A group of beer and soda distributors filed a lawsuit against the state Thursday alleging that its attempt to retroactively take the unclaimed nickel deposits on cans and bottles violates their constitutional property rights.
James Robertson Jr., the lawyer for the bottle distributors, said Thursday in Hartford Superior Court that distributors are not arguing in this lawsuit over the taking of the unclaimed deposits going forward. He said the proposed retroactive taking of them from Dec. 1, 2008 to April 1, 2009 is a violation of their constitutional property rights.
The lawsuit seeks to stop the state from taking the unclaimed nickel deposits on April 30.
Attorney General Richard Blumenthal, who is named as one of the defendants in the lawsuit along with Gov. M. Jodi Rell and the Department of Environmental Protection Commissioner, said Friday that lawsuits based on takings claims commonly fail in Connecticut courts. But he said he would certainly fight this one “vigorously and aggressively.”
Against the backdrop of a looming state budget deficit, the legislature on Nov. 25, 2008 passed a mitigation bill which required the distributors to open special bank accounts for the purpose of processing all deposits, returns, and refunds. The lawsuit says the November Act was essentially a reporting act and it was the January mitigation bill, which went one step further toward taking the money away from the distributors.
“Consistent with its purpose as an accounting and reporting mandate, the November Act did not provide that the funds deposited in the special accounts would cease to become the property of the plaintiffs, nor that they would become the property of the state,” Robertson writes in the lawsuit.
It wasn’t until Jan. 15, as the deficit continued to grow, that lawmakers decided to take the money from the special accounts to help stem the tide of red ink.
For the past 30 years, lawmakers had been hesitant to take the nickel deposits from more than 500 million unclaimed beer and soda cans, but they argued the budget situation was dire and necessitated the state claiming the estimated $25 million per year.
Robertson said the plaintiffs still have a property interest in those deposits and by taking it the state would be violating their constitutional rights.
Robertson said there’s also a question about whether the state would take the entire nickel or whether it would account for the 1.5 cents per bottle or can that the distributors pay the grocery stores and redemption centers to collect the bottles and cans.
In the lawsuit Robertson says the legislature’s intent regarding the taking of the funds is still vague.
During the floor debate in January, Rep. Cameron Staples, D-New Haven, said, “It is our intention to spend the next few months examining very carefully the impact of the escheats on the distributors, on the individuals and companies that involved in actually implementing the program and to come back to the table, if there is a better solution between now and April 1 with an amended proposal if that furthers the policy goals…”
Rep. Vincent Candelora, R-North Branford, said Friday that there should be a provision in the legislation that allows the distributors to pay redemption centers the 1.5 cent handling fee, but those provisions were left up to the Department of Environmental Protection. He said it’s “irresponsible of government to push costs onto the private sector.” The 1.5 cents would now have to be paid by the distributors without the help of the nickel deposits.
But faced with a difficult budget situation, Candelora said he would have a hard time allowing businesses to profit from money that should be going to the state for other public purposes. He said he doesn’t think it’s unreasonable for the state to take 3.5 cents both retroactively and in the future.
Ultimately Hartford Superior Court Judge James Graham may have the final say. Graham has scheduled an April 28 hearing on the case.