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Veolia customers may join in suit settlement (11/11/2012)
By Sarah Squires
Veolia Environmental Services and its subsidiaries will pay $15 million to customers as a result of a class action lawsuit settlement. The suit alleged the company overcharged its customers in multiple states over a period of nearly 10 years. Winona area residents have been receiving letters in the mail explaining their right to join the settlement and collect payments if their fees were increased improperly during the time the alleged rate-hikes were imposed.

Veolia is the same firm that is contracted by Winona County for recycling services. That contract has been in dispute for months, since the company requested a 20 percent increase in its $730,000 annual fee for the recycling program. The Winona County Board recently agreed to pay an additional $58,000 annually for the service, although it is unclear whether Veolia will accept the offer (see sidebar).

The $15 million Veolia settlement is the result of an agreement after almost four years of litigation and seven mediation sessions. The initial suit included 12 plaintiffs, 12 law firms, and eight cases in three states. Veolia eventually agreed to a settlement in which it does not admit to any wrongful action, but agrees to pay millions of dollars to customers across the country.

According to court documents, the lawsuit claims that Veolia violated the law in two ways: “First, it claims that Veolia improperly charged and collected a number of fees. These fees were called 'fuel surcharges,' 'environmental fees,' 'administrative fees,' 'service charges,' and 'ADEM charges' or substantively similar charges which were identified differently,” states the court settlement document. “Second, it claims that Veolia increased service rates by more than CPI-U. CPI-U is a government maintained measure of inflation.”

Veolia, which offers both solid waste collection and recycling services, is part of a large global corporation that includes subsidiaries that also contract with government units to privately manage and maintain municipal sewer and water services. The $15 million settlement is not available for municipalities that have contracts for services with the company or its subsidiaries.

Any customer who believes he may have paid one of the above mentioned fees or have been subject to rate increases above the CPI-U can call 1-888-793-7581 or visit www.janokasettlement.com for more information.

Other litigation

Veolia Environnement is the Paris-based corporate parent company of Veolia Environmental Services (as well as many other subsidiaries, most of which include the word “Veolia” in the company name). It is the 33rd largest corporate employer worldwide, according to Veolia, and the largest “environmental solutions” company in the world.

Veolia, in particular its U.S. subsidiaries, which maintain and operate municipal water and wastewater treatment services, and offer solid waste collection and recycling services, has been involved in repeated litigation over the last several decades. The company has also been the target of attacks from environmental groups in the U.S. which allege Veolia has contributed to environmental harm at its wastewater treatment facilities and other related operations.

In 2008, the nonprofit San Francisco Baykeeper reached a settlement with the city of Burlingame, Calif., after it sued the city and Veolia for alleged Clean Water Act Violations. The city’s wastewater treatment facility was maintained and operated by Veolia under a contract agreement, and Baykeeper sued after allegations that millions of gallons of partially-treated wastewater were released into San Francisco Bay. The city of Burlingame was ultimately responsible for millions of dollars in upgrades to the treatment facility as part of the settlement.

In 2006, a similar lawsuit brought by San Francisco Baykeeper against the city of Richmond, Calif., and Veolia accused the city and company of spilling more than 17 million gallons of sewage in or near tributaries that empty into San Francisco Bay.

In 2004, the city of Angleton, Texas, terminated a contract with Veolia for the operation of its wastewater treatment facility and street cleaning services. The city claimed that the company had not fulfilled its contract because it had failed to provide sufficient staff members for the operation, that it overcharged the city for maintenance and administrative work, and that services in the contract were not being provided. Veolia reimbursed the city for some of the alleged overcharges, but the two remained embroiled in litigation for years after the contract was ended.

Mark Vinall, Veolia area manager in Wisconsin, said that the divisions of the firm that deal with solid waste and water services are distant relatives of his office, which deals with solid waste and recycling services. “Those are far-removed other divisions of Veolia,” he said.

Another class action lawsuit was filed in December, 2011 in U.S. court by two New York law firms on behalf of purchasers of Veolia American Depositary Shares between 2007 and 2011. The suit alleged, among other things, that the company issued misleading financial statements and did not have a reasonable basis for releasing positive information about its financial prospects. The suit was eventually dismissed.

Richard Burke, President and CEO of Veolia Environmental Services North America Corp., announced in December 2011 that its Paris-based parent company Veolia Environnement planned to end its solid waste business in the U.S., and would seek a buyer for its North American branch. “These divestiture plans are in support of Veolia Environnement’s existing program to pay down debt and increase cash flow, which has been in place since 2009 and was expanded earlier this year,” Burke said in a statement. “Our solid waste business is self-sustaining, profitable and highly marketable, and its sale will make a significant contribution to the financial well-being of Veolia globally.”

Winona County and Veolia

Winona County contracted with Veolia for curbside recycling services for all county residents last year, and the service began in December, 2011. The $730,000 contract was initially for residential pick-up services for all county households, after county staff determined the program would be less expensive than the old recycling program, in which residents brought recyclable goods to sheds located in each township.

A third-party contractor distributed the recycling totes to households throughout the county. Those workers mistakenly distributed nearly 600 totes to 146 businesses in the county that were not included in the original contract. Veolia proceeded to provide recycling services to these businesses, despite the fact that small businesses were not included in the original contract.

County staff members recalled that Veolia also expressed problems with the service in January, 2012, telling county staff that there were more than a dozen roadways in the county that were difficult or impossible to service with large collection trucks. It also told county employees that it had received complaints in the city of Winona from residents who had difficulty bringing the totes to the curb, and thus wanted pick-up service in alleys. The company then reportedly told county staff it would “take care” of the problem, and began providing pick-up service both at the street curb and in alleys on some blocks in the city.

In July, Veolia approached the Winona County Board with these issues and asked for an addendum to the original contract that would provide for a 20 percent increase—$160,000 annually—in the cost for the recycling program.

County commissioners rejected the request, and asked staff members to negotiate with the company to find another solution. The board was also warned by the Winona County Attorney’s Office that such a contract increase could pose legal issues with the original bidding process. Another company submitted a bid for the contract that was $100,000 over Veolia’s base contract, and an increase of $160,000 could be construed as a violation of state bidding laws.

County staff approached the board earlier this month with a proposal to give Veolia another $58,000 annually for the service. The board agreed to the price in a 4-1 vote, with Commissioner Marcia Ward voting against the increase.



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