Jefferson Parish Consolidated Garbage District No. 1 et al v. Waste Management of Louisiana, L.L.C. et al

Filing 242

ORDER denying 207 Motion for Leave to File Third Amended and Supplemental Counterclaim. Signed by Magistrate Judge Karen Wells Roby on 11/16/2011. (clm, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
JEFFERSON PARISH CONSOLIDATED
GARBAGE DISTRICT NO. 1, ET AL.

CIVIL ACTION

VERSUS

NO: 09-6270

WASTE MANAGEMENT OF LOUISIANA,
L.L.C., ET AL.

SECTION: “B” (4)

ORDER
Before the Court is a Motion for Leave to File Third Amended and Supplemental
Counterclaim (R. Doc. 207), filed by Defendant Waste Management of Louisiana, L.L.C. (“Waste
Management”) seeking an Order from this Court granting it leave to file a Third Amended and
Supplemental Counterclaim (“Third Counterclaim”). Plaintiffs Jefferson Parish Consolidated
Garbage District No. 1, et al. (collectively, “Plaintiffs”), opposes the motion. ( R. Doc. 218) The
motion was heard with oral argument on September 28, 2011.
I.

Background
This action arises out of the alleged breach of various contracts pertaining to waste disposal

in Jefferson Parish, Louisiana. Plaintiffs filed this action seeking a declaratory judgment that their
landfill contract with Waste Management be terminated without penalty or expense. (R. Doc. 1-2,
¶¶ 15, 48.) Plaintiffs further seek liquidated damages pursuant to the contract, and a declaratory
judgment relating to certain rights and obligations under the contract. (R. Doc. 1-2, ¶ 48.)
On June 29, 2010, Waste Management filed a counterclaim against Plaintiff Jefferson Parish

Council
Council (“Jefferson Parish Counsel”)in its capacity as governing authority of the Jefferson Parish
Consolidated Garbage District No. 1 for alleged breaches of the parties’ Collection Contract and
Landfill Contract. (R. Doc. 74.) Waste Management seeks damages plus interest and attorney’s fees.
(R. Doc. 74, Prayer.)1
According to Waste Management’s First Amended and Supplemental Counterclaim, in

Council
September 2008, Jefferson Parish Counsel issued Request for Proposal (“RFP”) Number 176 (“RFP
176”). (R. Doc. 128, ¶ 31.) Waste Management alleges that the original purpose of the RFP was to
solicit bids to reduce landfill waste and promote recycling. (R. Doc. 128, ¶¶ 24-25.) Waste
Management alleges, however, that the RFP was improperly revised by Jefferson Parish President,
Aaron Broussard, and Chief Administrative Officer, Tim Whitmer, and worded “so broadly that it
solicited proposals to divert any type of waste in any quantity from the Parish landfill.” (R. Doc. 128,
¶¶ 26, 31.) Waste Management further alleges that the process of obtaining bids was improperly
rushed so as to permit River Birch, Inc. (“River Burch”) to obtain the contract. (R. Doc. 128, ¶¶ 32,
51.) Waste Management further alleges that on December 9, 2009, River Birch submitted its
response to RFP No. 176, which offered a contract which would result in the diversion of 100% of
the waste from Jefferson Parish Sanitary Landfill to River Birch Landfill, conditioned on Jefferson
Parish permanently closing its landfill. (R. Doc. 128, ¶ 36.) The proposed contract also required that
the Parish prematurely cancel the contract with Waste Management. Id. As a result, Waste
Management filed its First Amended and Supplemental Counterclaim seeking a declaratory judgment
that Jefferson Parish Resolution No. 111491, which approved a contract proposal by River Birch, and

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On June 29, 2010, Waste Management filed a motion for leave to file a First Amended and Supplemental
Counterclaim, which added a seventh counterclaim against Plaintiff Jefferson Parish Council. (R. Doc. 104.) The
motion was granted, and Waste Management’s First Amended and Supplemental Counterclaim was entered into the
record on February 23, 2011. (R. Docs. 127-128.)

