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Class Action Suits Challenge Rip-Off Prison and Jail Phone Rates

Suit Filed in Illinois

On May 5, 1999, a class action suit was filed by Illinois consumers who receive collect calls from Illinois state and county jail prisoners alleging that they are forced to pay exorbitant phone rates as a result of an illegal conspiracy between phone companies, the Illinois Department of Corrections (DOC) and some county jails. The plaintiffs include the unimprisoned spouses, parents and siblings of prisoners, prisoners and a legal services group. The defendants are the state of Illinois, the Illinois counties of DuPage, Cook, and Kane and telephone companies AT&T, Invisions Telecom, MCI Telecommunications Corporation and Consolidated Communications Public Services, Inc.

The plaintiffs allege that the exclusive phone service agreements entered into by the phone company and prison/ jail defendants result in those who receive collect calls from prisoners being charged excessive rates and surcharges. The contracts result in huge kickbacks; up to 50% of gross billed revenues, to the jails and prison systems who enter into these exclusive use contracts. The complaint alleges that these exclusive contracts, and the resulting excessive costs, constitute an illegal monopoly and violate the Sherman Anti-Trust Act, 15 U.S.C. § 1, the Telecommunications Act of 1996, the First, Fifth and Fourteenth amendments to the US constitution, the Illinois state constitution and the Illinois Anti-Trust Act.

The plaintiff class consists of all families, lawyers and bill payer plaintiffs who are billed for phone calls initiated by prisoners confined to a jail or prison operated by the state and county defendants. The prisoner plaintiffs are all people confined to facilities operated by the state and county defendants.

As relief, the plaintiffs are seeking a declaratory judgment that the current practices by the defendants are illegal; injunctive relief enjoining the illegal practices; monetary compensation for the losses incurred by the plaintiffs; compensatory and punitive damages and treble damages under the Sherman Act and attorney fees and costs.

The plaintiffs have filed a motion for a Preliminary Injunction which is scheduled for a hearing before judge Manning in September, 1999. The plaintiffs are seeking to preliminarily enjoin the state and county defendants from prohibiting alternative calling options and to enjoin all "commissions" to the government defendants and to place all Illinois prison and jail phone funds in an escrow account until the litigation is concluded.

PLN will report the outcome of the litigation. The plaintiffs are represented by veteran civil rights lawyer Michael Deutsch of the Center for Constitutional Rights. See: Arsberry v. State of Illinois, USDC ND IL, Case No. 99-C-2457.

Phone Rates Challenged in KY, MO, IN and AZ

In 1997 a class action suit was filed against the Commonwealth of Kentucky; the Kentucky DOC; the state of Missouri; the Kentucky counties of Grayson, Oldham, Bullit, LaRue, Franklin and Jefferson; the sheriff and county of Clark in Indiana and the Board of Supervisors of Pima County Arizona; MCI Telecommunications Corp.; Invision Telecom Inc.; LDDS Worldcom Inc.; Gateway Technologies and Security Telecom Corp. The plaintiffs are attorneys and citizens, primarily residing in Kentucky who receive collect calls from prisoners in the Kentucky and Missouri DOCs and from prisoners in the jails operated by the county defendants in Kentucky Arizona and Indiana.

The lawsuit alleges that the defendants entered into exclusive phone service contracts preventing any choice of carrier for the plaintiffs, resulting in substantially higher phone rates than those paid to accept non prisoner collect calls. The complaint alleges the phone company defendants then pay the state and county defendants substantial kickbacks skimmed from the excessive fees they charge consumers. The plaintiffs allege that the excessive fees are the result of an illegal monopoly and conspiracy among the defendants. The plaintiffs claim the defendants are in violation of the Sherman Anti Trust Act, 15 U. S. C. § 1, the RobinsonPatman Act, 15 U. S. C. § 13 and the equal protection clause of the 14th amendment to the U.S. constitution. The plaintiffs are seeking declaratory and injunctive relief, treble damages and attorney fees and costs.

