Three firms file lawsuit challenging Omaha scrap metal ordinance

The lawsuit was jointly filed by Alter Trading Corp., Everett Industrial Building Co. and Sadoff Iron and Metal Co.

SEATTLE (Scrap Monster): Three Omaha, Nebraska scrap metal companies have filed a lawsuit in Douglas County District Court against the scrap metal ordinance that came into force in 2016, in an attempt to reduce incidents of scrap metal theft in the region. The petitioners alleged that the ordinance forces them to violate the rights of customers by making them ask too much personal information from them. Following this, the district judge has issued a restraining order which exempts these three companies from adhering to the ordinance until the case is heard. The lawsuit was jointly filed by Alter Trading Corp., Everett Industrial Building Co. and Sadoff Iron and Metal Co.

As part of its efforts to thwart scrap metal theft, Omaha had introduced a municipal ordinance that requires digital collection of customer and material data by pawnbrokers and scrap yards for all scrap metal purchase and sell transactions. The details of scrap metal transactions must then be reported to a central database maintained by LeadsOnline. This database is then used by Omaha police to locate stolen material, track and identify suspicious transactions and customers. The ordinance is in effect since Jan 1, 2016.

Tom White, the attorney representing the three companies noted that though the ordinance is aimed at addressing the nationwide menace of scrap metal thefts, it results in Nesbraskans being forced to give up their important rights. He stated that the contract with LeadsOnline forces scrap yards and dealers to forfeit privacy rights, valuable property rights and constitutionally protected rights. It leads to exposure of trade secrets and fails to protect confidentiality of customer data by making it public through common database which can be accessed by enforcement officials. The ordinance risks loss of critical information such as customer fingerprints in the event of stolen data. Further, the contract interferes with the federal government’s right to regulate interstate commerce, the lawsuit noted. The lawsuit pleads the court to declare the ordinance void. It also calls for abolition of criminal penalties for refusing to comply with the same. A new system that addresses scrap metal thefts by protecting Nebraskans from exposing lot of private data must be in place, White said.

Meantime, City Councilman Pete Festersen, the author of the ordinance noted that the scrap metal theft ordinance has yielded positive results since its introduction last year. It helped police in recovering $337,000 worth of stolen materials. It also assisted the police in solving 172 cases. The ordinance should be expanded from scrap yards and pawn shops to secondhand shops, Festersen demanded. Also, Omaha City Attorney Paul Kratz said that the lawsuit by three dealers comes as a surprise when the rest of the dealers are quite satisfied with it. The ordinance has made it difficult for scrap metal thieves to resell the stolen materials at scrap metal dealers. Kratz noted.

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