Prison Phone Justice

•
IN THE
COMMONWEALTH COURT OF PENNSYLVANIA

C.U.R.E. OF PENNSYLVANIA,
Petitioner

v.

NO. 1183 CD 2001

PENNSYLVANIA PUBLIC UTILITY COMMISSION, :
Respondent

MAIN BRIEF OF PETITIONER
CITIZENS UNITED FOR THE REHABILITATION OF ERRANTS (C.U.R.E.)
(DEFINITIVE FORM)
FILED UNDER SEAL BY ORDER OF THE COMMONWEALTH COURT

Petition for Review of the order of the Pennsylvania
Public Utility Commission Entered on April 20, 200 I,
at Docket No. C-0098 1434

Angus R. Love, I.D. #22932

PENNSYLVANIA INSTITUTIONAL LAW
PROJECT
924 Cherry Street, Suite 523
Philadelphia, PA 19107
(215) 925-2966
Date: August 6,200 I

TABLE OF CONTENTS

TABLE OF AUTHORITIES ....................................................

IV

J. STATEMENT OF JURISDICTION ............................................. 1

II. ORDER IN QUESTION ..................................................... 2
III. STATEMENT OF QUESTIONS INVOLVED ................................... 3
IV. SCOPE AND STANDARD OF REVIEW ....................................... 4
V . STATEMENT OF THE CASE ................................................ 5
A. INTRODUCTION AND SUMMARY .................................... 5

B. PROCEDURAL HISTORY ............................................. 9
VI. SUMMARY OF THE ARGUMENT .......................................... 11
VII. ARGUMENT ............................................................ 15

A. THE PUBLIC UTILITY COMMISSION ERRED IN FINDING
AT&T'S RATES JUST AND REASONABLE ............................ 15
1. AT&T's Rates Are Not Just & Reasonable because the Rates

Violate the Pro-Competitive Goals of the Federal Telecommunications
Act of 1996 and the Pennsylvania Public Utility Code .................... 15
2. AT&T's Rates Are Not Just & Reasonable because AT&T's Rates
are Excessive .................................................... 18
a.

The Public Utility Commission's Comparison ofInmate
Collect Call Rates and Collect Calls Rates from Public
Payphones Is Not a Reasonable Basis for Comparison .............. 19

3. AT&T's Rates Are Not Just and Reasonable Because the Rates Do
Not Reflect the True Cost of the Telephone Service Provided .............. 20
4. AT&T's Rates Are Not Necessarily Just & Reasonable Because the
Rates Are Not Comparable to Those in Other States ...................... 23
5. AT&T's Rates Are Excessive in Light of the Poor Quality ofthe
Inmate Telephone System .......................................... 26

II

6. AT&T's Rates are Not Just and Reasonable Because They
Are Discriminatory ............................................. 27
B THE PUBLIC UTILITY COMMISSION ERRED IN FINDING
AT&T'S RATES CONSTITUTIONAL ................................. 29
1. AT&T's Rates Violate the First Amendment Rights of Families
and Friends of Inmates By Unnecessarily Burdening Their
Ability to Communicate with their Incarcerated Family Members
and Friends ................................................... 29
2. The Commission Owed to the Commonwealth under AT&T's
Contract for Inmate Telephone Service is an Unconstitutional Tax .......... 36
3. AT&T's Rates Violate the Equal Protection Clause by Subjecting
Recipients of Inmate Telephone Calls to Excessive Charges Not Imposed
on Similarly Situated Telephone Users ............................... 37
C. THE PUBLIC UTILITY COMMISSION lMPROPERL Y DISMISSED
VERIZON AND FAILED TO JOIN THE COMMONWEALTH AS
INDISPENSABLE PARTIES TO THE PROCEEDINGS ................... 42

VIII. CONCLUSION ....................................................... 45
APPENDIX

III

TABLE OF AUTHORITIES

CASES
AT&T v. Pennsylvania Public Utility Commission,
737 A.2d 201 (1999) ................................................... I
Bell v. Wolfish
441 U.S. 520 (1979) .................................................. 40
Benzel v. Grammer,
869 F.2d 1105 (1989) ................................................. 29
Camenter v. Pennsylvania Public Utility Commission,
IS A.2d 473 (1940) ................................................... 28
City of Cleburne v. Cleburne Living Center, Inc.,
473 U.S. 432 (1985) .................................................. 38
D.C. Transit System, Inc. v. Washington Metropolitan Transit Commission,
466 F.2d 394 (1972) .................................................. 26
Denoncourt v. State Ethics Commission
470 A.2d 945 (1983) .................................................. 39
Denver Union Stock Yard Co. v. United States,
304 U.S. 470 (1938) .................................................. 37
Duquesne Light Company v. Barasch,
488 U.S. 299 (1989) .................................................. 21
Federal Power Commission v. Hope Natural Gas Co.,
320 U.S. 591 (1944) ............................................. 20,21,23
Federal Power Commission v. Natural Gas Pipeline Co.,
315 U.S. 575 (1942) .................................................. 23
George v. Pennsylvania Public Utility Commission,
735 A.2d 1282 (2000) .................................................. 4
Groman v. Township of Manalapan,
47 F.3d 628 (1995) ................................................... 38
Harty Bernard v. ALLTEL Pennsylvania. Inc.,
1997 Pa. PUC LEXIS 82 ............................................... 43
IV

Inmates of Allegheny County Jail v. Wecht,
565 F. Supp. 1278 (1983) .............................................. 29
Jackson v. Metropolitan Edison Co.,
419 U.S. 345 (1974) .................................................. 38

P'

Johnson v. Galli,
596 F. Supp. 135, at 138 (1984) ...................................... - ... 29
1.S. v. Bethlehem Area School District
757 A.2d 412 (2000) ........................................... _...... 40
McGowan v. Maryland
366 US. 420 (1961) ........................ _.............. __ ......... 41
Morgan v. LaVallee,
526 F.2d 221 (1975) ............................................. ___ .. 29
National Utilities. Inc. v. Pennsylvania Public Utility Commission,
709 A.2d 972 (1998) ....................... . . . . . . . . . . . . . . . . . . . . . . .. 21,26
NCAA v. Tarkanian,
488 US. 179 (1988) ............................................. _.... 38
Norfolk and Western Railway Co. v. Pennsylvania Public Utility Commission,
413 A.2d 1037 (1980) .................................................. 4
Pennsylvania Public Utility Commission v. Pennsylvania Gas and Water Co ..
424 A.2d 1213 (1980) ................................................. 21
Peoples Natural Gas Co. v. Pennsylvania Public Utility Commission,
409 A.2d 446 (1979) .................................................. 28
Popowsky v. Pennsylvania Public Utility Commission,
706 A.2d 1197 (1997) .................................................. 4
Procunier v. Martinez,
416 US. 396 (1974) .................................................. 29
Public Advocate v. Philadelphia Gas Commission,
674 A.2d 1056 (1996) ................................................. 37

p!'oI

Sandra L. Feigley v. AT&T Communications of Pennsylvania. Inc.,
Docket No. C-00981434 ......................................... __ ..... 2

v

Smith v. City of Philadelphia,
516 A.2d 306 (1986) .................................................. 39
Smyth v. Ames,
169 U.S. 547 (1898) .................................................. 21
Strandberg v. City of Helena,
791 F.2d 744 (1986) .................................................. 29
Thornburgh v. Abbott,
490 U.S. 401 (1989) .................................................. 29
Turner v. Safley,
482 U.S. 78 (1987)

passim

Washington v. Reno,
35 F.3d 1093 (1997) .................................................. 29
Yick Wo v. Hopkins
118 U.S. 356 (1886) .................................................. 39

REGULATORY DECISIONS
In the Matter of Billed Party Preference for InterLAT A 0+ Calls, Second Report
and Order and Order on Reconsideration, CC Docket No. 92-77, Adopted
January 29, 1998 and Released January 29, 1998 ................................... 15
In the Matter of Establishment of an Operator Surcharge Rate for Collect
Telephone Calls from Confinement Facilities, Adm. Case No. 378 ...................... 25

STATUTES
Telecommunications Act of 1996, 47 U.S.C. §151, et seg. ("Telecom Act") .......... 15,18
2 Pa. C.S. §704 ............................................................. 4
42 Pa. C.S. §763 ............................................................ 1
42Pa. C.S. §5105 ........................................................... 1
52 Pa. Code §63.105(d)(I)-(2) ............................................... 23

VI

Public Utility Code, 66 Pa. C.S. §101 et seq.
66Pa.C.S.§1301 ................................................. 11,18
66 Pa. C.S. §1304 .................................................... 27
66 Pa. C.S. § 2907(b)(1) ............................................ 11,18
66 Pa. C.S. §3001, et seq .......................................... 16,17,21
66 Pa. C.S. §3004(d)(2) ................................................ 27

vii

I. STATEMENT OF JURISDICTION
This Court has jurisdiction over the April 20, 200 I Opinion and Order ofthe Pennsylvania
Public Utility Commission ("PUC") in this matter pursuant to 42 Pa. C.S. §5105, which provides
for a right of appellate review of governmental determinations, and by 42 Pa. C.S. §763, which

0'

provides for such appeals to be heard by the Commonwealth Court.

1

n.

ORDER IN QUESTION

The Order to be reviewed is the Opinion and Order entered April 20, 2001, in the case of
Sandra L. Feigley v. AT&T Communications of Pennsylvania, Inc., Docket No. C-00981434.
The pertinent ordering paragraphs of the PUC's order are as following:
1.

That the Exceptions of Sandra L. Feigley and intervenor, Citizens United for the
Rehabilitation of Errants, are denied.

2.

That the Formal Complaint of Sandra L. Feigley, docketed at No. C-00981434, is
denied, consistent with the discussion contained in this Opinion and Order.

3.

That the June 27, 2000 Recommended Decision of Administrative Law Judge
Louis G. Cocheres is adopted, as modified by this Opinion and Order.

4.

That this Formal Complaint, at Docket No. C-00981434, shall be marked
"closed."

2

III. STATEMENT OF QUESTIONS INVOLVED
1. Did the Commission err in finding AT&T's rates just and reasonable where AT&T's rates
violate the Commonwealth's pro-competitive goals, fail to reflect the true cost of the inmate
telephone service, are not comparable to rates in other states, are excessive in light of the poor
quality of the system and are discriminatory?

Suggested Answer: Yes.
2. Did the Commission err in finding AT&T's rates constitutional by violating the petitioners'
First Amendment rights and unnecessarily burdening their ability to communicate with
incarcerated individuals?

Suggested Answer: Yes.
3. Did the Public Utility Commission err in finding that the commission owed the
Commonwealth under AT&T's contract is not an unconstitutional tax?

Suggested Answer: Yes.
4. Did the Commission err in finding that AT&T's rates did not violate the 14th Amendment's

equal protection clause even though the rates subject recipients of inmate telephone calls to
excessive charges not imposed on similarly situated telephone users?

Suggested Answer: Yes.
5. Did the Commission err in dismissing Verizon and in failing to join the Commonwealth as
indispensable parties?

Suggested answer: Yes.

3

IV. SCOPE AND STANDARD OF REVIEW
A.

SCOPE OF REVIEW

This Court's scope of review of an order of the PUC is to determine whether a
constitutional violation or error in procedure has occurred, whether the decision is in accordance
with law, whether a manifest abuse of discretion has occurred, and whether the necessary findings
of fact are supported by substantial evidence. AT&T v. Pennsylvania Public Utility Commission,
737 A.2d 201 (1999); George v. Pennsylvania Public Utility Commssion, 735 A.2d 1282 (2000)
(citing 2 Pa. C.S. §704).

B.

STANDARD OF REVIEW

In Popowsky v. Pennsylvania Public Utility Commission, 706 A.2d 1197 (1997), the
Supreme Court defined the Commonwealth's standard of review of PUC decision as the
following:
The standard of review to be applied by the Commonwealth Court when reviewing
the PUC is that the court should not substitute its judgment for that of the PUC
when substantial evidence supports the PUC's decision on a matter within the
commission's expertise.
The Pennsylvania Supreme, Superior, and Commonwealth Courts have defined
"substantial evidence" as such relevant evidence that a reasonable mind might accept as adequate
to support a conclusion. A mere trace of evidence or a suspicion of the existence of a fact sought
to be established is insufficient. Norfolk & Western Railway Co. v. Pennsylvania Public Utility
Commission, 413 A.2d 1037 (1980).

4

V. STATEMENT OF THE CASE
A. INTRODUCTION AND SUMMARY
On April 21, 1998, Sandra F eigley filed two complaints with the Pennsylvania Public
Utilities Commission to contest the reasonableness and constitutionality of the rates charged by
AT&T and Bell Atlantic to recipients of telephone calls from inmates housed by the Pennsylvania
Department of Corrections. (See Certified List entry 0001).
Complainant Feigley subpoenaed John Malcom, a Commonwealth employee who manages
the Commonwealth's telephone system, to testity regarding the terms of the contract enforcing
the telephone rate structure for inmates housed by the Pennsylvania Department of Corrections.
(Entry 0049). Malcom testified that the inmate calls are governed by a larger contract between
the Commonwealth of Pennsylvania and AT&T.

