The basics:
- Saddle River alleges Veolia inflated water usage, overcharging $4M since 1997
- Lawsuit cites defective meters, breach of contract, fraud, NJ Consumer Fraud Act violations
- Mediation failed; borough preparing to serve Veolia with complaint in Bergen County Superior Court
- Dispute surfaced during due diligence to sell Saddle River water system; claims include failure to credit overcharges
Saddle River officials are proceeding with a complaint accusing Veolia Water New Jersey of using defective meters and inflated usage reports to overcharge the municipality by $4 million from 1997 through 2023.
The municipality filed a lawsuit Oct. 1 in Bergen County Superior Court. Saddle River claims the utilities management company “knowingly” misrepresented the amount of water flowing through its pipes in order to bill the town for water never used.
After waiting to serve Veolia pending the outcome of meditation, attorneys for Saddle River said they are preparing to deliver the complaint. Following a Nov. 14 sit-down between the two sides, Victor Herlinsky Jr. of Newark-based Sills, Cummis & Gross PC said, “Unfortunately, mediation has failed. We are now serving Veolia.”
Court of public opinion
Leading up to last week’s meditation session, Veolia sent an Oct. 29 notice of frivolous claim to Herlinsky. It demanded the plaintiffs voluntarily dismiss the complaint within 28 days. John Holden of New Brunswick-headquartered Windels Marx Lane & Mittendorf LLP represents the company.
The seven-page letter asserts that the New Jersey Board of Public Utilities has primary jurisdiction over water-related disputes. It also says that the Superior Court is an improper venue for Saddle River’s claims. It notes that established case law bars suing public utilities over the New Jersey Consumer Fraud Act.
Additionally, Veolia argues that the lawsuit violates court rules prohibiting filings made for improper purposes, like harassment or baseless claims. Veolia said it believes Saddle River is using the complaint to spread false statements about the company in the media – potentially for political or strategic reasons.
Boiling point
According to Saddle River’s complaint, Veolia’s readings indicated the borough used up to three times more the amount of water than the municipality actually consumed. The suit also says that some of the water went to neighboring towns, like Allendale and Ramsey, through its pipes.
Officials say the issue surfaced in 2022 while preparing to sell the town’s water system.
In conducting due diligence, the municipality compared individual residential and commercial meters against the bulk purchase readings supplied by Veolia. Saddler River said that’s how it discovered the alleged gap.
According to the complaint, Veolia said leaks, theft or faulty residential meters caused the discrepancies. A leak detection company retained by Saddle River found no leaks that could explain the discrepancies. According to the suit, that led officials to conclude that Veolia’s readings were deliberately inflated.
After that, Saddle River requested Veolia immediately replace all of the main bulk purchase meters owned and operated by the company, the lawsuit said. The company did, but Saddle River said it doesn’t know whether Veolia “destroyed, damaged or altered the defective meters,” according to the suit.
Saddle River also said Veolia didn’t dispute the claims but failed to offer any credit or correction, according to the complaint.
‘Frivolous’ or fair?
The borough’s relationship with the utility dates back to 1997, when the company was operating as United Water. The borough claims the company modified its wholesale water agreement several times over the years to increase the minimum water purchase requirements based on inaccurate data, the suit said.
Additionally, Saddle River says it was compelled to enter a fifth contract agreement last year to support a planned affordable housing development, despite questioning Veolia’s usage data.
Nicole McDonough of Sills Cummis & Gross said, “The facts in our complaint show this pattern of not accurately representing the water consumption data to Saddle River. And by apparently recognizing that, they sat down at the table with us [Saddle River] and attempted to resolve it. …[D]espite those talks, [Veolia has] really just stalled addressing it.”
The facts in our complaint show this pattern of not accurately representing the water consumption data to Saddle River.
– Nicole McDonough, Sills Cummis & Gross
The complaint accuses Veolia of breach of contract, fraud, unjust enrichment and New Jersey Consumer Fraud Act violations. The borough is seeking compensatory and punitive damages, as well as repayment for the alleged overcharges.
Veolia Water New Jersey is part of Veolia North America Inc., a subsidiary of multinational French corporation Veolia Group.
In a statement, Veolia NA Senior Vice President of External Communications Adam Lisberg said, “Veolia is disappointed that despite our good faith efforts in mediation, we were unable to reach a mutually acceptable resolution at this time.”
“Veolia has informed the Borough of Saddle River that its lawsuit against the company is frivolous and that we will fully defend our company against these legal claims as well as the disparaging statements Saddle River’s attorneys have made publicly about Veolia,” he said.
Veolia has informed the Borough of Saddle River that its lawsuit against the company is frivolous and that we will fully defend our company against these legal claims as well as the disparaging statements Saddle River’s attorneys have made publicly about Veolia.
– Adam Lisberg, SVP, External Communications, Veolia NA
“We remain committed to resolving this matter in a fair and reasonable manner and we will continue to explore all available options to achieve a resolution,” Lisberg added.
In the right court
Veolia’s notice of frivolous claim stated that Saddle River owes more than $985,000 in unpaid water charges since 2023.
“Your clients are well aware of the parties’ ongoing discussions and efforts to address certain underlying meter issues,” the notice says, continuing, “Your clients were intimately involved throughout the meter replacement processes in both 2019 and 2023. Your clients have also been active participants in the ongoing interactive process that followed the replacement of the meters, all of which was designed to itemize and ascertain the credit due to your clients.
“At no time has Veolia hidden anything from Saddle River, nor has it violated any agreement with your clients.”
Herlinsky feels that Veolia’s notice “is disappointing in that it continues the stonewalling of a potential settlement with Veolia and the town.”
He went on to say, “The claims asserted in the Complaint are not frivolous. The argument by Veolia in the frivolous litigation letter that we should have asserted our claims before the NJ Board of Public Utilities is baseless – we are properly before the Superior Court of New Jersey with our very serious claims detailing a pattern of knowing and intentional misrepresentations, asserted by the borough of Saddle River and its water utility against Veolia.”