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Jefferson Parish Resolution No. 12564, and the actual contract between Jefferson Parish and River
Birch, be invalided. (R. Doc. 128, Prayer.)
As to the instant motion, Waste Management alleges that on February 25, 2011, the Jefferson

Council
Parish Counsel issued RFP Number 0227 (“RFP 0227”), which solicited proposals for operation of
the Jefferson Parish Landfill following the natural expiration of the Landfill Contract with Waste
Management. Waste Management alleges that this latest effort is another attempt to improperly oust
it as the operator of the Jefferson Parish Landfill. Waste Management further alleges that the
Jefferson Parish Council improperly conducted the proposal approval process and violated its own
laws and procedures.
As such, Waste Management seeks injunctive relief to prevent the continued negotiation of
the contract for which it was not selected, even though it allegedly received the highest score of all
the proposals. Waste Management characterizes the ultimate selection of a different company, IESI
Corporation (“IESI”), as illegal, arbitrary, and capricious. It therefore seeks an order from this Court
protecting its interests against the actions of the Jefferson Parish Council.
II.

Standard of Review
Federal Rule of Civil Procedure (“Rule”) 15(a)(2) governs the amendment of pleadings and

provides that a “court should freely give leave when justice so requires.” The Rules “reject the
approach that pleading is a game of skill in which one misstep by counsel may be decisive to the
outcome and accept the principle that the purpose of pleading is to facilitate a proper decision on the
merits.” Conley v. Gibson, 355 U.S. 41, 48 (1957).
Thus, Rule 15(a) evinces a liberal amendment policy and a motion to amend should not be
denied absent a substantial reason to do so. See Jacobsen v. Osborne, 133 F.3d 315, 318 (5th Cir.

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1998). Furthermore, “this ‘policy’ is strongest when the motion challenged is the first motion to
amend.” Thompson v. New York Life Ins. Co., 644 F.2d 439, 444 (5th Cir. 1981). Permission may
be granted even though the original pleading is defective in its statement of a claim for relief or
defense. Id.
However, leave to amend is by no means automatic. Addington v Farmer’s Elevator Mut.
Ins. Co., 650 F.2d 663, 666 (5th Cir. 1981). The decision to grant or deny a motion for leave to
amend lies within the sound discretion of the trial court. Id. In exercising its discretion, the trial
court may consider such factors as: (1) undue delay, bad faith, or dilatory motive by the movant; (2)
the repeated failure to cure deficiencies by previously allowed amendments; (3) undue prejudice to
the opposing party if the amendment is allowed; and (4) futility of the amendment. Gregory v.
Mitchell, 634 F.2d 199, 203 (5th Cir. 1981).
III.

Analysis
Waste Management contends that despite this ongoing litigation the Jefferson Parish Council
Counsel

continues to attempt to enter into illegal contracts for the provision of waste management services
to its citizens. Particularly, Waste Management seeks leave to file this Third Counterclaim to assert

Council
a claim against the Jefferson Parish Counsel for its decision to prospectively hire IESI, which
allegedly received a lower proposal score than Waste Management.
A.

Timeliness

On June 29, 2011, the parties submitted a proposed joint scheduling order which was granted
by the Court on June 30, 2011. (R. Docs. 183-84.) On July 8, 2011 the presiding Judge set the
deadline for filing counter-claims, amendments and cross claims for September 9, 2011. (R. Doc.
185.) Waste Management filed the instant motion on September 1, 2011, some eight days before the

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deadline to amend pleadings. (R. Doc. 207.)
B.

Undue Delay, Bad Faith or Dilatory Motive

Further, there is no indication that Waste Management has filed the amendment with undue
delay, bad faith, or dilatory motive. The amendment was filed within the time frame permitted by
the presiding Judge. Further, under the Scheduling Order, the discovery deadline is not until January
30, 2012, and the trial is not scheduled until March 19, 2012. Furthermore, there is no indication that
Waste Management has repeatedly failed to cure deficiencies by previously allowed amendments.
This Waste Management’s third attempt to amend its counterclaim. The Court further finds no
indication that prejudice would result if the amendment is allowed.
C.