(Entry 0052). The contract covers over 2,000

pay phone stations on Commonwealth property as well as the inmate telephone system. (Tr.
('"

162a, 6/16/99). The contract came into being in 1988, when the Commonwealth designated
AT&T as exclusive primary contractor as a result of a competitive bidding process.
Subsequently, on February 10, 1999, Verizon replaced AT&T as the primary contractor, though
AT&T remains a subcontractor on the contract.
Malcom stated that the overall contract generates $12,766,000 in revenues per year, with
the Commonwealth receiving approximately $6 million per year as a commission. (Tr. 163a164a, 6/16/99). The Commonwealth receives approximately $5 million solely from the inmate
telephone system. (Tr. 165a, 6/16/99). Under the current contract, the Commonwealth's
commission is 47% of AT&T's gross billed revenues. (Tr. 173a, 6116/99). The amount of the

F"

Commonwealth's commission has multiplied substantially since 1988. In 1988, the
Commonwealth's share of the contract was 2% - 4% of the gross billed revenues. (Tr. 175a,
5

6/16/99). In 1991, the Commonwealth's commission had increased to 23.1% of all gross billed

revenues. (Plaintiffs Exhibit-8). Then, the passage of the Telecommunications Act of 1996
allowed the Commonwealth to double its portion of the revenues by introducing competition to
the bidding process. (Tr. 172a, 188a, 6116/99). The various telephone companies competing for
the Commonwealth's inmate telephone service contract inserted sizable commissions to the
Commonwealth in order to secure the contract.
A typical telephone call from the Pennsylvania Department of Corrections includes a
fi"

$3.00 prison coHect surcharge and a $.30 payphone surcharge regardless of the call's duration.
(AT &T Exhibit 5 and Tr. 106a, 6/16/99). A ten minute telephone call costs AT&T $6.196 before
taxes. (AT&T Exhibit 5). Such a call includes the $3.00 commission to the Commonwealth,
nearly halfofthe entire cost to AT&T. The remaining costs include $.38 for fraud control, $.06
for LIDB Dip, $.78 in uncollectibles, $.22 for network operations, $.08 for customer services,
$.084 for billing, $.24 per call compensation, $.79 for LEC Access, and $.56 for a 10%
contribution to overhead. (AT&T Exhibit 5). In contrast, a local telephone company in
Huntingdon (Adelphia) charges $.08 per minute. (P324a).
With Commonwealth approval, AT&T raised its rates by 300% during the pendency of

"'"

these proceedings alone. In April 1998, AT&T charged $3.30 in surcharges and between $.16
and $.31 per minute for inmate telephone calls depending on the time and length of the telephone
call. (AT&T Exhibit-6). By the following year, in August 1999, AT&T's charges had risen to a

('I'

flat rate of $.45. The surcharges remained at $3.30. (AT&T Exhibit-8).

6

6/16/99). In 1991, the Commonwealth's commission had increased to 23.1% of all gross billed

revenues. (Plaintiffs Exhibit-8). Then, the passage ofthe Telecommunications Act of 1996
allowed the Commonwealth to double its portion of the revenues by introducing competition to
the bidding process. (Tr. 172a, 188a, 6/16/99). The various telephone companies competing for
the Commonwealth's inmate telephone service contract inserted sizable commissions to the
Commonwealth in order to secure the contract.
A typical telephone call from the Pennsylvania Department of Corrections includes a
$3.00 prison collect surcharge and a $.30 payphone surcharge regardless of the call's duration.
(AT&T Exhibit 5 and Tr. 106a, 6/16/99). A ten minute telephone call costs AT&T $6.196 before
taxes. (AT&T Exhibit 5). Such a call includes the $3.00 commission to the Commonwealth,
nearly halfofthe entire cost to AT&T. The remaining costs include $.38 for fraud control, $.06
for LIDB Dip, $.78 in uncollectibles, $.22 for network operations, $.08 for customer services,
$.084 for billing, $.24 per call compensation, $.79 for LEC Access, and $.56 for a 10%
contribution to overhead. (AT&T Exhibit 5). In contrast, a local telephone company in
Huntingdon (Adelphia) charges $.08 per minute. (P324a).
With Commpnwealth approval, AT&T raised its rates by 300% during the pendency of
these proceedings alone. In April 1998, AT&T charged $3.30 in surcharges and between $.16
and $.3 I per minute for inmate telephone calls depending on the time and length of the telephone
call. (AT&T Exhibit-6). By the following year, in August 1999, AT&T's charges had risen to a
flat rate of$.45. The surcharges remained at $3.30. (AT&T Exhibit-8).

6

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Traditionally, the Commonwealth's entire commission received under the contract went
into the Inmate Welfare Fund. 1 (Plaintiffs Exhibit 6 and 8, Commissioner Lehman Letter
11/6/91; Tr. 187a, 216a-220a, 6/16/99). In 1997, the Department of Corrections capped the
commission amount entering the Inmate General Welfare Fund at $3 million (Tr. 186a-187a,
6/16/99). The remaining revenues of approximately $3 million are placed in the
Commonwealth's general fund (Tr. 186a-187a, 6/16/99), and not necessarily used to benefit
inmates.
Complainant Feigley testified about the rates she pays for calls from her husband, George,
who is incarcerated in the Pennsylvania Department of Corrections. (Tr. 102a-l 03a, 6/16/99).
She corroborated AT&T's testimony that upon placing the call, there is a $3.30 charge regardless
of the length of the call. (Tr. 106a, 6/16/99).
Dianna Hollis and Robert Franz, president and member, respectively, of Citizens United
for the Rehabilitation of Errants (C.U.R.E. ofPA.) also testified about the nature and quality of
the telephone calls and their bills for calls from family members incarcerated in the Pennsylvania
Department of Corrections. (Plaintiffs Exhibits 2 and 3, 6/16/99). Before accepting a call from
a correctional facility, recipients of inmate calls hear an automated message informing them of
the rates charged. (Tr. 319a-322a, 329a-330a, 332a, 12/21/99). The portion ofthe message
designed to explain the phone charges is often garbled. (Tr. 141a, 6/16/99; Tr. 330a, 12/21/99).
Moreover, C.U.R.E. testified that the automated message on inmate telephone charges was
incorrect. (Plaintiffs Exhibit 10, Tr. 353a-354a. 12/21/99). In addition, once the call recipient
has accepted the call, recorded messages interrupt conversation in four-minute intervals with

IThe Inmate General Welfare Fund is a fund to benefit inmates housed in the Pennsylvania Department of
Corrections, by purchasing leisure time and recreational items including such items as sports equipment,
televisions, motion picture rentals and recreational reading materials.

7

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messages announcing the origin of the cal1 and the amount oftiine remaining. These messages
last for three seconds and are included in the amount ultimately charged to the call recipient. The
callers cannot continue their conversation over these announcements. (Tr. 331 a, 12121/99).
Loud cracking noises also frequently interrupt telephone conversation, and any loud background
noise causes the security system to disconnect the call. (Tr. 336a=338a, 12/21/99). Once
disconnccted, the call recipients incurs another surcharge for accepting another call from the
inmate to continue their conversation.
C.V.R.E. also testified as to the importance of continuous contact and support from
family members and friends. (Tr. 122a, 6/16/99). Such contact through telephone caBs, visits
and letters is essential to the successful rehabilitation of an inmate and a primary deterrent to
recidivism. (Tr. 122a, 6/16/99). Continual and frequent contact between inmates and their
families and friends provides critical emotional and financial support while incarcerated, and
assists former inmates in their readjustment into society, once released. (Tr. 122a and Tr. 235a,
6/16/99). In light of the Pennsylvania Department of Corrections policy that places inmates in
facilities that are farthest from their homes, telephone contact is especially important to these
families where visitation is impractica1. (Tr. 122a-123a, 6/16/99).
On August 11, 1999, Angus Love withdrew from the case as Ms. Feigley decided to
represent herself. (Entry 0063). C.U.R.E. ofPA then filed a Petition to Intervene with Mr. Love
as counsel. The petition was granted by the Administrative Law Judge on December 21, 1999.
C.U.R.E. is a national organization and pro-family advocacy group that favors the humane
treatment of inmates. (Tr. 119a). The composition of C. U.R.E. members resembles the racial
composition of inmates housed in the Pennsylvania Department of Corrections, which is 56%
African-American and 9.5% Latino as of February 1999. (Plaintiffs Exhibit 9).

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B. PROCEDURAL HISTORY
On April 21, 1998, Sandra L. Feigley (Mrs. Feigley) filed two nearly identical complaints
with different respondents, AT&T Communications of Pennsylvania, Inc. (Docket No. C00991434) and Bell Atlantic-Pennsylvania, Inc. (Docket No. C-00991435). AT&T filed its
Answer of AT&T Communications of Pennsylvania, Inc. on May 13, 1998, and its Motion Of
AT&T Communications ofPennyslvania, Inc., For Judgment On The Pleadings by letter dated
June 22, 1998. Bell Atlantic filed its Answer And New Matter of Bell Atlantic-Pennsylvania,
Inc. To The Formal Complaints of Sandra L. Feigley on May 13, 1998, and its Motion Of Bell
Atlantic-Pennsylvania, Inc. For Judgment On The Pleadings on June 17, 1998. On June 30,
1998, Mrs. Feigley filed a Motion For Consolidation of Docket Nos. C-00991434 and C00991435.
On July 17, 1998, a prehearing conference took place before Administrative Law Judge,
Louis G Cocheres, which Mrs. Feigley attended pro se and Bell Atlantic and AT&T were each
represented by counsel. On September 16, 1998, by Recommended Decision, the AU dismissed
the Motion Of AT&T Communications Of Pennsylvania, Inc. For Judgment On The Pleadings,
and granted the Motion Of Bell Atlantic-Pennsylvania, Inc. For Judgment On The Pleadings.
The ALJ also reversed his decision to consolidate the cases. On February 17, 1998, the Public
Utility Commission denied all exceptions and affirmed the recommendations, by Opinion and
Order.
By letter dated November 18, 1998, Angus Love, Esq., appeared on behalf of Mrs.
Feigley. Mr. Love represented Mrs. Feigley through discovery and the initial hearing. Prior to
Mr. Love's opportunity to file a brief, Mrs. Feigley dismissed him as her attorney. Mr. Love
withdrew by letter dated August 4, 1999.
9

Doug and Dianna Hollis on behalf of themselves and the Citizens United for
Rehabilitation of Errants (C.U.R.E.) filed a Petition To Intervene by letter dated August 13,
1999. Mr. Love, who fonnerly represented Mrs. Feigley, was counsel for C.U.R.E. and Mr. And
Mrs. Hollis. AT&T responded to the Petition To Intervene by letter dated August 19, 1999, with
AT&T Communications of Pennsylvania, Inc.'s Answer In Opposition To Motion To Intervene.
Mrs. Feigley filed her Petitioner's Answer To The Petition To Intervene Filed On Behalf Of
Dianna Hollis with the Commission on September 7, 1999. The ALl denied the action to
P'-

intervene on September 16, 1999.
After closing the record for the hearing on 1une 16, 1999, and before completing of the
briefing process, the parties began to dispute over the cost of an intraLATA collect call from a
Pennsylvania correctional facility to Mrs. Feigley. The AU reopened the record solely to hear
evidence from both parties on what infonnation is automatically provided to recipients of inmate
collect calls in Pennsylvania and what charges arc actually incurred.
On December 21, 1999, the parties appeared for a final hearing before the AU. Mr.
Love, appearing on behalf of Mr. and Mrs. Hollis and C.U.R.E., renewed his petition to
intervene. While all parties consented to Mr. Love's petition to intervene, AT&T conditioned its
consent on an agreement that Mr. and Mrs. Hollis and C.U.R.E. not file a brief. Mr. Love agreed
to AT&T's condition, and Mr. and Mrs. Hollis and C.U.R.E. were granted the petition to
intervene.
On August 3, 1999, Mrs. Feigley filed her BriefIn Support Of Petitioner's Complaint,

pro se, dated July 27,1999. On October 18,1999, AT&T filed its Brief Of AT&T
Communications Of Pennsylvania, Inc., in both proprietary and nonproprietary [onnats. On
October 19, 1999, Mrs. Feigley filed Petitioner's Supplementary Brief Addressing Increase in

10

Tarif( pro se, and on October 27, 1999, Mrs. Feigley filed her Petitioner Sandra Feigley's Reply
Brief, pro se. AT&T then responded to both of the Feigley briefs by letter dated November 11,
1999.
On June 22, 2000, the Administrative Law Judge issued his Recommended Decision
(""

denying Mrs. Feigley's complaint. Mrs. Feigley filed Exceptions to the Recommended Decision
on July 12, 2000. C.U.R.E. filed Exceptions on July 19, 2000. AT&T issued its Replies to
Exceptions on July 27,2000. The Public Utility Commission issued its Opinion and Order on
April 19, 2001 denying Mrs. Feigley's and C.U.R.E.'s Exceptions and adopting the
Administrative Law Judge's Recommended Decision, except as modified by the Opinion and
Order.

VI. SUMMARY OF THE ARGUMENT
Mrs. Feigley's complaint contests the reasonableness and constitutionality ofthe rates
charged by AT&T to recipients of collect telephone calls from inmates housed by the
Pennsylvania Department of Corrections.
AT&T's monopoly over the inmate telephone system violates the pro-competitive goals
of the federal Telecommunications Act of 1996 and the Pennsylvania Public Utility Code. Since
1988, the Commonwealth has contracted with a single telecommunications provider (AT&T) for
the inmate telephone system. 2 Because 66 Pa. C.S. §2907(b)(I) requires that "aJl calls made by
inmates shall be collect calls only," the families and friends that receive inmate calls have no
meaningful choice as to provider and are automatically captive to AT&T's rates. While such a
restriction is more reasonably placed upon inmates as an "unfortunate incidence of incarceration"

February 10, 1999, the Commonwealth contracted with AT&T as exclusive primary contractor for
inmate telephone service. After February 10, 1999, Verizon replace AT&T as the primary contractor.
Since the contract in question specifies AT&T as the primary contractor, this briefwiIJ also refer to AT&T
as the primary contractor.

