Prison Phone Justice

1
2
3
4
5
6
7
8

BARRETT S. LITT, SBN 45527
E-Mail: blitt@kmbllaw.com
RONALD O. KAYE SBN 145051
E-Mail: rok@kmbllaw.com
Kaye, McLane, Bednarski & Litt, LLP
234 Colorado Boulevard, Suite 230
Pasadena, California 91101
Telephone: (626) 844-7660
Facsimile: (626) 844-7670

14

MICHAEL S. RAPKIN, SBN 67220
E-Mail: msrapkin@gmail.com
SCOTT B. RAPKIN, SBN 261867
E-Mail: scottrapkin@rapkinesq.com
Rapkin & Associates, LLP
723 Ocean Front Walk
Venice, California 90291
Telephone: (310) 319-5465
Facsimile: (310) 319-5355

15

Attorneys for Plaintiffs

9
10
11
12
13

16

UNITED STATES DISTRICT COURT

17

CENTRAL DISTRICT OF CALIFORNIA

18
19
20
21

TODD KAELIN et al.
Plaintiffs,

22

vs.

23
24

COUNTY OF RIVERSIDE, et al.,

25

Defendants.

26
27
28

CASE NO: 2:16-cv-02477-MFW(JC)
Consolidated with:
2:15-cv-09003
2:16-cv-01079
2:16-cv-02478
2:16-cv-02479
CONSOLIDATED OPPOSITION TO
DEFENDANTS’ MOTION TO DISMISS
Date: August 8, 2016
Time: 10:00 A.M.
Courtroom: 1600

1

TABLE OF CONTENTS

2

I.

INTRODUCTION .................................................................................................... 1

3

II.

THE PRIMARY JURISDICTION RULE DOES NOT APPLY BECAUSE THE
FCC ALREADY HAS ISSUED ITS ORDERS ON THIS VERY ISSUE ............. 1

4
5
6
7
8
9

III.

10
11
12
13
14

IV.

15
16
17
18
19
20

V.

21
22
23
24
25
26

VI.

27
28

VII.

A. STANDARDS FOR PRIMARY JURISDICTION ............................................................. 2
B. ANOTHER DISTRICT COURT ALREADY DENIED THE SAME ARGUMENT WITH EVEN
LESS INPUT FROM THE FCC THAN THIS COURT HAS BEFORE IT. .......................... 3
C. THE PRIMARY JURISDICTION DOCTRINE WOULD ONLY APPLY TO PLAINTIFFS’
FEDERAL COMMUNICATIONS ACT CAUSE OF ACTION IF THEY WERE PURSUING
IT. .......................................................................................................................... 3
THE IMPOSITION OF THE UNLAWFUL TAX UNCONSTITUTIONALLY
BURDENS PLAINTIFFS’ FIRST AMENDMENT RIGHT TO FREE SPEECH . 4
A. THE COMMISSION IS AN IMPERMISSIBLE TAX IMPOSED ON PLAINTIFFS’ FIRST
AMENDMENT RIGHTS TO FREE SPEECH. ................................................................ 7
B. THE COURT SHOULD REVIEW THE TAX UNDER HEIGHTENED SCRUTINY.............. 8
C. EVEN UNDER THE MORE DEFERENTIAL TURNER STANDARD, THE TAX IS STILL
UNCONSTITUTIONAL ............................................................................................ 10
THE COMMISSIONS ARE AN ILLEGAL TAX IN VIOLATION OF CAL.
CONST. ART. XIII C (PROPOSITIONS 218 AND 26). ..................................... 14
A. BACKGROUND ON PROPOSITIONS 218 AND 26 ..................................................... 14
B. THE COMMISSIONS DO NOT FALL WITHIN ANY OF THE EXCEPTIONS IN
PROPOSITION 26 (ART. XIII C, § 1, SUBD. (E)).................................................... 16
C. DEFENDANTS IMPOSE A FEE ON PLAINTIFFS TO USE THE INMATE PHONE SERVICES
............................................................................................................................ 22
D. PLAINTIFFS HAVE STANDING TO SUE. ................................................................. 24
THE COUNTY VIOLATED THE UNCONSTITUTIONAL CONDITIONS
DOCTRINE BY CONDITIONING PLAINTIFFS’ ABILITY TO
COMMUNICATE BY TELEPHONE UPON WAIVING RIGHT TO RECEIVE
JUST COMPENSATION. ..................................................................................... 27
A. PLAINTIFFS HAVE A PROPERTY INTEREST IN THE MONEY THAT THEY PAY FOR
PHONE CALLS FOR WHICH THEY ARE ENTITLED TO JUST COMPENSATION. ....... 29
B. PLAINTIFFS’ PAYMENTS ARE NOT VOLUNTARY .................................................. 31
C. THE REQUIREMENT TO EXHAUST STATE REMEDIES IS INAPPLICABLE. ............... 32
PLAINTIFFS HAVE SUFFICIENTLY ESTABLISHED AN EQUAL
PROTECTION AND DUE PROCESS VIOLATION........................................... 34
DEFENDANTS HAVE VIOLATED THE SHERMAN ANTITRUST ACT. ..... 35
A. STATE ACTION IMMUNITY DOES NOT APPLY. ..................................................... 35
i

1
2
3
4
5
6
7

B. THE ONLY COURTS TO HEAR SIMILAR CLAIMS HAVE OVERRULED DEFENDANTS’
MOTIONS TO DISMISS. ......................................................................................... 37
C. PLAINTIFFS DO NOT SEEK ANTITRUST DAMAGES. .............................................. 38
D. PLAINTIFFS HAVE STANDING BECAUSE THE ACTIVITIES AT ISSUE HAVE AN
EFFECT ON INTERSTATE COMMERCE. .................................................................. 39
E. THE TURNER STANDARD HAS NO BEARING ON PLAINTIFFS’ ANTITRUST CLAIM.
............................................................................................................................ 43
F. PLAINTIFFS’ ALLEGE AN ANTITRUST INJURY. ..................................................... 44
VIII. THE TELEPHONE COMPANIES ARE NOT NECESSARY PARTIES AND,
THUS, ARE NOT INDISPENSABLE PARTIES. ................................................ 44

8
9
10
11
12
13
14

IX.
X.

PLAINTIFFS’ HAVE PROPERLY STATED A CLAIM UNDER CIVIL CODE
§ 52.1. ..................................................................................................................... 50

XI.

