6/15/2016Ohio: Xerox Lawsuit Over Canceled Speed Camera Contract Heats Up
Xerox claims Cleveland, Ohio owes $9 million in unpaid speed camera rental fees.
A Fortune 500 firm calling Cleveland, Ohio a scofflaw for failing to pay over $9 million in speed camera fees. Xerox made its case earlier this month to US District Court Judge Dan Aaron Polster, who must decide whether city officials are on the hook for inking a four-year photo enforcement less than a year before Cleveland voters revolted and ordered the cameras taken down. Xerox is now suing the city to recover the money it invested in a massive camera expansion and upgrade in 2013.
Xerox insists that Cleveland was well aware that Cleveland voters might have banned cameras as several other Ohio towns had recently done (view list). City officials decided to proceed despite the risk of public disapproval. Xerox says that decision puts Cleveland on the hook for the $303,670 a month camera equipment fees. For the remainder of the agreement, that adds up to $9,413,770.
Even if forced to pay $9 million, Cleveland would still come out ahead considering it pocketed $12,235,985 in net profit over the life of the program. Xerox claims the city's interpretation of the contract is preposterous.
"Based on the enormous up-front cost to Xerox to implement the contract under negotiation, Xerox would never have agreed to a provision allowing the city to terminate the contract or even simply to stop paying Xerox due to a change in local law," Xerox lawyer Terry Brennan wrote.
Xerox used to have a cozy relationship with city officials. Martin L. Flask, Cleveland's public safety director, was a fan of photo ticketing who coordinated closely with the vendor to promote the use of cameras around the time that the anti-camera ballot measure was being circulated.
"I remember working with Xerox to create a message," he explained in a deposition. "I remember at least one conversation with a representative of Xerox in that regard."
The anti-camera initiative passed with an overwhelming 78 percent of the vote in November 2014. In the wake of the vote, Cleveland officials never asked Xerox about possible alternatives, such as continuing to use the cameras to issue warnings instead of citations.
"If we are sending out non-fine warning notices to everybody for the rest of the life of the contract, we would run into, essentially, a period where no revenue is generated so the city is not able to pay Xerox," city project manager Larry Jones said.
The decision to pull the plug on the ticketing program was made just before 8am on November 5.
"[The safety director] was going to talk to the law department and, subsequently, after he talked to the law department, I received an email saying to turn off the cameras," Jones said.
For its part, Cleveland has refused to give Xerox any money since November 4, 2014, citing the "force majeure" clause that nullifies the contract in the wake of unforeseeable events. Officially, the ballot petition signatures had not been turned in until August 18, 2014, over a year after the contract renewal had been signed.
"In this case, the charter amendment that was initiated and adopted solely by the voters was an unforeseen event beyond the control of the city government," Cleveland law director Barbara Langhenry wrote.