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Hancock Industries and Ace Service Corp. v. Schaeffer

filed: February 6, 1987.

HANCOCK INDUSTRIES AND ACE SERVICE CORP. AND EASTERN WASTE REMOVAL AND CHARLES CRUMBLEY, INC. AND EDWARD LAWRENSON, INC.
v.
SCHAEFFER, ERIK, J., INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY AS EXECUTIVE DIRECTOR OF CHESTER COUNTY SOLID WASTE AUTHORITY, AND CHESTER COUNTY SOLID WASTE AUTHORITY AND COUNTY OF CHESTER AND PETACCIO, VICTOR, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY AS EXECUTIVE DIRECTOR OF DELAWARE COUNTY INCINERATOR (SOLID WASTE) AUTHORITY, AND DELAWARE COUNTY INCINERATOR (SOLID WASTE) AUTHORITY AND COUNTY OF DELAWARE HANCOCK INDUSTRIES, ACE SERVICE CORPORATION, EASTERN WASTE REMOVAL AND EDWARD LAWRENSON, INC., APPELLANTS



Appeal from the United States District Court for the Eastern District of Pennsylvania, D.C. Civil No. 85-3158.

Author: Stapleton

Before: SLOVITER, and STAPLETON, Circuit Judges, and FARNAN, District Judge.*fn*

STAPLETON, CIRCUIT JUDGE :

The Chester County Solid Waste Authority ("Chester Authority") owns and operates the Lanchester Landfill. The Delaware County Incinerator (Solid Waste) Authority ("Delaware Authority") owns and operates the Colebrookdale Landfill. This lawsuit by private haulers of Philadelphia solid waste was precipitated by the closing of these landfills to waste originating outside of the respective counties other than that which the Authorities were required to accept by contract. The haulers, who sought access to the landfills through this suit, appeal a grant of summary judgment in favor of the defendants. Because the haulers challenge the procedure followed by the district court, we first trace the course of the proceedings in the district court.

I.

On June 4, 1985, the haulers filed suit against the Chester Authority, its executive director, J. Erik Schaeffer, and Chester County for closing the Lanchester Landfill to out-of-county waste not contracted for, and against the Delaware Authority, its executive director, Victor Petaccio, and Delaware County for closing the Colebrookdale Landfill to out-of-county waste. The haulers alleged that the closings violated their rights under the equal protection clause, the due process clause, and the federal antitrust laws.

Also on June 4, the haulers moved ex part for a temporary restraining order and accelerated discovery. The district court denied the motion for a temporary restraining order, stating that if the haulers were unable to reach an accommodation with the defendants before June 30, 1985, the date that out-of-county waste would be excluded from the Lanchester Landfill, the court would schedule a hearing on the haulers' motion for a preliminary injunction. The court did not rule on the motion to accelerate discovery and the haulers did not pursue the matter. On June 26, 1985, the haulers renewed their motion for a preliminary injunction.

On June 28, 1985, defendants Petaccio, the Delaware Authority, and Delaware County filed a motion to dismiss for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6) or, in the alternative, for summary judgment pursuant to Fed. R. Civ. P. 56. On July 1, 1985, defendants Schaeffer and the Chester Authority filed a motion to dismiss for failure to state a claim. Also on July 1, the district court entered an order setting a "preliminary injunction hearing" for July 5 and requiring submission of proposed facts and conclusions of law by July 3. At a conference with the parties on July 1, the district court advised that the other pending motions might also be considered at the July 5 hearing. On July 3, defendant Chester County filed a motion to dismiss for failure to state a claim or, in the alternative, for summary judgment.

On July 3, the haulers filed a motion to postpone consideration of summary judgment and permit discovery pursuant to Fed. R. Civ. P. 56(f). At the hearing on July 5, the haulers renewed this request. Suggesting that only legal issues were in dispute, the district court sought to determine what material facts the haulers hoped to uncover through discovery. The haulers asserted that discovery was necessary to determine whether or not a rational basis existed for the decision to close the landfills to out-of-county waste.

