A proposed class action alleges Waste Connections has overcharged customers for waste removal services by levying “unlawful and excessive” fuel surcharges and price increases.
The case alleges that although Waste Connections US, Inc. and Waste Connections Palmetto, Inc. have represented an add-on “Fuel & Material Surcharge” as a pass-through cost related to fuel and materials price increases, the charge is, in truth, a “hidden profit device” unrelated to the defendants’ actual costs.
“In fact, during the time period at issue, Waste Connections effectively has no [sic] increased fuel or material costs, nor has it ever attempted to quantify such costs or to tie the methodology or amount of the ‘Fuel & Material Surcharge’ to such costs,” the breach-of-contract lawsuit alleges.
The suit further claims that although Waste Connections maintains that it may increase rates “to adjust for increases in the Consumer Price Index” (CPI), the defendants have “deliberately and repeatedly” overcharged customers through automated price increases that far outweigh changes in the CPI. The complaint alleges Waste Connections has, as a direct result of its allegedly unlawful surcharges and rate increases, “wrongfully taken tens of millions of dollars” from customers.
According to the case, Waste Connections, who the complaint notes is one of the largest waste disposal companies in the U.S., enters into standardized contracts that purport to allow the defendants to pass through to customers “specific, discrete costs” the company may incur in the course of providing services. Per the suit, increases in “fuel and materials” may be passed through “proportionately to adjust” for service costs by way of a “Fuel & Material Surcharge” line item on customers’ invoices.
The lawsuit alleges, however, that the fuel and material surcharge is “wholly unrelated” to Waste Connections’ actual or increased costs for fuel and materials, and “far over-recovers any such costs.” Instead of applying the funds it receives from the surcharge to its supply costs, Waste Connections recognizes the amounts directly as revenue, the lawsuit says.
“The method by which Waste Connections determines the ‘Fuel & Material Surcharge’ has no relation to its increased fuel or material costs or to any changes in those costs,” the complaint claims. “It is arbitrary in that the only driving factor is the profit Waste Connections seeks to derive from this fee while maintaining the false appearance of the fee as a legitimate charge related to specific, discrete increased costs.”
The suit goes on to claim that Waste Connections has also violated its contracts with customers by “systematically increasing rates” by more than the changes in the Consumer Price Index. According to the complaint, Waste Connections’ contracts state that the company may increase rates “from time to time to adjust for increases in the Consumer Price Index.” The suit alleges, however, that the defendants’ price increases “far out-strip CPI increases over any given time period.”
Upon information and belief, the case says, the price increases are directed by the defendants’ corporate officers “as part of a broad strategy to increase profit.” Per the complaint, the amount of the price increases is “significant” and can result in customers paying 50 percent more than they agreed to by the end of the term of their contract.
Waste Connections, the case alleges, knows when it initially presents contracts with fixed prices that it will, unbeknownst to customers, “inflate these prices precipitously and continually.”
Get class action lawsuit news sent to your inbox – sign up for ClassAction.org’s newsletter here.