Tuesday, November 06, 2012

Talgo, Inc. sues Wisconsin

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Attorneys for Seattle-based Talgo, Inc. on Monday announced they had filed a lawsuit on behalf of the rail equipment manufacturer against the state of Wisconsin, based on the state's decision "to terminate its contract with the State of Wisconsin to build passenger trains to be used by the State for Amtrak's Hiawatha line between Milwaukee and Chicago."

The Badger State backed off its intent to implement higher-speed rail (HrSR) service linking Milwaukee and Chicago—and its plans for Talgo to manufacture the equipment at a site in the state—following the election of Gov. Scott Walker, who also turned away federal funding for the planned rail upgrade.

The suit was filed Nov. 1.

Representing Talgo, Madison, Wis.-based Cullen Weston Pines & Bach LLP said in a statement, "Talgo has substantially completed the trains under its contract, but the State has arbitrarily decided not to put the trains in service and has refused to pay Talgo the millions of dollars that it still owes for them.

"Talgo has filed a lawsuit in Dane County against Governor Scott Walker and Secretary of Transportation Mark Gottlieb, asking the court to review the State's course of conduct, determine that the State defaulted on the contract, and rule that Talgo properly terminated it.".

The attorneys note the legal move was not without warning, saying, "Talgo gave the State of Wisconsin ample opportunity to avoid this catastrophic loss of taxpayer funds. In July, Talgo formally notified the State that it was in default of the purchase contract. The State had thirty days to cure its default, but it did not do so. After Talgo provided another 70 days to cure and engaged in a day long mediation, the State still made no effort to resolve the dispute, despite knowing the consequences of its failure to do so.

Talgo Inc. CEO Antonio Perez, in a statement, added, "We invested in the State of Wisconsin by building a manufacturing facility in Milwaukee and creating manufacturing jobs. We built the trains and otherwise performed our obligations under our agreements with the State of Wisconsin. In return, rather than being "open for business" the State used every conceivable excuse, whether fair or not and whether lawful or not, to ensure that Talgo did not receive what it bargained for, including by refusing to pay for the trains that Talgo completed.

"I don't see how any company would in the future choose to do business with the State of Wisconsin when the State has shown that it cannot be trusted to honor contracts that it signed," Perez said.

Claiming Talgo was victimized by political maneuvering unrelated to business, Perez said, "Talgo is not in the business of politics. Talgo builds and maintains trains. It prefers to resolve disputes amicably. But the state's behavior made any negotiated resolution impossible. Terminating a contract and filing a lawsuit like this is an extraordinary and unprecedented action for us, one which we have taken reluctantly but with resolve."

Talgo, Inc. is the North American subsidiary of Madrid-based Talgo Patents SA, and is an established presence in the U.S. Pacific Northwest, where Amtrak used Talgo equipment on its Cascades Corridor route linking Eugene, Ore., Portland, Ore., Seattle, and Vancouver, British Columbia.