CVS Lawsuit: Why The Retailer Is Being Sued By California For $3.6 Million

CVS (CVS) has found itself embroiled in a lawsuit filed by the California Department of Resources Recycling and Recovery (CalRecycle) for failing to redeem bottle and can deposits at its stores.

The $3.6 million suit against the healthcare retailer found that 81 of its 848 retail stores in California refused to redeem the recycled bottles and cans or pay the $100 a day fee for not redeeming the beverage containers.

CalRecycle said the suit is part of an effort to “support recycling and ensure consumers have access to convenient recycling options as the recycling industry contends with changing global market conditions.” California pays a state subsidy to recyclers that resulted in $176 million in payments in 2018.

Stores located in California’s “convenience zones” are required by law to redeem California Redemption Value (CRV) beverage containers in-store or pay a $100 a day fee for not redeeming them or submit an affidavit explaining how they complied with in-store redemption standards, CalRecycle said.

“Today’s action sends a message that we will hold retailers accountable for refunding consumers their nickel and dime recycling deposits,” Jared Blumenfeld, California secretary for environmental protection said. “Everyone must do their part as we work to protect our environment and ensure that all Californians have convenient access to recycling.”

CalRecycle is looking to recover $1.8 million in $100-a-day fees from Oct. 31 from 81 CVS stores and an additional $1.8 million in $100-a-day civil penalties as well as agency administrative costs.

“California has one of the highest recycling rates in the nation because of our shared commitment to the environment,” Scott Smithline, CalRecycle director said. “Retailers face financial consequences if they do not fulfill their legal takeback requirements. This $3.6 million action is part of our ongoing enforcement of the bottles and cans program that includes intensified inspection efforts and ongoing recycling fraud crackdowns.”

The state’s bottle law was enacted in 1986, and has recycled nearly 400 billion beverage containers since that time.

Shares of CVS stock were down 2.68% as of 11:47 a.m. EST on Tuesday.