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MD Recycling, Inc. v. Allied Waste Industries

September 18, 2007


The opinion of the court was delivered by: Leon Jordan United States District Judge


This civil action came before the court for hearing on September 10, 2007, on plaintiff's motion for a preliminary injunction [doc. 2]. Plaintiff, MD Recycling, Inc. ("MDR"), filed a verified complaint on August 24, 2007, alleging breach of contract and requesting injunctive relief [doc. 1]. At the same time MDR filed its motion for a preliminary injunction. After hearing the testimony of witnesses and the argument of counsel and considering the documentary evidence presented, the court is now prepared to rule on the motion. For the reasons stated herein, the motion for injunctive relief will be denied.

I. Background Factual

MDR is a recycling company that engages in the secondary aluminum smelting business in Midway, Tennessee. It takes scrap aluminum and through the use of salt and potassium chloride flux melts the aluminum into blocks called ingots. Waste byproducts created by the process called salt cake and baghouse ash must be disposed of by MDR. On April 1, 2006, MDR entered into a "Special Waste Services Agreement" with defendant, Allied Waste Industries, Inc. ("Allied"), to dispose of this waste.*fn1 This was a renewal of their relationship as MDR had exclusively used Allied's disposal services since 2002.

The contract has a six year term for the "Disposal of Special Waste" described as "Salt [C]ake and Baghouse Ash." The base rate for the first year of the contract is $17.00 per ton and increases over the term of the contract to $21.69 per ton in the sixth year. Disposal rates are subject to a sliding scale, and tonnage is calculated on a monthly basis. Article I under Terms and Conditions of the contract states:

During the term hereof, subject to waste approval by BFI and availability of airspace or any periodic quantity limitations imposed by applicable law, regulation, permits or otherwise, BFI will exclusively collect, transport, process, treat, recycle and/or beneficially use and/or dispose of Customer's Special Waste as set forth above ("Services") and Customer will provide such Special Waste to BFI in accordance herewith. As used herein, the "Special Waste" means the waste set forth above and meeting the descriptions in and otherwise provided to BFI in accordance with all requirements in BFI's Waste Characterization Data Form for waste approval ("WCD"); provided, however, that any conflict between descriptions of waste above and in the WCD shall be governed by the WCD; provided further, that "Special Waste" shall exclude any amount of waste which is hazardous waste. The term "hazardous waste" as used herein shall include, but not be limited to, any amount of waste listed or characterized as hazardous by the United States Environmental Protection Agency or any state agency pursuant to the Resource Conservation and Recovery Act of 1976m as amended, and including future amendments thereto, and other applicable law or regulation and any polychlorinated biphenyls (PCB's) regulated by the Toxic Substances Control Act.

Plf. Ex. 2 (emphasis added).

In a letter dated April 12, 2007, Allied informed MDR that it would no longer be accepting MDR's special waste. That letter provides in pertinent part:

As you may know, the recent activities at the Countywide Landfill near Canton, Ohio, have drawn national attention to the management of certain industrial wastes. As a result, Allied Waste has conducted a review of all currently approved and pending special waste approvals and will no longer accept wastes with aluminum hydroxide as a constituent. These wastes include aluminum dross, sludges, filter cake, salt cake, and the associated baghouse dust from secondary aluminum production operations.

Although we greatly value the relationship with our industrial waste customers, it is vital that we protect our landfill assets and the surrounding communities in which we operate. Our ability to manage these sites in accordance with environmental regulations is of utmost importance. It is for these reasons that we have decided to suspend the acceptance of secondary aluminum production wastes effective May 15, 2007.

Plf. Ex. 4. The letter offered an alternative disposal option at a site in East Carbon, Utah. Allied agreed to dispose of MDR's waste for an additional 90 days, through August 15, 2007, at an increased rate of $45.00 per ton.

MDR has entered into an oral agreement with a competitor, Aleris, for disposal of the waste at a price of approximately $75.00 per ton. MDR is currently working on developing a process for disposing of its waste that will not require any special means of disposal. However, that alternative process is several months away from implementation.

Nature of Aluminum Waste Products A critical factor in this case is the nature of the special waste generated by MDR. The record indicates that aluminum reacts with water and creates aluminum oxide and ammonia. The result is the production of heat and gases, primarily hydrogen and ammonia. Thus, problems can arise when salt cake and baghouse ash, which contain aluminum, come in contact with water in municipal solid waste landfills.

The Countywide Landfill situation referred to Allied's April 12, 2007 letter involved a metal/chemical fire in a municipal landfill that was the result of a chemical reaction that occurred when aluminum waste came in contact with liquids and significant amounts of gas and heat were generated. There was also a smoldering fire involving ...

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