65 P.2d 1301.)   To repeat, reasonable police power regulation is available to deal with any public health and safety concerns legitimately implicated by the operation of private enterprises involved in buying, collecting and transporting recyclable materials, but a total prohibition on such enterprises, save for City's lone franchisee, is constitutionally impermissible.   The enforcement of the ordinance in question as interpreted by City is invalid because it denies such enterprises the fundamental right to engage in a lawful business endeavor and unduly burdens the fundamental property right of the owners of recyclable material to dispose of their recyclable materials for monetary compensation or charitable purposes without any showing of any overriding public health, safety or welfare interest.⁹

We thus conclude that City's interpretation and its enforcement of the Ordinance is legally incorrect and that the trial court erred in granting judgment for plaintiffs, presumably based on its conclusion that City's interpretation and enforcement were correct.

 We further hold, based on our foregoing analysis and conclusion, that defendant has not and will not violate the Act or Ordinance by the purchase, collection and transportation of recyclable materials from commercial enterprises within the City.

 Further, consistent with our analysis, such conduct by defendant is not and will not be an unlawful business practice in violation of Business and Professions Code section 17200 et seq.   Nor will it constitute an interference with either City's or Waste Management's contractual rights as parties to the Agreement and particularly the recycling portion thereof, insofar as such conduct relates to recyclable materials which have not become solid waste.

We shall therefore reverse the trial court's judgment for a permanent injunction in favor of plaintiffs against defendant.

C. Defendant's Cross–Complaint**

DISPOSITION

1. As to the complaint, the judgment is reversed.

2. As to the cross-complaint:

(1) Regarding the first, fourth and fifth causes of action naming Waste Management as cross-defendant, the judgment is affirmed as to the fourth and fifth causes of action and deemed moot as to the first cause of action.

(2) Regarding the second, fourth and fifth causes of action naming City as cross-defendant, the judgment is affirmed.

(3) Regarding the first and third causes of action naming City as a cross-defendant, the judgment is reversed to the extent it adjudges defendant not being entitled to an injunction and writ of mandate enjoining City from attempting to enforce the Ordinance regarding defendant's providing recycling services to commercial businesses in the City.

This matter is remanded to the trial court with directions that it (1) order a permanent injunction and/or writ of mandate in favor of defendant prohibiting the City from enforcing the Ordinance either by criminal prosecution or injunctive relief against defendant engaging in, within City's boundaries, the business of collecting, receiving, transporting, segregating, recycling and disposing of recyclable materials acquired from commercial establishments, which recyclable materials have not been turned over to City or its agent as discussed in this opinion;  and (2) conducting a proceeding pursuant to Code of Civil Procedure section 1021.5 to determine if defendant is entitled to attorney fees and if so, the amount of such fees.

Defendant shall recover costs on appeal.

FOOTNOTES

1.   Section 8.12.010 of chapter 8.12 of the City's Code (hereinafter referred to for convenience, but not as an accurate legal designation, “the Ordinance”) provides:“8.12.010 By city or agent only.   All garbage and rubbish accumulated in the city shall be collected, conveyed and disposed of by the city or by any person with whom the city has a contract for the collection, removal and disposal of ashes, waste matter, garbage and rubbish.   Except as otherwise provided in this chapter, no person, other than the city or its contract agent, shall collect, convey over any of the streets or alleys of the city, or dispose of any refuse accumulated in the city.”

2.   A final judgment was entered after the parties stipulated that the court's ruling on the plaintiffs' application for a preliminary injunction could become its decision as to the prayer for a permanent injunction, and after the parties decided to submit the matter, without a trial, as to all causes of action alleged in both the complaint and the cross-complaint because of their position that all the issues raised by the pleadings were legal issues.

3.   At the outset, we state that this opinion and resulting disposition is limited to the various contentions by defendant, City and Waste Management insofar as they concern defendant's business of collecting, removing and disposing of recyclable materials, which it acquires from commercial establishments.   Although defendant in its pleadings generally alleged that it was “engaged in the purchase, sale and transportation of recyclable materials for residents and various businesses in Rancho Mirage ․,” the evidence presented related only to its activities in obtaining such materials from businesses;  not occupants of single family or multiresidential buildings.   Defendant also confirmed this during oral argument on the instant appeal.We do further wish to make unequivocally clear that this opinion, as so limited, is not intended to address or constitute in any way a viewpoint or determination of any of the issues in this appeal as they may relate to any business operation which involves the collecting, receiving, transporting, segregating, recycling and disposing of recyclable materials obtained from occupants of single family or multifamily residential buildings.

4.   All further statutory code section references will be to the Public Resources Code unless otherwise noted.

5.   “Segregated from other waste material” is defined in section 40190 and relates to the methods of separating recyclables from “other waste material.”

6.   It is noted that the record does not show any formal statement by the city council of City that in its opinion the public health, safety and well-being required it to enter into an exclusive franchise agreement in order to provide waste handling services.   None of the parties raised as an issue on appeal that such an opinion was necessary to the validity of the Agreement;  we therefore do not address this issue.   We will, however, discuss later whether the City had sufficient grounds to support its argument that the Agreement or Ordinance, as interpreted by it, and applied to defendant was a proper exercise of the police power in the interest of the public health, safety and welfare.

7.   Subdivisions (b) and (c) of section 40191 except hazardous waste, low-level radioactive waste, and medical waste from the general definitions of solid waste.

8.   Amici curiae for City contend that no fundamental interest is implicated by the Ordinance here.   As discussed in more detail below, the Ordinance, as interpreted by City and enforced as so interpreted, does interfere with fundamental rights.

9.   The police powers may sometimes justify the entire prohibition of a legitimate occupation.   For example, in Daniel v. Family Security Life Ins. Co. (1949) 336 U.S. 220, 69 S.Ct. 550, 93 L.Ed. 632, the United States Supreme Court upheld a South Carolina statute which made it illegal to sell funeral insurance.   However, the entire prohibition of a type of occupation is different than the creation of a monopoly, which involves not a prohibition on the occupation itself, but a limitation on who may engage in that occupation, which limitation is not based on general regulations related to skill or care, but on economic considerations.   A state-sanctioned monopoly may be allowed in the case of a business charged with a public use, such as a public utility.  (New State Ice Co. v. Liebmann (1932) 285 U.S. 262, 52 S.Ct. 371, 76 L.Ed. 747.)   However, there is no showing in the record here that the recycling business is invested with such a public use that a state-sanctioned monopoly is valid;  the fact that the Act contemplates that owners of recyclable materials may contract with private recycling businesses indicates that the Legislature did not consider the recycling business to be so invested with a public interest as to require this sort of treatment.

FOOTNOTE.   See footnote *, ante.

TIMLIN, Associate Justice.

DABNEY, Acting P.J., and HOLLENHORST, J., concur.