Casella Waste Systems has agreed to pay the state of Vermont $1 million in a settlement over questionable trash hauling contracts with consumers.
The Rutland-based garbage hauler said it accidentally violated a 2002 agreement with the Vermont attorney general that was designed to protect consumers from anti-competitive service contracts.
Attorney General Bill Sorrell began an investigation into the trash service company’s contracts with customers in 2009 and 2010. The probe resulted in the state’s largest settlement with a Vermont business, according to Sorrell.
The company reported revenues of about $466 million in fiscal year 2011.
In 2002, Casella signed an “Assurance of Discontinuance” agreement with the attorney general that ordered the state’s biggest waste management company to stop issuing contracts that made it difficult for customers to switch trash hauling services. The contracts mandated that customers provide Casella with information about trash service offers from competitors. The company also required consumers to provide notification of service discontinuation four months in advance.
In the latest probe, Sorrell found that Casella, despite its legal agreement with the state, continued to require these contractual requirements.
In 2009 and 2010, Casella “erroneously” issued approximately 2,441 contracts to customers with anti-competitive terms.
In a press release from the company, Casella officials said the company mistakenly issued some service contracts that did not comply with the agreement. When Casella learned of the “errors,” officials said, it corrected the customer contracts and agreed to pay a penalty to the Attorney General’s Office, “fully resolving the inquiry.”
John W. Casella, chief executive officer of Casella Waste Systems, said in a statement released on Marketwire, a business news aggregation site: “These inconsistencies were isolated and are the result of an honest mistake. No customer suffered any harm at any time. We corrected the error, and notified those affected customers.”
According to the 2002 Assurance of Discontinuance, each violation of the agreement could have resulted in a $10,000 fine. If Casella had been penalized for every contract in violation sent to customers the company would be facing approximately $24.4 million dollars in penalties.
“It’s fair to say we were looking for more than that ($1 million),” Sorrell said in an interview. “There was some give and take as there always is.”
Under the terms of the 2002 agreement, Casella was required to strike two terms in its service contracts. But in 2009 and 2010, the company continued to ask consumers to give Casella “notice of any offer by or to another solid waste hauling firm or requires a customer to give respondent (Casella) a reasonable opportunity to respond to such an offer for any period not covered by the contract.” In addition, Casella asked customers to “grant us the right” to match written competitive offers.
The second violation was of a provision in the agreement that prohibits any contract term that “requires that the customer give respondent (Casella) notice of termination more than thirty (30) days prior to the end of any initial term or renewal term.”
The contract states: “As your partner we are committed to resolving any issue that may arise. In the event that you are still not satisfied, you agree to give us four months notice in writing so we can find a new home for your container.”
Casella initially claimed the state’s 2002 agreement was unclear. Eventually, company officials realized they had made a mistake, resulting in the settlement.
Casella didn’t change its contracts after 2002 because of a lack of communication between its legal department and customer service departments, according to Sorrell.
“One hand didn’t know what the other was doing,” Sorrell said.
Casella must pay $400,000 within two weeks of the revised final judgment, followed by incremental payments of $200,000 at the end of October, November and December.
“Although we are not happy paying a penalty of this size, particularly since no customers were harmed in any way and our error was unintentional, we recognize that we made a mistake,” John Casella said. “We have learned from that, and are moving on.
