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Short-Lived Class Action Lawsuit Filed Against Global Tel*Link in California, Then Secretly Settled

by Mike Brodheim

Sick and tired of being gouged by high prison phone rates, Nadia Alvarez and Rachel Fishenfeld, two California residents, filed a consumer class action suit against Global Tel*Link (GTL) in August 2010. GTL, a major telecommunications company that contracts with prisons and jails throughout the country to provide phone services, was accused of engaging in unfair business practices in violation of both federal law and California state law.

Alvarez and Fishenfeld sought certification of a class consisting of all United States residents who, within two years of the filing of the suit, paid for GTL’s services so they could receive phone calls from someone in a jail or prison. The plaintiffs also sought to certify a subclass of California residents only, consisting of those who paid for GTL’s services during the four years prior to the filing of the lawsuit.

The plaintiffs were represented by J. Paul Gignac, a partner at Arias Ozzello & Gignac LLP of Santa Barbara, as well as Steven S. Derelian of Pasadena and Eugene Feldman of Hermosa Beach – counsel with experience in handling class action litigation on behalf of consumers.

In their complaint, Alvarez and Fishenfeld stated that GTL is an “exclusive provider” at the facilities where it operates and thus is “able to exploit its customers by charging them exorbitant, undisclosed per-minute rates (often in excess of $1.00/minute) and excessive service charges.” GTL allegedly requires its customers to establish and maintain an advance pay balance that is used to pay for calls made to the customer by someone who is incarcerated, with such calls incurring varying per-minute rates that are not disclosed to the customer.

The suit further claims that GTL fails to inform its customers that they will be charged a service fee of $4.75 for each $25.00 prepayment they make towards an advance pay account. Nor does GTL notify its customers that this service fee will be deducted from their advance pay balance.

GTL is contractually obligated to “validate” the phone number of each call made by a prisoner. It does this, unbeknownst to its customers, by placing a hold or freeze on a portion of the advance pay balance of a customer’s account each time they receive a call from someone who is incarcerated. The amount held or frozen ranges from $14.71 to $21.62, and the hold lasts for 30 to 60 minutes – until the call is “validated.”

The hold thus has the effect of reducing the amount of the advance pay balance available to pay for incoming calls and forces GTL customers to make additional pre-payments, even before exhausting an existing advance pay balance, in order to continue to receive phone calls from prisoners.

The lawsuit enumerated five claims for relief, including violations of the Federal Communications Act, 47 U.S.C. § 201, and California’s Unfair Competition Law, Business and Professions Code § 17200, et seq. The suit sought damages, restitution, declaratory relief, injunctive relief and other equitable relief.

On January 31, 2011 the parties filed an agreed stipulation dismissing the suit – presumably pursuant to a confidential settlement agreement, though one of the plaintiffs’ attorneys declined to comment. The lawsuit had not reached the class certification stage at the time of the stipulated dismissal. See: Alvarez v. Global Tel*Link Corporation, U.S.D.C. (C.D. Cal.), Case No. 2:10-cv-06288-RGK-JC.

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Related legal case

Alvarez v. Global Tel*Link Corporation