A long-running legal tangle surrounding Metro's purchase of automatic fare-collecting Farecard equipment was resolved yesterday with an out-of-court settlement that cost Metro $2 million.
The settlement involved three parties and was announced in a carefully, worded press release from Metro. Metro had been sued for a total of $50 million in the various cases surrounding the acquisition of Farecard. All of the suits and countersuits were settled yesterday.
The $2 million settlement, paid by Metro to the Control Data Corp., technically occurred in an administrative proceeding that accompanied the lawsuits.
Stripped to its essentials, Control Data had charged Metro with breach of contract and both Metro and Cubic Western Data Co. with conspiracy when Metro decided to buy Farecard equipment from Cubic instead of Control Data.
The story began in 1972 when Metro awarded Control Data a $3.5 million contract to develop an automatic fare-collecting system. Metro then paid Control Data about $8 million as part of a contract for the first 905 pieces of equipment for the subway. Metro subsequently canceled that contract, charging Control Data with breach.
Meanwhile, Cubic, the manufacturer of a then-new automatic system for San Francisco's BART subway, began a vigorous campaign to win the Metro contract as well. Metro board members, concerned about slow progress by Control Data, ultimately went with Cubic.
The civil suits in U.S. District Court were settled yesterday with none of the three parties paying. Control Data was seeking payment from Metro for unreimbursed costs in a concurrent proceeding before the Army Corps of Engineers contract appeals board. That claim was settled yesterday when Metro officials handed Control Data officials a $2 million check.