I used to love to watch the TV show Columbo where the fumbling detective always outsmarted the bad guy by playing dumb. He would probe and push and almost apologetically ask the critical question that unraveled the mystery. Columbo would say, "Just one more little thing… something I don’t quite understand… If you could just explain for me…" Then he would expose what really happened, focusing on the one thing that everyone else seemed to overlook.
A similar situation appears to be developing in the two major court cases involving recycler rights and just compensation for returning CHEP-marked pallets back to the rental giant. Just in case you haven’t heard, Buckeye Diamond Logistics has settled its case with CHEP USA; and the federal appeals court has overturned the monetary award and ruling in the Mock Pallet Co. case. See the related story on page 66.
Some may think that these recent developments indicate that it is all over. CHEP has won the battle while recyclers can pocket a small concession in the form of a fuel surcharge added to CHEP’s Asset Recovery Program (ARP). But I tend to think that there is just one more little thing. And that little thing is a big deal.
Sure, the Buckeye case is over and none of the sensitive documents about the value of recycler services to CHEP will be disclosed. But the Mock case continues on, and the recent ruling by the Federal Appeals Court for the Eleventh Circuit raises some major questions about the legality of CHEP’s ARP. I used to raise the question, "Is CHEP’s ARP fair compensation for recycler services?" Now, I am raising the question, "Is the ARP even legal given the ruling by the appellate court in the Mock case?"
Do I have your attention yet?
The appellate court ruled that Mock Pallet is entitled to compensation under the unjust enrichment. And according to the ruling, the measure of damages is based on the benefit conferred upon CHEP, not the cost to render the services or the cost of goods. Damages based on the benefit to CHEP would likely be substantially more than just the cost of the service. CHEP has publicly stated that its ARP has been based on the costs associated with sorting, storing and transporting CHEP-marked pallets, not the benefit of the service to CHEP. This means that CHEP’s ARP does not adequately compensate Mock Pallet according to the ruling by the appellate court.
And while CHEP would likely say this is just one court’s opinion, it shows that CHEP’s ARP might not stand up in court under the unjust enrichment law existing in most states. If more recyclers were to contest the current payment structure, CHEP would have to seriously consider changing it. Regardless of whether or not CHEP’s ARP is legal compensation, CHEP will likely continue to push it unless recyclers challenge for something more.
In the Buckeye Diamond Logistics case, CHEP made a last minute appeal to seal many of the pertinent documents and to keep them from public record. In the interest of promoting the welfare of the industry and to make sure that the industry knows the truth about the value of recycling services to CHEP, Industrial Reporting Inc. (IRI), the publisher of the Pallet Profile and Pallet Enterprise, joined the case filing to keep the court open.
IRI believed that some of the records that CHEP wants to keep out of the public arena have ramification far beyond just Buckeye. Of course, that is all a moot point now that the case has been settled. But IRI stood up for disclosure because it believes the industry needs to know if CHEP is really playing fair and being legal with its business practices.
I will keep on asking these hard questions and looking for clues until I find the secret to the mystery.