Futility

In opposition, Plaintiffs contend that the amendment would be futile because the Court lacks
jurisdiction over the claims asserted in the proposed Third Counterclaim. Plaintiffs further contend
that the proposed Third Counterclaim is futile because (1) the claim does not allege diversity
jurisdiction as there is no amount in controversy in the pleading, and (2) there is no federal question
in the proposed Third Counterclaim, thus, the Court lacks jurisdiction over the proposed Third
Counterclaim. Plaintiffs further contend that because the counterclaim is a permissive counterclaim,
it must have its own jurisdictional basis. Finally, Plaintiffs contend that because there is no
connection between RFP 176 and RFP 0277, denial of Waste Management’s motion for leave would
not bar Waste Management’s ability to pursue the proposed claims at a later date.
In support of its motion, Waste Management contends that its claim is not futile because the
Court has subject matter jurisdiction over the proposed Third Counterclaim; Waste Management and
Plaintiffs are citizens from different states and the amount in controversy, if aggregated, would satisfy

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the jurisdictional amount requirement. Waste Management further contends that the value of the
proposed Third Counterclaim is the value of the contract that it was not awarded, which is well in
excess of the jurisdictional requirement.
A permissive counterclaim is one that a defendant “may” assert against a plaintiff that does
not arise out of the transaction or occurrence as plaintiff's claim. Fed.R.Civ.P. 13(b). To determine
whether a claim is a compulsory counterclaim, the Fifth Circuit applies the test articulated in Tank
Insulation Int’l, Inc. v. Insultherm, Inc., 104 F.3d 83(5th Cir.1997) which asks: (1) whether the issues
of fact and law raised by the claim and counterclaim largely are the same; (2) whether res judicata
would bar a subsequent suit on defendant’s claim absent the compulsory counterclaim rule; (3)
whether substantially the same evidence will support or refute plaintiff’s claim and defendant’s
counterclaim; and (4) whether there is any logical relationship between the claim and the
counterclaim. Id. at 85-86 (citing Park Club, Inc. v. Resolution Trust Corp., 967 F.2d 1053, 1058
(5th Cir.1992)). If the answer to any of these four questions is yes, then the counterclaim is
compulsory. Id. at 86.
In considering the Tank Insulation test, the Court finds that the issues raised by the claim and
counterclaim are not largely the same. The original claim was instituted by Plaintiffs against Waste
Management alleging breach of a contract to operate the Jefferson Parish Landfill through the
conclusion of Phase III of the landfill. In contrast, the original counterclaim alleges that the 2009
waste disposal contract as between the Jefferson Parish Council and River Birch was illegal.
Waste Management’s proposed Third Counterclaim seeks an order declaring the Jefferson
Parish Council’s prospective contract with IESI illegal, as the bid process set forth by the Jefferson
Parish Council was not adhered to. Waste Management’s proposed Third Counterclaim further seeks

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to enjoin the continued contract discussions between the Jefferson Parish Council and IESI. None
of the Tank Insulation factors are present in the proposed Third Counterclaim; (1) the issues involve
two separate contracts, (2) res judicata would not bar Waste Management’s proposed Third
Counterclaim because it involves different parties with different issues; and (3) different evidence
would be presented to prove Plaintiffs’ claim and Waste Management’s proposed Third
Counterclaim.
Having determined that Waste Management’s proposed Third Counterclaim is permissive,
the Court must now consider whether there is an independent basis for jurisdiction such that Waste
Management should be permitted to purse a claim against a different company, IESI, concerning
generally the prospective waste management contract.

As Waste Management’s permissive

counterclaim would require an independent basis of subject matter jurisdiction in order to permit
adjudication by the Court absent Plaintiffs’ claims, the Court must determine whether the proposed
Third Counterclaim meets the requirements of diversity of citizenship jurisdiction under 28 U.S.C.
§ 1332.
Plaintiffs do not dispute that the citizenship requirement has been met. They do, however,
suggest that the proposed pleading fails to set forth an amount in controversy. Therefore, the issues
before the Court are:(1) whether the value of the lost contract would be sufficient to establish the
jurisdictional amount in controversy; and alternatively (2) whether the amended counterclaims can
be aggregated to establish an amount in controversy in excess of the jurisdictional amount in
controversy.
A federal court has subject matter jurisdiction over cases in which the parties are of diverse
citizenship and the amount in controversy exceeds $75,000. 28 U.S.C. §1332(a)(1). The amount in

