Court hears dispute over school soft drink contracts

Posted 8:20PM on Thursday 18th July 2002 ( 23 years ago )

HELENA, MONTANA - Traditional soda pop rivals Coca-Cola and Pepsi found themselves on the same side Thursday in defending a decision by school officials in one Montana town to give them exclusive contracts to sell soft drinks on campus. In arguments before the Montana Supreme Court, the companies joined the Great Falls School District in insisting the district cannot be sued under the state's Unfair Trade Practices Act because it not a business and, therefore, not subject to the law. The district also contended it is immune from suit for legislative acts such as deciding who should be able to sell soft drinks in the schools. But attorneys for Montana Vending Inc. said the district is subject to laws against unfair trade practices because its relationship with Coke and Pepsi makes it a business involved in commerce. They also said the district's decision to award the contracts to the manufacturers, without giving Montana Vending a chance to bid, was not a legislative act protected by law. The dispute arose from a decision the district trustees made two years ago to adopt a policy of raising more money for Great Falls schools by offering exclusive soft drink contracts. Montana Vending had supplied such beverages and vending machines to the district for 20 years. In March 2001, the district agreed to give Coke and Pepsi the exclusive contracts in exchange for annual payments of $50,000 each. No competitive bidding process was used. Montana Vending sued last August, but the federal court case was put on hold when U.S. District Judge Sam Haddon asked the state's high court to settle two questions. He wanted to know if the school district is subject to the unfair trade practices law and whether the district signing the deals with Coke and Pepsi are actions that cannot be challenged in court. Christopher Meyer of Great Falls, lawyer for Montana Vending, said nothing in the trade practices law exempts school districts. To ensure the law works to prevent unfair business practices, the court should interpret the wording broadly enough to include such governments, he said. Because the school district makes significant money from the contracts with Coke and Pepsi, it obviously is in the business of selling soft drinks, Meyer said. He also said that, while adoption of the policy to award exclusive soft drink contracts is a legislative act that cannot be contested with a suit, the awarding of those contracts has no such protection. Chuck Johnson, attorney for the district, said the contract award is immune from suit because it implements the trustees' policy and is part of that process. William Conklin, attorney for Coke, told the court that the school district cannot be accused of unfair trade practices because it is not in the business of selling soft drinks. The district, he said, is in the business of educating students. Since the trade practices law does not specifically apply to school districts, the Supreme Court should not create such connection, Conklin said. Some court members questioned the reasoning of Conklin and Johnson. Justice Terry Trieweiler said the law is intended to prevent unfair trade practices, so why should it matter whether it halts such acts by a government agency or private business. Justice Jim Nelson questioned whether the broad immunity claimed by the school district goes too far in protecting actions that are not really legislative.

http://accesswdun.com/article/2002/7/192349