FOLLOW US

(USA Herald) - San Francisco-based landfill operator, Recology Inc., has been granted coverage by Berkley Regional Insurance Co. for revenue lost as a result of two employee kickback schemes. The California federal judge ruled that the loss Recology suffered from the theft committed by its former employees was covered under the company's commercial crime policy issued by Berkley Regional, with no exclusions applying.

The coverage dispute dates back to 2015 when Recology discovered that some of its employees had been involved in two separate schemes in which they received kickbacks from waste haulers. The employees would allow the waste haulers to dump waste at Recology's facilities at reduced rates or for free. Recology estimated that the losses from the schemes exceeded $2.5 million, including lost revenue.

In an order released on Friday, U.S. District Judge Phyllis J. Hamilton stated that the statements of loss made by Recology represented estimates of the amount of revenue the company should have collected if not for the illegal employee dumping schemes. Despite Berkley Regional's argument against Recology's damage claims, the judge ruled that the losses fall within the coverage boundaries of the company's commercial crime policy.

However, because Recology has not established the amount of its losses from the theft schemes, a jury will now determine the matter of damages. Judge Hamilton added that Berkley Regional had not acted in bad faith when denying coverage for the thefts, stating that her finding of coverage was not "synonymous with a finding that defendant acted unreasonably."

The case has been ongoing for several years, with investigative reporter Samuel Lopez previously reporting on the story https://usaherald.com/waste-co-says-a-jury-must-hear-bad-faith-claims-against-insurer/.

Recology is represented by Craig A. Pinedo of PinedoLaw, while Berkley Regional is represented by Georges A. Haddad and team from Clark Hill PLC.

This ruling highlights the importance of commercial crime coverage for companies, as employee theft can result in significant financial losses. It also serves as a reminder for companies to regularly review their insurance policies to ensure they have the necessary coverage for potential losses.

In conclusion, Recology's victory in this case demonstrates that companies can seek coverage for losses incurred from employee theft, but the amount of damages is subject to a jury's determination. The case serves as a warning for companies to take measures to prevent employee theft and to ensure they have adequate coverage for potential losses.