Beverage companies hit with novel bottle bill suit

Beverage companies hit with novel bottle bill suit

By Editorial Staff, Resource Recycling

A lawyer for two California redemption centers that were struck with bottle bill fraud accusations has hit back by suing beverage companies for negligent misrepresentation — that is to say, printing California Redemption Value information on beverage containers sold outside of the Golden State.

Alamo Recycling LLC and Chino Valley Recycling LLC in 2012 were involved with a California Redemption Value (CRV) fraud case, where beverage containers collected from outside California, typically from Arizona, were brought into the state to be illegally redeemed. As part of their defense, Alamo Recycling and Chino Valley Recycling said that employees at the firms checked each beverage container and accepted only those that had CRV printed on them.

Which is where the lawsuit comes in.

According to John Gugliotta, lawyer for the redemption centers, Alamo and Chino Valley were just doing what their centers are licensed to do — redeem CRV containers, which all of the containers had text on them saying they were. Which, Gugliotta says, is the fault of the beverage companies, not his clients.

"Recyclers cannot discern which containers come from outside the state," says Gugliotta, which is why he has filed a product liability suit in a San Bernardino Superior Court against a veritable who's-who of beverage companies, including Anheuser-Busch, Coca-Cola, Nestle Waters North America and Pabst Brewing.

Susan Collins, executive director of the Container Recycling Institute, says that she hasn't seen a lawsuit like this before. "This is certainly a novel approach," says Collins, who noted that typically, these types of suits are thrown out on the grounds of the Commerce Clause of the U.S. Constitution, which is generally interpreted to mean that states can't regulate products that are being sold across state lines.

The suit approaches the negligent misrepresentation claim from an interesting angle, noting that, through the abuse of the CRV system, the California Beverage Recycling Fund is (according to the suit) defrauded between $40 million and $200 million annually, which could cause the fund to become insolvent, which could then damage his client's businesses. The suit alleges that this abuse of the system is aided and abetted by the beverage company defendants, that these same beverage companies are printing the CRV on beverage containers intentionally, "with malice … done with the intent and or with willful and knowing disregard for the rights of Alamo and Chino."

"They want to crush us," says Gugliotta. "If I have a successful claim, it's going to cause problems for [the beverage companies]."

Resource Recycling was unable to reach Coca-Cola, the company that retained the defense lawyer of record, for comment. In another interesting twist, that lawyer is Patricia Millett, partner at Akin Gump Strauss Hauer & Feld LLP, who was recently nominated by President Obama to the U.S. Court of Appeals for the D.C. Circuit court. Millett has argued 32 cases before the Supreme Court. Akin Gump declined to comment.

"They brought out the big guns," says Gugliotta. "We'll see if [the suit] will survive; I think it will."

Gugliotta says that the case should have its first day in court sometime in late August or late September.

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