To "create some kind of record . . . either for summary judgment argument or for a preliminary injunction hearing," and to determine therefrom "what material facts may or may not be in dispute," app. at 192, the court permitted various defense witnesses to testify and be cross-examined, admitted stipulated facts into evidence, and accepted the parties' proffers as to what their witnesses would say if they testified. Before closing arguments, the court inquired whether plaintiffs still pursued their Rule 56(f) motion and, if so, as to what facts. Plaintiffs stated that they did and that "additional testimony is required on the issue of the actions taken by the officials at the Lanchester Landfill on the overall ultimate issues as to arbitrariness or whether there was a rational basis for their actions." Id. at 278.

In a bench opinion on July 5, the district court denied the haulers' motion for a preliminary injunction, finding that they were unlikely to succeed on any of their claims. The court further granted defendants summary judgment on the due process claim, because the haulers had no property right at stake, and on the antitrust claim, because the defendants were immune under the state action exemption to the federal antitrust laws and, even if not, their actions did not violate the antitrust laws. In a written opinion filed August 7, the district court elaborated upon its reasoning and made findings of fact, some of which were based upon the testimony of the defense witnesses. The court granted the haulers thirty days discovery on the equal protection claim, but rejected the Rule 56(f) motion as to the due process and antitrust claims on the ground that no material facts were in dispute. The haulers thereafter conducted discovery directed to the issue of whether the actions of the Authorities had a rational basis.

Later in August, defendants Schaeffer, the Chester Authority, and Chester County renewed their request for summary judgment on the equal protection claim. On December 9, finding that plaintiffs failed to establish the existence of any genuine issue of material fact, the district court granted summary judgment on the equal protection claim on the ground that "the distinction between in-county and out-of-county trash drawn by the Authority bears a rational relationship to the statutory obligation imposed on the county to provide for adequate and safe disposition of solid waste generated within Chester County." Hancock Industries v. Schaeffer, 625 F. Supp. 373, 377 (E.D. Pa. 1985).

The haulers appeal the orders of summary judgment on their antitrust and equal protection claims as to defendants Schaeffer, the Chester Authority, and Chester County, but do not appeal similar orders of summary judgment granted in favor of defendants Petaccio, the Delaware Authority, and Delaware County. The haulers also do not appeal the grant of summary judgment in favor of defendants on the haulers' due process claim.

II.

The haulers first assert that the district court erred in granting summary judgment on their antitrust claim without giving the minimum notice required by Fed. R. Civ. P. 56(c) and further erred in denying the haulers' Rule 56(f) motion for a continuance of the summary judgment proceeding to permit the haulers to conduct discovery. In addition, the haulers argue that the district court improperly granted summary judgment on both the antitrust and equal protection claims based on the district court's assessment of the credibility of the witnesses at the July 5 evidentiary hearing.

Before the July 5 hearing, Schaeffer and the Chester Authority sought dismissal pursuant to Rule 12(b)(6). Rule 12(b) provides that if, on a Rule 12(b)(6) motion, "matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56." Because the Chester County defendants tendered "matters outside the pleading," the district court had the option of treating their Rule 12(b)(6) motions as motions for summary judgment. This court has held, however, that the "reasonable opportunity" provision of Rule 12(b) incorporates the minimum notice provision of Rule 56(c). "To exercise the right to oppose summary judgment, a party must have notice." Bryson v. Brand Insulations, Inc., 621 F.2d 556, 559 (3d Cir. 1980). "Thus litigants are entitled to 10 days notice before a Rule 12(b)(6) motion to dismiss may be converted into a Rule 56 motion for summary judgment." Crown Central Petroleum Corp. v. Waldman, 634 F.2d 127, 129 (3d Cir. 1980); accord Winkleman v. New York Stock Exchange, 445 F.2d 786, 789 (3d Cir. 1971).

