(CN) – On top of multi-million dollar settlements ordered against hazardous waste management company Stericycle Inc., a shareholder derivative accuses the company of going against customers’ contracts and charging automatically renewed price increases.
Lead plaintiff Damon Turney filed suit the U.S. District Court for Northern Illinois against the Illinois-based multinational. Turney alleges Stericycle has shown “significant revenue growth for many consecutive years,” due to an 18 percent increase in the flat rates the company agreed to charge customers, which was automatically imposed every 6 to 12 months since at least 2013.
“This ‘automated price increase,’ or ‘API’, was never disclosed to the customers who paid it, and is not permitted by the customers’ contracts with Stericycle,” the suit says.
Despite an approved $28.5 million settlement between Stericycle and 14 U.S. states to resolve fraudulent surcharges against government customers, and a preliminary approval for a $295 million settlement to remedy a nation-wide class action lawsuit, both ordered in 2016, Stericycle’s officers allegedly allowed the company to engage in the same practice of increasing the billing rates for “small-quantity” customers.
Overbilling of small-quantity customers, in clear violation of the contracts, was used to generate the artificially high revenues the company touted, Turney claims.
Meanwhile, company officers engaged in “lucrative sales” of Stericycle stock at artificially pumped up prices on non-public information, the suit alleges. Defendants caused the company to repurchase its own stock from 2013 to 2015 at artificial prices, paying over $100 million more than the stock was worth. By July 2016, Stericycle’s share price fell from $105.93 per share to $90.27 per share.
Turney claims he sent a written litigation demand to Stericyle’s board in October 2016, urging that the board investigate to no avail, and when he received a response, Stericycle’s attorneys said that it would not be in the best interest of the company to launch a civil action against employees.
Turney is represented by Marvin A. Miller and Lori A. Fanning of Miller Law LLC in Chicago, Robert B. Weiser, Brett D. Stecker, and James M. Ficaro of The Weiser Law Firm in Berwyn. Pa., Frank Johnson of Johnson Fistel LLP in San Diego and Michael I. Fistel Jr. in Marietta, Ga.