THE COURT SHOULD NOT DECLINE JURISDICTION OVER THE STATE
LAW CLAIMS BECAUSE THEY ARE NOVEL AND COMPLEX. ................. 52

XII.

INMATE PLAINTIFFS WERE NOT REQUIRED TO PLEAD EXHAUSTION
AND, IN THE CONTEXT OF THIS CASE, WERE NOT REQUIRED TO
EXHAUST ADMINISTRATIVE REMEDIES, TO PURSUE THEIR STATE
LAW CLAIMS. ...................................................................................................... 54

15
16
17
18
19
20

A. THE COURT CAN PROVIDE COMPLETE RELIEF WITHOUT JOINDER OF THE
TELEPHONE COMPANIES. ..................................................................................... 45
B. RESOLUTION OF PLAINTIFFS’ CLAIMS WILL NOT IMPEDE THE TELEPHONE
COMPANIES’ ABILITY TO PROTECT THEIR INTERESTS. ........................................ 46
C. NO INCONSISTENT OBLIGATIONS WOULD BE CREATED. ..................................... 47
D. THE TELEPHONE COMPANIES ARE ADEQUATELY REPRESENTED......................... 48
GOVERNMENT CODE SECTION 11135 DOES CREATE LIABILITY
WHERE THERE IS A DISPARATE IMPACT .................................................... 49

22

XIII. INMATE PLAINTIFFS ARE ENTITLED TO PURSUE CLAIMS FOR
COMPENSATORY DAMAGES, INCLUDING PRESUMED DAMAGES, AND
VIOLATION OF CONSTITUTIONAL RIGHTS ................................................ 55

23

XIV. CONCLUSION ...................................................................................................... 57

21

24
25
26
27
28

ii

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

TABLE OF AUTHORITIES
Cases
Albers v. County of Los Angeles,
62 Cal.2d 250 (1965) ....................................................................................................... 33
Albrecht v. Williams,
2009 WL 3296649, (D.N.J. Oct. 13, 2009) ..................................................................... 55
Allen v. City of Sacramento,
234 Cal. App. 4th 41 (2015) ............................................................................................ 51
Allnet Communication Serv., Inc. v. National Exch. Carrier Ass’n, Inc.,
965 F.2d 1118 (D.C. Cir. 1992) ........................................................................................ 4
Apartment Assn. of Los Angeles County, Inc. v. City of Los Angeles,
24 Cal.4th 830 (2001) ............................................................................................... 18, 21
Armstrong v. United States,
364 U.S. 40 (1960) .................................................................................................... 29, 30
Arsberry v. Illinois,
244 F.3d 558 (7th Cir. 2001) .................................................................................. 4, 7, 38
Ashker v. Cal. Dep’t of Corr.,
350 F.3d 917 (9th Cir. 2003) ........................................................................................... 11
Associated Gen. Contractors of California, Inc. v. California State Council of

20

Carpenters,

21

459 U.S. 519, 103 S. Ct. 897, 74 L. Ed. 2d 723 (1983) .................................................. 39

22
23
24
25
26
27
28

Ass’n to Protect Hammersley, Eld, & Totten Inlets v. Taylor Res, Inc.,
299 F.3d 1007 (9th Cir. 2002) ......................................................................................... 46
Baldwin v. Redwood City,
540 F2d 1360 (9th Cir. 1976) ............................................................................................ 7
Beard v. Banks,
548 U.S. 521 (2006) ........................................................................................................ 11
Beauchamp v. Murphy,
37 F.3d 700 (1st Cir. 1994) ............................................................................................. 10
iii

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15

Beerheide v. Suthers,
286 F.3d 1179 (10th Cir. 2002) ......................................................................................... 5
Bell v. Wolfish,
441 U.S. 520 (1979) ........................................................................................................ 10
Block v. Rutherford,
468 U.S. 576 (1984) ........................................................................................................ 10
Blumhorst v. Jewish Family Servs. of Los Angeles,
126 Cal.App.4th 993 (2005) ............................................................................................ 49
Bounds v. Smith,
430 U.S. 817 (1977) ........................................................................................................ 13
Brandon v. Allen,
719 F.2d 151 (6th Cir.1983) ............................................................................................ 56
Bromell v. Idaho Dep't of Corr.,
2006 WL 3197157 (D. Idaho Oct. 31, 2006) .................................................................. 55
Brooktrails Township Community Services Dist. v. Board of Supervisors of Mendocino