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controversy is the amount required to satisfy the plaintiff’s demands in full on the day the suit begins,
or in the event of removal, on the day the suit was removed.” Oshana v. Coca-Cola Co., 472 F.3d
506, 511 (7th Cir. 2006) (citations omitted). The proponent of jurisdiction “has the burden of
showing by a preponderance of the evidence facts that suggest the amount-in-controversy
requirement is met.” Id.; see McMillian v. Sheraton Chicago Hotel & Towers, 567 F.3d 839, 844
(7th Cir. 2009). “To satisfy this burden, a party must do more than ‘point to the theoretical
availability of certain categories of damages.’” Id. (quoting Am. Bankers Life Assurance Co. of Fl.
v. Evans, 319 F.3d 907, 909 (7th Cir. 2003)). The proponent of jurisdiction must support its assertion
with “competent proof.” Oshana, 472 F.3d at 511. When the complaint does not establish the
amount in controversy, “a good-faith estimate of the stakes is acceptable if it is plausible and
supported by a preponderance of the evidence.” Id.
The amount in controversy is measured from the perspective of the plaintiff. Vraney v. Cnty.
of Pinellas, 250 F.2d 617, 618 (5th Cir.1958) (per curiam). In an action for declaratory or injunctive
relief, the amount in controversy is the “value of the object of the litigation,” or “the value of the right
to be protected or the extent of the injury to be prevented.” Leininqer v. Leininger, 705 F.2d 727, 729
(5th Cir.1983).
Here, the object of the litigation is to prevent the negotiation of an allegedly illegal landfill
disposal contract and protect the rights of Waste Management to be the rightful holder of the contract
or otherwise suffer irreparable harm. (R. Doc. 207, ¶ 93.) The complaint does not set forth an
amount in controversy. Indeed, the proposed Third Counterclaim only seeks to prevent the entry of
a contract. Further, it is not facially apparent that damages would likely be incurred if the
negotiations were allowed to continue. It is possible that the Jefferson Council Parish and IESI may

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not be able to agree to a contract. Consequently, the Court finds that the proposed Third
Counterclaim is futile, and the Court would not have subject matter jurisdiction over the matter.
The final issue for the Court to consider is whether it could exercise supplemental jurisdiction
over the proposed Third Counterclaim. In support of its motion, Waste Management contends that
the Court has jurisdiction over the proposed Third Counterclaim based upon 28 U.S.C. § 1367, which
was supplanted and now only requires that a counterclaim form part of the “same case or
controversy.”
In opposition, Plaintiffs argue that the Court’s supplemental jurisdiction cannot form the basis
of jurisdiction because the proposed Third Counterclaim is permissive and not compulsory.
Therefore, Plaintiffs contend the Court lacks subject matter jurisdiction.
According to 28 U.S.C. § 1367, which establishes supplemental jurisdiction, “in any civil
action of which the district courts have original jurisdiction, the district courts shall have
supplemental jurisdiction over all other claims that are so related to claims in the action within such
original jurisdiction that they form part of the same case or controversy under Article III of the
United States Constitution.” 28 U.S.C. § 1367(a). Supplemental jurisdiction promotes “judicial
economy, convenience, and fairness to litigants.” United Mine Workers v. Gibbs, 383 U.S. 715, 726,
86 S.Ct. 1130, 16 L.Ed.2d 218 (1966).
In considering this issue, the Court is of the opinion that the claims asserted in Waste
Management’s proposed Third Counterclaim are not so related to the claims in this action that they
form the same case or controversy as required by 28 U.S.C. § 1367(a). In the original action, the
Plaintiffs filed suit seeking a determination by the Court that Waste Management breached the waste
management contract. Waste Management responded with a counterclaim alleging that the Jefferson

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Parish Council’s efforts to cancel its contract with Waste Management and pursue a contract with
River Birch landfill was illegal and that the contract should be invalidated.
Here, the acts in question are totally different. Waste Management’s proposed Third
Counterclaim involves the Jefferson Parish Council’s efforts to contract for the discarding of its waste
at the conclusion of its contract with Waste Management, and its decision to select a company other
than Waste Management to provide services to it in the future. Clearly, the claims asserted in Waste
Management’s proposed Third Counterclaim are not so related that they could possibly involve the
same controversy, as they involve one executed and one pending contract, negotiated at different
times between different parties and under different circumstances. The court therefore declines to
exercise supplemental jurisdiction over Waste Management’s proposed Third Counterclaim.
IV.

Conclusion
Accordingly,
IT IS ORDERED that Waste Management of Louisiana, L.L.C.’s Motion for Leave to File

Third Amended and Supplemental Counterclaim (R. Doc. 207) is hereby DENIED for the

reasons assigned herein.
New Orleans, Louisiana, this 16th day of November 2011.

KAREN WELLS ROBY
UNITED STATES MAGISTRATE JUDGE

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