Garbage, recycling company hits city with another multimillion-dollar lawsuit

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This article was published 06/12/2022 (1095 days ago), so information in it may no longer be current.

The city is facing another multimillion-dollar legal challenge from its former garbage and recycling collector, years after the same company launched a $67 million lawsuit against the municipal government.

On Sept. 29, Emterra Environmental filed a statement of claim, alleging the city unfairly deducted some payments to the company, failed to provide compensation for extra work and failed to provide applicable bonuses, among other issues. Overall, the company seeks roughly $6 million in damages.

“The defendant had no regard for the interest of the plaintiff or the effect the money it was unlawfully withholding had on the plaintiff and its ability to conduct business. In so doing, the defendant caused the plaintiff significant damages,” the statement of claim alleges.

The court document says the alleged damages relate to contracts Emterra was awarded to collect, process and market Winnipeg recyclables.

When the city replaced blue-box collection with automated carts in fall 2012, Emterra claims the recycling contamination rate got much higher, which required extra time, money and resources to sort. Emterra claims it informed civic officials about the problem but the city didn’t start compensating the company for the extra work until September 2017, which cost Emterra $3.3 million in lost revenue.

Emterra also alleges the city incorrectly audited its work, leading it to “wrongfully” withhold more than $2.4 million in payments from the company.

“The defendant was not entitled and thus acted in a high-handed manner when it withheld money that was properly due and owing to the plaintiff,” the statement claims.

The court document claims the city also made improper inflation adjustments, neglected to pay bonuses for extra commodity sales and failed to update a contract to reflect changes in the provincial sales tax, creating further losses for Emterra.

On Tuesday, the company’s lawyer, Robert Tapper, said the city had not yet been served with the statement of claim.

The matter is separate from a much larger lawsuit Emterra filed against the city in 2018.

That $67 million suit alleges the city breached its contract with Emterra for garbage, recycling, bulk waste and yard waste collection, which ran from 2012 to 2017. In that legal claim, the company alleges the city failed to supply correct data to Emterra for route and resource planning, bought substandard garbage and recycling carts, changed the scope of work midway through the contract and unfairly charged financial penalties.

The lawsuit alleges the company was required to work with a cart inventory data system that had more than 66,000 errors, which included assigning some carts to the wrong addresses and assessing 26 different units as one pickup.

“It’s massive lawsuit… there’s just so many things that the city did wrong and what we will argue were contrary to the contract,” said Tapper.

That larger lawsuit is expected to be heard in court for about eight weeks, beginning on Jan. 15, 2024, he said.

Tapper said the lawsuit’s complexity prevented it from moving forward sooner.

“The discovery process took the better part of two years…. In that lawsuit, there were 109,000 documents,” he said.

In a 2018 counterclaim, the city denied causing Emterra any financial loss, alleging the company suffered from its own “managerial incompetence” and poor planning, as well as a lack of proper equipment and staff.

“The plaintiff’s continual breaches of contract resulted in thousands of calls to 311 every week and numerous service deficiencies,” the city’s court submission stated at the time.

On Tuesday, the city declined to comment on the additional legal challenge filed in September.

“The city isn’t able to comment while the matter is before the courts,” spokesman Kalen Qually said in an email.

None of the allegations has been proven in court.

joyanne.pursaga@freepress.mb.ca

Twitter: @joyanne_pursaga