16

County,

17

218 Cal.App.4th 195 (2013) ...................................................................................... 14, 18

18
19
20
21
22
23
24
25
26
27
28

Brown v. MCI WorldCom Network Servs.,
277 F.3d 1166 (9th Cir. 2002) ....................................................................................... 2, 4
Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc.,
429 U.S. 477 (1977) ........................................................................................................ 44
Buster v. George W. Moore, Inc.
(2003) 438 Mass. 635 [783 N.E.2d 399] ......................................................................... 51
Byrd v. Goord,
2005 WL 2086321 (S.D.N.Y. 2005) ............................................................. 10, 12, 35, 55
Cachil Dehe Band of Wintun Indians of the Colusa Indian Cmty. v. California,
547 F.3d 962 (9th Cir. 2008) ........................................................................................... 47
California Assn. of Prof'l Scientists v. Dep't of Fish & Game,
79 Cal. App. 4th 935, 94 Cal. Rptr. 2d 535 (2000) ......................................................... 53
iv

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

California Bldg. Indus. Assn. v. City of San Jose,
61 Cal. 4th 435 ................................................................................................................ 34
California Farm Bureau Federation v. State Water Resources Control Bd.
51 Cal.4th 421 (2011) ...................................................................................................... 52
Canell v. Lightner,
143 F.3d 1210 (9th Cir. 1998) ......................................................................................... 56
Cardio-Medical Associates, Ltd. v. Crozer-Chester Medical Center,
721 F.2d 68 (3d. Cir. 1983) ............................................................................................. 40
Carr v. Whittenburg,
2006 WL 1207286 (S.D. Ill. April 28, 2006) ............................................................ 56, 57
Chauffeurs, Teamsters & Helpers, Local No. 391 v. Terry,
494 U.S. 558, 110 S. Ct. 1339, 108 L. Ed. 2d 519 (U.S. 1990) ...................................... 38
Citizens for Fair Reu Rates v. City of Redding,
347 P.3d 89 (Cal. 2015)................................................................................................... 53
City of Watseka v. Illinois Public Action Council,
796 F.2d 1547 (7th Cir.1986) ......................................................................................... 56
Clark v. Time Warner Cable,
523 F.3d 1110 (9th Cir. 2008) .......................................................................................... 2
Cockcroft v. Kirkland,
548 F. Supp. 2d 767 (N.D. Cal. 2008) ........................................................................... 55
Collier v. City and County of San Francisco,
151 Cal.App.4th 1326 (2007) ......................................................................................... 53
Columbia v. Omni Outdoor Advertising, Inc.,
499 U.S. 365 (1991) ....................................................................................................... 35
Coronel v. State of Hawaii, Dept. of Corrections,
1993 WL 147318 (9th Cir. 1993) ..................................................................................... 9
Cost Mgmt. Servs., Inc. v. Wash Nat. Gas Co.,
99 F.3d 937 (9th Cir. 1996) ...................................................................................... 35, 43

v

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Cty. of Riverside v. McLaughlin,
500 U.S. 44, 111 S. Ct. 1661, 114 L. Ed. 2d 49 (1991) ................................................. 42
Daleure v. Kentucky,
119 F.Supp.2d 683 (W.D. Ky. 2000) ....................................................................... 38, 44
Darensburg v. Metropolitan Transp Com’n,
636 F.3d 511 (9th Cir. 2011) .................................................................................... 49, 52
Darensburg v. Metropolitan Transp. Com’n,
611 F.Supp.2d 994 (N.D. Cal. 2009) ............................................................................. 49
Dawavendewa v. Salt River Project Agric. Improvement & Power Dist.,
276 F.3d 1150 (9th Cir. 2002) ........................................................................................ 46
Decorative Carpets, Inc. v. State Board of Equalization,
58 Cal.2d 252 (1962) ...................................................................................................... 25
Disabled Rights Action Comm. v. Las Vegas Events, Inc.,
375 F.3d 861 (9th Cir. 2004) .............................................................................. 45, 46, 47
Dolan v. City of Tigard,
512 U.S. 374 (1994) ....................................................................................................... 27
Eastern Conn. Citizen Action Group v. Powers,
723 F2d 1050 (2d Cir. 1983) ............................................................................................ 7
Farley Transp. Co. v. Santa Fe Trail Transp. Co.,
778 F.2d. 1365 (9th Cir. 1985) ....................................................................................... 44
Fontan-de-Maldonado v. Lineas Aeras Costarricenses, S.A.,
936 F.2d 630 (1st Cir. 1991) ............................................................................................ 3
Fontes v. Time Warner Cable,
2015 U.S. Dist. Lexis 169580 (C.D. Cal. 2015) ............................................................... 2
Walton v. DOCS,
921 N.E.2d 145 (2009) .................................................................................................... 31
Frost & Frost Trucking Co. v. Railroad Comm’n,
271 U.S. 583 (1926) ....................................................................................................... 27

vi

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Frost v. Symington,
197 F.3d 348 (9th Cir.1999) ............................................................................................ 11
FTC v. Mylan Labs., Inc.,
62 F. Supp. 2d 25 (D.D.C. 1999) ................................................................................... 38
FTC v. Ticor Title Ins. Co,
504 U.S. 621 (1992) ....................................................................................................... 35
Howard Jarvis Taxpayers Assn v. City of Roseville
97 Cal.App.4th 63748 (200 ............................................................................................ 17
Gant v. County of Los Angeles
765 F.Supp.2d 1238 (C.D.Cal.2011).............................................................................. 50
General Telephone Co. of Southwest v. Falcon,
457 U.S. 147 (1982) ....................................................................................................... 43
Griffith v. City of Santa Cruz,
207 Cal. App. 4th 982,(2012) ......................................................................................... 52
Griggs v. Duke Power Co.,
401 U.S. 424, 91 S.Ct. 849, 28 L.Ed.2d 158 (1971) ...................................................... 49
Grotenhuis v. County of Santa Barbara,
182 Cal.App.4th 1158 (2010) ......................................................................................... 25
Hallie v. Eau Claire,
471 U.S. 34 (1985) ......................................................................................................... 36
Hanon v. Dataproducts Corp.,
976 F. 2d 497 (9th Cir. 1992) ......................................................................................... 43
Hells Canyon Pres. Council v. U.S. Forest Serv.,
403 F.3d 683 (9th Cir. 2005) ............................................................................................ 1
Hessel v. O'Hearn,
977 F.2d 299 (7th Cir. 1992) .......................................................................................... 56
Hi-Voltage Wire Works, Inc. v. City of San Jose,
24 Cal.4th 537 (2000) ..................................................................................................... 19

