Mega Beverage Redemption Center Inc. has accused Nestlé Waters North America, which is headquartered in Stamford, Connecticut, of violating the New York State Returnable Container Act (RCA) in a lawsuit filed Sept. 10 in Westchester Supreme Court. The complaint also names Arbor Equities LLC of New Rochelle and its trucking and recycling affiliates in the Bronx.
Nestlé and Arbor, Mega claims, are engaged “in an elaborate scheme to defraud plaintiff by issuing false and misleading audit reports in violation of the RCA in order to avoid legally mandated payments.”
Nestlé responded that it is highly confident in its legal position. “We look forward to vigorously defending ourselves, as well as possibly filing counterclaims in this matter,” spokeswoman Alyson Sturm said in a written response.
The lawsuit has not been served yet, she said, and the company does not comment on specific details of lawsuits as a matter of policy.
Arbor’s owner, Ralph Martucci, did not immediately respond to telephone and email requests for his side of the story.
The bottle law was enacted to counteract discarded beverage containers that were littering the landscape. Bottlers such as Nestlé must pay 5 cents for every empty container turned in, plus a handling fee of 3.5 cents per container for collecting, sorting and packaging bottles to return to the beverage company.
Mega collects empty bottles at a redemption center in Mount Vernon, New York. Arbor allegedly works with Nestlé to provide the packing materials, collect containers and pay the fees.
Payments were consistently late, according to the complaint, but the system worked until this past May. Then Nestlé’s national redemption manager, Heidi Frost, notified Mega that it had failed an audit performed by Arbor and was entitled to lower payments.
Mega claims that the law requires audits to be done at the redemption centers, where company officials may witness the counts. Mega’s principal, Conrad Cutler, claims his company was not even aware of the audit.
Such an audit, according to the complaint, is “fraudulent” and designed to “justify their continuing violations of the RCA.”
Mega claims that Nestlé and Arbor owe at least $50,000 in overdue payments.
Mega states that it has had to buy packaging materials that Nestlé or Arbor were required to supply, and it has incurred extra warehousing costs because bottles have been collected less frequently. It is demanding at least $325,000 for those costs.
Mega is also demanding $5 million for defamation, alleging that Nestlé, Arbor and unnamed defendants have falsely accused it of turning in “short bags” – packages with fewer bottles than required – and operating without a state redemption center registration.
Mega is represented by Henry C. Chan and Jeffrey L. Wilson of Wilson & Chan in Manhattan.