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National Waste Recycling, Inc. v. Middlesex County Imp. Authority

June 17, 1996


On appeal from the Superior Court of New Jersey, Law Division, Middlesex County.

Approved for Publication June 17, 1996. As Amended July 3, 1996.

Before Judges Pressler, Keefe and A.a. Rodriguez. The opinion of the court was delivered by Keefe, J.A.D.

The opinion of the court was delivered by: Keefe

The opinion of the court was delivered by KEEFE, J.A.D.

Defendant Middlesex County Improvement Authority (MCIA) and defendant Waste Management of North Jersey, Inc. (Waste Management) appeal from the entry of summary judgment in favor of plaintiff John Grywalski holding that Grywalski had standing to challenge the legality of a contract entered into between MCIA and Waste Management, and further holding that the contract was in violation of the Local Public Contracts Law (LPCL), N.J.S.A. 40A:11-1 to -49. The Attorney General of New Jersey, acting as attorney for the Division of Solid Waste Management of the New Jersey Department of Environmental Protection (DEP) and the Division of Local Government Services (LGS) of the New Jersey Department of Community Affairs, amici curiae, has filed a brief and argued on behalf of plaintiff Grywalski. *fn2

We affirm the trial court on the standing issue but reverse on the LPCL issue, and find that the contract in question falls within the statutory exemption to public bidding found in N.J.S.A. 40A:11-5(1)(s).

Each county is required to have a solid waste management plan, and each plan must have a recycling component. N.J.S.A. 13:1E-19 to -23; N.J.S.A. 13:1E-99.13. Further, each county's recycling plan is required to provide for recycling of at least sixty percent of its total waste stream by January 1, 1996. L. 1992, c. 167, sec. 1. Accordingly, on June 2, 1994, Middlesex County adopted an amendment to its recycling plan to establish a strategy for reaching the sixty-percent recycling goal by the target date. The amendment called for a county-wide recycling program, to be run by a private contractor, serving all municipalities electing to participate in it. The DEP approved the amendment.

The County then designated MCIA as the local agency responsible for implementation of the recycling program. On October 14, 1994, MCIA publicly issued a request for qualifications (RFQ) entitled "Collection and Marketing of Source-Separated Materials, Including the Processing and Transfer Services Necessary for such Marketing." The RFQ proposed that the contract encompass curbside "collection" to "sale or Disposition" of the recyclables to a third party. Frequency and scheduling of collection were specified, as were the materials to be collected. The contractor was to be responsible for supplying trucks, containers and other equipment necessary for pick-up and related functions. After reviewing several responses, MCIA decided that National and Waste Management were qualified as well as four other contractors. National's qualification approval contained certain conditions, only one of which is relevant here.

Thereafter, MCIA issued a request for proposals (RFP) to the six candidates. Five responded. Waste Management's and National's proposals were the two highest ranked. MCIA entered into negotiations with both companies. The negotiations centered on the contractors' willingness to make price concessions. Each candidate was apprised of the price terms proposed by the other to make sure each had an opportunity to respond accordingly. One major concession that MCIA was able to achieve from both companies was a guaranteed floor price for the recyclable materials regardless of the actual market price for such products. This negotiated procurement process sought to take advantage of the exemption from normal bidding procedures for contracts whose subject matter consists of the "marketing of recyclables recovered through a recycling program." N.J.S.A. 40A:11-5(1)(s).

The proposals that resulted from the negotiations were evaluated and a report was prepared which contained the recommendations of the evaluators. The contract was awarded to Waste Management on February 8, 1995, because its proposal was approximately $250,000 lower than National's over the five-year life of the contract; it was willing and able to service the entire county; and National failed to furnish an audited financial statement (one of the conditions under which MCIA agreed to qualify National). In a certification filed with the trial court, MCIA claimed that the negotiation process resulted in a savings of approximately $5,500,000.

Plaintiffs instituted this suit on February 21, 1995. Grywalski asserted standing as a Middlesex County taxpayer. However, discovery revealed that he is also a personal friend of one of the principals of National and that he was not expending any personal funds to prosecute this lawsuit. National's general counsel represented both plaintiffs in the trial court and represents Grywalski on appeal. Defendants moved for summary judgment, claiming that Grywalski and National lacked standing and that the contract fell within the exception contained in N.J.S.A. 40A:11-5(1)(s). The hearing on the motion resulted in the judgment now under review. The trial court granted a stay of its order voiding the contract pending appeal.


We address the standing issue first. The right of a taxpayer to challenge bidding procedures is well recognized. K.S.B. Tech. Sales v. No. Jersey Dist. Water Supply, 75 N.J. 272, 279-280, 381 A.2d 774 (1977), appeal dismissed, 435 U.S. 982, 98 S. Ct. 1635, 56 L. Ed. 2d 76 (1978); Disposmatic Corp. v. Mayor & Council of Kearny, 162 N.J. Super. 489, 492, 393 A.2d 610 (Ch. Div. 1978). Grywalski's status as a taxpayer is conceded. However, defendants essentially claim that Grywalski should suffer from the same bar that National suffers from because he is simply National's nominee. Otherwise, according to defendants, National is simply circumventing the ruling in Autotote Ltd., supra.

The trial Judge was troubled by the facts, but nevertheless granted Grywalski standing, relying on Schnell v. Township of Millburn, 127 N.J. Super. 155, 316 A.2d 708 (App. Div. 1974), aff'd, 66 N.J. 137, 328 A.2d 624 (1974). The court was correct in so ruling. Where such proceedings arguably serve the public interest the taxpayer's motive is immaterial. It is not inappropriate to induce taxpayers to join in litigation involving a public question impacting on the interest of other ...

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