2Prior to

11

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(PUC Opinion & Order, p. 25), it is unreasonable to restrict thc choice available to members of
the general population.
66 Pa. C.S. §130l requires that "[e]very rate made, demanded, or received by any public
utility...shall be just and reasonable, and in conformity with regulations and orders of the
commission." AT&T's rate structure for imnate telephone service is not just and reasonable.
AT&T charges a $3.30 surcharge and $.45 per minute rate on intrastate inmate telephone calls,
regardless of the time, distance and duration of the telephone calls. This amount contrasts
r"

sharply with intrastate direct dialed residential service which dips as low as $.08 per minute.
While inmate calls exact higher rates due to critical security features, the tremendous cost
differential between the two services is unjustified and unreasonable.
AT&T's rates are not just and reasonable because the rates charged far exceed the true
cost of providing telephone service to inmates. During the pendency of this litigation alone,
AT&T has raised it rates for recipients of imnate telephone calls by as much as 300%, increasing
the per minute charge from between $.16 and $.31 to a flat rate of $.45 per minute. On average,
a ten minute inmate call costs AT&T $6.196 before taxes. Included in those costs is a $3.00
commission to the Commonwealth, equaling nearly half ofthe total cost of the telephone call.
Under the contract to the Commonwealth, AT&T returns 47% of its gross billed revenues from
the inmate telephone system to the Commonwealth. This commission generates $5 million for
the Commonwealth annually. While the Commonwealth distributes $3 million to the Inmate
General Welfare Fund,3 the remaining millions enter the state's general fund. The commission
does not subsidize the cost of the inmate telephone system in any way. Thus, AT&T's rates do
not reflect the true worth of the imnate telephone service provided.

3For

a description of the Inmate General Welfare Fund, see Footnote I.

12

AT &T's rates are not just and reasonable because AT&T's rates are not comparable to
the rates charged in other states. Pennsylvania has one of the highest surcharge rates of the states
surveyed. While Pennsylvania charges a $3.30 surcharge per inmate call, other states, such as
Alaska, California, Florida, Kentucky, Missouri, New York and Virginia, charge between $1.50
and $3.00 per inmate call. Moreover, many states, such as Alaska, Florida, Kentucky, Missouri,
New York and Virginia, also offer lower per minute rates on intrastate collect calls than
Pennsylvania's $.45 per minute rate. Other prison systems, such as the Federal Bureau of
Prisons, Colorado, Tennessee and Missouri, have instituted alternative telephone systems, such
as debit and prepaid phone systems, that significantly lower call costs for inmates and their
families and friends. In addition, many state legislatures have adopted or pressed for legislation
that would result in lower calls costs. The content of such legislation has ranged from
eliminating commissions to requiring contracts to be awarded to provider offering the lowest cost
to users.
(%.

Furthermore, AT&T's rates are not just and reasonable in light of the poor quality

of the inmate telephone system. Courts have recognized that the rates charged by a public utility
and the quality of service provided to ratepayers are inextricably linked. Prior to accepting a
collect call from an inmate, the call recipient hears a message detailing the rates charged. These
messages are often garbled and incorrect. Moreover, loud cracking noises frequently interrupt
conversation and any loud background noises causes the security system to disconnect the call.
Moreover, AT&T's rates are unconstitutional. AT&T's rates violate the First
Amendment rights of families and friends 0 f inmates by unnecessarily burdening their ability to
communicate with their incarcerated family members and friends. The appropriate standard of
review for the instant case requires that the restriction on inmate correspondence be no greater
than necessary to protect the government's legitimate interest in security. AT&T's rates far

13

exceed those necessary to preserve the Commonwealth's security standards. Other states that
face similar security concerns with regard to their inmate telephone systems, including
California, New York, Florida, Colorado, Kentucky and Virginia, have offered significantly
lower surcharges and rates. Other states, such as Colorado, Missouri and Tennessee, have
implemented alternative telephone systems that decrease call costs without sacrificing security
standards.
AT&T's rates also violate the Fourteenth Amendment's equal protection clause by
f"

subjecting recipients of inmate telephone calls to excessive charges not imposed on similarly
situated telephone users. AT&T's rates require strict scrutiny since the rates implicate a suspect
class, are discriminatory against African-American and Latino populations in their application
and infringe upon the fundamental right of free speech. To survive strict scrutiny, AT&T's rates
must be narrowly tailored to the Commonwealth's interest in security and internal order. As
mentioned earlier, AT&T's rates far exceed those rates necessary to maintain high security
standards.

14

VII. ARGUMENTS
A. THE PUBLIC UTILITY COMMISSION ERRED IN FINDING AT&T'S RATES
JUST AND REASONABLE.
I. AT&T's Rates Are Not Just & Reasonable because the Rates Violate the ProCompetitive Goals of the Federal Telecommunications Act of 1996 and the Pennsylvania
Public Utility Code.
On February 8, 1996, Congress enacted the Telecommunications Act of 1996 (Telecom
Act). The Telecom Act's mandate is "to make available, as far as possible, to all the people of the
United States, a rapid, efficient, nationwide and worldwide wire and radio communication service
with adequate facilities at reasonable charges." 47 U.S.C. § 151. The Act seeks to fulfill its
mandate through the establishment of a "pro-competitive, de-regulatory national policy
framework" that makes advanced telecommunications and information technologies and services
available to all Americans "by opening telecommunications markets to competition." In the
matter of Billed Party Preference for InterLAT A 0+ Calls, Second Report and Order and Order
(iI"I

on Reconsideration, CC Docket No. 92-77, Adopted January 29, 1998 (hereinafter BPP Second
Report and Order (Slip Op. at §6). With respect to inmate telephone service which is typically
offered through a monopoly provider, the FCC has recognized the potential for abuse. In BPP
Second Report and Order, the FCC acknowledged the risk for excessive charges on families of
inmates, stating that "we do agree with commentators that consumers, in this case the recipients
of collect calls from inmates, require additional safeguards to avoid being charged excessive rates
from a monopoly provider." (Slip Op. at §60). As a protective measure, the FCC has suggested
introducing competition to lower rates, including the use of 800 numbers and pre-paid debit
cards, as "such options would exert downward pressure on high interstate rates for 0+ calls from

r"

inmate phones, [and] diminish the ability of a prison and its PIC to set supracompetitive rates ... "
BPP Second Report and Order, (Slip Op. at §57).
15

In Chapter 30 of the Public Utility Code, 66 Pa. C.S. §3001, the General Assembly ofPA
has declared a similar pro-competitive policy in accordance with the Telecom Act. According to
Chapter 30, it is the Commonwealth's policy to:
( I) Maintain universal telecommunications service at affordable rates while encouraging
the accelerated deployment of a universally available state-of-the-art, interactive,
public-switched broadband telecommunications network in rural, suburban and urban
areas, including deployment of broadband facilities in or adjacent to the public rightsof-way abutting public schools, including the administrative offices supporting public
schools; industrial parks; and health care facilities, as defined by the act of July 19,
1979 (P.L. 130, No. 48), known as the Health Care Facilities Act. (Footnote
omitted).
(2) Ensure that customers pay only reasonable charges for local exchange
telecommunications services which shall be available on a nondiscriminatory basis.
(3) Ensure that rates for noncompetitive telecommunications services do not subsidize the
competitive ventures of providers of telecommunications services.
(4) Provide diversity in the supply of existing and future telecommunications services and
products in telecommunications markets throughout this Commonwealth by ensuring
that rates, terms and conditions for noncompetitive services, including access services,
are reasonable and do not impede the deyelopment of competition.
(5) Ensure the efficient delivery of technological advances and new services throughout
this Commonwealth in order to improve the quality of life for all Pennsylvanians.
(6) Encourage the provision of telecommunications products and services that enhance the
quality of life of people with disabilities.
(7) Promote and encourage the provisions of competitive services by a variety of service
providers on equal terms throughout all geographic areas of this Commonwealth.
(8) Encourage the competitive supply of any service in any region where there is a market
demand.
(9) Encourage joint ventures between local exchange telecommunications companies and
other entities where such joint ventures accelerate, improve or otherwise assist a local
exchange telecommunications company in carry out its network modernization
implementation plan.
(1993, July 8, P.L. 456, No. 67 § 1, imd. effective)
The contract between the Commonwealth of Pennsylvania and AT&T has enabled AT&T4
to maintain a monopoly over the Department of Correction's inmate telephone system. AT&T's

4 In 1988, the Commonwealth designated AT&T as exclusive primary contmctor for the
Department of Corrections' irunate telecommunications service as a result of a competitive bidding
process. Subsequently, on February 10, 1999, Verizon replaced AT&T as the primary contmctor, though
AT&T remains a subcontractor on the contract. Since the contract in question specifies AT&T as the
primary contmctor, this brief will also refer to AT&T as the primary contractor.

16

monopoly violates the pro-competitive goals of the federal Telecom Act as well those of Chapter
30 of the Public Utility Code: to "maintain universal telecommunications service at affordable
rates" [66 Pa. C.S. §3001(1)], "provide diversity in the supply of existing and future
telecommunications services and products in telecommunications markets throughout this
Commonwealth by ensuring that rates, terms and conditions for noncompetitive services,
including access services, are reasonable and do not impede the development of competition" [66
Pa. C.S. §3001(3)], "promote and encourage the provisions of competitive services by a variety
of service providers on equal terms throughout all geographic areas of this Commonwealth" [66
Pa. C.S. §3001(7)] and "encourage the competitive supply of any service in any region where
there is a market demand" [66 Pa. C.S. §3001(8)].
The language of the Telecommunications Act of 1996 and Chapter 30 of the Public Utility
Code unequivocally encourages competition in telecommunications markets and the deregulation
of telecommunications services to ensure that telephone rates are reasonable for consumers.
Unfortunately, the introduction of competition into the Commonwealth inmate
telecommunications service industry has produced unreasonably high rates for consumers. The
Commonwealth contracts with a single telecommunications provider to service the inmate
telephone system. To secure the Commonwealth contract, the competing bidders include sizable
commissions to the Commonwealth in their proposals. The Commonwealth subsequently awards
the contract to the highest bidder (here, AT&T) and in turn, generates a substantial profit from
the contract. Currently, the Commonwealth receives a 47% commission on all gross billed
revenues from the inmate telephone system which totals approximately $5 million. s To avoid a

SThe AT&T and Commonwealth contract in question covers the inmate telephone system, along with
approximately 2,000 public pay phone stations on Commonwealth property. The entire contract generates
$12,766,000 in revenues with the Commonwealth receiving approximately $6 million per year. Of that
amount, $5 million per year is derived solely from the inmate telephone system.

17

financial loss, AT&T's rates necessarily reflect the commission owed to the Commonwealth, and
the ratepayers shoulder the burden of the commission by paying excessive rates. Thus, the
introduction of competition, as endorsed by the Telecom Act and Chapter 30, has severely
frustrated the primary pro-competitive goal of reasonable rates.
Because AT&T is the sole provider of inmate telecommunications service for the
Department of Corrections, inmates who wish to maintain contact with their families and friends
are automatically subject to the terms of the contract between the Commonwealth and AT&T and
AT&T's excessive rates. The Administrative Law Judge reasoned that the "constraints from
competitive alternatives are an unfortunate incidence of incarceration." (PUC Opinion & Order, p.
25). However, the burden of the lack of choice does not fall upon the inmates, but more
significantly, on the recipients ofinmate telephone calls. Because 66 Pa. C.S. § 2907(b)(I)
requires that "all calls made by inmates shall be collect calls only," the families and friends that
accept telephone calls from inmates are also automatically subject to the terms of the
(l'

Commonwealth and AT&T contract and AT&T's rates. It is not at all reasonable to restrict the
range of choice available to members of the general population and burden the families and friends
of inmates with telephone costs reflecting the "unfortunate incidence of incarceration."

2. AT&T's Rates Are Not Just & Reasonable because AT&T's Rates are Excessive.
AT&T's rates are excessive in violation of section DOl ofthe Public Utility Code, 66 Pa.
C.S. §1301, which requires that "[e]very rate made, demanded, or received by any public utility,
or by any two or more public utilities jointly, shall be just and reasonable, and in conformity
with regulations and orders of the commission" (emphasis added). Because 66 Pa. C.S.
t""

§2907(b)(I) requires that "all calls made by inmate shall be collect calls only," Administrative Law
Judge contrasted AT&T's rates for inmate collect calls with AT&T's rates for collect calls from a
18

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public payphone phone. He found AT&T's rates on inmate calls to be just and reasonable
because the cost differential was $.90. The cost differential was justifiable because of the
additional costs incurred by AT&T for security, recording and monitoring equipment, and the
commission owed the Commonwealth.
a. The Commission's Comparison of Inmate Collect Call Rates and Collect Calls
Rates from Public Payphones Is Not a Reasonable Basis for Comparison.
We take issue with the Administrative Law Judge's comparison of inmate collect calls
with collect calls from a public payphone. Such a comparison is inappropriate since individuals
electing to use a public payphone for collect calls and inmates using facility telephones are not
similarly situated. A person making a collect call from a public payphone has a wide variety of
options to reduce the cost of the call. An individual at a payphone is not subject to a monopoly
provider and has the option of selecting his or her preferred carrier to reduce the cost of the call.
A person can also charge the call to an alternative number, such as a home or work number,
thereby fully absolving the recipient of the call costs. More generally, public payphones provide
consumers with a multitude of other call options, such as coin calls, calling card options, etc. In
contrast, inmates have none of these options to reduce the cost of such calls. Inmate calls are
captive to the high rates charged by the presubscribed carrier that holds the inmate telephone
service contract.
Moreover, by comparing inmate collect calls with collect calls from a public payphone, the
ALJ elected to compare the rates of the competitive payphone industry with the rates of the
noncompetitive inmate telephone system. In this context, such a comparison is inappropriate.
While introducing competition to a market typically drives down rates and benefits consumers,
this is not necessarily true for collect call rates from public payphones. Instead, collect call rates
from public payphones are inflated due to the unique situation of the caller and the infrequency of
19

such calls. With the wealth of options available to payphone users, such as coin calls, calling
cards and prepaid phone cards, the collect caller at a public payphone typically places such a call
in more urgent or emergency situations, as last resort. Because of the immediacy of the caller's
situation, the carrier can demand high rates that the caller accepts. Consequently, the call's
f""

recipient also more readily accepts the excessive rates of such calls precisely because the calls are
urgent and more rare. Thus, collect calls from public payphones and their higher rates are not an
appropriate measure of the reasonableness of inmate telephone calls.
Instead, inmate telephone service is more appropriately compared to direct dialed
residential telephone service. Both services serve the same primary purpose of maintaining
frequent and continual contact with families and friends. Both services have much higher user
frequencies than collect calls from public payphones. A comparison of intrastate long distance
service rates for direct dialed calls and intrastate rates for inmate collect calls reveals the
excessiveness of the rates charged by AT&T for inmate calls. The rates for directed dialed
intrastate long distance service dip as low as $.08 per minute for the general population of
Pennsylvania. This contrasts sharply with the $3.30 surcharge and the $.45 per minute rate
charged to recipients of inmate telephone calls under AT&T's and the Commonwealth's current
contract. While it is clear the inmate telephone system will demand higher rates than residential
service rates due to the increased security features, the tremendous differential between the two
services is unjustifiable and unreasonable.

