The five major manufacturers of polystyrene food-service products and the trade association that represents them have been accused of conspiring to thwart a Massachusetts company's attempt to implement closed-loop recycling of school lunch trays.
Evergreen Partnering Group Inc. in North Reading, Mass., filed a $25 million antitrust lawsuit in U.S. District Court in Boston on May 9, claiming that Pactiv Corp., Genpak LLC, Solo Cup Co., Dolco Packaging and Dart Container Corp. agreed among themselves not to partner with Evergreen.
The five companies are part of the Plastics Foodservice Packaging Group of the American Chemistry Council all of which were named as defendants in the antitrust lawsuit.
We believe these allegations are without merit, and ACC's Plastics Foodservice Packaging Group intends to vigorously defend against these wildly imaginative, but baseless, claims, ACC said in an emailed statement.
The plastics food-service industry strongly supports recycling that is sustainable, economical and environmentally responsible, ACC said.
The association said it had not seen a copy of the suit that Evergreen founder and President Michael Forrest filed on his own, without a lawyer.
Since 1990, the broad plastics industry including the plastics recycling value chain has invested significantly to increase recycling and educate communities in the United States about recycling, ACC said.
The lawsuit follows more than 18 months of discussions and negotiations between Forrest, the five companies and Washington-based ACC after Evergreen was unable to make its system economically successful. Evergreen said its system costs roughly $1 million to implement, but that it cannot be economically feasible without the cooperation of the companies that make and sell the foam trays to a particular school system.
Evergreen had operated closed-loop recycling systems, beginning in 2002, in public school systems in Providence, R.I.; Boston; Pasco County, Fla., and Gwinnett and DeKalb counties in Georgia. The last that was still operating in Gwinnet County closed for good in January 2009, citing a lack of cooperation from those PS tray manufacturers.
According to the suit, the five companies control over 90 percent of the $4.5 billion foam food-service packaging and tableware market in the United States.
The lawsuit charges the five companies with collusion, unlawful conspiracies to restrain trade, violations of the Sherman Antitrust Act, false advertising and unfair and deceptive business practices.
Forrest had repeatedly told Plastics News, for more than a year, that he would file the suit if he could not obtain the cooperation of the companies and ACC.
In an email a year ago, he said: It has become evident that the only way for the ACC and the industry to do 'the right thing' will be with a highly publicized antitrust lawsuit and [Federal Trade Commission] investigation with claims of collusion and abuse of power to influence distribution, management groups, schools, government officials/agencies, press, etc.
He said in that email that collusion was costing schools perhaps as high as [$1 billion] in waste fee overcharges ... hurting the environment and costing EPG/my family millions.
In his lawsuit, he said PS resin suppliers and suppliers of PS packaging have resisted efforts at recycling used polystyrene food-service products.
The document charged that the Evergreen recycling system was a particular threat to Pactiv.
To protect their market share and maintain the industry's status quo market division scheme, Pactiv refused to deal with EPG and influenced Dart, Genpak, Solo, or Dolco to participate in a group boycott of EPG and its closed-loop 'school to career' recycling program, the lawsuit said.
In a November email to Plastics News, Forrest said he had offered to settle the matter out-of-court for $5.6 million.
Forrest said he had asked for these amounts from the individual companies:
* A lump sum of $1.68 million from Lake Forest, Ill.-based Pactiv or a five-year agreement with annual consulting fees to Evergreen of $400,000 offset by ongoing projected royalties.
* Either $1.12 million or a five-year $250,000 annual consulting agreement from ACC to direct a membership partnering program for the association with Department of Education and Department of Labor on a closed-loop recycling project for preferred plastics.
* A lump sum of $840,000 from Glen Falls, N.Y.-based Genpak or a five-year agreement with annual consulting fees to Evergreen of $200,000, offset by ongoing projected royalties.
* A lump sum of $840,000 from Mason, Mich.-based Dart or a five-year agreement with annual consulting fees to Evergreen of $200,000 offset by ongoing projected royalties.
* A lump sum of $560,000 from Lake Forest, Ill.-based Solo or a five-year agreement with annual consulting fees to Evergreen of $150,000 offset by ongoing projected royalties.
* A lump sum of $560,000 from Decatur, Ind.-based Dolco or a five-year agreement with annual consulting fees to Evergreen of $150,000 offset by ongoing projected royalties.
The lawsuit contends that each company has over 70 percent market share in their individual market segments: Pactiv, in foam school trays for large school systems and school food management companies that supply schools with those products; Dart in injected foam hot and cold cups; Solo in thermoformed foam cups; Dolco in foam egg cartons and Genpak in foam trays for small and medium-sized schools that are not supplied by food-service management companies.
The lawsuit charges that Pactiv turned down requests by large school systems in Los Angeles, New York, and Chicago to participate in closed-loop PS recycling.
According to the lawsuit, the top 30 public schools systems in the U.S. purchase more than 3 million cases of foam trays per year. It contends recycling those trays would trim school waste disposal costs which current cost those schools between $30 million and $40 million by more 35 percent.