ReCommunity and Ann Arbor, MI settle contract lawsuit with no monetary damages
- The Ann Arbor City Council unanimously approved a resolution authorizing the city attorney's office to finalize a settlement and obtain dismissal of a lawsuit filed by Resource Recovery Systems and FCR, collectively known as ReCommunity, as reported by MLive. This suit was originally filed in July 2016 after the Michigan city terminated ReCommunity's contract to operate its local MRF.
- This was preceded by an Aug. 31 opinion from a U.S. District Court judge that granted Ann Arbor's motion for partial dismissal. The decision centered around the interpretation of contract terms and ReCommunity's claims of property damage due to lost profits. No monetary damages will be awarded as a result of the proposed settlement.
- Per the terms of the settlement, ReCommunity will "dismiss and release with prejudice all claims, including all the claims they brought or could have brought against the City in the lawsuit." In turn, the city will "release with prejudice all claims, including the claims it submitted against the surety bond for the contract, and all the claims they brought or could have brought" against ReCommunity. The council resolution also stipulates that Ann Arbor's "rights to indemnification and to coverage as a third party insured under the contract for claims arising under the contract remain in effect."
According to the court documents, ReCommunity — and previous versions of the company — had been operating the Ann Arbor MRF and transfer station since 1993. The company's latest contract was set to run through 2021. More recently, the city encouraged ReCommunity to begin taking third-party material under separate contracts and switch to a revenue-sharing model. This was activated once net revenue passed $54 per ton.
ReCommunity claims that Ann Arbor made nearly $2 million through this deal, including revenue from third parties. The company claims that relations began to sour once commodity prices shifted and the city started owing money, rather than making it. According to ReCommunity, Ann Arbor still owes close to $184,000 as a result. Responsibility for the cost of a new $550,000 baler that the city promised to fund was also a factor leading up to the abrupt termination of ReCommunity's contract in July 2016. The city claimed this decision was due to safety and performance issues.
Following the termination and ensuing lawsuit, Ann Arbor brought in Waste Management for a temporary arrangement that was extended multiple times. Earlier this year, the council approved a new one-year contract with nonprofit Recycle Ann Arbor to take over operations while a longer-term plan was developed. Due to issues at the facility, all material is being shipped loose offsite for sorting at other facilities such as Rumpke Waste and Recycling Services in Cincinnati.
While all of this was happening, ReCommunity was hashing out the details of an acquisition by Republic Services. The company — created in 2011, and often billed as the nation's only large independent recycler — is now set to join the second largest operation in the U.S. industry. This will include 26 MRFs in 14 states and a number of long-term municipal contracts.
- MLive Ann Arbor settles lawsuit over firing of city's recycling plant operator
- U.S. District Court - Michigan Opinion & Motion for Partial Dismissal
- Ann Arbor City Council 17-1585
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