A.G. Schneiderman Reaches Agreement With Buffalo Biodiesel Over Lawsuits Targeting Small Businesses

(Attorney General Eric T. Schneiderman) Attorney General Eric T. Schneiderman today announced an agreement with Buffalo Biodiesel, a company that collects cooking oil waste and converts it into biodiesel, over claims that the company filed lawsuits against hundreds of small businesses across Western New York and several surrounding states. The over 600 lawsuits, most of which were filed in Buffalo City Court, made various breach of contract claims against small businesses that had entered into a contract with the company. Buffalo Biodiesel sought thousands of dollars, sometimes as much as tens of thousands of dollars, in damages from ‘mom and pop’ restaurants.

The agreement announced today requires Buffalo Biodiesel to withdraw all applications it made for default judgments, to vacate default judgments it has taken against unrepresented businesses, and return any money it might have collected on judgments. Buffalo Biodiesel has also agreed that, before it files any new court actions, the company will provide notice to businesses of its intent to sue in order to give the businesses the opportunity to resolve matters without a lawsuit.

“Our legal system rightfully allows for parties to sue when a breach of contract occurs, but that right should not be used as a license to unjustly bully and intimidate small businesses,” saidAttorney General Schneiderman. “The agreement announced today required the termination of hundreds of pending lawsuits filed against mom and pop businesses that lack the financial resources to fight costly court battles.”

The lawsuits that were examined by Attorney General Eric Schneiderman’s Office began in March 2013. By 2015, the total number of lawsuits eclipsed 600, virtually all of which were filed in Buffalo City Court. The Attorney General’s investigation showed that frequently the small businesses sued by Buffalo Biodiesel did not respond to the lawsuits and, as a result, Buffalo Biodiesel applied for default judgments to the clerk of the Buffalo City often seeking damages in the thousands of dollars. The investigation concluded that most of the Buffalo Biodiesel lawsuits for which it was seeking default judgments, however, were improperly filed in Buffalo City Court.

The investigation also showed that the complaints initiating the lawsuits were virtual carbon copies of each other. The complaints, while alleging breach of a contract, provided very little specific information on how the small business was supposed to have done so. Also, when seeking default judgments, Buffalo Biodiesel did not, as required by law, provide a sworn affidavit from someone with personal knowledge describing the facts of the breach.

This case was handled by Assistant Attorney General James M. Morrissey of the Buffalo Regional Office. The Buffalo Regional Office is led by Assistant Attorney General-in-Charge Michael Russo. The Buffalo Regional Office is part of the Division Of Regional Affairs led by Deputy Executive Attorney General for Regional Affairs Marty Mack. READ MORE and MORE (Biodiesel Magazine)

Excerpt from Biodiesel Magazine: The lawsuits began when restaurants with which Buffalo Biodiesel had oil supply agreements started “bucking” signed contracts without notification, said Buffalo Biodiesel President Sumit Majumdar.

“I’m a grown-up, I can deal with people flipping oil collectors,” Majumdar toldBiodiesel Magazine. “But not a thousand.”

Majumdar said Buffalo Biodiesel never wanted money damages from those claimed in breach. “We wanted the oil,” he said. “But in city court, you can’t ask for specific performance”—meaning a court order that businesses honor their contracts—“you can only ask for money.”

While honoring contracts is paramount, Majumdar said the vast majority of business Buffalo Biodiesel conducts with restaurants is done on a handshake, not on a contract.

Majumdar said Buffalo Biodiesel did not seek to file interference-of-purchase lawsuits against oil collectors that took his accounts.

Majumdar said he believes some of the contract breaches were triggered by racism. “I was accused of being a Muslim and an Arab,” he said. “And it gets dirtier and dirtier. Don’t get me wrong though, the super vast majority of people we deal with are darn good people who are just happy we are supporting the biodiesel industry.”

Buffalo Biodiesel currently has nearly 10,000 accounts, and over 11 years of operations it has signed 13,000 accounts from seven states. Majumdar said his business collects and processes nearly 3 MMgy of used cooking oil and sells to biodiesel producers such as Hero BX. READ MORE