Largest CRT supplier to Closed Loop agrees to pay $6 million

E-scrap processor Kuusakoski has agreed to pay $6 million to settle a lawsuit demanding that it help clean up massive CRT stockpiles in Columbus, Ohio.

The multi-million-dollar settlement is by far the largest reached in the Closed Loop Refining and Recovery case, even after the parties negotiated the sum down by a couple million dollars. Court filings suggest Kuusakoski is pushing to have its insurance providers pay the settlement sum, although one insurance company has fought back in court.

Closed Loop failed in 2016, abandoning about 158 million pounds of CRT materials in warehouses owned by landlords Garrison Southfield Park and Olymbec USA. Garrison Southfield Park and Olymbec USA have sued dozens of e-scrap companies and electronics brand owners, claiming federal law requires that they help fund the cleanup.

The case is in U.S. District Court for the Southern District of Ohio.

“To date, over 30 defendants, including the Kuusakoski Defendants and Sony Electronics Inc., have agreed to make meaningful contributions to help Garrison Southfield Park LLC clean up the Watkins Road properties. Garrison currently anticipates completion of the cleanup at one of its two properties by the end of January,” Karl Heisler, counsel for Garrison Southfield Park, said in a statement to E-Scrap News. “This collective effort has achieved real successes that protect the public health and the environment and that benefit the Columbus community.”

In a separate statement to E-Scrap News, Olymbec USA noted it expects to begin cleanup at its warehouse soon.

“Within the next two months, Olymbec anticipates starting cleanup activities at its property,” the property management company noted. “A substantial number of parties in the litigation have settled with Olymbec and have made or have agreed to make contributions to support the effort by Olymbec to clean up its property.”

Nearly 50 million pounds shipped

On Dec. 22, Garrison Southfield Park, Olymbec USA and a representative of several Kuusakoski-owned companies asked the judge to approve the $6 million settlement (the Kuusakoski companies are Kuusakoski, Inc., Kuusakoski US LLC, Kuusakoski Glass Recycling LLC, Vintage Tech, LLC a.k.a. Vintage Tech Recyclers, Inc., and Vintage Tech Recycling).

Although it hasn’t been approved or rejected by the judge yet, the Kuusakoski settlement is substantially larger than any other reached to date. The next largest, Sony’s $1.2 million agreement, was reached in recent months. That settlement is being objected to by a handful of other OEMs – ASUS Computer International, Dell Technologies, and LG Electronics USA – as well  stewardship organization Electronic Manufacturers Recycling Management Co. (MRM).

Additionally, on Jan. 11, the judge approved a settlement with CompuPoint USA, which shipped nearly 3 million pounds to Closed Loop in Ohio. That agreement includes having the Norcross, Ga.-based company provide in-kind CRT recycling services.

The Kuusakoski agreement acknowledges the company shipped over 49 million pounds of material to Closed Loop from 2012 to 2016.

In court documents, Kuusakoski claimed the Superfund Recycling Equity Act (SREA) protects it from liability under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), among many other legal defenses argued. In its SREA defense, Kuusakoski insisted it shipped recyclable material to Closed Loop, and that Kuusakoski exercised reasonable care to determine that Closed Loop was in compliance with applicable law.

And in April 2019, shortly after the landlords’ complaint was filed against over 40 e-scrap companies, Kuusakoski released a statement to E-Scrap News noting that it would defend itself in the litigation and explaining why it believed it is not liable.

Kuusakoski declined to comment to E-Scrap News on the settlement.

Negotiation reduces sum

The motion for settlement notes that the landlords calculated Kuusakoski’s share of the cleanup at over $8.2 million, but that the parties negotiated the sum down to $6 million, or 73% of the calculated share, for various reasons. That comes out to about 12.2 cents per pound shipped.

In declarations filed with the court, attorneys for Garrison Southfield Park and Olymbec USA explained that the landlords took into consideration the fact that Kuusakoski provided “actionable information regarding the identity and role of other PRPs, including original equipment manufacturers,” that it is cooperating with plaintiffs, and that it paid for pollution legal liability insurance covering cleanup costs.

Additionally, the filing notes, Kuusakoski believes the reduced settlement amount is fair because it takes into account its SREA legal defenses and a separate court decision in the case Carolina Pines I, LLC v. City of Abbeville Pu. Works, et al.

A federal case that also involved CERCLA liability, the Carolina Pines I lawsuit related to the cleanup of a South Carolina warehouse that had been leased by the failed e-scrap company Creative Recycling Systems. After a non-jury trial, a judge in November 2018 allocated cleanup responsibility to both the municipalities that shipped CRTs to the site and to the landlord, although the judge heavily reduced the dollar amount CRT suppliers had to pay.

Insurance to fund settlement?

The latest court documents describe how the Closed Loop case is related to a separate insurance battle between Kuusakoski, the landlords and Navigators Specialty Insurance Co.

In June 2019, the New York City-based insurance company filed the lawsuit in Ohio state court against Kuusakoski and Garrison Southfield Park (Olymbec USA was later added as a defendant). The insurance company claims the policy it sold Kuusakoski for the period June 15, 2017 to June 15, 2018 doesn’t obligate it to defend or indemnify Kuusakoski in the Garrison/Olymbec case (the complaint briefly notes that a separate insurance company, Westchester Surplus Lines Insurance Co., has agreed to defend Kuusakoski).

Kuusakoski counter-sued, claiming the insurance provider is obligated to defend the e-scrap company. Kuusakoski said it purchased the policy “to minimize their risk of environmental liability arising out of hazardous material deliveries to downstream recyclers.”

The motion to approve Kuusakoski’s settlement in the Garrison/Olymbec case suggests the settlement could lead to resolution of the insurance dispute. “Resolution of this state court action, which is necessary to allow settlement funds to flow to the environmental cleanup, is expressly contingent on the dismissal of the Kuusakoski Defendants in this action, with prejudice,” the motion states.

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