3. AT&T's Rates Are Not Just and Reasonable Because the Rates Do Not Reflect the True Cost
of the Telephone Service Provided.
According to the U.S. Supreme Court in Federal Power Commission v. Hope Natural Gas
Co., 320 U.S. 591, at 602 (1944), inquiries into the reasonableness of rates involves a balancing

20

of investor interests and consumer interests. In accordance with Hope, in Pennsylvania Public
Utility Commission v. Pennsylvania Gas and Water Co., 424 A.2d 1213 (1980), the Pennsylvania
Supreme Court stated that the requirement of "just and reasonable" rates set forth in 66 Pa. C.S.
§ 1301, requires an "appropriate balance between prices charged to utility customers and returns
on capital to utility investors consonant with constitutional protections applicable to both. II 424
A2d 1219. The balance seeks to protect consumers from exploitative rates charged by utility
companies while upholding the financial integrity of the utility.
AT&T's rates are not just and reasonable because the rates charged far exceed the true
cost of providing telephone service to inmates. In Duquesne Light Company v. Barasch, the
Supreme Court held that "the public is entitled to demand ... that no more be exacted from it for
the use of [utility property] than the services rendered by it are reasonably worth." 488 U.S. 299,
at 308 (1989) (citing Smyth v. Ames, 169 U.S. 547 (1898). Following suit, the Commonwealth
Court of Pennsylvania, in National Utilities. Inc. v. Pennsylvania Public Utility Commission,
construed Barasch as indicating that "rate increases requested by the public utility have to have
some relationship to the service it provides to the public." 709 A.2d 972, at 977 (1998).
Furthermore, Chapter 30 of the Public Utility Code substantiates the assertion that rates should
reflect the cost of the provided service. Chapter 30 requires that "rates for noncompetitive
telecommunications services not subsidize the competitive ventures of providers of
telecommunications services." 66 Pa. C.S. §3001(3). Literally, this provision prevents public
utilities from hiking noncompetitive rates to artificially depress their competitive rates.
Underlying this provision is also the contention that noncompetitive rates should reflect the cost
of the provided service.

21

AT&T's costs of providing inmates with telephone service are excessive due to recent rate
increases and the annual commission paid to the Commonwealth. During the pendency of this
litigation alone, AT&T has raised the rates for recipients ofinmate telephone calls by as much as
300%, increasing the per minute charge from between $.16 and $.31 to a flat rate of $.45 per
minute. The Pennsylvania Public Utility Commission approved each of these rate increases. On
average, a ten-minute telephone call from an inmate housed by the Department of Corrections to
a Pennsylvania address costs AT&T $6.196 before taxes. Included in those costs is a $3.00
return to the Commonwealth that equals nearly half of the total cost of the telephone call. The
Commonwealth's current return on the contract is 47% of AT&T's gross billed revenues. The
amount of the Commonwealth's commission has increased substantially since the creation of the
contract in 1988, when the Commonwealth's share was merely 2% - 4% of all gross billed
revenues. While it is true that property owners of payphone locations typically receive a
commission, the commission received by the Commonwealth is excessive and extortionate. The
commission alone from inmate telephone calls generates $5 million for the Commonwealth
annually. The commission does not subsidize the cost of the inmate telephone system in any way.
By eliminating or reducing the commission, AT&T's costs for the inmate telephone system would
decrease substantially. Consequently, costs to recipients of inmate telephone calls would decrease
and conform to reasonableness standards. Thus, AT&T's rates do not reflect the true worth of
the inmate telephone service provided.
In response to the contention that AT&T rates are not just and reasonable, AT&T alleged
that its rates on inmate telephone calls are just and reasonable because AT&T is not guaranteed a
profitable return on its contract with the Commonwealth. The ALJ also interpreted this
information as further evidence that AT&T's rates are just and reasonable. However, according

22

to Hope, the balancing of investor and consumer interests does not "insure that the business shall
produce net revenues." [quoting Federal Power Commission v. Natural Gas Pipeline Co., 315
U.S. 575, at 590 (1942)]." 320 U.S. at 603. No authority exists that consumer interests must
yield to the interests of investors to ensure the utility's financial integrity. Thus, a utility's rates
may be unreasonable, even if the rates do not yield a return.

4. AT&T's Rates Are Not Just and Reasonable Because the Rates Are Not Comparable to Those
in Other States.
The rates for comparable services in other states and jurisdictions are relevant factors in
assessing the reasonableness of a rate. In the Hope decision, the Supreme Court emphasized that
reasonable rates yield returns that "should be commensurate with returns ... in other enterprises
with corresponding risks." 320 U.S. 603. Moreover, for a Commonwealth Public Utility
Commission approval of a rate change for a noncompetitive service, the Pennsylvania Code
requires that the Commission consider whether: 1) the proposed change is designed to make the
rates, terms or conditions for the service conform to the comparable rates, or conditions for the
same service that have become lawfully effective in the interstate jurisdiction; and, 2) the
proposed change is designed to make the rates, terms or conditions that have become lawfully
effective in several other states. 52 Pa. Code §63.105(d){I) - (2).
A comparison of AT&T's rates under the Commonwealth contract and the rates of inmate
telephone service providers under contract with other states reveals that AT&T's current rates are
excessive and unreasonable. Pennsylvania has one of the highest surcharge rates of the states
surveyed. 6 In Kentucky, the surcharge on inmate collects calls is $1.50 per call. Moreover, other

Inmate Collect Call Quotes: Alaska: $1.55 - $2.50 surcharge & $.39 - $.060/min.; California: $3.00
surcharge & $.50/min.; Florida: $1.75 surcharge & $.21 - $.26/min.; Federal Bureau of Prisons: $2.45
surcharge & $.40/min.; Kentucky: $1.50 surcharge; Missouri: $3.00 surcharge & $.30/min.; New York:
$3.00 surcharge & $.33/mln.; Pennsylvania: $3.30 surcharge It $.45/min.; Virginia: $1.55 - $2.25
surcharge & $.048 - AD/min.

6

23

states, such as Alaska, Florida, and Virginia charge between $1.55 and $2.50 for surcharges.
While Missouri and New York charge $3.00 as a surcharge, those states offer significantly lower
per minute rates of$.30 and $.33 per minute, respectively. The Federal Bureau of Prisons collect
call system offers rates of $.40 per minute with a $2.45 surcharge.
Moreover, other states have instituted alternative telephone systems in their correctional
facilities, such as debit or pre-paid telephone systems, to reduce the cost of inmate calls. Such
systems allow inmates to place direct dialed calls. The call charges are drawn directly from
inmate debit accounts or prepaid phone cards, which absolves families and friends of all call costs.
Debit and pre-paid telephone systems also offer significantly lower rates.' For example,
Colorado's debit system charges inmates a $1.25 surcharge per call with a $.29 - $.32 per minute
rate. The Federal Bureau of Prisons (BOP) has eliminated its surcharge for debit calls and
charges $.04 - $.15 per minute (in contrast to the $2.45 surcharge and $.40 per minute rate on
collect calls). Significantly, 92% of inmate calls from the BOP are through the debit system.
Debit and prepaid phone systems can lower costs in part by eliminating the telephone company's
risk of uncollectibles. Under the contract in dispute, AT&T charges a 13% fee per ten-minute call
for uncollectibles.
In addition, many state legislatures have adopted or pressed for legislation that would
result in lower call costs for recipients of inmate telephone calls. 8 The content of such legislation

7 Inmate Debit Systems: Colorado: $1.25 surcharge & $.29 - $.32/min.; Federal Bureau of Prisons: No
surcharge & $.04' $.15/min.; Missouri: $.13/min.
8 Introduced Legislation It Status: California: Bill requiring contracts to be awarded to telephone
company providing lowest reasonable costs to user passed through legislature, vetoed by Davis; DC:
Passed Prisoner Equitable Phone Charges Act of 2000: requires that inmate collect calls not exceed public
payphone collect calls; Florida: Legislature established rate caps; Louisiana: 1999 Act requires that
inmate calls not exceed operator assisted collect calls & rate caps; Massachusetts: Pending legislation
requires that inmate phone service be comparable to residential telephone service, contracts must be
awarded to telephone company offering lowest cost to user and eliminates commission; Michigan: Two
bills died in committee allowing for debit system and requiring that toll/operator service provider cannot
exceed state average rate; New Mexico: Legislation passed requiring correctional facilities to contract
with telephone company offering lowest cost of service and eliminating commission; North Carolina:
Pending legislation requires debit system for minimum security inmates; Ohio: Pending (?) legislation
requires creation of inmate debit telephone system. South Carolina: Joint resolution established

24

has ranged from establishing rate caps to eliminating commissions, from requiring that contracts
be awarded to the telephone service provider with the lowest cost to users to establishing
alternative inmate telephone service systems, such as debit and prepaid telephone systems. For
example, the New Mexico legislature recently passed bills requiring the Department of
r'7"

Corrections to contract with a telecommunications service that "provides the lowest cost of
service to inmates or any person who pays for inmate telecommunications service," and that the
contract "shall not include a commission."9
Moreover, in Kentucky, the Public Utility Commission recently reduced the rates on
inmate collect calls in an administrative proceeding. The Kentucky Public Utility Commission
found the surcharges placed on inmate collect calls to be "unjust and unreasonable and [that] this
must be changed ... " In the Matter of: Establishment of an Operator Surcharge Rate for Collect
Telephone Calls from Confinement Facilities, Adm. Case No. 378. Like Pennsylvania, the
Kentucky Department of Corrections contracts with telecommunications carriers to service its
inmate telephone system. Originally, the surcharges to recipients of inmate telephone calls were
$3.00 per call. The Kentucky PUC found that "recipients of inmate collect calls face (I) a lack of
choice of carriers, (2) a

la~k

of calling options, (3) limited call duration, and (4) a likelihood of

frequent and repeated calls." (Opinion, p. 2). Subsequently, the Administrative Law Judge
ordered the surcharge reduced to $1.50 per call.

committee to study reasonableness of charges; vermont: Pending legislation requires contracts to be
awarded to telephone company charging lowest reasonable costs, creates debit system & eliminates
commission; Virginia: Legislation required study of reasonableness of rates resulting in recommendations
of capping or eliminating commissions, lengthening time limits, limiting surcharges and establishing debit
system or prepaid systems. Pending legislation would eliminate commission.
9

SBlO2

25

In essence, the Commonwealth boasts one of the highest surcharge rates, one of the
highest per minute rates, and demands a substantial commission from the inmate telephone
system. Because the Commonwealth has been unwilling to employ any of a variety of available
remedies for reducing the costs to recipients of inmate collect calls, AT&T's rates under contract
to the Commonwealth are excessive, unjust and unreasonable.

5. AT&T's Rates Are Excessive in Light of the Poor Quality of the Inmate Telephone System
Courts have long recognized that the rates charged by a public utility and the quality of
service provided to ratepayers are inextricably linked. Pennsylvania law has made clear that the
PUC has the discretion to withhold, limit or condition rate approvals on the quality of service
provided by the utility. In National Utilities. Inc. v. Pennsylvania PUC, the Commonwealth Court
affirmed a PUC decision denying a water utility a rate increase due to the poor quality and
quantity of water supplied to its consumers. 709 A.2d 972 (1998). Citing the United States
Court of Appeals in D.C. Transit System. Inc. v. Washington Metropolitan Transit Commission,
466 F.2d 394 (1972), the court held that the "caliber of a utility'S service is not a neutral factor in
determining its allowable rate ofretum." 709 A.2d 978. The court declared that the obligations
of the utility and the consumer are interrelated and reciprocal, with the utility's responsibility being
to "furnish safe, adequate and proper service, II while the consumer is obliged to pay this service's
reasonable worth. 709 A.2d 979.
Despite the poor quality of the inmate telephone system, AT&T has raised the per minute
rates charged to recipients of inmate telephone calls by as much as 300%, from $.16 - $.31 per
minute to a flat rate of $.45 per minute during the pendency of this litigation. The PUC approved

26

each of these rate increases. Prior to accepting an inmate collect call, the recipient hears a
recording of the rates charged for the call. The portion of the message designed to explain the
phone charges is often garbled. Also, the rates heard by the call recipient are often incorrect. In
addition, all calls between inmates and the general population are interrupted every four minutes
with messages announcing the origin of the call and the amount of remaining time. During these
announcements, the parties cannot continue their conversation. Recipients of inmate telephone
calls also complain about loud cracking noises that frequently interrupt the telephone
conversation, and that any loud background noise causes the security system to disconnect the
call. Once disconnected, the call recipient incurs another surcharge fee ifhe or she accepts
another call from the inmate to continue their conversation. Thus, in light of the poor quality of
the inmate telephone system, AT&T's rates are excessive.

6. AT&T's Rates are Not Just and Reasonable Because They Are Discriminatory.
Ms. Feigley alleges unlawful discrimination in AT&T's rate structure, arguing that
recipients of inmate telephone calls are charged excessive rates in comparison to other consumers
that are subject to AT&T rates. AT&T's discriminatory rates violate 66 Pa. C.S. §3004(d)(2)
("assures that rates for noncompetitive phone services are just, reasonable and not unduly
discriminatory") as well as Section 1304 of the Public Utility Code, 66 Pa. C.S. §1304, which
provides in pertinent part:
No public utility shall, as to rates, make or grant any
unreasonable preference or advantage to any person,
corporation, or municipal corporation, or subject
any person, corporation, or municipal corporation to
any unreasonable prejudice or disadvantage. No
public utility shall establish or maintain any
unreasonable difference as to rates, either as
between localities or as between classes of service.

