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Shareholder Resolutions Seek to Lower Phone Rates at Private Prisons

On November 26, 2013, shareholder resolutions were filed with Corrections Corporation of America (CCA) and The GEO Group, Inc. – the nation’s two largest for-profit prison companies; the resolutions seek to reduce the high cost of phone calls made by prisoners at CCA and GEO facilities nationwide.

Prison phone rates are typically much higher than non-prison rates, and a 15-minute call can cost up to $17.30. Such exorbitant costs make it difficult for prisoners to maintain regular contact with their families and children; an estimated 2.7 million children in the United States have an incarcerated parent.

In September 2013, the Federal Communications Commission issued an order capping the cost of interstate (long distance) prison phone calls. FCC Commissioner Mignon Clyburn observed that “Studies have shown that having meaningful contact beyond prison walls can make a real difference in maintaining community ties, promoting rehabilitation, and reducing recidivism. Making these calls more affordable can facilitate all of these objectives and more.” However, the FCC’s order has not yet gone into effect and does not apply to in-state prison phone rates. [See: PLN, Dec. 2013, p.1].

Therefore, Alex Friedmann, associate director of the Human Rights Defense Center (HRDC), PLN’s parent non-profit organization, filed shareholder resolutions with CCA and GEO that would require both companies to reduce the cost of all phone calls made by prisoners housed at their for-profit facilities.

HRDC is a co-founder and coordinator of the Campaign for Prison Phone Justice, in conjunction with the Center for Media Justice/Media Action Grassroots Network (MAG-Net) and Working Narratives. The Campaign was instrumental in the FCC’s decision to take action against interstate prison phone rates.

The shareholder resolutions request that CCA and GEO not accept “commissions” – kickbacks paid by prison phone companies, usually based on a percentage of revenue generated by prisoners’ phone calls. Commission kickbacks correlate with higher prison phone rates, and eight states have banned commissions.

Further, the resolutions ask that the companies “give the greatest consideration to the overall lowest” costs when evaluating or entering into prison phone contracts. The resolution filed with CCA notes that one of the company’s facilities, the Silverdale Detention Facility in Chattanooga, Tennessee, receives a 48% kickback and a 15-minute call “can cost as much as $9.75.” CCA received $205,136.78 in prison phone commissions at Silverdale in fiscal year 2012 alone. Further, a GEO-operated facility in Florida, the South Bay Correctional Facility, receives a 35% kickback that generated $125,600 in commissions in fiscal year 2012.

“As the largest private prison and detention corporation in the country, CCA has a responsibility to ensure that the families of incarcerated individuals are able to maintain the vital relationships needed in the rehabilitation process,” stated Steven Renderos, national organizer for the Center for Media Justice. “For immigrants in detention, a phone call can be the difference between securing adequate legal representation or not being able to see their families again.”

If the resolutions receive a majority vote among CCA and GEO shareholders, they will require the companies to ensure their prison phone contracts comply with the terms of the resolutions within 180 days.

In October 2013, CCA vice president Kim White wrote that rehabilitation and reentry programs are a “top priority” for the company. “It is important to us to see inmates grow during their incarceration, offering them the chance at a better life for themselves and their families after their release,” she said. “This is part of our responsibility to society as a corrections company, and it’s also essential to serving our government partners and taxpayers well.”

“This resolution gives CCA an opportunity to prove they are truly interested in rehabilitating prisoners and reducing recidivism,” Friedmann stated. “By decreasing the high costs of prison phone calls, the company can promote greater communication between prisoners and their families and children, which research has shown results in improved post-release outcomes and lower rates of recidivism. Or, if CCA is primarily concerned about its profit margin, it will object to the resolution and try to prevent it from going to a shareholder vote.”

Should the resolutions survive a challenge filed by CCA or GEO with the Securities and Exchange Commission (SEC), they will be presented to the companies’ stockholders for a vote sometime in May 2014. Friedmann is represented pro bono by the New York-based law firm of Stroock, Stroock & Lavan.

Sources: HRDC press releases (Dec. 2, 2013); CCA and GEO shareholder resolutions

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