A federal judge has rejected Sony’s $ 1.2 million closed-loop cleaning case settlement, saying the dollar amount may not cover all OEM-related books.
The move marks the first time that a settlement agreement has been rejected in the years-long closed-loop refining and recovery case.
On September 27, U.S. District Court Judge Edmund Sargus, Jr. rejected the proposed deal between Sony Electronics and warehouse owners Garrison Southfield Park and Olymbec USA. Under the deal, Sony reportedly paid $ 1.2 million to help fund the cleanup of tens of millions of pounds of CRT material left behind by Closed Loop Refining and Recovery in Columbus, Ohio.
Sargus agreed with OEMs and electronics scrap companies who opposed Sony’s settlement. He ruled that the settlement was premature and that it would be unfair for the other defendants to approve it.
“[Evidence] suggests that Sony may be in possession of documents showing that it is responsible for a greater share of e-waste at closed-loop facilities than the currently proposed settlement accounts, ”Sargus wrote.
First OEM to set up
In March 2019, Garrison Southfield Park and Olymbec USA named more than 40 electronics scrap companies as defendants in the Closed Loop case, which is in U.S. District Court for the Southern District of Ohio. The owners have claimed that these companies shipped CRT materials to Closed Loop and are legally responsible for helping pay for the cleanup.
To date, the court has approved settlements, totaling more than $ 2.7 million, with 25 of those defendants. Four other electronic scrap companies have reached settlements totaling $ 7 million – the largest is the Kuusakoski Recycling / Vintage Tech deal, at $ 6 million – but the judge has yet to make a final ruling on those. regulations.
In August 2020, the owners also named as defendants Nine OEM and Electronic Manufacturers Recycling Management Co. (MRM), which works on behalf of OEMs. The plaintiffs asserted that brand owners and MRM are also responsible for funding the cleanup due to their participation in Extended Producer Responsibility (EPR) electronic disposal programs in several states.
Among the OEM defendants, Sony was the first to reach a settlement with the plaintiffs. Another OEM defendant, ASUS Computer International, and electronic waste processor Dynamic Lifecycle Innovations have jointly agreed to a settlement of $ 850,000 with the owners. This is one of the regulations that Justice Sargus has yet to rule on.
Determination of a fair contribution
After Sony’s settlement went to the judge for approval, 10 other defendants objected, including e-scrap processors, OEMs, and MRMs.
Sargus pointed out that the $ 1.2 million settlement amount was not based on the same cost recovery formula used for previous settlements, which factored in the books shipped and the costs of the cleanup project. Instead, to arrive at the figure of $ 1.2 million, the parties partially factored in Sony’s 4.38% domestic market share for this type of electronic device.
Lawyers for Garrison Southfield Park and Sony have said that because of the way OEMs meet their obligations under EPR legislation, it is “extremely difficult to assign specific weights of e-waste on the facility to Specific OEMs with a reasonable degree of certainty “. They said going through the discovery process, which involves parties handing over documents and answering questions from others, would be “expensive and potentially inconclusive.”
But other defendants objected and presented evidence that Sony ordered one of its subcontractors, Victor, NY-based e-waste processor EWASTE +, to send at least £ 11 million worth of money. material to Closed Loop, Sargus wrote in its decision (the owners also sued EWASTE +, claiming the processor shipped 16.4 million pounds to Closed Loop in Ohio).
EWASTE + (also known as Rochester Computer Recycling and Recovery) objected to Sony’s settlement and said the processor was “expressly required” by Sony to send Closed Loop all CRT material that had been collected to New York to meet Sony’s obligations under the New York EPR Act. Shipments totaled more than 11 million pounds, according to EWASTE +.
The processor submitted copies of previously confidential Sony contract documents, including a statement of work signed by Sony in January 2016, just before Closed Loop lost its R2 certification and failed, but long after it began to experience issues. financial and regulatory. The contracts include language directing EWASTE + to send material to Closed Loop. They state that Sony was to pay EWASTE + 15 cents per pound for 2014 and 2015 and 17.5 cents per pound for 2016, although the documents indicated that if Closed Loop increased its billed prices to EWASTE +, then EWASTE + could increase its billed price. to Sony for an equivalent amount.
On September 14, 2021, MRM filed a memorandum insisting that the discovery will likely reveal that Sony was a strong supporter of Closed Loop and ordered its third-party recycling companies to send material to Closed Loop to satisfy a significant share. recycling Sony CRT glass. obligations under many state EPR programs. MRM’s memo claims that this discovery would also show that MRM ordered its contract recyclers, including the Kuusakoski / Vintage Tech e-waste processor, not to send material to Closed Loop.
In its decision, Sargus wrote that “although the EPR market share method used by plaintiffs for OEM defendants is rationally connected to Closed Loop, this method may be arbitrary if there is evidence to show that Sony played a larger role in the delivery of CRT materials to Closed Loop than other OEM defendants who have a larger market share. This evidence may or may not exist. But opposing defendants have a right to make some level of discovery to find out, unless the plaintiffs and Sony can present the court with more specific evidence that the proposed settlement is fair. “