27

It is true that Pennsylvania courts have established that mere differences in utility rates

between classes of customers does not establish unreasonable discrimination. Peoples Natural
Gas Co. v. Pennsylvania Public Utility Commission, 409 A.2d 446 (1979). Different rates may be
charged to customers that are receiving a different type, grade or class of service. Carpenter v.
Pennsylvania Public Utility Commission, 15 A.2d 473 (1940). However, rates for one class of
service cannot be unreasonably prejudicial and disadvantageous to another class of service, with
advantage to one class resulting in injury to another. Such an injury can arise from collecting a
more reasonable rate from one class in order to make up for inadequate rates charged to another.
Carpenter v. Pennsylvania Public Utility Commission, 15 A.2d 473, at 474 (1940).
The rates charged to recipients of inmate telephone calls are excessive and unreasonably
prejudicial in comparison to the rates charged to the general population. Intrastate long distance
service rates for direct dialed calls are as low as $.08 per minute for the general population of
Pennsylvania. This contrasts sharply with the $3.30 surcharge and the $.45 per minute rate
charged to recipients of inmate telephone calls under the current contract between AT&T and the
Commonwealth. Moreover, the rates charged to recipients of inmate telephone calls are
unreasonably disadvantageous to that class, while disproportionately benefitting the taxpayers of
Pennsylvania. The commission received by the Commonwealth for 47% of AT&T's gross billed
revenues supports the Commonwealth's general fund and the Department of Corrections' Inmate
General Welfare Fund (IGWF).lo Of the $5 million received annually by the Commonwealth from
revenues derived from inmate collect calls, only $3 million enters the IGWF. The remaining
millions fund state programs and initiatives otherwise financed by Commonwealth taxpayers.

10 The Inmate General Welfare Fund is a fund to benefit inmates, by purchasing leisure time and
recreational items including such items as sports equipment, televisions, motion picture rentals and
recreational reading materials.

28

Thus, through AT&T's excessive rates and the Commonwealth's commission, recipients of
inmate telephone calls are disproportionately shouldering the burden of state expenses, to the
benefit of the rest of the Commonwealth taxpayers.

B. THE COMMISSION ERRED IN FINDING AT&T'S RATES CONSTITUTIONAL
I. AT&T's Rates Violate the First Amendment Rights of Families and Friends ofInmates
By Unnecessarily Burdening Their Ability to Communicate with Their Incarcerated Family
Members and Friends.
The US. Supreme Court has recognized that "prison walls do not form a barrier
separating prison inmates from the protections of the Constitution." Turner v. Safley, 482 US.
78, at 84 (1987). Federal courts have emphasized that convicted inmates retain their First
Amendment rights to communicate with family and friends. Morgan v. LaVallee, 526 F.2d 221,
at 225 (1975). While it is true that an inmate's First Amendment right does not extend to
unlimited access to a telephone, Benzel v. Grammer, 869 F.2d 1105, at 1 108 (1989), federal
courts have found "no legitimate governmental purpose to be attained by not allowing reasonable
access to the telephone, and ... such use is protected by the First Amendment." Johnson v. Galli,
596 F. Supp. 135, at 138 (1984). See also Inmates of Allegheny County Jail v. Wecht, 565 F.
Supp. 1278 (1983), Washington v. Reno, 35 F.3d 1093 (1997). An inmate's right to telephone
access is restricted only by "rational limitations in the face of legitimate security interests of the
penal institution." Strandberg v. City of Helena, 791 F.2d 744, at 747 (1986).
Federal courts have also held that prison walls do not "bar free citizens from exercising
their own constitutional rights by reaching out to those on the 'inside.'" Turner v. Safley, 482
U.S. 78, at 94-99 (1987). See Procunier v. Martinez, 416 US. 396 (1974), Thornburgh v.
Abbott, 490 US. 401, at 407 (1989). In Martinez, the Supreme Court invalidated a prison
regulation permitting censorship of outgoing prison mail on grounds of preserving the First
29

Amendment rights of the non-prisoner correspondent. The Martinez court stated that "whatever
the status of a prisoner's claim to uncensored correspondence with an outsider, it is plain that the
latter's interest is grounded in the First Amendment's guarantee of freedom of speech. " 416 U.S.
at 408. The court's holding revolved around the fact that the challenged regulation caused a
"consequential restriction on the First and Fourteenth Amendment rights ofthose who are 1101
prisoners." 416 U.S. at 409 (emphasis added).
In Martinez, the Court adopted a standard of review that requires that 1) the regulation
furthers an important or substantial government interest, such as security, order, or rehabilitation;
and, 2) the limitations on the right are no greater than necessary or essential to the protection of
the government interest. Thus, a restriction on inmate correspondence is invalid under the First
Amendment ifits scope is unnecessarily broad. Later, in Thornburgh v. Abbott, 490 U.S. 401
(1989), the Court restricted the holding in Martinez to regulations concerning outgoing personal
correspondence, regulations that are not of central importance to maintaining prison order and
security. Challenged prison regulations that involve heightened administrative and security
concerns face a more deferential standard delineated in Turner v. Safley that requires that the
prison regulation only be "reasonably related to legitimate penological interests." 482 U.S. at 89.
The Martinez standard is the appropriate standard of review in the present context. While
it is true that all correspondence between inmates and the general population involve some
security concerns, closely monitored and recorded outgoing inmate telephone calls to a restricted
telephone list of family member, friends and attorneys do not raise the same level of concern that
unregulated incoming prison mail raises. Unregulated incoming prison mail can contain
contraband and can easily excite prison behavior. On the contrary, inmate telephone calls with
families and friends serve an important rehabilitative purpose and regulations on such calls deserve

30

a more restrictive standard of review. Continual and frequent contact between inmates and their
families and friends increases the likelihood that inmates have emotional and financial support and
assistance while incarcerated. Once released, such support helps former inmates in their
readjustment into society, allowing them to become productive citizens.
AT&T's rates do satisfY the first prong of the Martinez standard. AT&T's rates do
further an important government interest by covering important security features, such as
recording and monitoring equipment for inmate telephone calls. However, AT&T's rates do not
satisfY the second prong of the Martinez standard because the rates place a far greater burden on
recipients' First Amendment rights than is necessary to protect any legitimate administrative and
security concerns. Moreover, the DOC's system does not allow for more affordable, alternative
methods of telephone communication that would satisfY security concerns and lessen the burden
on plaintiffs' First Amendment rights.
While conceding that inmate telephone service with its heightened security features is
typically more expensive than residential telephone service provided to the general population, the
rates charged by AT&T are excessive, even in light of these increased costs. While all state
correctional departments face similar security concerns with regard to their inmate telephone
systems, numerous states including California, New York, Florida, Colorado, Kentucky and
Virginia have contracted with telephone companies that offer significantly lower surcharges and
rates. lI Moreover, a significant number of state correctional departments, such as Colorado,
Missouri and Tennessee, and the Federal Bureau of Prisons have instituted alternative telephone
systems, such as debit or pre-paid telephone systems that significantly decrease call costs. All of

California: $3.00 surcharge & $.50/min.; New York: $3.00 surcharge & $.33/min.; Florida: $1.75
surcharge & $.21 • $.26/min.; Colorado: $1.25 surcharge & $.29 - $.32/min.; Kentucky: $1.50 surcharge
& Virginia: $1.55 - $2.25 surcharge & $.048 - SAO/min.

II

31

these alternative systems contain the security features deemed necessary by the Commonwealth
Department of Corrections, including monitoring, regulating and reporting functions. Thus,
AT&T's telephone rates are excessive and not essential to satisfY the Commonwealth's security
and safety concerns. The rates unnecessarily restrict the ability offamilies and friends to
(I'!>o

communicate and maintain relations with inmates and as such, violate their First Amendment
rights.
Even if this court were to find the more deferential standard adopted in Turner more
appropriate in this context, AT&T's telephone rates charged would not withstand a First
Amendment challenge. In Turner, the Supreme Court held that a prison regulation infringing
upon a constitutional right is valid if "reasonably related to legitimate penological interests."
Turner, 482 U. S. at 89. The factors for determining reasonableness include: 1) a valid, rational
connection between the prison regulation and the legitimate government interest justifYing the
regulation; 2) the existence of alternative means of exercising the abridged right; 3) the impact of
an accommodation of the abridged right on prison resources; 4) the absence of alternatives for
exercising the right at de minimis cost to penological interests. Turner, 482 U.S. at 89-91.
AT&T and the Commonwealth will set forth various government interests to justifY the
excessive telephone rates and the contract in question. The defendants will undoubtedly maintain
that 1) security and administrative concerns mandate that inmate telephone service contain
features, such as specialized control, monitoring, and recording devices, that ultimately raise the
cost of the service; and that 2) the 47% commission to the Commonwealth that raises inmate call
costs actually affords the average taxpayer and Commonwealth relief from the burdensome cost
of incarceration.
32

There is no valid, rational connection between the excessive rates charged to recipients of
('l'I

inmate telephone calls and the Commonwealth's security concerns because the current rates far
exceed those rates necessary to cover such security devices. As identified earlier in this brief,
numerous states that face similar security and safety concerns, including California, New York,
Florida, Colorado and Virginia have contracted with telephone companies that offer significantly
lower surcharges and rates. (See Footnote 9). Moreover, state correctional departments can
institute alternative systems, such as debit or pre-paid telephone systems, which contain the same
security standards and substantially decrease call costs. Thus, because AT&T's rates extend well
beyond those required to satisfy the Commonwealth's security interests, there is not a valid,
rational connection between the rates and the legitimate government interest.
Moreover, there is no valid, rational connection between AT&T's excessive rates and the
relief afforded taxpayers and the Commonwealth from the cost of incarceration. The
Commonwealth's 47% commission from AT&T's gross billed revenues derived from inmate
collect calls generates approximately $5 million per year. The Commonwealth distributes $3
million to the Department of Corrections' Inmate General Welfare Fund (IGWF). The remaining
millions remains in the Commonwealth's coffers.

As distributed, the Commonwealth's commission does not provide taxpayers or the
Commonwealth necessary relief from the cost of incarceration. The IGWF does not and has
never received any taxpayer dollars or public money. The fund draws its revenue from a variety
of sources, including prison telephone service, profits from the prison commissary, visiting room
vending machines, fees from the Prison Medical Services Programs, etc ... Because the taxpaying
population and the Commonwealth do not contribute to the IGWF, AT&T's rates do not provide

33

any relief to those entities for the cost of incarceration. Moreover, because the IGWF obtains its
(1"1

funding from such a wide variety of sources, even if the Commonwealth reduced its commission,
the reduction would not substantially jeopardize the fund. Other states have either capped or
eliminated the kickbacks received from telephone companies while maintaining their inmate

f"

welfare funds. For example, New Mexico recently passed legislation eliminating the commission
received from its inmate telephone service provider. 12 Moreover, the state legislatures of
Massachusetts, Vermont and Virginia have proposed similar legislation that would eliminate or
cap the commissions received. 13
Furthermore, the $3 million delivered to the Commonwealth's general coffers does not
provide Commonwealth taxpayers relief that is rationally connected to the cost of incarceration.
The surplus flows into the state's general fund for use for any budget items, not necessarily
incarceration. 14 The surplus does not necessarily supplant taxpayer incarceration costs. Thus,
because the commission does not replace taxpayer incarceration costs, AT&T's rates are not
rationally connected to the burdensome cost of incarceration.
As the second factor, the Turner reasonableness test also considers whether alternative
means for exercising the abridged right remain open to prisoner inmates. While alternative
methods of communication between inmates and their families and friends do indeed exist, such as
visitation and mail correspondence, telephones enable families and friends to maintain more
regular, uninterrupted communication than visits or mail correspondence. Inmates are only
allowed one visit per week. Moreover, in light of the Department of Corrections policy to place

HB 133 & sa 103.
n Massachusetts: HB 2598; Vennont: HB 246; Virginia: HB 2213.
14 As of 2000, the Commonwealth has a 1.2 billion surplus in its Rainy Day Fund. (cite).

12

34

inmates in facilities located farthest from their homes, telephone contact is particular important. If
an inmate's family and friends do not live near the inmate's facility, visitation can be expensive
and impractical. Moreover, mail correspondence is not always an option for inmates. According
to a 1996 article in Investor's Business Daily, 60% of the nationwide prison population is
illiterate.
The third factor in the Turner reasonableness assessment is to the extent to which
accommodating the abridged right would impact prison resources, prison staff and the other
inmates. Decreasing AT&T's rates would not substantially impact prison resources. Only half of
the $6 million commission received by the Commonwealth is guaranteed to subsidize the
Commonwealth's penal institutions by entering the IGWF. As mentioned earlier, the IGWF
retains its funding from a wide variety of sources, not relying exclusively on revenues generated
through the inmate telephone system. Moreover, other states have endorsed eliminating or
capping their commissions to reduce the rates charged to recipients of inmate telephone calls
while maintaining their inmate general welfare funds.
The fourth factor is the extent to which obvious, easy alternatives exist to accommodate
the abridged right, demonstrating that the regulation is an exaggerated response to prison
concerns. If an inmate can point to an alternative that fully accommodates the prisoner's right at
de minimis cost to the institution's interests, a court may consider that as evidence that the
regulation does not satisfy the reasonable relationship standard. Turner, 482 U.S. at 91. The
Commonwealth can reduce its commission percentage, which would translate into a reduction in
inmate call costs. Moreover, the Commonwealth can institute alternative telephone systems, such

35

as debit and pre-paid telephone systems, which would decrease the cost of calls for recipients and
(l'I

maintain the necessary security standards.

