"ensure that polystyrene products will remain non-recyclable and without post-consumer content recycled material so that the Defendants' existing market shares will not be disrupted, the status quo will be maintained, and the Defendants will be able to offer higher-priced products such as paper, pulp, bio-plastics, R-PET, PLA, ceramic, bamboo, and others, without any low cost options for consumers."
Thursday, June 20, 2013
Jun 19: In the U.S. Court of Appeals, First Circuit, Case No. 12-1730. Appealed from the U.S. District Court of Massachusetts, Boston. Plaintiff Evergreen Partnering Group, Inc. (Evergreen) appealed from a judgment of the United States District Court for the District of Massachusetts dismissing its Second Amended Complaint (complaint). The complaint alleges that defendants-appellees, polystyrene food service packaging manufacturers and two trade associations, refused in concert to deal with Evergreen in a recycling business method for polystyrene food service products. Evergreen also appeals the district court's refusal to grant it leave to amend its complaint. The Appeals Court ruled, "After careful consideration, we vacate the judgment of dismissal and remand for further proceedings." The lengthy opinion provides fascinating insight into the inner workings of the polystyrene recycling business and its major players.
Evergreen, founded in 2002 by Michael Forrest (Forrest), is the first company to develop a business model to recycle polystyrene products by using a post-consumer polystyrene resin (PC-PSR) to create trademark products known as "Poly-Sty-Recycle." Polystyrene food service products must be "food-grade" as deemed by the Food and Drug Administration (FDA), and Evergreen's Poly-Sty-Recycle was the first recycled polystyrene product to be so deemed.
The complaint paints a picture of the polystyrene industry increasingly coming under criticism from environmental advocacy groups, local governments, and dissatisfied customers prior to and during the period of the alleged conduct. Past efforts to make polystyrene products more environmentally friendly resulted in failure, and the producer defendants have maintained that their products are non-recyclable because production of recyclable polystyrene is not economically feasible. This has resulted in movements to ban polystyrene products -- including city-wide bans in 30 California cities -- as well as to discourage their use through implementing producer-responsibility mandates and product surcharges.
The five polystyrene producer defendants -- Pactiv Corporation (Pactiv), Genpak, LLC (Genpak), Dart Container Corporation (Dart), Dolco Packaging, a Tekni-Plex Company (Dolco"), and Solo Cup Company (Solo) -- are alleged to control an estimated 90 percent of the market for single-service polystyrene food service packaging and tableware.Defendant American Chemistry Council (ACC) is a trade association that engages in advocacy, trade and lobbying for the chemical and plastic industry. The Plastics Food Service Packaging Group (PFPG) is a business group within the ACC. In or about late 2005 or 2006, the PFPG met to address criticisms of the polystyrene industry, and at that meeting, the complaint alleges, John McGrath of Pactiv announced to PFPG members that recycling polystyrene products was not an option in the industry's battles with polystyrene's critics.
The complaint alleges that, following the meeting, the named defendants "combined and conspired to unreasonably restrain trade and commerce in the market for single[-]service polystyrene food service products by refusing in concert to deal with Evergreen in a sole-source closed-loop recycling business method for polystyrene food service products" until at least 2009. The purpose of the concerted refusal to deal was to:
Defendants collectively and individually moved to dismiss Evergreen's complaint pursuant to Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief can be granted. They argued, inter alia, that the complaint did not set forth a plausible basis for finding any agreement, but rather merely listed allegations consistent with unilateral refusals to deal based on business decisions. Evergreen opposed defendants' motions, arguing that the complaint met the standard established in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), but requested in its opposition permission to file an amended complaint if the court did not agree.
Evergreen argues on appeal that the allegations in its complaint are sufficient to support a plausible conspiracy claim under § 1 of the Sherman Act, and the district court erred in concluding otherwise. The Appeals Court says, "After reviewing the district court's analysis of the facts alleged and its application of the Twombly plausibility standard, we agree with Evergreen. . .we hold that Evergreen alleged sufficient facts to adequately plead its § 1 claim. Since the district court summarily dismissed Evergreen's Massachusetts Chapter 93A claim because it 'fail[ed] for the same reasons that the Sherman Act claim fails,' we remand for the district court to reconsider this issue consistent with the strictures of this opinion. We thus vacate the district court's judgment and remand the case for further proceedings. Costs of appeal awarded to plaintiff. Vacated and Remanded."
Access the complete opinion (click here). [#P2, #Solid, #CA1]
Posted by JPMcJ at 10:36 AM
Jun 18: In the U.S. Court of Appeals, Fifth Circuit, Case No. 12-20545. Appeal from the United States District Court for the Southern District of Texas. The Appeals court summarizes, "An insurer sought a declaratory judgment that it was not required to show prejudice before denying coverage for liability arising out of a pollution occurrence which the insured did not report within thirty days, as required by a pollution buy-back clause in the policy. The district court granted the insurer's motion for judgment on the pleadings and denied the insured's motion for summary judgment. We affirm." The decision is based primarily on decisions of the Texas Supreme Court.
On November 7, 2010, an accidental release of the chemical meta-toluene demine occurred while an SGS employee was conducting unloading operations at a Bayer chemical plant in Baytown, Texas. SGS learned of the release that same day. Based on the initial report and information Bayer provided SGS, the preliminary estimate for the clean-up costs was between $600,000 and $1 million. Because this was within the $2 million coverage limit of its primary policy with Allianz, SGS did not inform Starr of the release. However, on December 20, 2010, Bayer presented SGS with invoices reflecting clean-up costs of over $4 million. Only in late December did SGS first realize the costs exceeded $2 million and would trigger coverage beyond the limits of its policy with Allianz. On January 5, 2011, fifty-nine days after SGS learned of the chemical release, SGS sent an email reporting the release to Starr.
Starr and SGS had added to the policy a provision, commonly called a pollution "buy-back," which deleted the pollution exclusion and replaced it with ". . .This exclusion shall not apply, however, provided that the assured establishes that all of the following conditions have been met: . . . (4) the discharge, dispersal, release or escape was reported in writing to these underwriters within 30 days after having become known to the assured.
SGS argues that the opinion is "no longer tenable" and its reasoning is "deeply flawed." It maintains that the Texas Supreme Court has now changed the law pertaining to notice requirements in insurance contracts, citing two cases referenced as PAM, Inc. v. Hanover Ins. Co., 243 S.WE.3d 630 (Tex. 2008) and Prodigy Communications Corp. v. Agricultural Excess & Surplus Ins. Co., 288 S.WE.3d 374 (Tex. 2009). But, the Appeals Court disagreed and said, ". . . we are dealing with a specific endorsement, separately negotiated by the parties, and with a clear notice requirement. Following an inquiry similar to the one outlined in PAM and Prodigy, Matador concluded that a notice requirement in this type of supplemental pollution endorsement is essential to the bargained-for coverage. We remain bound by that precedent."
Access the complete opinion (click here). [#Remed, #CAD]
Posted by JPMcJ at 10:34 AM