Three Southland law firms have filed a class-action lawsuit on behalf of Santa Clarita residents who say they have been “systematically overcharged” by Santa Clarita’s trash companies. The lawsuit seeks to recover the alleged excess charges as well as punitive damages for breach of contract, unfair business practices and fraud.
It accuses the trash companies, which are franchised by the city of Santa Clarita, of overcharging residents as “part of a scheme conceived by (the trash companies) to maximize the amount of money (they) could collect from individual clients to remove the trash while minimizing (their) cost to actually dump the trash.”
The lawsuit, filed Wednesday, targets Santa Clarita Disposal Co., Blue Barrel Disposal Co., Atlas Refuse Removal Co. and their corporate affiliates. Blue Barrel and Santa Clarita Disposal, now owned by Waste Management Inc., haul 85 percent of the city’s household waste; the remainder is hauled by Atlas, a Consolidated Disposal Service company.
According to the lawsuit, the trash companies were required, under their 1991 contracts with the city, to calculate residential trash rates on the basis of the amount they pay to dump trash in a landfill.
The plaintiffs allege that the trash companies “purposely misled” the city of Santa Clarita and its residents, “with the intent of defrauding all of the residents of the city of Santa Clarita in order to illegally maximize (their) own profits at the expense of (their) clients.”
“They had the duty to notify the city ... and they didn’t,” said Greg Owen, a Valencia attorney representing the plaintiffs.
In 1995 the city hired a consultant who calculated household trash rates in part on an expectation that the haulers would be paying $34.33 per ton to dump trash. However, unrelated court records show Blue Barrel was under contract with the Chiquita Canyon Landfill to pay $25.59 until 1999, when its per-ton cost was cut to $11. Meanwhile, city residents continued to pay rates based on the presumed $34.33 dumping charge.
The haulers “improperly overcharged the individual residents of the city of Santa Clarita an inflated rate based upon an inaccurate dumping rate” since 1996, the lawsuit alleges.
It claims residents are still being overcharged since the same contract rates are still in effect.
Several other Southland law firms have indicated their intent to file similar class-action suits.
When the trash rate discrepancy was discovered by The Signal in early 2001, Blue Barrel’s then-manager Karl McCarthy told the City Council it would be economically unfeasible for his company to reduce the amount it charges households for trash pickup.
The council, at the time, was considering a renewal of the trash contracts. After delaying its decision, the council granted a temporary extension at the same household rate.
A year later, when the city and its haulers failed to meet a state-mandated recycling requirement, the council put the $135 million contracts to a competitive bid.
Last month, the council approved a new contract with Waste Management (Blue Barrel) that will result in substantially reduced rates to households — from the current $22.13 per month to $18.64 beginning in January, falling further to $16.25 when the new contract takes effect in April 2006.
The lawsuit seeks to determine whether the trash companies were obligated to adjust the rates they charged residents based on the amount they were paying to dump trash in the landfills; whether the companies misled the city of Santa Clarita about the dumping fees; and whether their actions constitute breach of contract, unfair business practices, and fraud.
Owen said the city of Santa Clarita is not being sued, although it is possible the trash companies could name the city as a cross-defendant.
Jill Fosselman, assistant to City Manager Ken Pulskamp, said the city has a policy not to comment on pending litigation.
Blue Barrel Manager Chris Fall declined to comment, saying his company has not yet seen the complaint.
“It sounds similar to an audit conducted a few years ago that found nothing wrong,” Fall said.
The audit, initiated by the City Council in 2001 to investigate allegations of inflated trash rates and higher landfill tonnages, was inconclusive. The council terminated it in March 2002 before it could be completed, ruling it too costly to pursue.