PLN has been monitoring the suit since it was filed The defendants have filed a motion to dismiss which has yet to be ruled on as far as PLN knows. The Kentucky Public Utilities Commission has granted substantial relief to the Kentucky plaintiffs (see related story following this article). The plaintiffs are represented by Kentucky lawyers F. Thomas Conway and Bart Adams. PLN will report the outcome ofthe litigation. See: Daleure v Kentucky, USDC WD KY, Louisville Division, Case No. 3:97CV-70911

Similar litigation challenging excessive prison and jail phone rates is being planned in other states around the country, including California and Washington. PLN will report on these suits as they are filed as well as significant developments in the cases.

PLN has extensively reported on prison and jail phone issues in the past. The prison and jail collect call market is a billion dollar a year business with prisons and jails receiving hundreds of millions of dollars in kickbacks annually. While rate payers have received relief from state utility commissions in Louisiana, Nevada and Kentucky, other state utilities commission have been totally unresponsive to the issue.

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Related legal cases

Arsberry v. State of Illinois

117 F.Supp.2d 743

United States District Court, N.D. Illinois, Eastern Division.

Katie ARSBERRY, et al. Plaintiffs,
State of ILLINOIS, et al., Defendants.

No. 99 C 2457.

March 22, 2000.

Prisoners and those wishing to have telephone contact with them sued state and telephone companies, challenging fairness of collect call rates. On defendants' motions to dismiss, the District Court, Hibbler, J., held that issue was non-justiciable under the "filed rate" and "primary jurisdiction" doctrines.

Motions granted.

Alexandra C. Buzanis, Richard John Siegel, Illinois Attorney General's Office, Patrick Malone Blanchard, Paul Anthony Castiglione, Leslie M. Smith, Kirkland & Ellis, Lois Lipton, Ross Benjamin Bricker, David Charles Layden, Jenner & Block, Gary Senner, Sanford Mark Pastroff, Sonnenschein, Nath, Rosenthal, Chicago, IL, Thomas F. Downing, Paul Francis Bruckner, DuPage County States Attorney's Office, Wheaton, IL, Patricia Johnson Lord, Jacqueline A. Morrison, Kane County State's Attorney's Office, Geneva, IL, Donald B. Leist, Elgin, IL, Ellen L. Champagne, Arlington Heights, IL, Jay M. Vogelson, Stutzman & Bromberg, P.C., Dallas, TX, Geraldine M. Alexis, Matthew C. Blickensderfer, Sidley & Austin, Chicago, IL, for Defendants.


HIBBLER, District Judge.

Pending before the Court is defendants' motion to dismiss the action brought against them by Katie Arsberry and others. The plaintiffs may be divided into two groups: (1) prisoners wishing to contact people on the outside and (2) people on the outside wishing to have telephone contact with prisoners. The defendants may also be divided into two groups: (1) governmental entities who are engaged in exclusive dealing agreements with telephone companies and (2) the telephone companies which provide long distance services for the government entities' prisons.

The causes of action arise under the First, Fifth and Fourteenth Amendments of the Constitution; the Sherman Antitrust Act; the Telecommunications Act of 1996; and various state causes of action.

*744 The one issue that all of these causes of action have in common is that they challenge the fairness, at some level, of the telephone rates charged by the telephone companies to the recipients of prison inmate-initiated collect telephone calls. However, this is an issue which the Court finds to be non-justiciable under the "filed rate" and "primary jurisdiction" doctrines.

