VeriFone Sued for $250 Million Over New York Taxi Ad Deal

VeriFone Systems Inc. (PAY), the largest maker of credit-card terminals, was sued by Creative Mobile Technologies LLC for more than $250 million over an agreement to place advertisements on screens in New York taxis.

Creative Mobile was founded in 2005 in response to the city’s mandate that cabs install passenger information monitors, according to the complaint filed today in state court in Manhattan.

Creative Mobile, based in New York, developed media systems that are now in more than 6,600 city cabs, and it entered into a sales agreement with Clear Channel Outdoor Holdings Inc.’s Clear Channel Taxi Media LLC to place ads on the screens, according to the complaint.

VeriFone acquired Clear Channel Taxi Media in 2009. The suit accuses the San Jose, California-based company of “intentionally and maliciously” violating and interfering with Creative Mobile’s rights under the agreement and causing Clear Channel Taxi Media to breach the pact, according to the complaint.

Creative Mobile accuses VeriFone of refusing to supply data and information needed to calculate amounts due under the agreement and putting ads on screens not operated by Creative Mobile while not paying the company its share of revenues under the pact.

Outside City

VeriFone also allegedly caused its taxi media unit to put ads in cabs outside of New York without first offering Creative Mobile the opportunity to carry the ads, as called for under the agreement.

“VeriFone intentionally caused and directed these breaches to damage CMT and to tortiously remove CMT both as its only competitor in the New York City” passenger-information monitor market “and also as its only significant competitor in markets outside New York City,” Creative Mobile said in the complaint.

Andy Payment, a spokesman for VeriFone, declined to comment on the lawsuit.

The case is Creative Mobile Technologies LLC v. VeriFone Systems Inc., 654379/2012, New York State Supreme Court, New York County (Manhattan).

To contact the reporter on this story: Chris Dolmetsch in New York at cdolmetsch@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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