A.G. Schneiderman Files Lawsuit Against Large Beverage Distributor Alleging Persistent And Repeated Violations Of New York’s Bottle Bill
News from Attorney General Eric T. Schneiderman
FOR IMMEDIATE RELEASE
October 5, 2016
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A.G. SCHNEIDERMAN FILES LAWSUIT AGAINST LARGE BEVERAGE DISTRIBUTOR ALLEGING PERSISTENT AND REPEATED VIOLATIONS OF NEW YORK’S BOTTLE BILL
Suit Alleges That, Since 2011, North Bergen Beverage Repeatedly Broke The Law By Selling Regulated Beverages For Which Deposits Were Not Collected
Schneiderman: My Office Is Committed To Vigorously Enforcing The Bottle Bill And State’s Other Environmental Laws, And Will Seek To Hold North Bergen Beverage Fully Accountable Under The Law For Its Alleged Misconduct
NEW YORK – Attorney General Eric T. Schneiderman today announced a lawsuit alleging that a New Jersey-based company, North Bergen Beverage, and its owner and operator, Steven Arillo, have for years violated New York’s Returnable Container Act, otherwise known as the Bottle Bill. Investigations by the Attorney General’s Office and the New York State Department of Environmental Conservation (DEC) revealed that, since 2011, North Bergen Beverage has sold millions of containers of regulated beverages in New York, for which the required 5-cent deposit has not been collected and placed into a dedicated account. A portion of collected bottle deposits must then be remitted to the state. By flooding the New York market with these beverages, the company allegedly undermined the law, gained an unfair price advantage over competitors, and denied the state millions of dollars in revenue.
“The Bottle Bill is one of New York’s hallmark environmental laws – reducing litter, promoting recycling, and annually generating millions of dollars for the public benefit,” Attorney General Schneiderman said. “Our suit charges that North Bergen Beverage persistently and repeatedly broke the law in order to gain a price advantage over its New York competitors. Such conduct not only harms New York businesses, but undermines the law and deprives the state of millions of dollars in revenue. My office is committed to vigorously enforcing the Bottle Bill and state’s other environmental laws, and will seek to hold North Bergen Beverage fully accountable under the law for its alleged misconduct.”
“Companies have a responsibility to comply with the state’s environmental laws, and I commend DEC investigators and our partners in the Attorney General’s Office for taking decisive action in the North Bergen beverage case,” DEC Commissioner Basil Seggos said. “We must continue to ensure compliance with New York’s Bottle Bill law and put an end to deceptive practices that take advantage of consumers. Unclaimed deposits support important environmental programs that protect our environment, reduce the amount of waste disposed in landfills and save energy.”
New York’s Bottle Bill, which regulates carbonated soft drinks, water, beer, other malt beverages and wine coolers sold in containers of less than one gallon in size, has been one of the state’s most effective recycling and litter prevention programs. According to the DEC, the law has reduced roadside container litter by 70 percent and recycled 90 billion containers, equal to 6 million tons of materials, at no cost to local governments. Additionally, the Department estimates that program has saved more than 52 million barrels of oil and eliminated 200,000 metric tons of greenhouse gases each year.
The Bottle Bill requires that beverage containers covered by the law carry a label indicating a New York deposit of at least 5-cents, and that a deposit be collected on every beverage container that is sold in the state. The entity that first sells or offers the beverage for sale in the state, and collects the first nickel deposit, is the “deposit initiator.” Distributors, such as North Bergen Beverage, who typically buy from deposit initiators and then resell them to retailers, as well as retailers who sell directly to consumers, must also charge a nickel deposit for each container sold. Once a beverage container is returned, the process is reversed so that each party who paid a nickel in the process is refunded a nickel.
The deposit initiator must register with the New York State Department of Taxation and Finance before selling in the state, and maintain a refund account into which the deposits collected on the first sale of the beverage for consumption in the New York are deposited. When returned containers reach the beverage initiator, funds are taken out of the account for that reimbursement. On a quarterly basis, deposit initiators must remit to the state 80% of the unclaimed deposits held in the account.
Based on an investigation conducted by the Attorney General’s office and DEC, the suit alleges that, since January 2011, North Bergen Beverage – doing business under several names, including Fly Fly, Fly Fly Steven Beverage, and Beverage Plus – sold beverages in New York for which a deposit had not been initiated, in violation of the law. The suit additionally alleges that the company sold beverages for which a deposit had been initiated in New York without collecting the required nickel deposit.
The Attorney General’s lawsuit, filed in New York County Supreme Court, alleges that, all told, since 2011, the company has sold tens of millions of beverage containers subject to Bottle Bill in the state without complying with the law.
The suit charges that through these alleged illegal activities, North Bergen Beverage created an unfair price advantage for its products over its competitors in New York. Further, by flooding its New York market with millions of beverage containers for which a deposit was never initiated, North Bergen Beverage caused the refund accounts of registered deposit initiators to be reduced when the “non-initiated” containers the company sold into New York were redeemed. Since deposit initiators are required to remit 80% of all unclaimed deposits to the State of New York, the lawsuit charges that the reductions in refund accounts caused by North Bergen Beverage’s allegedly illegal activities resulted in the State being deprived of revenue conservatively estimated in the millions of dollars.
In the lawsuit filed today, Attorney General Schneiderman requests that the court provide the state with several types of relief, including:
- enjoining the company and Arillo from conducting any further beverage sales in New York without fully complying with all requirements of the law;
- ordering the company and its owner to reimburse the state for the revenue the company deprived it of by flooding the state with “uninitiated” beverage containers; and
- ordering the company and Arillo to pay penalties, as provided for in the law, for each violation of the Bottle Bill. All penalties are deposited in the state’s Environmental Protection Fund.
In 2014, Attorney General Schneiderman obtained a $160,000 settlement against another New Jersey-based company, FID Distributors, and an $80,000 settlement against a Monroe County company, The Juice Factory Corp., both for failing to register as deposit initiators and opening refund deposit accounts, while repeatedly collecting deposits, thus evading the required payment of a portion of unclaimed deposits to the state.
Attorney General Schneiderman thanks the DEC for its assistance.
This case is being handled by Assistant Attorneys General John Turrettini, Mandy DeRoche and Andrew Gershon, and Deputy Bureau Chief Monica Wagner of the Environmental Protection Bureau, which is led by Lemuel M. Srolovic and is part of the Division of Social Justice, which is led by Executive Deputy Attorney General for Social Justice Alvin Bragg. DEC Senior Attorney Cristin Clarke, and Bureau of Environmental Crime Investigations Lieutenant Jesse Paluch and Investigator Sara Komonchak are assisting in this matter.