1/24/2013Louisiana: Redflex Appeals Court Loss In Lawsuit Against Sheriff
Redflex appeals its $8 million lawsuit loss against former client Jefferson Parish, Louisiana.
Redflex Traffic Systems is appealing its failed effort to sue a former red light camera client for $8 million in federal court. Redflex last week asked the Fifth US Circuit Court of Appeals to overturn Judge Eldon Fallon's December 20 ruling that dismissed the company's demand that Jefferson Parish, Louisiana Sheriff Newell Normand pay up.
Automated ticketing firms have a history of taking their claims to federal courts, sometimes even forum shopping to exploit personal connections for a favorable decision. Here the standard tactics backfired, as Judge Fallon refused to allow the Australian company to argue Jefferson Parish and Sheriff Normand violated their automated ticketing contract.
Redflex became infuriated on January 27, 2010, when local officials decided to suspend the red light camera program after serious ethics concerns were raised about the company's practices. Documents revealed Redflex had paid a 3.2 percent cut of the firm's profit on each ticket to lobbyist Bryan Wagner, a former New Orleans city councilman, who in turn shared the funds with the wife of District Judge Robert Murphy. Wagner was set to earn an estimated $90,000 a year from this deal. Jay Morris Specter, the lobbyist who hired Wagner on behalf of Redflex, was released from federal prison on October 21, 2010 after serving time on unrelated fraud charges. The parish placed $4.7 million in payments to Redflex in a lockbox pending resolution of the ethics concerns.
Redflex sued for that amount, plus damages, for breach of contract. Unfortunately for the firm, the same contract specifies that state courts, not federal courts, are the proper venue for a lawsuit.
"Any dispute arising out of or in connection with this agreement shall be submitted to the exclusive jurisdiction and venue of the courts located in the Jefferson Parish, Louisiana and both parties specifically agree to be bound by the jurisdiction and venue thereof," Section 10.17 of the Redflex contract with Jefferson Parish stated.
Redflex argued that the language specifying "courts" included the US District Court for the Eastern District of Louisiana because its jurisdiction includes Jefferson Parish. Redflex is only entitled to sue for $20,000 in a parish court. In his ruling, Judge Fallon suggested Redflex would not likely succeed in any appeal.
"The United States Court of Appeals for the Fifth Circuit is careful to distinguish the concepts of physical location and geographical extent of jurisdiction; where a clause defines the forum in terms of one, courts must not imply the other," Judge Fallon concluded. "Here, the cited language clearly refers to location, employing the phrase 'the courts located in the Jefferson Parish, Louisiana,' as opposed to geographical extent of jurisdiction. Therefore, the defendants' motion to dismiss is well-founded and must be granted."
A copy of the December ruling is available in a 90k PDF file at the source link below.