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12/3/2009Maryland: Vendor Holds Red Light Cameras Hostage
Baltimore, Maryland claims photo enforcement vendor threatened to turn of red light cameras unless demands were met.
According to Baltimore, Maryland officials, a photo enforcement vendor has threatened to unplug the city's red light camera program unless its financial demands are met. The charges were leveled in a federal lawsuit initially filed by Dallas-based Affiliated Computer Services (ACS) against Arizona-based American Traffic Solutions (ATS). Baltimore inserted itself into the lawsuit last month claiming it had more of a stake in the matter.
"The contract between ACS and the city for the operation of the red light camera system generates significant revenues for the city of Baltimore," Baltimore's Chief Solicitor Michael S. Elder explained. "These revenues are utilized to fund other important governmental functions. Any interruption in the operation of the system will deprive the city of revenues that are desperately needed for essential functions in the current economic climate... The city's interest in its ability to fund vital government functions through its share of the revenue stream derived from the red light traffic camera system program is an interest that is plainly not shared by ACS."
The dispute is a complicated contractual matter over just who owns the automated ticketing machines installed at 47 intersections throughout Baltimore. The city contracted with ACS to operate every aspect of the camera program in return for a fixed cut of each ticket generated by the system. ACS, which specializes in handling paperwork and collections, subcontracted the job of providing the equipment to Nestor. Nestor went bankrupt in June and ATS bought all of that company's assets, and none of its liabilities, for $7.1 million in September.
ATS believes that the terms of its purchase included the camera equipment in Baltimore, unencumbered. ACS and Baltimore disagreed, insisting that ATS was bound by Nestor's agreement to transfer ownership of all camera equipment to Baltimore at the end of the contract period. ACS asserted that ATS had made "extortionist-like demands" that Baltimore drop its contract with ACS and switch to ATS to keep the cameras running.
"ATS's claim of ownership of essential system components, and its threats to disable and/or remove them, would cut off this vital source of funding," Elder wrote. "ATS's conduct is improper as it is using the threat of interruption of the operation of the red light camera system for unfair economic advantage in its subcontract negotiations with ACS. Moreover, the removal or disabling of the system without the city's permission is illegal and would involve a trespass, and the threat to do so is thus improper conduct."
ATS has yet to formally answer charges made in the lawsuit. The company is expected to file its response by next Monday.
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