vii

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Holloway v. Magness,
666 F.3d 1076 (8th Cir. 2012) .......................................................................................... 4
Homebuilders Association of Tulare/Kings Counties, Inc. v. City of LeMoore,
185 Cal.App.4th 554 (2010) ........................................................................................... 22
Hoover v. Ronwin,
466 U.S. 558 (1984) ....................................................................................................... 35
Horne v. Dept. of Agriculture,
135 S. Ct. 2419 (2015) ....................................................................................... 28, 31, 32
Hospital Bldg. v Co. v. Trustees of Rex Hosp.,
425 U.S. 738 (1976) ................................................................................................. 41, 42
Howard Jarvis Taxpayers Assn. v. City of La Habra,
25 Cal.4th 809 (2001) ..................................................................................................... 24
Hrdlicka v. Reniff,
631 F.3d 1044 (9th Cir. 2001) ........................................................................................ 11
Hutchings v. Corum,
501 F.Supp. 1276 (W.D. Mo. 1980)................................................................................. 9
Illinois Brick Co. v. Illinois,
431 U.S. 720, 97 S. Ct. 2061, 52 L. Ed. 2d 707 (1977) ................................................. 38
In re Exxon Valdez,
484 F.3d 1098 (9th Cir. 2007) ........................................................................................ 54
In re Flash Memory Antitrust Litig.,
643 F. Supp. 2d 1133 (N.D. Cal. 2009) ......................................................................... 39
In re Grimes,
208 Cal.App.3d 1175 (1989) .......................................................................................... 12
In re Online DVD-Rental,
779 F.3d 914 (9th Cir. 2015) .......................................................................................... 44
Jacks v. City of Santa Barbara,
349 P.3d 1066 (Cal. 2015).............................................................................................. 53

viii

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Javor v. State Board of Equalization,
12 Cal.3d 790 (1974) ...................................................................................................... 26
Johnson v. Galli,
596 F.Supp. 135 (D. Nev. 1984) .......................................................................... 4, 12, 13
Johnson v. State of Cal.,
207 F.3d 650 ( 9th Cir. 2000) ....................................................................................... 4, 6
Jones v. Bock,
549 U.S. 199, 127 S. Ct. 910, 166 L. Ed. 2d 798 (2007) ............................................... 54
Jones v. N.C. Prisoners’ Labor Union, Inc.,
433 U.S. 119 (1977) ....................................................................................................... 10
Jordan v. Gardner,
986 F.2d 1521 (9th Cir. 1993) ........................................................................................ 10
Keenan v. Hall,
83 F.3d 1083 (9th Cir. 1996) .................................................................................... 4, 6, 9
King v. Zamiara,
788 F.3d 207 (6th Cir. 2015) .......................................................................................... 57
Kleindiest v. Mandel,
408 U.S. 753 (1972) ....................................................................................................... 12
Klicker v. Northwest Airlines, Inc.,
563 F.2d 1310 (9th Cir. 1977) .......................................................................................... 3
Koontz v. St. Johns River Water Mgmt. Dist.,
133 S. Ct. ................................................................................................................. passim
Leathers v. Medlock,
499 U.S. 439 (1991) ......................................................................................................... 8
Lennar Mare Island, LLC v. Steadfast Ins. Co.,
139 F.Supp. 3d 1141 (E.D. Cal. 2015) ............................................................... 46, 47, 48
Lierboe v. State Farm Mut. Auto Ins. Co.,
350 F3d 1018 (9th Cir. 2003) ......................................................................................... 43

ix

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Lomayaktewa v. Hathaway,
520 F.2 1324 (9th Cir. 1975) .......................................................................................... 46
Loretto v. Teleprompter Manhattan CATV Corp.,
458 U.S. 419 (1982) ....................................................................................................... 32
Makah Indian Tribe v. Verity,
910 F.2d 555 (9th Cir. 1990) .................................................................................... 45, 47
Marsh v. Alabama,
326 U.S. 501 (1946) ......................................................................................................... 8
Marsh v. Edwards Theatres Circuit, Inc.,
64 Cal.App.3d 881 (1976) .............................................................................................. 49
Martin v. Struthers,
319 U.S. 141 (1943) ......................................................................................................... 8
Massachusetts v. United States,
435 U.S. 444 (1978) ....................................................................................................... 30
McGuire v. Ameritech Servs, Inc.,
253 F.Supp.2d 988 (2003) ....................................................................................... passim
McKibben v. McMahon,
No. EDCV1402171JGBSPX, 2015 WL 10382396 (C.D. Cal. Apr. 17, 2015) ............. 51
McLain v. Real Estate Bd.,
444 U.S. 232 (1980) ....................................................................................................... 40
McWilliams v. City of Long Beach,
56 Cal. 4th 613, 300 P.3d 886 (2013) ............................................................................ 24
Memphis Community School District v. Stachura,
477 U.S. 299 ................................................................................................................... 56
Mercado v. McCarthy,
2009 WL 799465 (D.Mass. March 25, 2009) ................................................................ 55
Miami Herald Publ’g Co. v. Tornillo,
418 U.S. 241 (1974) ....................................................................................................... 28

