OAKLAND, Calif. (CN) – A federal judge indicated Tuesday she would toss at least some claims in four related class actions accusing Bay Area jails of allowing telecoms to overcharge inmates and their families for phone calls in exchange for a slice of the profits.
Inmates filed virtually identical class actions accusing Alameda, Contra Costa, Santa Clara and San Mateo counties of forcing them to pay excessive fees to make and receive phone calls, in violation of the First Amendment, the Fifth Amendment’s unlawful takings provision, the Equal Protection Clause and Section 1 of the Sherman Antitrust Act. All four class actions were filed in August 2016 and amended in December.
Similar lawsuits have been filed against Los Angeles, Orange, Riverside, San Bernardino and Ventura counties.
The inmates say the four Bay Area counties struck deals with Global Tel Link Corp. and Securus Technologies, granting them exclusive rights to run phone systems in their jails. Inmates or their families must set up prepaid accounts with the telecoms, are charged “unreasonable, unjust and exorbitant rates,” and most of the money goes to the counties as “commissions,” according to the four virtually identical complaints.
The counties and their jails get $1.5 million annually or nearly 71 percent of the commissions, whichever is higher, and a yearly $150,000 technology grant, according to the complaints.
At oral argument Tuesday, U.S. District Judge Yvonne Gonzalez Rogers ripped apart most of the plaintiffs’ arguments, and turned her most scathing critique upon their constitutional claims.
The lawsuits claim that the phone rates “essentially extort() monies from mostly poor and minority families trying to get by and stay in contact with loved ones,” in violation of the First Amendment. They also claim that the fees and the “extortionate and outrageous ‘commissions’” disproportionately charge poor people and people of color for county services whose costs should be borne by all taxpayers, in violation of the Fifth Amendment’s takings provision.
“What concerns me in this case is the needle the plaintiffs are trying to thread,” Gonzalez Rogers said.
“‘No, judge, we’re just talking about, you issue an order setting aside all future contracts, but we are really not trying to invalidate the contracts in front of you.’ It seems to me that if I find that these contracts are unconstitutional as a matter of law, how can I sit here and allow them [the contracts] to proceed until the expiration of their terms?”
Plaintiffs’ attorney Barrett Litt told Gonzalez Rogers they are challenging the constitutionality of the commissions, not the constitutionality of the contracts themselves. He said the court could segregate the commissions and put them into an inmate welfare fund for education and other inmate services.
Gonzalez Rogers seemed dissatisfied with that argument, saying that by challenging the commissions, the plaintiffs are also challenging the terms of the contracts.
The parties then turned to joinder. In a consolidated motion to dismiss, filed in January, the counties say the claims should be dismissed because the plaintiffs failed to join Global Tel Link and Securus, which charge and collect the phone rates and fees, with the counties as defendants.
Litt countered Tuesday that the suits are focused on the government, not the telecoms, and that adding the telecoms “would unnecessarily complicate what we have tried to make a very clear focus of this litigation.”
“There are lots of cases challenging on a nationwide basis whether or not these phone companies can engage,” he said. “This is not what this case is about. This case is about the role of government entities and whether it’s permissible role for them to play.”
Gonzalez Rogers seemed equally skeptical of the plaintiffs’ joinder argument, essentially telling Litt that his clients would lose on the issue.
“I think both sides concede that joinder is feasible, correct?” she asked of Litt.
Gonzalez Rogers largely refrained from offering her opinion on the Sherman Act arguments.
The plaintiffs claim that instead of keeping prices low by putting phone services out for bid, or allowing multiple companies to provide service, the counties sign exclusive agreements with the company “willing to pay the highest kickback.”
The counties say the Sherman Act claims are barred because counties collect the commissions pursuant to state law. They deny that exclusive contracting and collecting commissions violate antitrust laws.
“The county’s decision to have one phone provider, that’s what makes it anticompetitive. The size of the commissions has nothing to do with being competitive or anticompetitive,” said San Mateo County attorney Michael von Loewenfeldt.
“The question is: Did the Legislature understand it was going to be anticompetitive activity? Yes. Did the Legislature also foresee that anticompetitive activity included charging commissions? Yes, because they told us what to do with the money.”
Von Loewenfeldt is with Kerr & Wagstaffe in San Francisco; Litt with Kaye, McLane, Bednarski & Litt in Pasadena.