NEW ORLEANS (CN) — A Louisiana board of court reporters and its members have insulated themselves from competition, a New Jersey-based court reporting firm claims in federal court.
According to Vertitext Corp.'s August 17 complaint, the erroneously identified Louisiana Board of Examiners of Certified Court Reporters its actual name is Louisiana Board of Examiners of Certified Shorthand Reporters and its members have conspired to keep out-of-state reporting firms from establishing a presence in Louisiana.
Veritext, which is based in Livingston, N.J., says it offers negotiated rates for court-reporting services in Louisiana and across the United States to insurance companies, large companies, government agencies, regulatory authorities, educational institutions and other high volume users, and offers its reporters not only good wages and benefits, but also protection from non-payment and other issues.
Despite this, Veritext says, it has been greeted with a cold-shoulder by available reporters in the state. This, it claims, is due to a concerted effort to prevent it from entering the market.
"The Board and the Court Reporters have become so brazen about their agreements to rig the competitive playing field that they recently issued an agenda for the Board's Research and Planning Committee and Ad Hoc Committee to Promote Efficiency in Court Reporting which contained a clear statement and admission of their intent to increase court reporting rates in Louisiana at the expense of consumers," the complaint says. "In this agenda, the Ad Hoc Committee is scheduled to meet to discuss 'How to increase rates?"' as part of an agenda item about the future of court reporting services in Louisiana."
Veritext is challenging a state statute — La. Code Civ. Proc. art. 1434(A)(2) — which purports to prohibit court reporters in Louisiana from entering into long-term or volume-based contracts with frequent consumers of court reporting services.
"This restriction was not designed or intended to advance a legitimate state interest, but rather to protect the self-interest of court-reporters at the expense of consumers and the administration of justice by limiting competition and promoting artificially high prices for court reporter services in Louisiana," Veritext says.
"The members of the Board, six of whom are practicing court reporters, are engaged in an illegal coordinated campaign to thwart competition by working to bar national providers of court case reporting services from selling their services in Louisiana," its complaint continues. "Their unlawful actions have included, among other things, preventing and discouraging entry by national and regional court-reporting firms by sending notices threatening cease and desist proceedings, conducting public and nonpublic investigations, discouraging court reporters in Louisiana from working with firms outside Louisiana by targeting and harassing court reporters suspected of working with those firms, and issuing a rule to show cause against Veritext.
"The Court Reporters also have agreed with each other and invited other competing court reporters to engage in conduct designed to increase the rates for court-reporting services in Louisiana and to frustrate national and regional firms in their efforts to market their services in Louisiana," the lawsuit claims.
Veritext says its business works by contracting with large-scale companies to provide "preferred provider engagements," which result in lower prices and higher quality service.
Veritext's contracts also permit customers to reduce their own costs by eliminating their need to spend time identifying, contracting with, and monitoring numerous court reporting services, the lawsuit says.
"Preferred provider arrangements also support a significant public interest and the administration of justice by reducing the high cost of litigation, mitigating the significant administrative costs which law firms are frequently required to absorb by their clients, and ensuring that deposition transcripts comply not only with state laws governing court reporting services but also federal privacy requirements under the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") and the Gramm-Leach Bliley Act, each as amended," Veritext says.
According to the lawsuit, a 1995 rule from the Louisiana legislature bars court-reporting firms like Veritext from getting jobs in the state by stipulating that court reporters may not "contract" with anyone — i.e. companies like Veritext.
In 2012 the board said it planned to enforce the contracting rule, and many court reporters subsequently shied away from contracting with companies like Veritext out of fear they would be stopped by the board.
"Article 1434 exists for one reason" the complaint says, "to keep the rates charged by Louisiana court reporters artificially high and to stifle innovation in the court-reporting industry, thus depriving participants in Louisiana's court system of the substantial cost savings achieved by contracts between Veritext and other court-reporting firms and their clients."
Veritext says it "has incurred financial losses in the form of revenue that it would have otherwise earned from customers who, as a result of the anticompetitive conduct, chose not to utilize the services offered by Veritext; higher costs associated with the artificially high fees Veritext incurred in contracting for court-reporting services in Louisiana; and expenses Veritext incurred responding to the actions of the Board."
Veritext's lawsuit seeks compensatory damages as well as trebled damages for attorneys' fees.
The Board of Court Reporters are represented by David Marcello of New Orleans. Marcello did not immediately reply to a phoned request for comment Friday.
Veritext is represented by Robert Bieck Jr. of Jones Walker in New Orleans.
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