Co. v. Mccarthy, CV-09-4043592-S.

• Decision Date: 23 April 2010
• Docket Number: No. CV-09-4043592-S.,CV-09-4043592-S.
• Court: Connecticut Superior Court
• Parties: A. GALLO AND COMPANY et al. v. Gina McCARTHY, Commissioner of Environmental Protection, et al.

51 Conn.Supp. 425

2 A.3d 56

A. GALLO AND COMPANY et al.

v.Gina McCARTHY, Commissioner of Environmental Protection, et al.

No. CV-09-4043592-S.

Superior Court of Connecticut,Judicial District of Hartford.

April 23, 2010.

COPYRIGHT MATERIAL OMITTED.

James K. Robertson, Jr., Waterbury, and David S. Hardy, New Haven, for the plaintiffs.

Richard Blumenthal, attorney general, and Robert W. Clark, assistant attorney general, for the defendants.

Garrett S. Flynn, Patricia A. Millett, pro hac vice, and Kevin R. Amer, pro hac vice, for the American Beverage Association as amicus curiae.

DOMNARSKI, J.

In this action, the plaintiffs seek declaratory relief and money damages. The plaintiffs claim that certain provisions of Public Acts 2009, No. 09-1 (P.A. 09-1), effected a retroactive taking of their property in violation of the fifth and fourteenth amendments to the United States constitution and article first, § 11, of the constitution of Connecticut. The property at issue is unclaimed beverage container deposits. The plaintiffs have moved for summary judgment on liability, and the defendants have filed a cross motion for summary judgment Additionally, the American Beverage Association has filed an amicus brief in support of the plaintiffs' motion and in opposition to the defendants' cross motion.

The plaintiffs initially sought a temporary injunction prohibiting the defendants from enforcing certain portions of P.A. 09-1. See A. Gallo & Co. v. McCarthy, Superior Court, judicial district of Hartford, Docket No. CV-09-4043592-S, 2009 WL 1532228 (May 5, 2009) ( Aurigemma, J.). At the hearing on the temporary injunction, before Judge Aurigemma, the parties jointly submitted a proposed finding of facts that were not in dispute. The application for the temporary injunction was denied. Id. The parties have asked this court to rely on the facts contained in the ruling on the temporary injunction. Accordingly, Judge Aurigemma's thorough discussion of the stipulated facts, which are set forth as follows.

IFACTS FROM RULING ON APPLICATION FOR TEMPORARY INJUNCTION

“The plaintiffs, A. Gallo & Company, Allan S. Goodman, Inc., Dichello Distributors, Inc., Dwan & Company, Inc., F & F Distributors, Inc., Franklin Distributors, Inc., G & G Beverage Distributors, Inc., Hartford Distributors, Inc., Levine Distributing Company, Inc., Northeast Beverage Corporation of Connecticut and Star Distributors, Inc., are Connecticut corporations and at all relevant times were distributors of beer in the state of Connecticut. The plaintiff Pepsi Cola Newburgh Bottling Company, Inc., is a New York corporation and at all relevant times was a distributor of soft drinks in the state of Connecticut.

“The defendant Gina McCarthy is the commissioner of the department of environmental protection (department). Commissioner McCarthy and the department are charged with administering and enforcing General Statutes § 22a-243 et seq., as amended by Public Acts [2008, No. 08-1 (P.A. 08-1) ], and P.A. 09-1, and McCarthy is responsible for depositing the payment appropriated thereby in the state's general fund.

“The state is facing a significant economic crisis. On January 20, 2009, the [defendant Governor M. Jodi Rell] ¹ announced that the estimated budget deficit for the current fiscal year ending June 30, 2009, was at nearly $922 million. On April 20, 2009, the governor announced that the 2009 budget deficit had increased to approximately $1.056 billion and that the estimated budget deficit for the next two fiscal years combined was $7.95 billion. To reduce the 2009 deficit, the governor submitted, and the legislature passed, a number of deficit mitigation plans, including P.A. 08-1 and P.A. 09-1. In addition, the governor sought state employee concessions, state agency budget rescissions, instituted a ban on state travel and nonessential purchasing by state agencies, and instituted a hiring freeze.

“[Public Acts 1978, No. 78-16], effective January 1, 1980, codified as § 22a-243 et seq., is commonly known as the ‘Bottle Bill.’ In an effort to reduce litter and solid waste levels, the Bottle Bill established a system of beverage container recycling to be administered, in part, by Connecticut's beer and soft drink distributors such as the plaintiffs. The Bottle Bill required the plaintiffs to pay a five cent refund value upon the return of empty beer or soft drink containers of the kind, size and brand sold by the distributor.