x

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Minneapolis Star & Tribune Co. v. Minnesota Commissioner of Revenue,
460 U.S. 575 (1983) ......................................................................................................... 7
Monongahela Navigation Co. v. United States,
148 U.S. 312 (1893) ....................................................................................................... 29
Morning Star Co. v. Bd. of
Education, 201 Cal.App.4th 737 (2011) ..................................................................... 6, 17
Murdock v. Pennsylvania,
319 US 105 (1943) ........................................................................................................... 7
Musick v. Burke,
913 F.2d 1390 (9th Cir. 1990) ........................................................................................ 39
N.G. v. Connecticut,
382 F.3d 225 (2d Cir.2004) ............................................................................................ 13
Nat. Res. Def. Council v. Kempthorne,
539 F. Supp. 2d 1155 (E.D. Cal. 2008) .......................................................................... 47
Nat’l Awareness Found. v. Abrams,
50 F.3d 1159 (2d Cir. 1995) ............................................................................................. 7
Nelson v. City of Los Angeles,
2015 WL 1931714 (C.D. Cal. 2015) .......................................................................... 5, 11
New York State Thruway Auth. v. Level 3 Communications, LLC,
734 F.Supp.2d 257 (N.D.N.Y. 2010) ............................................................................... 4
Newhall County Water District v. Castaic Lake Water Agency,
243 Cal.App.4th 1430 (2016) ................................................................................... 18, 20
Oliver v. Keller,
289 F.3d 623 (9th Cir.2002) ........................................................................................... 56
Pacific Palisades Bowl Mobile Estates, LLC v. City of Los Angeles,
55 Cal.4th 783 (2012) ..................................................................................................... 50
Parks v. Watson,
716 F.2d 646 (1983) ................................................................................................. 29, 31

xi

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Parrish v. Johnson,
800 F.2d 600 (6th Cir. 1986) .......................................................................................... 57
Parthemore v. Col,
221 Cal. App. 4th 1372, 165 Cal. Rptr. 3d 367 (2013) ............................................ 54, 55
People ex rel. Harris v. Rizzo,
214 Cal. App. 4th 921, 154 Cal. Rptr. 3d 443 (2013) .................................................... 34
People v. Stringham,
206 Cal.App.3d 184, 253 Cal.Rptr. 484 (1988) ............................................................. 19
People v. Superior Court (Pearson),
48 Cal.4th 564, (2010) .................................................................................................... 19
Perry v. Sinderman,
408 U.S. 593 (1972) ....................................................................................................... 28
Phillips v. Wash. Legal Found.,
524 U.S. 156 (1998) ....................................................................................................... 29
Phoebe Putney,
122 S. Ct., 1003 (2013) ............................................................................................. 35, 36
Pinhas v. Summit Health, Ltd.,
894 F.2d 1012 (9th Cir. 1989) ......................................................................................... 43
Pitts v. Thornburgh,
866 F.2d 1450 (D.C. Cir. 1989) ..................................................................................... 10
Police Dep’t of City of Chicago v. Mosley,
408 U.S. 92 ..................................................................................................................... 34
Ponderosa Homes, Inc. v. City of San Ramon,
23 Cal.App.4th 1761 (1994) ........................................................................................... 23
Prison Legal News v. Cook,
238 F.3d 1145 (9th Cir. 2001) ........................................................................................ 11
Professional Engineers in California Government v. Kempton,
40 Cal.4th 1016 (2007) ................................................................................................... 19

xii

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Reading Indus., Inc. v. Kennecott Copper Corp.,
477 F. Supp. 1150 (S.D.N.Y. 1979) ............................................................................... 39
Rhoades v. Avon Prods., Inc.,
504 F.3d 1151 (9th Cir. 2007) .......................................................................................... 2
Richards v. Jefferson County, Alabama,
517 U.S. 793 (1996) ....................................................................................................... 26
Riker v. Lemon,
798 F.3d 546 (7th Cir. 2015) ............................................................................................ 5
Romer v. Evans,
517 U.S. 620, 116 S. Ct. 1620, 134 L. Ed. 2d 855 (1996) ............................................... 8
Rufo v. Inmates of Suffolk County Jail,
502 U.S. 367, 112 S.Ct. 748, 116 L.Ed.2d 867 (1992) .................................................. 13
Salt River Project Agr. Imp. & Power Dist. v. Lee,
672 F.3d 1176 (9th Cir. 2012) .................................................................................. 45, 48
San Diego & Electric Co. v. San Diego Air Pollution Control Dist.,
203 Cal.App.3d 1132 (1988) .......................................................................................... 53
Santos v. Brown,
238 Cal. App. 4th 398, (2015) ........................................................................................ 19
Schmeer v. County of Los Angeles,
213 Cal.App.4th 1310 (2013) ................................................................................... 15, 53
Schneider v. Dep’t of Corr.,
151 F.3d 1194 (9th Cir. 1998) ........................................................................................ 29
Scol Corp v. City of Los Angeles,
12 Cal.App.3d 805.......................................................................................................... 25
Sentinel Communications Co. v. Watts,
936 F2d 1189 (11th Cir. 1991) ......................................................................................... 7
Shakur v. Schriro,
514 F.3d 878 (9th Cir. 2008) ............................................................................................ 5

