A federal jury ruled Thursday against a traffic camera company that had sought to impose a $20 million fine on its nearest rival. The panel of eight spent an hour-and-a-half to arrive at the verdict denying American Traffic Solutions (ATS) payment for contract revenue lost in twelve cities after the Australian firm Redflex Traffic Systems snuck uncertified equipment into the country in violation of Federal Communications Commission regulations.
Redflex admitted that the DRS-3 radar system that it used on every mobile speed camera citation the company issued in the US between 1997 to 2008 was illegal. ATS argued that when Redflex portrayed its services to city and state officials as fully compliant with the law, these statements amounted to false advertising under the Lanham Act. US District Court Judge Frederick J. Martone scolded ATS in the final days of the trial, giving a glimpse at the jury verdict that was yet to come.
“At best the plaintiff has an extraordinarily weak case,” Martone said with the jury out of the courtroom. “It is weak at every point.”
Before the six-day trial began, Martone had expressed his frustration with the conduct of both companies in written motions, singling out Redflex for the greatest criticism. ATS attorneys had laid out a systematic case that Redflex knowingly misled cities, but Martone opined that the conduct did not appear to meet the definitions in the Lanham Act which deals with false advertising that misleads consumers, not government agencies.
ATS CEO Jim Tuton and top company officials like Adam Draizin argued their position in frequently combative testimony. Although Tuton lost the case, his lawyers grilled Redflex Holdings Ltd. Board Member Karen Finley on the stand, forcing her to admit that her company misled the Arizona Department of Public Safety (DPS) regarding the legality of equipment used in the statewide photo radar contract, as follows:
ATTY: Mr Burke is a lawyer [who]… is writing this letter on behalf of Redflex to the chief procurement officer of Arizona DPS, is he not?
ATTY: Let’s turn to page four of this letter. Now the first thing he says here is: ‘Redflex has the intention and ability to fulfill this contract with certified equipment. The Multanova and AGD-340 are now FCC certified.’ You see that?
FINLEY: Um, yeah.
ATTY: We know now by the date of this letter, August 12, 2008, certainly the AGD-340 was certified but the Multanova DRS-3 was not certified, was it?
FINLEY: But I’m not sure when we found that out.
ATTY: Excuse me ma’am, that’s not my question. We know to this good day — Mr Carpinteri testified for us — that the DRS was never certified and it’s still not certified. Do you recall his testimony about that?
FINLEY: Um, yeah.
ATTY: Your lawyer, Mr. Burke, here tells the DPS that the Multanova was FCC certified, does he not, ma’am?
FINLEY: That’s what he says.
The intense litigation has imposed a heavy toll on both firms since ATS filed suit in November 2008. Redflex reported that the case was the primary reason the company’s legal bills had reached $6.2 million for the year. Redflex opened a retaliatory Lanham Act case against ATS in which trial is pending. US District Court Judge Susan R. Bolton had scheduled a pretrial conference for June 28, but ATS succeeded in delaying the move until Bolton rules on a motion to disqualify the Redflex law firm, Greenberg Traurig, because it has inside information on ATS operations from prior legal work. Redflex paid Greenberg more than $1 million for its help in defeating ATS.