2. The Commission Owed to the Commonwealth under AT&T's Contract for Inmate Telephone
Service Is an Unconstitutional Tax:
Under the contract between AT&T and the Commonwealth, AT&T delivers a 47%
commission to the Commonwealth for all gross billed revenues derived from the contract. The
commission amounts to a $6 million return for the Commonwealth, with the value of the contract
totaling $12,766,000 per year. Of the $6 million commission, $5 million is -derived solely from
revenues from the inmate telephone system. While the Department of Corrections designates $3
million of the commission for the Inmate General Welfare Fund, the remaining portion of the
commission contributes to the Commonwealth general fund. Through the bid process, the
Commonwealth typically awards the inmate telephone service contract to the bidder offering the
highest commission. Since of course, telephone rates reflect the commission percentage,
ratepayers bear the burden of the commission to the Commonwealth.
The Commonwealth's commission constitutes an unconstitutional and confiscatory tax
and violates the due process clauses of the Fifth and Fourteenth Amendments. The commission
forces AT&T to charge rates beyond just and reasonable standards to compensate for the 47%
commission received by the Pennsylvania Department of Corrections. The Fifth Amendment to
the U.S. Constitution provides that no person shall be deprived offife, liberty, or property,
without due process of law, nor shall private property be taken for public use, without just
compensation. The Fourteenth Amendment pertains to the states providing that no State shall
deprive any person oflife, liberty, or property without due process oflaw. Under the due process

36

clauses of the Fifth and Fourteenth Amendments, a utility is entitled to rates, not per se excessive
and extortionate, sufficient to yield a reasonable rate of return upon the value of property used, at
the time it is being used, to render the services. Denver Union Stock Yard Co. v. United States,
304 U.S. 470, at 475 (1938).
In Public Advocate v. Philadelphia Gas Commission, 674 A.2d 1056 (1996), the
Pennsylvania Supreme Court considered whether a fixed annual payment of$18,000 by the
Philadelphia Gas Works (PGW) to the City of Philadelphia was constitutional and could be
included in PGW's rate increase or whether the payment was an unconstitutional tax. The
Supreme Court held that the payment was not confiscatory, because Philadelphia owned the gas
company and was therefore entitled to a rate of return on its assets, and because the payment fell
within the broad zone of reasonableness since the payment was merely a 9% rate of return.
In contrast, in the present case, the commission received by the Pennsylvania Department
of Corrections is an unconstitutional tax. While the Commonwealth, as property owner of the
payphone locations, is entitled to a percentage of AT&T's gross billed revenues from inmate
collect calls, the commission received by the Commonwealth is excessive and extortionate,
comprising 47% of all gross billed revenues and amounting to $6 million annually. This rate of
return to the Commonwealth far exceeds the broad zone of reasonableness. Thus, the
commission constitutes an unconstitutional tax and is confiscatory.

3. AT&T's Rates Violate the Equal Protection Clause By Subjecting Recipients ofInmate
Telephone Calls to Excessive Charges Not Imposed on Similarly Situated Telephone Users.
AT&T's rate structure violates the equal protection clause of the Fourteenth Amendment
which provides that no State shall "deny to any person within its jurisdiction the equal protection
37

of the laws." U.S. Const Amend. XlV, § L The equal protection clause protects a party from
state action that selects the part for discriminatory treatment by subjecting the party to regulations
not imposed on others in the same class. To prove state action, a private party's conduct must be
so closely connected to the state's conduct that it may be treated as conduct of the state itself
f""

Jackson v. Metrop.0litan Edison Co., 419 US. 345, at 351 (1974). According to the Pennsylvania
Commonwealth Court, the issue is whether the private party's action is attributable to the state
and "whether the State provided a mantle of authority that enhanced the power of the harmcausing individual actor." Groman v. Township of Manalapan, 47 F.3d 628, at 638 (1995)
(quoting NCAA v. Tarkanian, 488 U.S. 179, at 192 (1988)).
In the instant case, AT&T's rates clearly fall within the purview of state action. Under
contract to the Commonwealth, AT&T installs and maintains the system according to the
Department of Corrections' guidelines, regulations and restrictions. For rate approval, AT&T
must file a tariff with the Public Utility Commission. Any change to those rates requires further
PUC approval. In return, AT&T pays the Commonwealth a 47% - 50% commission of all gross
billed revenues from inmate telephone calls. The Commonwealth clearly provides the mantle of
authority for AT&T's rate structure.
AT&T's rate structure violates the equal protection clause by subjecting recipients of
inmate telephone calls to excessive charges not imposed on similarly situated telephone users.
The equal protection clause ensure that government treats all similarly situated persons identically.
City of Cleburne v. Cleburne Living Center. Inc., 473 U.S. 432, at 439 (1985). Courts evaluate
equal protection challenges under three levels of scrutiny depending on the nature of the
classification and the interest that the classification implicates: I) for classifications that implicate
38

a "suspect" class or fundamental right, the court employs a strict scrutiny standard that demands a
"compelling" governmental purpose; 2) for classifications that implicate a "sensitive"
classification, the court employs heightened scrutiny that demands an "important" governmental
purpose; and, 3) all other classifications require a rational basis for the classification. Smith v.
f"

City of Philadelphia, 516 A.2d 306, at 311 (1986).
The present challenge to AT&T's rates demands strict scrutiny because AT&T's rates
implicate a "suspect" class and are discriminatory against African-Americans in their application.
While it is true that strict scrutiny requires a finding of purposeful discrimination, the Supreme
Court has recognized that classifications, though racially neutral, are unconstitutional if racially
discriminatory in their administration and application. Yick Wo v. Hopkins, 118 U.S. 356, at 373
(1886). As stated in Yick Wo, "though the law itself be fair on its face and impartial in
appearance, yet, if it is applied and administered by public authority with an evil eye and an
unequal hand, so as practically to make unjust and illegal discriminations between persons in
similar circumstances, material to their rights, the denial of equal justice is still within the
prohibition of the Constitution." 118 U.S. 374. The Commonwealth's inmate population is 56%
African-American and 9.5% Latino as of February 1999. (Plaintiffs Exhibit 9). Presumptively,
inmates' families have similar racial compositions. Thus, though AT&T's rates apply to all
recipients of inmate telephone calls regardless of race, because the families and friends of inmates
are disproportionately African-American and Latino and the Commonwealth condones the
excessive rates applied exclusively these populations, AT&T's rates are racially discriminatory.
To survive the strict scrutiny standard, AT&T's rate must be justified by a compelling
state interest and must be narrowly tailored to the state interest at stake. Denoncourt v. State
39

Ethics Commission, 470 A.2d 945, at 949 (1983). While the Supreme Court has recognized an
institution's interest in internal order and security as legitimate, Bell v. Wolfish, 441 U.S. 520
( 1979), AT&T's rates are not narrowly tailored to the Department of Corrections' interest of
security and internal order. AT&T's current rates far exceed the rates necessary to maintain high
security standards. States, such as California, New York, Florida, Colorado and Virginia, have
contracted with telephone service providers that offer significantly lower surcharges and rates,
while upholding security standards. (See Footnote 3). Moreover, alternative systems, such as
debit and pre-paid telephone systems, allow for a substantial decrease in call costs without
sacrificing the systems' security interests. Because AT&T's rates greatly surpass those rates
necessary to cover such security devices and are not narrowly tailored to the state interest at
stake, AT&T's rates do not survive strict scrutiny.
The instant case also demands strict scrutiny because AT&T's rate infringe upon the free
speech guarantee of the recipients of inmate telephone calls, protected by the First Amendment.
Because freedom of speech is a fundamental right, an equal protection challenge to that
fundamental right requires strict scrutiny. 1.S. v. Bethlehem Area School District, 757 A.2d 412
(2000). Again, while institutional security and internal order are compelling government interests
and call for legitimate restrictions on the ability of family members and friends to communicate
with inmates, AT&T's rates place excessive restrictions on that ability. As identified earlier in this
brief, the Commonwealth has a multitude of options for lowering surcharges and the rates
charged without jeopardizing the security of the system. The Commonwealth can also institute
alternative systems of communication, allowing families and friends to maintain more consistent
and frequent telephone contact with inmates. Thus, AT&T's rates are not narrowly tailored to
40

the Commonwealth's interest in security and unnecessarily violate the call recipients' fundamental
right of freedom of speech.
In the alternative, even under a more deferential standard of scrutiny, AT&T's rates do
not survive an equal protection challenge because AT&T's rate structure is not rationally rclated
to a legitimate state interest. In McGowan v. Maryland, the Supreme Court held that unless a
classification is inherently suspect, a "classification's validity is tested by assessing whether the
classification has some reasonable basis." 366 U.S. 420, at 425-26 (1961). There is no
reasonable basis justifying AT&T's excessive rates charged exclusively to recipients of inmate
telephone calls.
The Administrative Law Judge justified AT&T's rates by comparing the rates charged to
recipients of inmate telephone calls and recipients of public payphone collect calls. Finding a $.90
differential between the two groups of call recipients, the Administrative Law Judge defended the
rate differential due to the additional cost of the monitoring and recording equipment used for
security purposes. As indicated previously we take issue with the comparison of inmate collect
calls with public payphone collect calls because inmates and public payphone users are not
similarly situated with regard to the purpose of the telephone calls, the frequency of the telephonc
calls and the situation of the caller. Instead, inmate telephone service is more appropriately
contrasted with direct dialed residential telephone service because both services serve more
analogous purposes, have more similar user frequencies and are placed by callers in more
comparable situations. IS With intrastate long distance residential rates dipping as low as $.08 per
minute, the contrast reveals the excessiveness of the inmate telephone rates. As indicated

ISSee Brief Section (A)(2)(a).

41

previously, AT&T's excessive rates are not rationally related to the government interest in
security, since the rates far exceed institutional security needs. Thus, such a vast rate differential
denies equal protection to similarly situated telephone users without being rationally related to a
legitimate government purpose.

C. THE COMMISSION IMPROPERLY DISMISSED VERIZON AND FAILED TO
JOIN THE COMMONWEALTH AS INDISPENSABLE PARTIES TO THE
PROCEEDING.
The Commission improperly dismissed Verizon and failed to join the Commonwealth
as indispensable parties to the proceeding. On September 16, 1998, by Recommended Decision,
the Administrative Law Judge granted Verizon's (formerly Bell Atlantic-Pennsylvania, Inc.)
motion for judgment on the pleadings and dismissed Verizon as a party to the proceeding. In the
Opinion and Order adopted April 19, 2001, the PUC disagreed with the Recommended Decision,
stating that "Verizon's participation in the hearings would have been appropriate" in order to
"fashion an overall perspective of the issues relating to collect call charges for inmate service."
Notwithstanding the procedural error, the PUC affirmed the Administrative Law Judge's decision
on the basis that Ms. Feigley "incurred no harm as a result of the lack of participation of
Verizon." With respect to the Commonwealth's participation in the proceeding, during the public
hearing on June 16, 1999, Mr. Love orally moved to join the Commonwealth as an indispensable
party pursuant to 52 Pa. Code § 5.103. The Administrative Law Judge denied Mr. Love's
motion.
The Pennsylvania Public Utility Commission has held that an indispensable party is one
whose rights are so connected with the claims of the litigants that no relief can be granted without

42

impairing or infringing upon those rights. Harry Bernard v. ALLTEL Pennsylvania, Inc., 1997
0"

Pa. PUC LEXIS 82. With regard to Verizon's improper dismissal as an indispensable party,
under the contract in question, AT&T was the exclusive primary contractor with the
Commonwealth for inmate telephone service until February 10, 1999. On February 10, 1999,

0"

Verizon replaced AT&T as exclusive general contractor, though AT&T remains a subcontractor
on the contract. As exclusive general contractor to the contract in dispute, Verizon has an
undisputable right and interest related to petitioner's claim that the current rates charged to
recipients of inmate telephone calls are unreasonable and unconstitutional. Verizon's continued
absence would greatly impair its ability to preserve the current rate structure. Moreover,
Verizon's participation is essential to the merits of the claim since Verizon, as prime contractor,
contributes necessary information and insight. Lastly, a disposition against AT&T would deprive
Verizon of its due process rights by vastly altering the corporation's approved rate structure and
collectibles without providing Verizon an opportunity to challenge the disposition.
Furthermore, the Commission improperly denied Mr. Love's motion to join the
Commonwealth as an indispensable party. The ALl stated that while the case in hand "does
concern the business relationship between AT&T and the Commonwealth," the ALl was
unconvinced that the issue regarding the reasonableness of the rates requires the participation of
the Commonwealth or its agencies as parties. (cite) However, the essence of the dispute involves
the reasonableness of AT&T's rates and the terms and conditions of the inmate telephone system
as delineated by the contract between AT&T and the Commonwealth. AT&T's rates are subject
to the approval of a Commonwealth agency, the PUC, with respect to their reasonableness. In
addition, a disposition in Ms. Feigley's favor would result in a substantial financial loss for the

43

Commonwealth, since the Commonwealth receives a 47% commission from AT&T under the
0'

contract, totaling $6 million annually. The Commonwealth has an undisputed right to protect its
interest in the contract and is thus, an indispensable party.

44

VIII. CONCLUSION
For the reasons stated above, the Court should remand AT&T's rates for inmate telephone
calls set by the Pennsylvania Public Utility Commission, with instructions that such rates must
conform to just and reasonable standards.

924 Cherry Street, Ste. 523
Philadelphia, P A 19107
(215) 925-2966
Dated: August 6, 2001

45

APPENDIX

OPINIO ANI) onDER ENTERED APnlL 20, 2001, IN THE
CASE OF SA 'DnA L. FEIGLEY V. AT&TCO~I~IU ICATIONS
OF PE NSYLVANIA, INC., DOCKET NO. C-00981434

....

~,

.

PENNSYLVANIA
PUBLIC UTILITY COMMISSION
Harrisburg, PA 17105-3265
Public Meeting held April 19, 2001

Commissioners Present:
John M. Quain, Chairman
Robert K. Bloom, Vice Chairman
Nora Mead Brownell
Aaron Wilson, Jr.
Terrance J. Fitzpatrick

Sandra L. Feigley

v.
AT&T Communications of
Pennsylvania, Inc.