xiii

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Shoyoye v. County of Los Angeles,
203 Cal. App. 4th 947 (2012) ................................................................................... 50, 51
Silicon Valley Taxpayers Ass’n, Inc. v. Santa Clara Open Space Authority,
44 Cal.4th 431 (2008) ..................................................................................................... 15
Sinaloa Lake Owners Ass'n v. City of Simi Valley,
882 F.2d 1398 (9th Cir. 1989) .................................................................................. 34, 35
Sinclair Paint Co. v. State Bd. of Equalization,
15 Cal. 4th 866, 937 P.2d 1350 (1997) .............................................................. 17, 21, 53
Sipple v. City of Hayward,
225 Cal.App.4th 349 (2014) ..................................................................................... 24, 25
Spicer v. City of Camarillo,
195 Cal. App. 4th 1423 (2011) ....................................................................................... 50
Stanburg v.City of Helena,
791 F.2d 744 (9th Cir. 1986) ............................................................................................ 4
State Dep’t of Public Health v. Superior Court,
60 Cal.4th 940 (2015) ............................................................................................... 49, 50
Stone St. Capital, LLC v. California State Lottery Comm'n,
165 Cal. App. 4th 109, 80 Cal. Rptr. 3d 326 (2008) ...................................................... 21
Stone v. City and County of San Francisco,
968 F.2d 850 (9th Cir.1992) ........................................................................................... 13
Summit Health, Ltd. v. Pinhas,
500 U.S. 322 (1991) ................................................................................................. 40, 41
Tex & Pac. Ry. Co. v. Abilene Cotton Oil Co.,
204 U.S. 426 (1907) ......................................................................................................... 2
Thornburgh v. Abbott,
490 U.S. 401 (1989) ............................................................................................... 5, 9, 11
Tiburon v. Bonander,
180 Cal.App.4th 1057 (2009) ......................................................................................... 14

xiv

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21

TK’s Video, Inc. v. Denton County, TX,
24 F.3d 705 (5th Cir. 1994) .............................................................................................. 7
Todorov v. DCH Healthcare Auth.,
921 F.2d 1438 (11th Cir. 1991) ...................................................................................... 39
Torres v City of Yorba Linda,
13 Cal.App.4th 1035 (1993) ........................................................................................... 25
TracFone Wireless, Inc. v. County of Los Angeles,
163 Cal.App.4th 1359 (2008) ................................................................................... 25, 26
Turner v. Safley,
482 U.S. 78 (1987) ..................................................................................................... 9, 11
Union Pacific Railroad Co. v. Public Service Commission of Missouri,
248 U.S. 67 (1918) ......................................................................................................... 31
United States v. Bowen,
172 F.3d 682 (9th Cir. 1999) .......................................................................................... 47
United States v. General Dynamics,
Inc. 828 F.2d 1356 (9th Cir. 1987) ................................................................................... 4
United States v. Henderson,
416 F.3d 686 (8th Cir. 2005) ............................................................................................ 2
United States. v. Sperry Corp.,
493 U.S. 52 ..................................................................................................................... 30
United States v. Women's Sportswear Mfg. Ass'n (U.S. Reports Title: U.S. v. Women's

22

Sportswear Mfrs. Ass'n),

23

336 U.S. 460, 69 S. Ct. 714, 93 L. Ed. 805 (1949) ........................................................ 42

24
25
26
27
28

Van Den Bosch v. Raemisch,
658 F.3d 778 (7th Cir. 2011) ............................................................................................ 5
Vance v. Barrett,
345 F.3d 1083 (9th Cir. 2003) .................................................................................. 28, 30
Vignolo v. Miller,
120 F.3d 1075 (9th Cir. 1997) ........................................................................................ 28
xv

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

Village of Euclid v. Ambler Realty Co.,
272 U.S. 365, 47 S.Ct. 114, 71 L.Ed. 303 (1926) .......................................................... 35
Villanueva v. George,
659 F.2d 851 (8th Cir. 1981) .......................................................................................... 56
Wal-Mart Stores, Inc. v. Dukes,
564 U.S. 338, 131 S. Ct. 2541, 180 L. Ed. 2d 374 (2011) ............................................. 43
Walje v. City of Winchester, Ky.,
773 F.2d 729 (6th Cir. 1985) .......................................................................................... 56
Washington v. Reno,
35 F.3d 1093 (6th Cir. 1994) ............................................................................................ 4
Webb’s Fabulous Pharmacies, Inc. v. Beckwith,
449 U.S. 155 (1980) ....................................................................................................... 29
Western Waste Service Systems v. Universal Waste Control,
616 F.2d 1094 (9th Cir. 1980) .................................................................................. 40, 41
Williamson Cty. Reg'l Planning Comm'n v. Hamilton Bank of Johnson City,
473 U.S. 172, 105 S. Ct. 3108, 87 L. Ed. 2d 126 (1985) ......................................... 32, 33
Yamagiwa v. City of Half Moon Bay,

18

523 F.Supp.2d 1036 (N.D.Cal.2007) ............................................................................. 33

19
20

Statutes
28 U.S.C., 1367(C)(1) ........................................................................................................ 52

21

42 U.S.C. §1997e(e)........................................................................................................... 57

22

Cal. Const., art XIII A ........................................................................................................ 14

23

Cal. Rev & Tax Code § 5721 ............................................................................................. 23

24

Cal. Rev & Tax Code § 8651 (a) ....................................................................................... 23

25

Civil Code § 52.1 .................................................................................................ii, 1, 50, 51

26

Gov. Code § 11139 ............................................................................................................ 49

27

Government Code section 11135 .......................................................................ii, 49, 50, 52

