Automated ticketing vendor American Traffic Solutions (ATS) filed suit Tuesday against Knoxville, Tennessee for its failure to issue tickets for turning right on a red light -- and that is costing the company a lot of money. A state law took effect in July banning the controversial turning tickets, but the Arizona-based firm contends the law should not apply to their legal agreement with the city, which anticipated the bulk of the money to come from this type of tickets.

Municipalities were disappointed in August when Attorney General Robert J. Cooper Jr shot down the argument that this statute somehow did not apply to existing contracts, writing that "the parties have no vested right in a particular level of revenue" (view opinion). ATS disagrees.

"Because of the uncertainty caused by the attorney general's opinion, Knoxville has been compelled to cease issuing citations to the owners of vehicles detected making illegal 'right turns on red' by traffic cameras based on the attorney general's opinion," ATS attorney C. Crews Townsend wrote. "In 2010, right-turn-on-red violations accounted for substantial fines collected by Knoxville pursuant to their respective ordinances. A portion of these fines were remitted to ATS pursuant to the agreement. This was a critical component of the agreement's consideration supporting the parties' contractual rights and obligations."

ATS bases its argument on the "legislative history" of the new law. Many friendly state lawmakers assured the company that a grandfather clause would be slipped into the bill. The final, adopted version contained no such language exempting existing photo enforcement programs from the law's provisions. ATS insists the lack of this provision is hurting the company's bottom line.

"Without a court order clarifying that Public Act 425 does not impact the agreement, the injury to ATS will remain significant, immediate and continuing," Townsend wrote. "If, as the attorney general has opined, Public Act 425 applies to existing contracts, including the agreement, then Public Act 425 has substantially impaired the agreement. Indeed, Knoxville has ceased prosecuting certain violations as required under the otherwise existing, valid, and enforceable agreement, and is causing ATS to lose substantial revenue."

ATS asked the Chancery Court for Knox County to declare the right turn law unconstitutional because it discriminates against traffic camera companies.