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U.S. Court Renders Split Decision on Sears, Recycler Contract Dispute

Article-U.S. Court Renders Split Decision on Sears, Recycler Contract Dispute

This article has been updated to clarify that the court did not rule that APS was correct in a charge of fraud against Sears.

In a contract dispute over recyclables, the U.S. District Court for the Northern District of Illinois, Eastern Division, ruled with appliance recycler APS Express Inc. that it can move forward in its attempt to prove fraud by Sears, but ruled with Sears and its affiliated companies on APS’ charge of breach of contract.

Sears contracted with Miami-based APS to process all the used appliances Sears hauls away from its customers’ homes after they buy a new appliance. APS had claimed that Sears allowed its truck drivers to cherry-pick the higher value haul-away appliances, because policing such action had a negative impact on delivery times, according to the suit. It also allowed Sears to subsidize delivery driver compensation with property in which APS had a contractural right.

APS maintained that the contract meant it would receive all the materials generated by Sears, both good and bad. APS claimed fraud, tortious interference and breaches of contract by against EPS by Sears Holdings Corp., Sears Holding Management Corp. and Innovel Solutions Inc.

Judge Sharon Johnson Coleman ruled in favor of the defendants on seven of the nine counts. It agreed with Sears that the theft of appliances by Sears’ truck drivers does not constitute a breach of contract. It said APS has no right to materials until they are loaded on its trailers and driven off of Sears’ property.

On the fraud charges of volume and scope misrepresentation, the court ruled that APS could move forward to attempt to prove the claims. Coleman concluded that even if APS relied on false data and might not have been awarded the contract if it had placed a lower bid, it would not have spent the money it did in preparing for and performing the contract. Also, it would have been free to pursue other, more lucrative business opportunities.

In addition, the court dismissed APS’ claims of negligent misrepresentation.

Appliance recyclers and big manufacturers continue to forge relationships. Earlier in the year Retailer Spichers Appliances, Hagerstown, Md., agreed to recycle nearly 10,000 appliances annually through a recycling program backed by General Electric (GE) Appliances, Fairfield, Conn. The family-owned retailer will use the services of ARCA Advanced Processing (AAP), a Philadelphia-based company that provides appliance end-of-life management services, including for GE Appliances in 12 Eastern states.

Also, Recleim LLC, a next-generation recycling services provider, partnered with Dumpster Depot, a waste-removal and recycling company, to offer South Carolina’s Aiken County residents an environmentally-sound solution for disposing of household appliances. Items accepted include refrigerators, dishwashers, washing machines and dryers.

In a recent column for Waste360’s Recycling Business, Jason Linnell outlined some of the challenges of defining electronics. Manufacturers pay close attention to this issue because the definition can mean the difference between having to register and pay for recycling programs, or being completely exempted of requirements, Linnell pointed out.

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