WAUKESHA, Wisc. (CN) - Spike, the "energy drink" maker, claims it paid - twice - to have nearly $1 million of its products destroyed, only to find out that the recycler was selling the goods on the sly.
Spike sued Nationwide Recycling and John McCardle in Waukesha County Court.
Spike claims it wanted $900,000 worth of its "Spike Energy Drink" and "Spike Shooter" drinks removed from the market in 2010, "out of concern for its customers and its own business reputation."
So it says it paid National Environmental Solutions $6,000 to "safely and ethically dispose of the removed Spike products."
NES took delivery of the 18 pallets of drinks - 13,617 cases - in April 2010, and agreed to dispose of the drinks and recycle the metal, Spike says.
NES was owned and operated by Dean Schwichtenberg, and went out of business on Aug. 31, 2010, according to the complaint. The very next day, Sept. 1, defendant McCardle began running Nationwide Recycling at the same address just vacated by NES, Spike says. What's more, Spike says, McCardle, who was a real estate broker, not a recycler, hired Schwichtenberg to run Nationwide.
"Nationwide picked up where NES left off - taking over accounts and relationships that had been NES customers," according to the complaint.
In mid-September, Spike says, it learned that its 18 pallets of drinks had not been destroyed. Spike says it called McCardle on Sept. 20, "alarmed that the removed Spike products still existed."
In that phone call, Spike says, "McCardle represented himself to Spike as the landlord of the building ('2230 Stonebridge') NES had operated in. McCardle did not represent himself as the owner of a successor business at that time.
"During that September 20, 2010 phone call, McCardle represented that Schwichtenberg owed McCardle money and made other negative statements about Schwichtenberg."
In another call a week later, Spike says, McCardle informed it that the "removed Spike products" were still in the building.
"McCardle represented to Spike at that time that he was not in the recycling business, but offered for a fee of $10,000 plus additional transportation costs to act as an agent to arrange for the transport of the removed Spike product to another company ... for destruction of the product," the complaint states. "McCardle dictated the only payment he would accept for this work was an immediate wire transfer of $10,000."
Spike says it wired him the $10,000 that day.
It claims that on Nov. 2, 2010, McCardle told it that the products had been destroyed, and that "he did not know where Schwichtenberg was," but that Schwichtenberg was not in his building.
In fact, Spike says, "Unbeknownst to Spike, McCardle was operating a business in conjunction with Schwichtenberg out of the 2230 Stonebridge premises.
"McCardle conspired with Schwichtenberg to make illicit sales of the expired Spike products as of November 2010. Operating outside of the terms of his business and contract, he was allowing or encouraging Schwichtenberg to illicitly take and sell removed Spike products through unauthorized channels."
Spike says it learned of these illicit sales in late January, 2011, and that after "falsely claim(ing) he did not know where Schwichtenberg was or how to get in touch with him," McCardle finally "admitted his earlier claims to have destroyed the product were false."
To top it off, Spike says, "On or around February 11, 2011, Spike received a certificate of destruction from Nationwide stating they had destroyed all of the removed Spike products.
"That certificate was false. The illicit sales of the removed Spike products occurred as late as April 2011."
Spike demands treble damages for conspiracy, breach of contract, fraudulent misrepresentation and conversion. It is represented by Paul Hoefle and Amy Lindner with The Schroeder Group.
Subscribe to Closing Arguments
Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.