Thinking Ahead–Letter from Chaille: Proprietary Pallet Dilemmas — Mine, Mine!
A number of recyclers have reported being “visited” by private law enforcement working on behalf of Coke. One of these incidents involved the manager of a pallet yard being arrested by police and taken off in handcuffs.
By Chaille M. Brindley
Date Posted: 3/1/2008
My brother’s children are interesting creatures. I love them, yet I am continually amazed at the mind of a child. They can fight over something that doesn’t belong to them, yet act like you have violated an international peace accord if you take it to return to its rightful owner.
I think that some pallet users must feel the same way when it comes to proprietary pallets. They spend lots of money on a pool and want the asset back when it gets misplaced. They feel like a recycler should just do the “right thing” and give it back. But what happens when your whole business model is built around doing the “right thing?” Who has to pay for this service? And who should do it just out of the kindness of their heart?
All of these thoughts arose after learning about some encounters between recyclers and asset protection personnel working for Coca-Cola on the West Coast. A number of recyclers have reported being “visited” by private law enforcement working on behalf of Coke. One of these incidents involved the manager of a pallet yard being arrested by police and taken off in handcuffs even though the recycler had an agreement with a company that does repairs for the beverage giant.
I have decided to forgo the details and withhold all the names of the players except for Coke, which is important because recyclers need to know what pallets to keep a watch out for in the Los Angeles area. We have not been able to tell if Coke is doing similar things with Coke-marked pallets in other parts of the country. Coke did not return our calls.
While the manager who was arrested was later let go without being charged, the entire situation certainly caused embarrassment and unnecessary business stress. It appears that the private investigator had been there in the past and nobody really thought much of it.
The moral of this story is when somebody gives you an aggressive warning or starts snooping around about proprietary pallets, take steps to protect your company and employees. You should document what happened and communicate with your customer and the “owner” of the pallets to resolve any questions. If a local recycler handles repairs for the company in question, see if you can work out an agreement that is mutually beneficial to all involved. You may want to ask that you receive some type of assurance that you will be shielded from any policing action.
Look at contract wording when taking on repair work to guard against incidental proprietary pallet receipt or if possible get compensated for it. One of the more reputable Los Angeles pallet companies told us that they don’t accept soft drink pallets from pickers because of the issues those pallets raise. If you can afford to lay down restrictions on what you will and won’t take, that’s a great way to avoid many problems altogether.
One legal expert familiar with the case suggested, “Immediately after the first visit, aggressively paper trail Coke, or whoever, that you are not possessing or dealing but only holding for transfer with authorized representatives of their own system.”
This person also suggested having a kit for each yard manager that details the issues so that you can try to convince police to recognize it as a civil matter. He suggested that the kit have documents detailing return agreements, articles on proprietary pallet issues, correspondence, etc.
Also, it never hurts to have relationships with local law enforcement so that they will be less inclined to think you are the bad guy. Some cops are quick to act tough if they think you are in possession of stolen, MARKED property. They may not stop to realize that what they have gotten involved in is likely a civil matter because they don’t understand how the pallet market works.
All of this assumes that you came across those pallets in the process of normal recycling operations and are not involved with stealing pallets from secure locations.
Proprietary pallets can be a cloudy issue because it is not clear just because someone marks their logo on a pallet if they still own it. The pallet could have been sold with what was on it. The pallet owner may have abandoned the property. It is just not clear that someone owns a pallet because they scream, “Mine, Mine” and put their name on the side. Pallets are generally thought of as fungible good unless they are part of a proprietary pool that is properly protected.
If you are going to have a pallet pool, you have to manage it. It is downright childish to neglect an asset and expect others to manage it for you for free. This includes visibly marking the pallets, securing stray assets, contacting recyclers to express your ownership interest, having legal agreements in play with key users to return pallets after use, establishing return and collection procedures that are followed in real world situations and establishing a system to track your pallets throughout the supply chain. Anything less could mean that you have abandoned your ownership interest.
Even if a marked pallet is owned by the company claiming ownership, the recycler has costs involved with procuring, safeguarding and returning any stray assets. Just because you lose something, doesn’t mean that you are entitled to free logistics. This includes CHEP, Coke or even the U.S. government. If someone steals your car and takes it joy riding for 200 miles, you still have to pay the tow company to drop it off at your house.
In the Coke situation, it appears the company has been cracking down on misuse of its pooled pallets. Some other soft drink companies seem to be much looser about their pallet pools. One of the big problems is at the retail level where some workers will sort pallets for vendors and others will not. Sorting pallets is not the primary function for grocery store stock clerks. And it can be easy for that to get overlooked if the person is rushed for time.
Special thanks to Rick LeBlanc who helped me with reporting on this issue.
This issue is filled with some important news items, including detailed coverage of the current nail situation and a major class action lawsuit involving CHEP and pallet recyclers.
In an age where it has become increasingly difficult to make a buck, we will likely hear more people yelling “Mine, Mine” for the dollars that you have in your pockets.
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