Judge rules against city of Fort Smith in recycling lawsuit

The city of Fort Smith lost a class-action lawsuit related to recycling services, with Sebastian County Circuit Court Judge Stephen Tabor ruling Wednesday (Aug. 3) that the city owes $745,057 for not properly processing recyclable materials.

The city took recyclable materials to the landfill from October 2014 to June 2017, though residents were not notified that recyclables were not being recycled. From October 2014 to June 2016 some of the city’s recyclable material was taken to Green Source Recycling in Clarksville, though during that time 89% of the recyclable material was dumped in the landfill. The city claims the period in which recyclable materials were not properly discarded was July 1, 2015 to May 1, 2017.

A lawsuit was filed in late 2017 by Jennifer Merriott alleging the city lied for almost three years to residents about recycling efforts. The city has admitted to redirecting recycling to its landfill.

Tabor disagreed with the city’s assertion that because it collected a single fee for waste and recycling removal it couldn’t place a value only on the recycling service. He also said the city’s actions to deceive the public proved the recycling service was valuable to the city and its residents.

“The fact that the City never abandoned their interest in a recycling program, notwithstanding two years of inaction during the period of disruption, demonstrates they recognized the value of the program. The fact that City officials took great pains to hide that recycling was essentially non-existent for thirty (30) months signals that the City knew recycling was a benefit citizens expected to be serviced by the City,” Tabor wrote in his ruling.

Continuing, he noted: “(T)he Court finds the class paid money expecting, in part, to receive recycling services. Further, the City accepted that money knowing the expectations of those paying the money and that the reasonable value of the expected services has been established.”

It is unclear how much each resident will receive who was active during the period covered in the lawsuit. Any payment could also be delayed if the city decides to appeal the ruling.

Whit Hyman, an attorney for Merriott with Fort Smith-based King Law Group, said he is confident Tabor’s ruling will stand if the city decides to appeal.

“This decision is a victory for governmental accountability, proper stewardship of taxpayer funds, and the environment. I hope the City accepts responsibility and does not appeal this decision. However, if they do so I’m confident the Arkansas Supreme Court would uphold Judge Tabor’s excellent decision,” Hyman told Talk Business & Politics.

The city is likely to appeal, according to a statement from City Administrator Carl Geffken. Following is his complete statement.

“We received the opinion and order of the court today for the recycling lawsuit. The court found in favor of the plaintiff on both pleaded claims (illegal exaction and unjust enrichment). As a result, the Court has awarded damages in the amount of $745,057.85 to all sanitation rate payers between July 2015 and May 2017.

“We believe the court has erred as a matter of law in finding an illegal exaction in this matter. Tax monies, not fees charged for services must be the issue in a public funds type of illegal exaction. It is undisputed that the funds at issue in this case were sanitation fees and not taxes. Further, there is no precedent supporting the court’s application of an illegal-tax analysis to a public funds case. As to the unjust enrichment claim, the undisputed evidence at trial was that the usage of the rear loaders to collect/transport the recycling was more cost efficient than using the automated trucks for that function. Put another way, there was no evidence that the City would have spent less money in collecting the recycling had it done so in a different manner. As such, we maintain there was no evidence that the City was unjustly enriched.

“City Administration and the City Attorney strongly recommend the City appeal this decision.”