Pursuant to both the federal Telecommunications Act and the Universal Telephone Service Protection Law of 1985, the telephone company defendants file schedules or tariffs governing the telecom services they offer. 47 U.S.C. § 203(a); 220 ILCS § 5/13-501. These schedules contain the rates, terms and conditions of service, and cannot be varied by any other contract, agreement or unilateral action of the parties. American Telephone and Telegraph Co. v. Central Office Telephone, Inc., 524 U.S. 214, 118 S.Ct. 1956, 141 L.Ed.2d 222 (1998). The purpose of the tariff is to preserve to the FCC and ICC the authority to determine the reasonableness of rates and to ensure that the telephone companies charge only the rates filed with those agencies. Arkansas Louisiana Gas Co. v. Hall, 453 U.S. 571, 577-78, 101 S.Ct. 2925, 69 L.Ed.2d 856 (1981); North River Ins. Co. v. Jones, 275 Ill.App.3d 175, 211 Ill.Dec. 604, 655 N.E.2d 987 (1995), appeal denied 164 Ill.2d 567, 214 Ill.Dec. 323, 660 N.E.2d 1272.

The fact that Congress and the Illinois Legislature have vested these responsibilities in the FCC and ICC, respectively, is highly significant. First, the statutes clearly assign to the FCC and ICC the authority to determine the reasonableness of telecom rates. This is an area in which these dedicated agencies are experts in important ways that the Court is not. Congress' delegation of responsibility to the FCC is something that it was entitled to do under the broad sweep of the Commerce Clause. The Illinois Legislature was similarly authorized to enact the Universal Telephone Service Protection Law. Since they have done so, this Court is in no position to undermine their authority by seizing the fact-finding role for itself.

The "filed rate" doctrine is not merely a random government regulation; it is motivated by two "companion principles"--(1) the need to prevent carriers from engaging in price discrimination as between ratepayers (the "nondiscrimination strand") and (2) the preservation of the exclusive role of federal agencies in approving rates for telecommunications services that are "reasonable" by keeping courts out of the rate-making process (the "nonjusticiability strand"), a function that the federal regulatory agencies are more competent than the Court to perform. Wegoland v. NYNEX Corp., 27 F.3d 17, 19 (2nd Cir.1994); see also H.J. Inc. v. Northwestern Bell Tel. Co., 954 F.2d 485, 488 (8th Cir.1992). Other jurists have waxed eloquent on the pros and cons of this doctrine, but the bottom line is that the fairness of the rate as filed is up to the FCC and ICC. In that determination, this Court has no role at all. There are several compelling reasons which require the Court to defer to the FCC and ICC in this dispute. First, the Court does not possess any experience in determining the fairness of telephone rates. Second, Congress has laid down no guidelines for judicial determination of these matters. Third, if the Court did interfere, it would violate the separation of powers doctrine and encroach upon the sovereignty of the Illinois state government. Fourth, the Court would run the risk of making a pronouncement on an issue another government body has seized primary jurisdiction over, a situation which could potentially end up in two government bodies rendering inconsistent opinions on the same issue. Given the pervasive interstate commerce issues connected with the process for the establishment of telephone rates, such a situation could be disastrous.

To illustrate how any action taken by this Court could result in a conflict one only need consider the possible remedies available to the Court if it found an equal protection cause of action. If the Court enjoined telephone companies from providing service at the filed rate it would then, *745 in effect, be forcing them to break their "contract" with the FCC and sua sponte usurp the authority of the ICC. If, alternatively, the Court decided to give the plaintiffs monetary compensation, the Court would then be economically punishing the telephone companies for obeying the FCC and ICC, which they are by law required to do. Additionally, in order to set compensation, the Court would be required to make its own determination of "reasonable" as opposed to "excessive" telephone rates. This is the function of the FCC and ICC in this very specialized, regulated industry. Either remedy would interfere with both bodies' delegated powers and authorities. Although there are some significant public policy issues which may dictate a need for review of these rates, it is not the role or function of this Court to effectuate public policy.

The foregoing is true for each and every cause of action asserted. Therefore, the Court must GRANT the Motion to Dismiss because this is a non-justiciable controversy and the FCC and ICC have primary jurisdiction over the issue. It is appropriate that this matter be referred to the FCC and ICC for examination. All motions in the present case are terminated as moot.

117 F.Supp.2d 743


Daleure v. Kentucky