pair of Florida firefighter pension funds, which hold shares in the suburban
Chicago-based international hazardous waste disposal company Stericycle, are seeking
a class-action suit in Chicago federal court, asserting Stericycle cost
investors millions of dollars by not divulging that much of its business was
based on allegedly defrauding customers.
July 11 in U.S. District Court for Northern Illinois, the St. Lucie County Fire
District Firefighters' Pension Trust Fund and the Boynton Beach Firefighters'
Pension Fund filed suit against Stericycle Inc., which is headquartered in Lake
Forest. Stericycle operates in 21 countries as a waste disposal company,
specializing in the disposal of medical, pharmaceutical and hazardous
industrial waste, as well as the disposal of confidential documents.
A. Alutto is president and chief executive officer. In February 2016, the
company said it brought in almost $3 billion in 2015.
five-count suit alleged Stericycle violated the U.S. Securities Act and the
U.S. Securities Exchange Act. Besides the company itself, the suit also targets
several officers and directors of Stericycle, as well as a number of investment
houses that served as underwriters to Stericycle.
lawsuit said the two firefighter pension funds bought more than 3,000 shares of
common stock between them in the second half of 2015. However, in October that
year the value of Stericycle’s stock fell 19 percent and in April 2016, plunged
another 22 percent. Shareholders lost millions of dollars.
blamed the decline on market conditions, but plaintiffs allege the real reason
was Stericycle was hemorrhaging customers, because of “fraudulent billing
lawsuit said Stericycle derives 63 percent of its revenue from what it terms
“small quantity” customers, as the company pursues such accounts because they
garner more profits. However, plaintiffs alleged Stericycle “engaged in a
systematic and deliberate scheme” to regularly raise rates “without
justification or notice to its (small quantity) customers.”
alleged Stericycle would “simply increase” a customer’s bill, hoping the
customer would either not catch it, or if the customer did, still pay without
squawking. The increases varied by customer, but in some cases were jacked up
by as much as 18 percent every six months, according to the suit.
customers paid the increases, with Stericycle subjecting those who complained
to such threats as saying the company would bill “large liquidated damage
charges” if they canceled their contracts, plaintiffs alleged. Other times,
Stericycle would go the other way, offering “price reductions,” but which would
leave customers still allegedly paying more than they agreed to pay in the
the company’s billing practices spurred a number of customers to walk away,
which began taking a toll on revenue by the third quarter of 2015, leading to
the drop in stock value, plaintiffs alleged.
contended Stericycle misled investors into believing the company was above board
in its dealings, which served to artificially buttress the price of Stericycle
securities by making it appear the company’s relations with customers were
firefighter pension funds have asked for the class action to cover investors
who bought stock between Feb. 7, 2013 and April 28, 2016. They seek
compensatory damages in an amount to be proved at trial.
pension funds are represented by the firm of Bernstein, Litowitz, Berger &
Grossman, which has offices in New York, Chicago, San Diego and New Orleans.