28

Government Code section 820.2 ........................................................................................ 34
Penal Code § 4025 ................................................................................................. 13, 49, 50
xvi

1

Penal Code § 4025 (d)........................................................................................................ 37

2
3

Rules
Fed. R. Civ. P. 19(a)(1)(A) ................................................................................................ 45

4

Fed. R. Civ. P. 19(a)(1)(B)(i)............................................................................................. 45

5

Fed. R. Civ. P. 19(a)(1)(B)(ii)............................................................................................ 45

6

Rule 19 ............................................................................................................................... 47

7

Rule 19(a) ..................................................................................................................... 45, 48

8
9

Regulations
22 Cal. Code Regs. § 98101 (i) .......................................................................................... 49

10

372 Cal.Code Regs., tit. 15, §§ 3084.1–3084.7 ................................................................. 54

11
12

Other Authorities
1 McLaughlin on Class Actions § 4:28 .............................................................................. 56

13

Drawing the Line Between Taxes and Takings: The Continuous Burdens Principle, and

14

Its Broader Application,

15

97 Nw. U. L. Rev. 189 (2002) ........................................................................................ 38

16

Prop 218 ............................................................................................................................. 53

17

Proposition 26 (2010)......................................................................................................... 15

18

The Implications of Lingle on Inclusionary Zoning and other Legislative and Monetary

19

Exactions,

20

28 Stan.Envtl. L.J. 397 (2009)........................................................................................ 36

21
22
23
24

Rates for Interstate Inmate Calling Services,
28 FCC Rcd 14107 (2013) ............................................................................................... 1
Rates for Interstate Inmate Calling Services,
30 FCC Rcd 12763 (Nov. 5, 2015) .................................................................................. 1

25
26
27
28

xvii

1

I.

2

INTRODUCTION
Defendants challenge Plaintiffs’ claims on every conceivable front. To

3

begin, Plaintiffs advise the Court that they will not pursue the Federal

4

Communications Act (“FCA”) claim. The appropriate vehicle to dismiss a claim as

5

opposed to a whole action is to abandon the claim by filing an amended complaint

6

under Rule 15. See, e.g., Hells Canyon Pres. Council v. U.S. Forest Serv., 403 F.3d

7

683, 687 (9th Cir. 2005). Accordingly, Plaintiffs will file an amended complaint

8

without the FCA claim after the Court rules on the pending motion (along with any

9

other changes if ordered by the Court).

10

As to Defendants’other arguments, they are not well-taken. Particularly in

11

light of the abandonment of the FCA claim, Defendants’ reliance on the primary

12

jurisdiction rule (that the FCC exclusively sets rates) is inapplicable. Plaintiffs do

13

not seek to set rates but argue that the Counties’ conduct as a government entity

14

violates their rights for multiple reasons. There is ample authority for

15

Plaintiffs’federal First Amendment, unconstitutional conditions/takings and

16

Sherman Act claims, as there is for Plaintiffs’ state law tax, disparate impact, and

17

Civil Code § 52.1 claims. These are all discussed at length in the body of the

18

Memorandum. (Because of the interconnection between the First Amendment and

19

state tax claims, we have positioned the state tax discussion immediately after the

20

First Amendment. Finally, Plaintiffs’ state law claims do not involve novel and

21

complex questions over which this Court should decline to exercise jurisdiction.

22

II.

24

THE PRIMARY JURISDICTION RULE DOES NOT APPLY
BECAUSE THE FCC ALREADY HAS ISSUED ITS ORDERS ON
THIS VERY ISSUE

25

Because, as noted, Plaintiffs are dismissing their FCA claim, primary

26

jurisdiction should no longer be at issue. Further, because the FCC has now acted

27

on both the intrastate and interstate call issues, Rates for Interstate Inmate Calling

28

Services, 28 FCC Rcd 14107 (2013) (2013 Order); Rates for Interstate Inmate

23

1

1

Calling Services, 30 FCC Rcd 12763 ¶ 9 (Nov. 5, 2015), the policy considerations

2

deferring to the FCC have been met. The FCC has provided the necessary

3

“analysis and guidance.” See Wright v. Corrections Corporation of America, et al.,

4

No. 00-cv-0293-GK (D.D.C) (class action complaint filed in 2000 dismissed until

5

FCC action under the “primary jurisdiction” doctrine).1

6

A.

7

“Primary jurisdiction applies in a limited set of circumstances.” Clark v.

STANDARDS FOR PRIMARY JURISDICTION

8

Time Warner Cable, 523 F.3d 1110, 1114 (9th Cir. 2008). See also United States v.

9

Henderson, 416 F.3d 686, 691 (8th Cir. 2005) (The doctrine of primary jurisdiction

10

“should be used sparingly.”). The doctrine is used only if a claim “requires

11

resolution of an issue of first impression, or of a particularly complicated issue that

12

Congress has committed to a regulatory agency. Brown v. MCI WorldCom

13

Network Servs., 277 F.3d 1166, 1172 (9th Cir. 2002) (citing Tex & Pac. Ry. Co. v.

14

Abilene Cotton Oil Co., 204 U.S. 426, 442 (1907) (emphasis added). Invoking

15

primary jurisdiction is disfavored if it would needlessly delay resolution of claims.

16

E.g., Rhoades v. Avon Prods., Inc., 504 F.3d 1151, 1165 (9th Cir. 2007)

17

(“efficiency” is the “deciding factor” in whether to invoke primary jurisdiction).

