Yeti thought the thousands of branded vests, jackets, backpacks and tote bags it sent to TerraCycle would be destroyed and recycled as the popular outdoor products company requested.

But instead, a lawsuit claims, a subcontractor for TerraCycle, Akshar Plastic Inc., illicitly sold the products to middlemen who facilitated the unauthorized retailing of the branded merchandise.

As part of the ongoing case, a federal judge last week entered a default judgement against one of the alleged middlemen – Oscar Guel, reported to be a Murrieta, CA, resident who court papers say does business under the name “Imperium.”

Texas-based Senior U.S. District Judge David Alan Ezra ordered Guel to return any Yeti-branded goods in his possession and to pay Yeti $124,200 he allegedly netted from the sales of the merch, in addition to enjoining Guel from further selling Yeti goods.

Court records indicate that Guel never responded to Yeti’s complaint – an alleged inaction that opened the door to the default judgement motion. The judge ruled against Guel based on Yeti’s claims of trademark infringement, false designation of origin and unfair competition under Texas common law. Ezra determined that no material facts were in dispute, and the factual allegations in Yeti’s complaint supported an award of damages.

‘Intentionally False’

Still, the case is bigger than Guel.

According to the lawsuit, Yeti paid TerraCycle to have approximately 55,000 pounds of jackets, vests, backpacks and totes destroyed and recycled.

The backpacks and totes alone were worth more than $1 million, the suit states. Those products were obsolete items Yeti was ready to sunset. The jackets and vests were goods Yeti sourced but ultimately decided to not bring to market, according to court papers.

TerraCycle specializes in used product destruction and recycling. The company says it accepts many items that municipal recycling centers cannot and gives them a second life by transforming them into new things, including playgrounds and shipping pallets.

TerraCycle, which reportedly operates in 21 countries, sent the Yeti goods to Bloomington, IL-based Akshar Plastic Inc. for processing. Akshar, the lawsuit claims, certified to TerraCycle that the goods were processed as requested. TerraCycle then certified to Yeti that the items had been destroyed and recycled, according to the complaint.

However, according to Yeti, Akshar’s certification was “intentionally false” and TerraCycle’s certification was based on Akshar’s representations, “without any independent verification whatsoever.” (TerraCycle claimed it was provided with false evidence of destruction by Akshar.)

More than 2,000
Number of Yeti jackets, along with tote bags, that the outdoor company says defendant Akshar sold illicitly.(From the Yeti lawsuit)

Rather than remove the Yeti goods from circulation, Akshar, allegedly under the direction of an individual that the lawsuit identifies as Akshar Chief Operating Officer Devang H. Patel, “sold more than (2,000) of the stolen jackets along with stolen tote bags” through a middleman network.

The dealings of the alleged middlemen, including Guel, resulted in the Yeti products coming to be for sale on MorningSave.com, a consumer site run by Mercatalyst, as well as on Woot!, an Amazon-owned internet retail company, according to the lawsuit.

Yeti says that a MorningSave.com representative even promoted the Yeti products on the Rachael Ray Show as featured holiday gifts. Consumers in the U.S. allegedly purchased Yeti products that were supposed to have been recycled and destroyed.

After Yeti learned about the goods for sale on Woot!, it contacted the retailer, which subsequently told the outdoor company that it canceled orders associated with the merchandise and shut down sales of the items, the lawsuit says.

According to Yeti, Mercatalyst purchased the goods following a chain of gray market product movement that saw Akshar sell to Guel and an alleged partner, who then allegedly sold to others.

Yeti was initially suing Mercatalyst, but the parties settled with each other and Yeti withdrew its claims against the company. The claims were withdrawn with prejudice – essentially meaning they can’t be refiled.

Court records show that claims were also withdrawn against others, including a Florida businessman who allegedly acted as an illicit broker of the Yeti products. That withdrawal was made without prejudice, meaning it’s possible similar claims could be made against the individual again.

As part of the case, Yeti has sued defendants that include TerraCycle, Akshar and Patel. Court records show – and a court official confirmed to ASI Media – that claims against those defendants are still in play. ASI Media contacted the defendants’ attorneys for comment, but the lawyers had not responded as of this writing. Yeti’s attorneys also did not respond to comment requests.

Promo Perspective

Top 40 supplier HPG (asi/61966) recently partnered with TerraCycle to create a Zero Waste Box for recycling pens, pencils and markers. HPG was in contact with TerraCycle about the Yeti situation. Through HPG, TerraCycle provided a comment, saying it's guiltless of any wrongdoing. 

"TerraCycle had no involvement in the alleged scheme to misappropriate Yeti’s recycled goods and has fully cooperated with Yeti since December 2022 when we first learned that Yeti’s backpacks, tote bags, and jackets were misappropriated from Akshar Plastic’s facility," the company said.

The statement continued: "Since the lawsuit was filed, Yeti has produced overwhelming documentary evidence that Akshar and other third parties engaged in a deliberate scheme to misappropriate Yeti’s recycled goods – unbeknownst to TerraCycle or Yeti. While the wheels of justice spin slowly, we trust that we will be fully exonerated by the legal process."

After the allegations against Akshar surfaced, TerraCycle said that it ceased all work with Akshar. No materials/products collected through the HPG program have been sent to Akshar, TerraCycle asserted.

"TerraCycle strictly controls the movement of materials through each part of the recycling process so we can track and confirm where materials were sent and for what purpose," the recycler said. "We developed the first-of-its-kind, auditable standard to ensure strong traceability management practices are in place and auditable for all waste streams we collect."

TerraCycle isn’t the only company that proposes to recycle no-longer-needed merch.

SwagCycle is an initiative started in 2019 through Somerville, MA-based distributor Grossman Marketing Group (asi/215205). It helps keep obsolete promotional products out of landfills through charitable donation or by facilitating their recycling.

SwagCycle had nothing to do with the Yeti case. However, at ASI Media’s request, founder Ben Grossman offered insights on the product recycling process, saying that it’s essential to closely monitor vendors and implement checks to give distributors or end-clients wishing to have products taken out of circulation confirmation that such work has occurred to the letter.

“We work with a vetted group of recycling partners that provide certificates of recycling on a load-by-load basis, as well as photo proof of destruction, when requested,” said Grossman. “We have been onsite to a number of our recycling partners to review their operations. We work to build long-term partnerships with these recycling organizations to ensure the brand integrity of our clients is protected at all times.”

Distributors/brands looking to have merch destroyed and recycled could request photographic or video proof that such processing has occurred in addition to receiving a certification via document.

*This article was updated to include TerraCycle's response to the allegations.