FM suit flames wood vs. plastic pallet debate
A lawsuit from Factory Mutual Insurance Co. and FM Approvals against Intelligent Global Pooling Systems (iGPS) promises to fuel the flames of an ongoing pitch battle between the U.S. wood and plastic pallet industries.
In its lawsuit, FM alleges iGPS committed acts of 'false, misleading and fraudulent claims' when offering its all-plastic pallets to customers as FM-approved. FM said only iGPS's third pool of plastic pallets are approved at the FM 4996 fire safety standard, whereas the company's earlier pallets are only certified by Underwriters Laboratory at the UL 2335 standard. 'The UL 2335 standard is not as rigorous as the FM 4996 standard,' FM said in its suit.
'In actuality, customers who lease pallets from iGPS are likely to receive a significant portion that are not FM approved,' FM said. 'Thus, customers who rely on these false and fraudulent claims are exposed to non-approved pallets that do not meet the same safety specifications as FM approved pallets.'
FM added: 'Aside from the direct harm to (FM's) marks and reputation, iGPS's actions are also causing a safety hazard to iGPS's customers. iGPS's customers rely on the false claim that the entire iGPS pallet pool are FM approved for safety decisions and for insurance purposes and coverage.'
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| Scholnick |
'These accusations are sure to raise questions of warehouse safety and insurance risks in the minds of iGPS's customers,' said Bruce Scholnick, president and chief executive officer of the National Wooden Pallet and Container Association, in a statement.
Started in March 2006, the Orlando, Fla.-based iGPS' pallets are used by a number of large manufacturers, such as General Mills, PepsiCo/Gatorade/Tropicana, Cott Corp., and Imperial Sugar.
The company's senior management and board are also composed of former wood pallet industry executives and government officials. Late last year, Carlos Gutierrez, former U.S. Commerce Secretary and head of Kellogg Co., joined the iGPS board.
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'In brief, except for a small number of early prototype pallets, all iGPS pallets manufactured prior to the FM approvals listing date are identical in design and materials, and manufactured by one company only,' said Bob Moore, chairman and chief executive officer of iGPS, in a statement to customers earlier this month in response the FM lawsuit.
'For reasons that make sense only to FM, it claims to maintain a 'policy' that it does not provide retroactive approval to products manufactured prior to FM's certification date — even when those products can be unequivocally proven to be identical to the products certified,' Moore said. 'Therefore, FM objects to the factually accurate statement that our pallet has been FM certified, alleging that it somehow causes marketplace 'confusion.' This 'policy' is the crux of FM's lawsuit.'
iGPS noted that its pallets received UL 2335 listing on July 20, 2007 and FM approvals listing on Sept. 8, 2008.
The wood pallet industry said iGPS has not been above board with notifying its customers that not all of its plastic pallets had FM approvals. 'My experience with iGPS product marketing is that it is not anchored to facts or wedded to truth,' Scholnick said.
However, Moore said iGPS is prepared to defend its integrity in court.
'While we prefer to settle matters in the marketplace and not through litigation, FM's suit will have its benefits,' he said. 'It will shine a light on FM's anticompetitive business practices, its favoritism toward the wood pallet industry, and the arbitrary nature of its certification standards and processes. We believe that all companies in the supply chain will find it illuminating.' ' Chris Gillis
