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Delaware Residents Challenge City’s ‘Impound-and-Scrap Scheme’ as ‘Unconstitutional’ Private ‘Racket’

Earl Dickerson and Ameera Shaeed

Earl Dickerson and Ameera Shaeed

Delaware’s most populous city touted a supposedly “cost-free” method of towing cars allowing private companies to keep and scrap people’s cars. Two Wilmington residents challenged that system as “fundamentally unconstitutional” in a federal lawsuit asking a judge to put an end to that system and make them whole.

“Wilmington hired private towing companies to run its municipal impound system,” the 32-page complaint states in the introduction. “However, in lieu of monetary payment, the City contractually empowered the private towing companies to keep and scrap people’s cars. As a result, the towing companies scrapped thousands of cars without compensating owners. In the end, the City gets its municipal impound program for free, the tow companies make money by confiscating a large portion of the cars they tow, and vehicle owners lose their cars.”

Their lawyers at the Institute for Justice (IJ), an Arlington, Va.-based nonprofit, describe the system as a “racket” in a press release—in the colloquial sense. The complaint does not allege racketeering.

Grandparents Ameera Shaheed and Earl Dickerson claim that this system violated their rights and left them helpless, without transportation.

“When they took my vehicle, it hindered me from being able to get around. I have a bad back. I can’t do a lot of walking,” Shaheed said in a statement. “I needed that vehicle. It was my pride and joy.”

Shaheed says she owned a 2005 Hyundai XG350 worth approximately $4,250.

Dickerson, a 73-year-old retiree, described finding himself in a similar situation with his 2002 Dodge Ram 1500 Van, valued at as much as $4,834.

“It was my only means of transportation,” he said in a statement. “And without that, I felt almost helpless.”

They sued the city and two companies—First State Towing, LLC and City Towing, LLC—in federal court on Wednesday.

Shaheed says that her ordeal began when authorities ticketed her legally parked car six times within nine days.

“Then, while her appeal of the tickets was pending, Defendants towed her car and refused to release it unless she paid the city $320. When Ameera couldn’t afford to do so within thirty days, Defendants scrapped her car and kept the entire value for themselves, even though the car’s value far exceeded the alleged ticket debt. Outrageously, Defendants didn’t even credit the value towards her parking tickets or compensate her for the loss. So Ameera lost her car and still owes $320,” documents said.

Unlike Shaheed, Dickerson concedes a petty traffic violation, but he says the punishment did not fit the alleged offense.

“Earl Dickerson didn’t move his car from its parking spot in time, so Defendants towed it. Earl paid the resulting ticket, but Defendants still refused to release his vehicle unless Earl paid an additional $910 that he absolutely did not owe,” the lawsuit continued. “Because he couldn’t afford to pay the ransom, Defendants scrapped Earl’s car and kept the entire value for themselves.”

According to the lawsuit, the duo have plenty of company.

In 2020, the city and the towing companies towed 2,551 cars and kept 987 of them, a rate of more than 38 percent, the lawsuit claims.

“Wilmington is taking cars without any kind of procedural protections, holding them for ransom, and then refusing even to credit the value of the car toward the supposed ticket debt,” IJ’s senior attorney Rob Johnson said in a statement. “No private debt collector could ever get away with that. The city doesn’t get extra leeway to take private property just because it’s the government. To the contrary, we should be holding the government to a higher standard.”

They demand the return of their cars or their fair market value, if they have been scrapped. Their legal team also seeks an injunction blocking the practice as a violation of the Fourth Amendment protections against unreasonable searches and seizures and Fourteenth Amendment due-process guarantees.

Wilmington’s Law Department did not immediately respond to a telephone press inquiry.

Read the lawsuit below:

(Photos courtesy of Institute for Justice)

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Law&Crime's managing editor Adam Klasfeld has spent more than a decade on the legal beat. Previously a reporter for Courthouse News, he has appeared as a guest on NewsNation, NBC, MSNBC, CBS's "Inside Edition," BBC, NPR, PBS, Sky News, and other networks. His reporting on the trial of Ghislaine Maxwell was featured on the Starz and Channel 4 documentary "Who Is Ghislaine Maxwell?" He is the host of Law&Crime podcast "Objections: with Adam Klasfeld."