At a Glance

  • Lollicup USA (a wholly owned subsidiary of publicly traded Karat Packaging) is leading a class action lawsuit against Oregon Department of Environmental Quality (DEQ) Director Leah Feldon, targeting the state's packaging extended producer responsibility (EPR) law, the Plastic Pollution and Recycling Modernization Act.
  • Lollicup's attorneys filed the lawsuit on June 25 in the U.S. District Court in Portland, Oregon, seeking a declaration that the law is unconstitutional and an injunction against its enforcement.
  • The lawsuit cites a pending case filed in Oregon last year by the National Association of Wholesaler-Distributors (NAW). Lollicup seeks to represent producers not covered by the preliminary injunction obtained by NAW members.

In-Depth Analysis

In its complaint, Lollicup USA describes Oregon's EPR law as "an unprecedented experiment in privatization of regulation." The Texas-based company manufactures and distributes foodservice supplies, including PET thermoformed cups and trays, polypropylene containers, poly-coated paperboard cups, as well as plastic lids, straws, and cutlery. The plaintiff states that it ships from California to the Oregon market and, to comply with the law, would have to implement "significant operational changes" at its California facilities and bear other burdens.

Similar to the NAW case, Lollicup's complaint alleges that Oregon's EPR implementation violates the Dormant Commerce Clause and the Due Process Clause of the Fourteenth Amendment. The complaint, referencing Oregon's selected producer responsibility organization, the Circular Action Alliance (CAA), states that the law in part "conscripts the national supply chain into a state-specific regulatory regime that is opaque, retroactive, unilaterally modifiable, judicially unreviewable, and administered by private actors whose founding members and board of directors are the very industry participants the Act authorizes it to regulate."

According to the complaint, Lollicup registered as a producer in Oregon effective September 25, 2025. Since then, the company has received multiple warnings from CAA and DEQ regarding noncompliance issues. The complaint states: "CAA's founding members and board members occupy both ends of the regulatory relationship: they sit on the body that sets fees and also receive incentives and fee adjustments granted by that body. Medium and small producers—including Lollicup—do not have equal access to the fee-setting mechanism and have no representation on the board that sets fees."

NAW filed its federal lawsuit in Oregon state court last July, after Oregon became the first state in the U.S. to launch a packaging EPR program. NAW's lawsuit targets the Oregon Department of Environmental Quality, the Oregon Environmental Quality Commission, and Oregon Attorney General Daniel Rayfield. Meanwhile, CAA continues to collect and distribute funds in Oregon, including deploying thousands of recycling bins across the state.

Lollicup's case has been assigned to Judge Michael Simon, who is also presiding over the NAW case, which is scheduled for trial starting July 13. According to the court schedule, discovery in the Lollicup case must be completed by October 23, and pretrial orders must be filed by November 23.

The Lollicup case is the latest in a series challenging state packaging EPR laws. Last week, the Nebraska Attorney General, on behalf of attorneys general from 17 states, filed a federal lawsuit challenging California's packaging EPR law, with NAW joining as the only participating business entity. That case alleges violations of the Commerce Clause and the First Amendment, among other issues.