9/10/2015Speed Camera Company Sues Cleveland, Ohio
Photo ticketing vendor Xerox seeks to impose early termination fee on Cleveland, Ohio.
Photo enforcement vendors do not give up easily when cities decide that using speed cameras is not for them. Xerox, for example, recently filed suit against Cleveland, Ohio after its residents voted by an overwhelming 78 percent margin to ban the use of red light cameras and speed cameras in 2014. The photo copying giant insists that it is owed money because the automated ticketing contract does not expire until June 1, 2017. The company was only able to collect ticketing revenue for a year and a half.
In July 2013, Xerox won a contract extension to continue running Cleveland's automated ticketing machines, even though its main competitor, Redflex Traffic Systems, paid bribes to Columbus officials to take the lucrative deal away from Xerox. City officials backed off on the idea of switching vendors after the Australian company's ethical problems were exposed in Chicago, Illinois. Xerox inked the renewed deal to provide 44 red light cameras and 19 speed cameras for $3,644,040 per year. Cleveland pocketed $9 million in profit from the "cost neutral" contract that ensures Cleveland could never lose money on the cameras.
When the voters decided to oust the cameras, Cleveland decided to make the most of that "revenue neutral" provision by not canceling the contract -- avoiding the early termination fee that would have been based on lost ticketing revenue. Xerox insists that the terms of the contract require its monthly fee be paid out of the $9 million profit the city had accumulated when the cameras were operational.
"The city appears to believe that the license and services agreement no longer requires payment because the city has decided to discontinue using the cameras, and thus no longer raises revenue from their use," Xerox corporate counsel Wes Wadle wrote. "The city has accumulated a large surplus from the revenues it has generated under the traffic enforcement program, and considerably more than is needed to continue paying Xerox's monthly fee under the license and services agreement... The city may terminate the contract for convenience -- for a fee. But it has not done so. Thus, the city has no basis to discontinue its obligation to pay Xerox."
Xerox also points out in its lawsuit that the contract's force majeure clause allows for termination of the contract if the federal or state government bans the use of automated ticketing machines. No provision was made in the clause for a local ballot referendum. Cleveland officials must respond to the suit by October 26.