A state law preventing companies from collecting data on license-plate photographs is infringing on federal speech and equality rights, two companies say.

Digital Recognition Network -- a Fort Worth-based company -- and Vigilant Solutions, based in Livermore, Calif., are suing the state in federal court, contending that the state law violates their First and 14th Amendment rights. The two companies sued Gov. Mike Beebe and Attorney General Dustin McDaniel in their capacities as elected officials and asked a federal judge to grant an injunction, which could make the law ineffective.

Beebe's spokesman, Matt DeCample, referred questions about the lawsuit to the attorney general's office. The attorney general's spokesman, Aaron Sadler, said the law "is crafted carefully to protect both the privacy concerns of Arkansans and legitimate law enforcement purposes."

"We are prepared to defend the law," Sadler said.

The law went into effect last year and restricts the use of automatic license-plate readers by anyone other than law enforcement and parking enforcement agencies. Arkansas Code Annotated 12-12-1801 et seq. also only allows those agencies to retain the license-plate data for up to 150 days unless the data are part of an ongoing investigation.

Law enforcement can only share the license-plate information with other agencies, but individuals' license-plate data can be dispensed to the owner of the tag or vehicle and with the owner's written consent, according to the law, which was sponsored by Rep. Nate Steel, D-Nashville.

The law was a "middle ground" between law enforcement and privacy advocates, Steel has said.

But the two companies said the law restricts them from carrying out their corporate speech. The collection and dissemination of the license-plate information is protected by the First Amendment, they said, adding that the law is a "content-based speech restriction."

"Moreover, the Act's extensive exceptions further demonstrate that it discriminates based on the content of the speech and the identity of the speaker," the lawsuit states.

Digital Recognition Network uses photographs of license plates and image-content analysis -- developed by Vigilant Solutions -- for financial services, insurance and vehicle-repossession businesses. The company's cameras are usually mounted on affiliates' tow trucks or vehicles owned by repossession companies and snap pictures of license plates while traveling. The pictures include a date and time stamp, along with GPS coordinates of where the photograph was taken.

At the same time, software in the vehicles cross-checks the license plate information with a database of plates of vehicles wanted for repossession. The software will alert the affiliate if the vehicle is wanted for repossession, and the affiliate will need to call a dispatch number to verify the vehicle's status.

The company sells the license-plate data to vehicle lenders and insurance companies and had sold three license-plate reader kits to separate Arkansas companies -- Arkansas Repossessors, Absolute Towing, and Recovery & Remarketing -- for $15,825 each before the law took effect.

The companies have also turned over the data to law enforcement agencies "usually at no cost" to help find missing persons or stolen vehicles, the lawsuit states.

But once the law took effect, the companies' operations have stopped in Arkansas: Digital Recognition Network is no longer selling the cameras to other businesses, and Vigilant can no longer receive the license-plate data.

The companies contend the law "does not further a substantial governmental interest, does not directly and materially advance a governmental interest and restricts more speech than is necessary to further the governmental interest at issue."

The state Legislature created the law to "[protect] the 'privacy' of publicly-divulged license-plate numbers," but the Fourth Amendment doesn't apply to private entities, the lawsuit states. While license plates are public, they do not have any personally identifiable information, such as names or addresses.

Access to information that would link a person to a specific license plate is regulated by federal and state laws, the companies said.

In 2013, Utah legislators enacted a similar law regulating the use of license-plate readers but soon after amended the law to allow private companies to use the cameras. The changes came after some legislators said the law was "an explicit violation of that First Amendment right," the lawsuit states.

The Arkansas chapter of the American Civil Liberties Union was reviewing the lawsuit -- which was filed May 30 -- to see if the companies had "valid concerns" about First Amendment violations, Executive Director Rita Sklar said.

"The primary concern with the [law] was the maintenance of records by law enforcement and by the government," she said. "So what we would be concerned with is where their activities intersect with the government."

The ACLU brought up privacy concerns as Arkansas legislators considered the bill. The group worried that law enforcement agencies could track certain people by collecting data on the license plates.

Several law enforcement agencies have the scanners, including the Little Rock and North Little Rock police departments. The ACLU did not know how many agencies were using the license-plate readers.

While the companies have corporate speech rights, Sklar said they must be weighed against people's privacy concerns.

"This is more complicated," she said. "The law has a very legitimate goal. It prevents private entities from collecting this information, and that may not be necessary as long as it's related to a legitimate law enforcement concern."

Metro on 06/08/2014