In this case, the haulers were not provided with 10 days notice that summary judgment would be considered at the July 5 hearing. Nonetheless, we find that the failure to comply with the minimum notice requirement of Rule 56(c) was harmless error in the context of this case. In Davis Elliott International, Inc. v. Pan American Container Corp., 705 F.2d 705 (3d Cir. 1983), we noted that even where the 10 day notice requirement has been violated, a grant of summary judgment for a defendant may be affirmed where there is no "state of facts on which plaintiff could conceivably recover." Id. at 708; accord Brobst v. Columbus Services International, 761 F.2d 148, 155 (3d Cir. 1985). As we will detail more fully hereafter, because the defendants are immune, as a matter of law, from the haulers' antitrust claim pursuant to the state action exemption to the federal antitrust laws, there is no state of facts on which the haulers could conceivably recover on their antitrust claim.*fn1

The haulers further contend that the district court erred in denying discovery pursuant to Rule 56(f) on their antitrust claim. Rule 56(f) provides that, if it appears "from the affidavits of a party opposing the motion that he cannot for reasons stated present by affidavit facts essential to justify his opposition," the court may order a continuance to permit discovery. (Emphasis added). In Mid-South Grizzlies v. National Football League, 720 F.2d 772 (3d Cir. 1983), cert. denied, 467 U.S. 1215, 81 L. Ed. 2d 364, 104 S. Ct. 2657 (1984), we noted that:

Where Rule 56(f) affidavits have been filed, setting forth specific reasons why the moving party's affidavits in support of a motion for summary judgment cannot be responded to, and the facts are in the possession of the moving party, we have held that a continuance of the motion for purposes of discovery should be granted almost as a matter of course.

Id. at 779.

Nonetheless, we find that the district court did not err in denying discovery on the haulers' antitrust claim. As a procedural matter, the haulers' Rule 56(f) motion was insufficient. The haulers did not file a Rule 56(f) affidavit. See id. at 780. Moreover, even if we treat plaintiffs' motion as an affidavit, it fails to explain the need for discovery and what material facts the haulers hoped to uncover to support their allegations. See id. To state that "information is known to us, that simply must be pursued via discovery and deposition before the plaintiffs are in a position to respond," app. at 161, is insufficient; such information must be revealed to the court.

Even if we were inclined to overlook the motion's technical deficiencies, however, the motion fails on a substantive ground. Because the haulers' antitrust claim was properly resolved as a matter of law on the basis of stipulated facts, factual discovery was unnecessary. Euster v. Eagle Downs Racing Association, 677 F.2d 992, 997 (3d Cir.), cert. denied, 459 U.S. 1022, 74 L. Ed. 2d 519, 103 S. Ct. 388 (1982). Indeed, the haulers arguably conceded this point when they told the district court at the July 5 hearing only that additional discovery was needed on defendant's rational basis in closing the landfills.

The haulers' third attack on the procedure employed in the district court evidences a basic misunderstanding of how the district judge utilized the information he received at the July hearing. As we read the record, the judge used that information for three different purposes, each of which was legitimate and each of which is consistent with the rule, expressly acknowledged by the district judge, that summary judgment cannot be based on a resolution of disputes concerning material facts.

First, the district court used the July hearing as the record basis for his decision on the haulers' motion for a preliminary injunction. In this context it was entirely appropriate for the court to make tentative decisions regarding disputed facts in order to assess the likelihood of success, irreparable injury, and the other factors upon which pendente lite relief turns. Sims v. Greene, 161 F.2d 87, 88-89 (3d Cir. 1947). The court's August 7 decision was addressed almost entirely to the preliminary injunction motion and "findings of fact" were made therein because they are required by Fed. R. Civ. P. 52(a) when a decision is made granting or refusing a preliminary injunction. Bateman v. Ford Motor Corp., 310 F.2d 805, 807 (3d Cir. 1962). It was in this context that the judge found the witnesses of the Chester County defendants to be "credible."

Second, the district court utilized the testimony at the July hearing to determine what facts were not in dispute. This also was appropriate. Rule 56(c) provides that the "judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Testimony given in an evidentiary hearing is no different from testimony given in a deposition and may be treated the same in summary judgment proceedings. 6 J. Moore, W. Taggart & J. Wicker, Moore's Federal Practice P56.11[8] (2d ed. 1986).*fn2 As with deposition testimony and affidavits, if there is no contradictory evidence, facts testified to in a hearing may be accepted as true for summary judgment purposes without an assessment of the credibility of the witness. The trial judge in this case, however, had no occasion to rely upon facts vouched for only by ...


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