Dumpster Divers Extract Millions of Dollars. Again.

From 2013 through 2015 investigators checked trash dumpsters from Home Depot stores. Based on what they found, the California Attorney General and various District Attorneys (collectively the “State”) brought a claim with astronomical potential penalties for what they had found.

Home Depot agreed to pay $27.8 million to settle the claim when faced with the evidence of discarded materials that included regulated hazardous waste and readable customer information. The March 8, 2018 Consent Judgment provides not only for that penalty, but for injunctive relief requiring programs to prevent future inadvertent disposal of such materials.

The lawsuit capped three years of “Dumpster Dives” by the investigatory arms of these agencies. Investigators followed trash collectors off more than 300 Home Depot retail sites and sifted through the rubbish. They then catalogued and photographed batteries, aerosol cans and electronic devices which had been thrown in the trash, rather than recycled. These types of wastes are technically Hazardous Waste, but under California law they fall under a less stringent regulatory program for Universal Waste due to their less serious hazard to human health/environment and their ubiquitous nature in society. Businesses should recycle them. The investigators here also found paint (a classic hazardous waste) and items containing customer information that had not been correctly redacted or covered to conceal customer information. The lawsuit alleged violations of hazardous waste laws, universal waste law, customer privacy laws and unfair competition (e.g., Home Depot enjoyed an alleged advantage over competitors since it wasn’t properly recycling universal waste or shredding confidential information).

The Consent Judgment entered by the Court on March 8 imposes penalty payments, injunctive relief, and a host of environmental compliance programs (some required by law and some characterized as “above compliance programs” that require Home Depot to spend $6,840,000 in order to offset up to $3,420,000 in penalties). In total, the company must:

• Pay $27.84 million in penalties, environmental projects, and reimbursement to the agencies for investigation and enforcement costs.
• Comply with environmental and customer record regulations. The injunctive relief basically tracks the regulations – the company must comply with all laws and regulations relating to generating, storing and disposing of hazardous waste, including universal waste, as well as those regulations requiring the company shred or somehow make unreadable any customer records or personal information.
• Implement compliance programs, explicitly agreeing to:
  • employ environmental managers;
  • implement a daily inspection program of various store areas, such as Garden and Paint;
  • enhance its IT program to identify hazardous materials in products it stocks; and
  • provide proof of prior trash compactor assessments it claims to have already performed.

This is not Home Depot’s first battle with the State on this topic. On October 2, 2007, it entered into a similar Consent Judgment with the State and paid $9,900,000 as penalties. The 2007 Consent Judgment was one of the earliest settlements by the State’s environmental investigatory team, and it represents more of a “bare bones” agreement. It required future compliance, but, unlike the 2018 decree, did not contain explicit requirements regarding training, updating regulatory programs, adding new hires, status reports or certifications under penalty of perjury.

The State’s years-long Dumpster Diving investigation into the practices of a company with which it already had a Consent Judgment shows an aggressive bent. These agencies are extracting millions of dollars in settlements for alleged violation of hazardous waste disposal in a program based on human activity and error (trash discard). Companies – even, and maybe especially, those that have previously settled with the State over their trash management practices – better review their training programs and compliance records, focusing on environmental department programs and trash inspection….or they may find the State comes knocking. Again.