By Dan Christensen, FloridaBulldog.org
High-stakes Broward litigation has heated up with a judge’s ruling that a recycling company has provided sufficient evidence to establish that Waste Management’s effort to hide certain corporate records is bogus because the garbage giant may have sought legal advice to perpetrate a crime or fraud.
Attorneys for Waste Management will get a chance to rebut the court’s decision that Davie-based Bergeron Environmental and Recycling had made a prima facie case that some documents Waste Management is trying to shield are not subject to attorney-client privilege. No hearing date for that rebuttal argument has been set.
Attorney-client privilege usually is the legal right to keep secret communications between a lawyer and a client. But one exception to that right in Florida law is known as the “crime-fraud exception.” It holds that there is no lawyer-client privilege when “the services of the lawyer were sought or obtained to enable or aid anyone to commit or plan to commit what the client knew was a crime or fraud.”
A court special master determined last month that Bergeron Environmental and Recycling had met its legal burden of demonstrating a prima facie case for the crime-fraud exception. On Nov. 7, after an “extensive in camera review,” Broward Chief Judge Jack Tuter approved the special master’s finding regarding certain allegedly privileged documents as being subject to pre-trial discovery by Bergeron due to the crime-fraud exception.
In a court document filed Nov. 13, attorneys for Waste Management stated that documents cited as establishing the crime-fraud exception were “inadvertently” turned over to Bergeron Environmental and its attorneys. The special master’s findings, however, were made with other documents.
What those documents are about, and why the court considers them to be good evidence of a possible crime by Waste Management, is not known. But at least some of them relate to events surrounding Waste Management’s $525-million acquisition of assets of Davie-based Southern Waste Systems in January 2016 and state and federal regulators’ antitrust review of it.
SWS’s recycling division, Sun Recycling (now known as LGL Recycling) , was 50-50 partners with Bergeron Environmental in Sun Bergeron, a joint venture that starting in 2013 processed tons and tons of recycled trash for 17 Broward municipalities representing half of the county’s 2 million residents.
Sun Bergeron broke Waste Management’s decades-old monopoly on the county’s solid waste disposal business. But Waste Management’s SWS purchase restored its control of the recycling stream, resulting in significantly higher recycling costs for local governments when their contracts with Sun Bergeron were up for renewal in July.
Bergeron Environmental sued Waste Management not long after it bought Davie-based Southern Waste Systems. The other defendants are LGL Recycling and LGL executives Anthony and Charles Lomangino, Charles Gusmano and John Casagrande.
Bergeron Environmental contends Waste Management misled Department of Justice antitrust regulators to win approval of its takeover of SWS as part of a conspiracy to ruin its business and steal its customers.
LGL was accused of breach of contract and conspiracy for allegedly selling out to Waste Management without informing their partner, wealthy Davie businessman Ron Bergeron, the owner of Bergeron Environmental. The lawsuit labeled the sale “a silent act of betrayal.”
The public record on case number 16-000158 is extensive, with nearly 1,000 items docketed, yet many documents nevertheless remain hidden because of Waste Management’s decision to broadly mark its documents confidential. Oddly, that censorship extends to an amended complaint filed in September by Bergeron Environmental’s attorney, Mitchell Berger.
Portraying ‘this case as something it is not’
According to court papers filed by Waste Management’s co-defendant, LGL Recycling, the amended complaint contains new information unearthed in sealed records obtained by Berger during the course of the litigation. The LGL attorneys derided the new 16-count complaint, which they said seeks in excess of $126 million in damages, as “a narrative based upon misinterpretation of documents and allegations of potential criminal behavior, in order to portray this case as something it is not.”
The amended complaint’s counts include breach of contract, misappropriation of trade secrets and a trio of counts for violation of Florida antitrust statutes.
“The ‘factual’ allegation section … reads like a complex novel, filled with corporate intrigue, secret cabals, and a conspiracy years in the making, occurring on a number of layers among and across a number of corporate entities,” wrote LGL attorneys L. Louis Mrachek and Roy E. Fitzgerald of West Palm Beach.
Berger would not comment. But the confidential records appear to be important to the public’s understanding of the impact of Waste Management’s acquisition of SWS – a takeover looked at and allowed by both state and federal antitrust regulators.
One document that leaked out in May due to a court clerk’s error roiled Sun Bergeron’s municipal customers. It was a secret, two-page letter sent by Florida Attorney General Pam Bondi’s office to Waste Management’s lawyers in December 2015 which showed that the state OK’d the SWS buyout only after being assured by the garbage titan that those Broward customers would be allowed to renew their expiring contracts this year for another five years on the same terms, conditions and prices. Bondi’s office, however, never enforced that condition or even informed the cities of its existence.
“The crux of this case centers on the legitimacy of the underlying transaction, the DOJ antitrust review, and voluminous discovery pertaining to that review,” Judge Tuter wrote in his Nov. 7 order.
In addition to contending that Waste Management misled Department of Justice antitrust regulators, Bergeron Environmental has also alleged that the company ran afoul of a trio of criminal statutes that prohibit making false statements, obstructing the investigation and falsifying documents.
Antitrust reviews impacted?
In his October report and recommendation to Tuter, Special Master David H. Lichter wrote that Bergeron Environmental “fears that the review process may have been tainted by false and misleading statements allegedly made by [Waste Management] and documents created in connection therewith. This in turn could have impacted the decision of these agencies on the merger which was allegedly part of the larger conspiracy to destroy plaintiff’s business and ultimately acquire its customers.”
“Bergeron has provided a number of examples which it claims will establish that the documents [Waste Management] has withheld on privilege grounds, ‘were part of a pattern of activity intended to destroy the Sun Bergeron Joint Venture’s ability to maintain its current client base or compete against Waste Management, despite representations to the DOJ to the contrary,’” Lichter wrote.
Specifically, Judge Tuter said that the “crime fraud theory raised by Bergeron relates to the purported misleading tactics orchestrated by [Waste Management Vice President for Legal Affairs John] Tsai,” outside counsel and various company employees to “influence” the Justice Department’s antitrust investigation.
Tsai did not respond to requests for comment. Waste Management spokeswoman Dawn McCormick said, “The matter is a complicated series of lawsuits and ongoing legal motions that began more than two years ago and despite Mr. Bergeron’s allegations, there has been no finding by the Court against anyone at Waste Management.”
Bergeron has sought a court order authorizing it to transmit to both Justice and Bondi’s office a host of exhibits marked confidential by Waste Management that it apparently believes might trigger a reconsideration of the antitrust decision. They include email strings, agreements and other documents created by Tsai.
So far, Tuter has issued no such order and the records remain under seal in Broward Circuit Court.