C-00981434

TABLE OF CONTENTS

Page
Background .................••.••.......••.....•.•........•.•.....•.••................................•••••......•.......

Discussion

A.
B.
C.

.................................................................................................................
Introduction .
......................................................................................
ALJ Decision ••••.•..................................•.•••.•..•.••..•••..•..•••.•••................
Exceptions

..........................................................................................

1.

2.

D.

Complainant ..•...•...•..•...••..•••••.•.... ~ ...••••..•••.....•.•....
CURE

..........................................•...................

't'
·
D ISPOSI Ion

1.

••••••••••••••••••••••••••••••••••••••••••••••

2
6
6
8
14

14

16
17
17

(a)

2.
3.
4.
5.
6.
7.
8.

Commonwealth Contract Bidd

19
Chapter 30 and T A-96 ......

21

Class •......•••••.••••.••.............

27
30

.............................................

32
33
34
34

. .......•..............................................................................

37

, .

BY THE COMMISSION:
Before the Commission for consideration are the Exceptions filed by
Sandra L. Feigley (Complainant) on July 12, 2000, to the Recommend

cision (R.D.)

of Administrative Law Judge (ALl) Louis G. Cocheres issued on

00. Replies

to Exceptions were received from AT&T Gommunicatio s o,~ero~'y

nco (AT&T

or Respondent) on July 27, 2000. We further note t t Citiz
tation of Errants. (CURE),' an intervenor in these pro
about July 19,2000.

On April 21, 1998
Complaints with the co~~. .
s
No. C-00981434, nam

two (2) substantially similar Formal
first Formal Complaint, docketed at
he Respondent. (R.D., p. 1). The second Formal

C 0981435, named Verizon Pennsylvania, f/k/a Bell
c. (Verizon PA) as the second Respondent. (R.D., p. 2).2
as set forth the operative paragraph contained in both Formal

I [Complainant] receive collect telephone calls from a prison.
The companies grossly overcharge for the service in order to
pay an unauthorized tax of35% and 50% respectively to the
Commonwealth. No legislation authorizes the Commonwealth to tax my speech in this way.
(Complaints, ~3).

As will be more fully explained, below, CURE is an organization of family
members, friends, and person~ who are interested in maintaining a humane criminal
justice system. The national headquarters for CURE is San Antonio, Texas. (See
Finding of Fact Nos. 17-18, infra).
2
The docket numbers in the text of the Recommended Decision should
reflect the year 1998 rather than 1999.
2

By Letter dated November 18, 1998, Angus Love, Esquire entered an
appearance for the Complainant. 3 Presiding ALJ Cocheres noted that:
Throughout the discovery process and the hearings held
April 16 and June 16, 1999, Mr. Love represented
Mrs. Feigley. Thereafter, and prior to Mr. Love's 0 0
to file a brief in this case, Mrs. Feigley dis i S S e 0
her attorney. In accordance with his cr t w he
withdrew by letter dated August 4, 19 . See I
. 0
No.4, dated September 16, 1999, at 6- .
(R.D., pp. 2-3).
Do

4

and Dianna Hollis filed a Letter-

(See R.D.,

(Id).

the legal representation of Counsel. e.g., Complainant's Reply Brief, p. 1. Counsel was, at the time this Complaint was prosecuted, the
Executive Director of the Pennsylvania Institutional Law Project, Philadelphia, Pennsylvania. The Complainant points out that Counsel had been contacted to represent her
incarcerated husband, George Feigley. She also comments that the Pennsylvania
Institutional Law Project, which employs Counsel, limits his representation to prisoners.
Of course, the Complainant is not a prisoner. (Complainant R.B., p. 1; also Interim Order
No.4).
4
Mr. Douglas Ilollis, who is married to Dianna Hollis, was, at the time of the
Recommended Decision, incarcerated at the state correctional institution at Frackville,
Pennsylvania. (See Finding of Fact No. 14). Also, Mrs. Hollis was, at the time of the
hearing, a member of the Pennsylvania Prison Society and Chaitperson of Pennsylvania
CURE. (Tr., p. 68).
The Complainant disputed

4

.::c:

. (.'.l,;;l ..

us""." ::,-,,,,,,lid Wi).:::':",

' " ,i.::::

wd.,."':;.t.J.t.U.£mt./Mt..t

htJPkt.i.MW.@Q4)t .tS.t.3

1.3.# .&

!J.A.JQ... Uqu.a

". a.t..t..t.t. J,ttQfM%Y£.::;;::;;pq6.,~gAh~!li&iI§I;fJ.AA'IfSJ.::::.

We also note that Mr. Guzzi, Esquire, appeared on behalf of the Commonwealth of
Pennsylvania Department of Corrections.6

Briefs were prepared by the Complainant and AT&T. ---...."'_-n>ust 3, 1999,
the Complainant filed her Brief In Support of Petitioner's Compl

The Brief

was dated July 27, 1999. On October 18, 1999, (in ac.".,.,.,......

nstructions

from ALI Cocheres to delay filing until the Petition

Interv.. . "'l!......:up

filed its Brief in both proprietary and non-proprietary •
ncrease In Tariff, pro se. On

Complainant served her Supplementary Brie
October 27, 1999, the Complainant serve

etit.

II~~
Briefs filed by the Comp~ina
>
~~
se. By Letter dated November

TheRec~~

r Sandra Feigley's Reply Brief, pro
onded to both of the most recent

ecision was issued on June 27, 2000. Presiding ALI

de~~the Formal Complaint of Mrs. Feigley be denied, consistent

Cocheres reco

~
:~xc

., p. 64). As noted, Exceptions were filed by the Complainant
ions were filed by CURE on July 19,2000. Replies to

re received from AT&T on July 27, 2000.

Discussion

A.

Introduction
The instant formal Complaint presents certain matters of first impression

for this Commission: The Complainant's Formal Complaint lodges an attack against the
constitutionality and reasonableness of the rates and conditions of service provided by

The Commonwealth Department of Corrections was not made a party to the
proceedings. (Tr., p. 48). Counsel, whose presence was acknowledged, did not formally
record an entry of appearance. (Tr., p. 58; 178-182; 185).
6

6

and (3) the transport charge ($.27).& The rates charged by AT&T are contained in
F"

Commission-approved tariffs which require AT&T to charge unifonn rates for all inmate
service calls. (AT&T MB, p. 5).

exercise enumerated statutory powers or such power
our enabling statute. (66 Pa. C.S. §§101-3315; West
471 Pa. 347, 370 A.2d 337 (1977); National
464 A.2d 546 (Pa. Cmwlth. Ct. 1983)). P.
diction over the reasona~nes

~

~

the Commission's enabling statute,

Q.~
embly with exclusive original juris~~nd sufficiency of public utility rates and

the Commission has been vested

431 Pa. 63,243 A.2d

uan

.

,

LJ Cocheres made one-hundred seventy (170) Findings ofFact and
enty-seven (27) Conclusions ofLaw. 9 We, hereby, adopt the ALJ's Findings

of Fact unless expressly or by necessary implication they are modified or rejected by this
Opinion and Order.

A summary of non-proprietary facts, excerpted from pages 32-37 of the Recommended
Decision, is provide~, below:

The transport charge was increased to $.45 per minute, effective August 6,
1999. (See AT&T MB, p. 3, n. 8).
9
Finding of Fact Nos. 166-170 contain proprietary information.
8

8

hearing), the recipient also has the option to hear the
maximum interstate charges applicable to collect calls from
prisons. 4 At this point, the call recipient can refuse the call by
hanging up and will incur no charges. if the recipient wishe
to continue, he/she must push a designated button to acce t
the charges.

cOQ

After the call is accepted, the. connection i
an
'11
conversation can begin. Periodically, t ca
interrupted (a few seconds) to inform e partie
e .
remaining before call termination. Du' thes announcements the parties cannot continue
ir c
tion. The
audio portion of the call can als b 'nterr:upted by loud
cracking noises. Finally, 10
ound noises in the
vicinity of the recipient
se tli security system to
disconnect the call.
I' is nnected, the inmate and
the call recipient m e a e process to transmit another
collect callPTh
p'
ust then pay another service
in additi~~
4

G

~~
~

I per minute costs.

~~he option to hear a recorded message

Ii provides the maximum interstate charges
licable to collect calls from prisons is a
re irement imposed by the Federal Communications Commission (FCC). 47 C.F.R. §64.710.
Further, at the December 21 hearing, AT&T
explained that its subcontractor had failed to
specify in the message that the charges only
applied to interstate calls.

',-

(R.D., pp. 32-34) (Emphasis original).

f!'

ALl Cocheres concluded that the Complainant had the burden of proof to
show that the rates charged by AT&T were "unreasonably high." (See R.D., p. 37; 66 Pa.
C.S. §31S(a)). On consideratiOI~ of the record, the presiding ALl concluded that the
111

Complainant failed to meet her burden of proof that the rates at issue were too high or
r'

that there was something improper relative to some component of the rate which made
the total rate unjust or unreasonable. (66 Pa. C.S. §1301). The main thrust of the

10

98 S. Ct. 401,54 L. Ed. 2d 281 (1977); reh'g. ~enied,
434 U.S. 1025,98 S. Ct. 754, 54 L. Ed. 2d 774,
(1978).

5.

United States Constitution guarantees to its citize
right of freedom of speech. U.S. Const. Amen . .

6.

-Tnl~lo.o\\collect,

7.
meets the regulat

9.

In Na

s

D~'~I(j

o
n

toll calI rate

•

ls~ation For the Advancement Of

iss' , 5 Pa. Commonwealth Ct. 312, 290 A.2d
2), the Court ruled that this Commission had
0 ower to regulate utility employment practices in
context of a general rate case. The Court continued
th the authority to investigate allegations of the
discriminatory employment practices is vested the
Pennsylvania Human Relations Commission.
1

7

~

~

10.

In Philadelphia Electric Company v. Pennsylvania
Human Relations Commission, 5 Pa. Commonwealth
Ct. 329,290 A.2d 699 (1972), the Court ruled that the
Human Relations Commission did not have the
authority to investigate allegations of discrimination
by a utility in the provision of home economics department services, the requiring of security deposits and
the termination of service for failure to pay bills. The
Court continued that the jurisdiction to review
allegations of racial discrimination on these subjects
was vestCld i~ the Public Utility Commission. The
Court reasoned that these subjects were within this
Commission's exclusive jurisdiction over rates and
servIces.

12

interstate, collect, toll call. BPP Second Report And
Order. 47 C.F.R. §64.710.
25.

Mrs. Feigley has not prevailed on any portion of her
claim.

26.

Mrs. Feigley failed to prove that AT&T did
which violated the Pu~lic Utility C e, ~.. "",..
e 0 ti ......a''' .....
regulation, Commission order 0
Pennsylvania or the United Stat .

(R.D., pp. 59-63).

C.

Exceptions

1.

Any

The Complainant's Exceptions, summarized, are as follows: Complainant
Exceptions 1-3 raise alleged procedural irregularities. The Complainant objects to the
dismissal ofVerizon from this proceeding and repeats her position that Mr. Angus Love,
Esquire, did not represent her during the proceedings. (Complainant Exc., pp. 1-2).

Exception No.4 of the Complainant represents the substantive details of
her disagreement with the reoon1t:nendation of ALl Cocheres. These contentions are
noted below:

14

that "First Amendment freedom of speech rights are imp1i~ated through this Complaint,
('"

and that the charges for collect call recipients from inmates amount to an improper tax
imposed by a government agency. Finally, the Complainant objects, in

0

to ALl Cocheres' Conclusions of Law and to his general understandi
te behavior
should not, essentially, be imposed on "oth·er citizens."

2.

. 7).

CURE
CURE's Exceptions, in add·

Complainant, assert that the Com

Utility Code, and the Com~~n'
Exc., pp. 3-9). CURE

pounding on the positions of the

.

rden of showing that the rates from

gulations at 52 Pa. Code §63.l05. (See CURE

~~ y presents several policy arguments the import of which

stI~~rise is in need of regulation" by this Commission
ative mandate. (CURE Exc., p. 11).

ission's Regulations, and the federal Telecommunications Act of 1996,
47 U.S.C. §I5I, et seq. (TA-96), to bear on the resulting rates. Essentially, CURE notes
that "[t]he ALl fails to note that AT&T raised rates four (4) times during the pendency of
this action (see AT&T Exhibits 6-9), the last two (2) increases occurring after the AT&T
testimony regarding the profitability of the Contract. . . . The increases reflect as much as
a 300% increase in

r~tes

during the pendency of this litigation." (CURE Exc., p. 15).

16

those tariffs are on the record of this proceeding. AT&T
Exh.I-4.
(R.D., p. 39) (Note omitted).
ismissalof
her claim that there were irregularities in the bidding ~n..l'"

xceptions,

the Complainant argues, in pertinent part that:

In its Replies to E

(R.Exc., pp. 12-13).