“Under the provisions of the Bottle Bill and Connecticut's long-standing and highly regulated three tier alcoholic beverage distribution system (distributor-retailer-consumer), the basic mechanics of the return and refund process function as follows:

“a. Beverage distributors such as the plaintiff[s] ‘initiate,’ or charge and collect,

a five cent refund value on each container sold to a retailer;

“b. Retailers pay the five cent refund value on each container purchased from the distributor, and, in turn, charge and collect a five cent refund value from the end-purchaser-consumer of the beverage;

“c. If a consumer returns the empty container to the retailer (or a redemption center), the retailer (or redemption center) is required to pay the consumer a refund of five cents; and

“d. The retailer (or redemption center), in turn, will return the empty container to the distributor of the

product, who must reimburse the retailer (or redemption center) five cents.

“The plaintiffs also incur costs and expense administering portions of the Bottle Bill, including:

“a. Paying a one and one-half cent statutory handling fee to the retailer (or redemption center) for each empty beer container returned. In the case of soft drinks, the statutory handling fee for the return of empty containers is two cents;

“b. Transporting empty containers from the retailer back to the distributor;

“c. Providing dedicated space for processing returns;

“d. Making arrangements for the processing and recycling of the empty containers; and

“e. Incurring the costs of labor, overhead and insurance necessary to perform these functions and to comply with the mandates of the Bottle Bill.

“After paying the refund value and the handling fee, the distributors own the returned containers, which are recyclable materials, and may dispose of them as they choose. Distributors may sell returns to third parties. The costs of performing the tasks described in the preceeding paragraph are borne by the Connecticut beverage distributors like the plaintiffs.

“Under the Bottle Bill, distributors do not hold refund values in a manner that makes them identifiable to a specific container or a specific consumer. The plaintiffs have a statutory obligation to pay retailers five cents when presented with an empty container of the kind, size and brand sold by the plaintiffs, regardless of when the container was actually sold to a retailer or consumer. The Bottle Bill does not refer to the amounts paid by a distributor to retailers upon the return of an empty container of the kind, size and brand sold by the distributor as a ‘deposit.’ Instead, the Bottle Bill defines such payments as ‘refund values.’

“On November 25, 2008, the legislature passed [P.A.] 08-1, entitled ‘An Act Concerning Deficit Mitigation’ [2008 Deficit Mitigation Act]. [The 2008 Deficit Mitigation Act] required each of the plaintiff distributors to ‘open a special interest-bearing account at a Connecticut branch of a financial institution, as defined in section 45a-557a of the general statutes, to the credit of the deposit initiator.’ P.A. 08-1, § 11(a). The 2008 Deficit Mitigation Act further provided that ‘[e]ach deposit initiator shall deposit in such account an amount equal to the refund value established pursuant to subsection (a) of section 22a-244 of the general statutes, for each beverage container sold by such deposit initiator.’ Id. ‘[F]or any beverage container sold during the period from December 1, 2008, to December 31, 2008, inclusive, such deposit shall be made not later than January 5, 2009.’ Id. All interest, dividends and returns earned on the special account were required to be paid into such account and such moneys were required to ‘be kept separate and apart from all other moneys in the possession of the deposit initiator.’ Id. [Last], the 2008 Deficit Mitigation Act provided that ‘[a]ny reimbursement of the refund value for a redeemed beverage container shall be paid from the deposit initiator's special account.’ Id., at § 11(b).

“One of the purposes of the 2008 Deficit Mitigation Act was to provide the state and [the department] with information concerning the container return rate and the amount of money representing the difference between refund values deposited and paid. The [department] published a document on its [Internet site] entitled ‘bottle Bill FAQ.’ On January 5, 2009, [the department] edited the web page by changing the name of the person at [the department] to whom public inquiries could be made about the subject matter of the web page. The updated information provided in pertinent part: ²

“Who gets the money from bottles that are not returned?

“Called unclaimed deposits, these monies accumulate from containers that are either thrown away, or recycled through curbside programs. These fund[s] are kept by the distributors.

“Beginning on December 1, 2008, the plaintiffs began opening and funding accounts in accordance with the terms of the 2008 Deficit Mitigation Act. On or before March 15, 2009, the plaintiffs were required to submit reports on their account activity for the period December 1, 2008, through February 28, 2009, to the [the department] in accordance with the 2008 Deficit Mitigation Act.

“On January 15, 2009, the legislature passed, and the governor signed, [P.A.] 09-1, entitled ‘An Act Concerning Deficit Mitigation for the Fiscal Year Ending June 30, 2009.’ Section 15 of P.A. 09-1, the section relevant to this case, provides that it is ‘[e]ffective April 1, 2009, and...