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Judge reverses ruling against TDS over city anti-lobbying ordinance

Monday, March 24, 2014 by Michael Kanin

A ruling against the City of Austin in a case stemming from the application of its Anti-Lobbying Ordinance could have broad implications for the way the city’s Purchasing Department enforces its no-contact provisions.


On Thursday, Federal District Judge Lee Yeakel ruled for the plaintiff, Texas Disposal Systems, in the lawsuit the company brought against the city after staff ruled that TDS had violated prohibitions against contacting city officials while engaged in the city’s bidding process. That company had challenged the city’s interpretation of the no-contact provision, arguing that staff’s ruling violated its free speech rights.


Graves Dougherty Hearon & Moody’s Jim Hemphill represented TDS in the matter. Late Friday, he gave the Monitor his read of the ruling. “I think that in this particular case, the city applied an overly broad reading of the anti-lobbying ordinance and ….that is not the only time that the city has read that ordinance more broadly than the ordinance’s terms require,” he said.


“I think this case confirms that… an ordinance such as this needs to be carefully and narrowly read and (staff should not extend that) beyond what the ordinance itself would dictate…that’s really why I think this case is important and especially because the anti-lobbying ordinance is an ordinance that restricts speech,”


Hemphill continued. “Any time a governmental body adopts (a rule) that prohibits speech, (the Constitution) requires it to be read narrowly. We did not argue that the anti-lobbying ordinance is unconstitutional, we believe some restrictions on free speech (are OK)….but (the way the staff interpreted it) would present constitutional problems. We were happy that Judge Yeakel ruled (for us)….under those terms TDS didn’t do anything wrong.”


City legal staff offered only a brief statement via email Friday afternoon. “We are surprised and disappointed by the judge’s decision,” the Law Department told the Monitor through city spokesman Kyle Carvell.


The case centers around actions taken by TDS as it joined a heated 2009-2010 battle for the city’s residential recycling contract. City officials had disqualified TDS from one set of bidding for the contract after it alleged that company representatives had improperly engaged in communication with city officials.


Yeakel’s ruing addresses only the more narrow issue at hand. “The Court declares that neither the Dec. 8, 2009 email sent by Texas Disposal’s Bob Gregory to Defendant City of Austin nor Texas Disposal’s Feb. 9, 2010 proposal to the City seeking to amend its existing 2000 City contract violate the City’s Anti-Lobbying and Procurement Ordinance,” Yeakel writes in decision. “Further the court declares that the City improperly assessed the disqualification against Texas Disposal . . .”


Yeakel’s ruling removes the violation from TDS’ record. It is an important victory for the firm. Under existing rules, multiple violations of the no-contact provision, “more than two” in five years, can result in disbarment for a company.


Despite the fact that the judge disagreed with Purchasing Officer Byron Johnson’s interpretation of the ordinance, Yeakel ruled that Johnson had acted within the scope of this authority. Johnson passed away recently.


In a news release issued after Yeakel’s verdict, TDS urged Council members to revisit their policy. “TDS is hopeful that the Austin City Council will amend the Anti-Lobbying Ordinance to place the City Council as the final arbiter in the appeal process to overturn a staff disqualification decision, instead of the City Purchasing Officer being the final arbiter before a contractor has to challenge staff’s disqualification decision in state or federal district court.”


Yeakel’s ruling allows TDS to collect legal fees it incurred for the case from the city but no monetary damages.

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