AT&T, citing Schnieder v. Pa. PUC, 479 A.2d 10 (Pa. Cmwlth. 1984),

petition for allowance of appeal denied (1984), states that "the Commission lacks juris-diction to hear questions of federal and constitutional law which go beyond application of
its enabling statute nor to decide the constitutionality of its own enabling statute."
(R.Exc., p. 12; n. 34 citing Schniedl!r, City ofPhila. v. Kenny, 369 A.2d 1343 (Pa.
Cmwlth. 1977) and Borough of Green Tree v. Bd. ofProp. Assessments, 459 Pa. 268, 328
A.2d 819 (1974»). Also, AT&T argues that since the Complainant's constitutional
challenges are directed at the"Coininonwealth's actions, any review of these issues would
involve this Commission's review of the constitutionality of actions taken by the

18

In Elkin v. Bell Telephone Co. ofPa., 491 Pa. 123,420 A.2d 371 (1980),
f'"

the Supreme Court favored a bifurcated procedure where complex matters within an
agency's area of expertise are resolved by the agency. (See also Feingold

Pennsylvania, 477 Pa. 1,383 A.2d 791 (1977». Those matters not recFUl::J.ng
y the courts.
1982).

d not refer the matter to the Commis-

Ide a means of redress to Mrs. Feigley regarding the merits of

ould it be appropriate for this Agency to consider the Complainant's
f"

suggestions that there were competing and conflicting financial objectives on the part of
the Commonwealth DOC which led to the selection of the successful bidder. 10

The Complainant strongly suggests that she is, as a collect telephone call
recipient, within the class of persons on whose behalfthe DOC should act in its
solicitation of bids. The Commonwealth contract involved here provides approximately
$3 million per year to the DOC which is used for the Inmates General Welfare Fund.
This fund is, in tum, used to provide services to inmates, such as recreation, entertainment, etc. (See Findings of Fact Nos. 92-96). Consequently, the negotiated contract bid
price provides benefits to taxpayers and prisoners by ameliorating the tax burden of
incarceration. (Finding Fact No. 96; Tr., p. 165).
10

of

20

conditions for the same service that have b~come lawfully
effective in the interstate jurisdiction". 52 Pa. Code
§63.105(d)(I). In this litigation, the A~ministrative Law
Judge (ALJ) utilized long distance collect calls as a basis for
comparison. (P.35 of Opinion). These rates are based 0
competitive services that give individuals a choice in sm'Vrc:~\\
i.e., collect calls t personal cell phones, credit card c s,
public pay phone charges t debit cards or 1 0 : e 0
services. The testimony indicates that
lai" n d
witnesses frequently utilize the service tissue . ng
Fact Nos. lOt 20, 39)t yet they cannot
rcise e many ess
expensive options listed above. T lea
sive option of
choosing one's own long dista
s rvice. is not considered by
the ALl. Intervenor C.U.R
to Plaintiffs
Exhibits 1-3, 12, for Ion
ce ra s available to
e' ve services were perMs. Feigley and wi
mitted. These rates
r
ttle as $.06 cents per minute
as opposed<ib t~~~
per minute rate charged under
the current c~~

~~elePhone
r7'_~'-,\~~~laintiff'S
~
r:\\

bills ofFeigley, Franz and

Exhibits 1-3.

AT&T, in its Replies, does not directly respond to this contention of
II

However, AT&T notes that higher rates for collect calls are justified and not

discriminatory in light of the fact that AT&T incurs categories of costs in providing
inmate services calls that it does not incur in providing direct dial service. These costs
include, inter alia, operator costs, dial around compensation costs, higher uncollectibles,
and fraud control. (See Reply Exceptions, p. 11). Additionally, AT&T asserts that any

This contenti0,9 of CURE is, as noted, implied from its Exceptions. We
note that AT&T variously complains that the Exceptions of the Complainant and CURE
are "erratic" and "incomprehensible." We recognize that neither CURE, nor the Complainant may be conversant with the details ofpractice before the Public Utility
Commission and have endeavored to draw all reasonable inferences from well-pleaded
contentions. (Tr., p. 233).
II

22

In light of the foregoing, this Commission is without primary jurisdiction to
address that aspect of the instant Formal Complaint challenging the reaso bleness of
inmate access to telephone facilities. This is a question closely relate

process by

which the Commonwealth has selected Verizon as contractor and

ub-

contractor) to provide telecommunications services.
system by inmates is a matter within the discretion 0
DOC, subject to court review. (37 Pa. Code §93.7).
Telecommunications Act of 1996 (TA-96) i

n~
rison ~s

telephone

fac that Chapter 30 and the

Ie ent a.new regulatory regime of

competition and competitive choice arno

ervl

Commonwealth contract appears t(~~

and service providers, but that the

choices, does not, in our view, present

a question within the are~fC~~thiSCommission.
We note

January 29, 1998
prevailing
i

at

ti£~~Billed Party Preference Order, supra,

released

e ~~fective date ofTA-96, discussed without criticism the

~~
h~rvi

ectional institutions throughout the United States to provide
s through a competitively bid sole source. 13 Also, while the

unications Commission (FCC) has expressed concern over comments
the reasonableness of costs, it did not express disapproval of the limitation of
choice on the called party. If such a question were to be placed squarely before this
Agency, we would

Our review of the record in this matter and our review of the decisions in
other jurisdictions that have considered the issue, indicates that only the state of Florida
appears to provide some degree of choice for the recipient of a collect call initiated from
an inmate. (See FCC Billed Party Preference Order). Also, CURE, in its Exceptions,
and citing the FCC Billed Pa}ty Preference Order, asserts that the system installed by the
Federal Bureau of Prisons provides for choice in providers via the Telephone Operator
Consumer Services Improvement Act of 1990. (CURE Exc., p. 10). See also Tr., p. 139,
citing Wisconsin as another jurisdi~tion which may offer some alternative billing
arrangement.
IJ

24

Contract for Payphone and Inmate Services (RFP Number 97-15-2580-011) (Exh. P-5),
states the following: 16

All parties must also agree t
Commonwealth of Penn"L[nT<llTU

iting inmate initiated calls to only collect calls is prescribed by
t

ivocally mandated use of the collect only system for the inmates. See also In

the Matter ofAmendment ofPolicies and Rules Concerning Operator Service Providers
a~d Call Aggregators, 11 FCC Rcd 4532 (March 5, 1996), Para. 29 - "In view ofthe

"exceptional" circumstances presented by the correctional environment, ... we are not

"
--------------------the February 10, 1999 contract between the Commonwealth
We note that
16

and Bell Atlantic-Pennsylvania, Inc., admitted into the record as Exhibit P-5 was
erroneously marked proprietary. (See Finding of Fact No. 74). Said document is not a
proprietary document. (Id.; Tr. 143).
26

o

'

difference between an intrastate, interLAT A collect call from
a public payphone and the same collect call from an inmate in
a correctional institution was $.90. In other words, even
though AT&T incurred additional capital investment costs £;
security, recording and monitoring equipment in the pris
setting, the resulting cost differential made the inmate
$.90 more expensive (including the commission pa' 0
Commonwealth). The proprietary cost inti~. .c
was set forth in the "Undisputed Facts" n
h s
explained by AT&T's witness and whi was a
t i
findings of fact above justified the init high per call
costs. In addition, I stress that, wh the
closed, it was
$.45 less expensive for the inm
nect ca I than the public
payphone conect call. Thus
e prices of all of the
calls went up, the inmat
the least. Under these
circumstances, I do ~ ~i
nreasonable or
y
violative 0S-n
~t
tility Code.

©

rft"~hll:'''~Cts

as valid. *They:ere adopted in
leg'
length transactions with authorized agents of
.
nwealth. The negotiated prices and the bid prices
p
enefits to both the taxpayers and the prisoners. The
;
in
.ce differences in comparison to the same cans
om public payphones ($.90 higher for intrastate, inmate
calls at the start of the case and $.45 lower for intrastate,
inmate calls at the end of the case) fall within a zone of
reasonableness. In addition, the resultant rates consistently
fall within or below the regulatory benchmark (i.e. equal to or
below the interstate rates for similar cans) ....
...

~

(R.D., pp. 44-45) (Note omitted).
In her. Exceptions, the Complainant asserts that the communication at issue
is speech protected by the First Amendment to the United States Constitution and by the
Pennsylvania Constitution.

'Co~plainant

Exc., p. 4). In addition to her First Amend-

ment claims in this area, the Complainant additionany asserts that the rates result in an
improper "tax" imposed by the executive branch, rather than the legislative branch of the
General Assembly. (Jd). In connection with this improper taxation argument, the
28

unjust and unreasonable, we conclude that their incurrence by the call recipient does not
impact her constitutional rights.

4.

Equal Protection and Protected Class

mended
Decision.
follows:
As I indicated above, the re
ate, collect, toll calls
beginning of the case th .
were more expensi
p ic payphone, collect
calls. I also rejecte
e' e
using direct dialed toll calls
as a valid ~crJ
ate collect calls. Instead, I used
the cost O f ! ' a 11 ne collect toll calls as a comparison
point to i t o
calls. At this point, I am compelled to
obse
the cord showed at the end of the case that the
cos
p I ayphone collect toll calls were more expensive
in ate collect toll calls. After evaluating the closing
ase v' nce, I have concluded that those rates did not
ns e a prima facie case of disparate treatment of a
rotected class. Thus, Mrs. Feigley had not carried her
burden of demonstrating a prim a facie case during the length
of the proceedings.

-e~

In conclusion, my review illustrated 1) that Mrs. Feigley and
her witnesses were not representative of the protected classes,
2) that the Commission has jurisdiction over the disparate
treatment claim, 3) that, assuming Mrs. Feigley was permitted
to represent the protected classes, she did not establish a
primafacie case for any part of the proceeding, 4) that
Mrs. Fdgley failed to establish a valid basis for comparison
of existing inmate rates to other less costly rates, and 5) that
the societal goal of controlling inmate behavior justified the
limited access t'O the telephone system and the additional
costs of security measures. Accordingly, I have concluded
that on balance the societal concerns over security and its
costs justified the price differential in the rates without regard

30

·

argues that it has standing to prosecute the racially disparate treatment claim. CURE
refers to its Exhibit 9 and the transcript, pages 182-184. Here, CURE established that
two-thirds of the inmate population are racial minorities. Thus, CURE co ends that the
"burden of high-cost telephone calls falls disproportionately on mino .
d

and friends." ld.

,+.

URE, we find
that no equal protection violation has been establishe
plainant and CURE that they represent a clas
incarcerated persons, against whom high

~ates are equally apPI.ied to a clas
Incarcerated persons m

racial minority does

n~ea

equal protection
--

t~ Co

0
-

s.

f ersons, friends and family members of

elep

~~.

e position of the Com-

11

e rates are imposed. However, the

i~ients of~elephone calls from

~~lrrespechve of an Improper and suspect

suspect class that this Commission may recognize for

ee Abdul-Akbar v. McKelvie, _ F.3d _ (3 rd Cir. 2001),

-

ry 29, 2001, citing Pryor v. Brennan, 914 F.2d 921, 923 (7th CiT.
that prisoners do not constitute a suspect class.

Additionally, we are convinced, based on this record, that the relevant
charges are within a zone of reasonableness and not in violation of Commission
Regulation.

5.

Illegal Monopoly

The inmate provided telephone system is, among the majority of jurisdictions; a monopoly service. (See FCC BPP Order). We note that the FCC BPP Order

'"
was rendered after the promulgation ofTA-96. Thus, we do not acknowledge that the
pro-competitive goals ofTA-96 have, in some way, altered the legitimate security
interests of the state in maintaining control over inmate access to the telephone facilities.

32

7.

AT&T's Profits

AT&T's costs were detailed in Exhibit"No. 5 (Proprietary).
the individual cost elements presented in this record, we agree with
the average cost ofa [BEGIN PROPRIETARY] ten minute tele
while the average revenue related to a call of the sam
PROPRIETARY]. While CURE and the Complai
AT&T's provision of service pursuant to the Commo
information shows that the profitability of th

0

0

ti~ .
t have~e
ealt contract at a loss, the

ract (or AT&T is not guaranteed.

The reasonableness

As

Dismissal of Verizon as a Party Respondent

At transcript pages 42-43, Mr. Angus Love, Esquire, orally moved the
presiding ALJ to reconsider his ruling which granted Verizon's motion in the nature of a
motion for summary judgment and resulted in its dismissal from this proceeding.
Mr. Love averred, in!er alia, a material change occurred related to a new contract
We take administrative notice that the current tariffed rate for an
intraLATA or interLATA call is now $3.45 per call (See AT&T Tariff No. 9, Third
Revised Sheet 38A and 39A, effective August 6, 1999).
20
As observed by ALl Cocheres, in the instance where a call is prematurely
terminated for whatever reason and the process begins anew, another surcharge is
imposed.
19

34

· ,

Changes in circumstances whereby Verizon became the general contractor
and AT&T was the subcontractor for services to the Commonwealth could be material to
fashioning an overall perspective of the issues relating to collect call char s for inmate
service. As subcontractor, AT&T would not be directly in privity wit

the calls complained of were a mixture of calls where·

ere,

alternately, the prime contractors.

Notwithstanding the foregoing . I ht of the fact that the Complainant has
arding the impropriety of any rate
Code, she has incurred no hann as

4

e question pursuant to the Commission's Rules of Practice and

,

not seek such review has no substantive bearing on the
IS

case.

Conclusion
Based on our review of the record, we conclude that the ALJ's Recommended Decision is supported by substantial and competent evidence. We shaH adopt the
Recommended Decision of Administrative Law Judge Louis G. Cocheres, as modified by
this Opinion and Order. The Formal Complaint of Sandra L. Feigley is denied.

36

CERTIFICATE OF SERVICE
1

I

I hereby certify that on the 61h day of August, 2001 two copies of Petitioner's Appeal Brief
and Reproduced Record in the above-captioned matter were served via U. S. Mail, first class,
postage paid on the following:
Susan D. Colwell, Esquire
Law Bureau
Pennsylvania Public Utility Commission
Floor 3 West
Commonwealth Keystone Bldg.
Post Office Box 3265
Harrisburg, PA 17105-3265
Telephone: (717) 787-5000
Facsimile: (717) 783-3458

,

Alan Kohler, Esquire
Christine S. Dutton, Esquire
Wolf, Block, Schorr & Solis-Cohen LLP
212 Locust Street, Suite 300
Harrisburg, P A 17101
Telephone: (717) 237-7160
Facsimile: (717) 237-7161 (fax)
Janet Miller, Esquire
Louise A. Knight
Malatesta, Hawke & McKeon LPP
100 North Tenth Street
Harrisburg, PA 17105-1778
Telephone: (717) 236-1300
Facsimile: (717) 236-4841
Sandra L. Feigley
Box 15541
Harrisburg, P A 17105