18
19
20
21
22
23
24
25
26
27

1

In March 2016, the US Court of Appeals for the District of Columbia stayed the
implementation of the rate caps in the 2015 Order, but did not stay the limits on ancillary
fees. Global Tel*Link v. Federal Communications Commission, et al., Case No. 15-1461,
Dkt No. 1602581 (D.C. Cir. Mar. 7, 2016). Effective June 20, 2016, there will be caps on
the per-minute rates for interstate calls and limits on ancillary fees. Therefore, any ruling
by the D.C. Circuit will not have any effect on the 2013 Order or much of the 2015
Order. Furthermore, although the D.C. Circuit may find that the “hard caps” for intrastate
rates should be prospectively increased from the caps ordered by the FCC, the court’s
decision will have no effect on the dispositive issue in Plaintiffs’ claim, the FCC’s
conclusion that the previous rates violated Sections 201 and 276 of the FCA. Compare
Fontes v. Time Warner Cable, 2015 U.S. Dist. Lexis 169580, at *8 (C.D. Cal. 2015)
(noting that the Court of Appeal’s ruling may vacate the FCC’s ruling on “many
dispositive issues in the case”).

28

2

1

Primary jurisdiction is improper where an agency has already decided the issue.

2

See, e.g., Klicker v. Northwest Airlines, Inc., 563 F.2d 1310, 1313 (9th Cir. 1977)

3

Fontan-de-Maldonado v. Lineas Aeras Costarricenses, S.A., 936 F.2d 630, 631

4

(1st Cir. 1991) (“Of course, if the agency has already announced its views, there is

5

no need to apply the [primary jurisdiction] doctrine”) (emphasis added). Given the

6

FCC proceedings that have already transpired, there remains no issue in this

7

litigation that should or must be referred to the FCC. 2

8

B.

9
10
11
12
13
14
15
16
17
18

ANOTHER DISTRICT COURT ALREADY DENIED THE SAME
ARGUMENT WITH EVEN LESS INPUT FROM THE FCC THAN THIS
COURT HAS BEFORE IT.

In January 2015, before the FCC issued its 2015 Order concerning intrastate
rates, a District Court in Arkansas, presiding over the consolidated nationwide
class action against Securus and GTL alleging unjust and unfair rates in violation
of the FCA, denied Defendants’ Motion for Stay based on primary jurisdiction. See
Request for Judicial Notice, Ex. 6, (Securus v. Mojica, Case No. 5:14-cv-5258TLB, Doc. 36 (W.D. AK Jan. 29, 2015) (FCC had “already made available a good
deal of [its] expertise” by Nov. 13). In contrast, this Court now has the benefit of
both FCC Orders – concerning interstate and intrastate rates.
C.

19
20
21

THE PRIMARY JURISDICTION DOCTRINE WOULD ONLY APPLY TO
PLAINTIFFS’ FEDERAL COMMUNICATIONS ACT CAUSE OF ACTION
IF THEY WERE PURSUING IT.

Other than the to be dismissed FCA claim, Plaintiffs’ Complaint does not

22

implicate the primary jurisdiction doctrine because the only technical issue within

23

the FCC’s expertise is whether the rates violate Sections 201 and 276 of the

24

Federal Communications Act. The other causes of action concern legal questions

25
26
27
28

2

Nearly all of the cases relied on by Defendants at pages 6-7 of their Motion are
misplaced either because they were decided years before the applicable FCC Orders
concerning inmate phone rates (Mot. at 6:17-24) or because, as Defendants note, the
respective court issued its order while the FCC was still considering the particular issue
before that court. Mot. at 7:7-12.

3

1

implicating the United States and California constitutions, the Sherman Antitrust

2

Act, and certain California statutes. See, e.g., Brown, 277 F.3d at 1172 quoting

3

United States v. General Dynamics, Inc. 828 F.2d 1356, 1365 (9th Cir. 1987)

4

(“primary jurisdiction is properly invoked when a case presents a far-reaching

5

question that requires expertise or uniformity in administration”). 3 Since, for

6

reasons unrelated to primary jurisdiction, Plaintiffs are not pursuing their FCA

7

claim, the Court need not spend time on it.

8

III.

9
10
11
12
13
14
15
16
17

THE IMPOSITION OF THE UNLAWFUL TAX
UNCONSTITUTIONALLY BURDENS PLAINTIFFS’ FIRST
AMENDMENT RIGHT TO FREE SPEECH
In contrast to Defendants’ contentions, inmates do “have a First Amendment

right to telephone access” under Ninth Circuit law (in contrast to other circuits) 4
which right is subject to “reasonable limitations arising from the legitimate
penological and administrative interests of the prison system.” Johnson v. State of
Cal., 207 F.3d 650, 656 ( 9th Cir. 2000).5 Defendants misdirect the issue by
arguing that “prisoners are [not] entitled to a specific rate for their telephone calls.”
Mot. at 14:5-8 (citing Johnson). 6 However, Plaintiffs do not seek to set specific

18
19
20
21
22
23
24
25
26
27
28

3

See also, e.g.,, Allnet Communication Serv., Inc. v. National Exch. Carrier Ass’n, Inc.,
965 F.2d 1118, 1121 (D.C. Cir. 1992); New York State Thruway Auth. v. Level 3
Communications, LLC, 734 F.Supp.2d 257, 267-71 (N.D.N.Y. 2010) (doctrine
inapplicable to “questions within the conventional competence of the courts”).
4
Defendants rely on cases from outside the Ninth Circuit that inmates have no First
Amendment right to even speak on the telephone. Holloway v. Magness, 666 F.3d 1076
(8th Cir. 2012); Arsberry v. Illinois, 244 F.3d 558, 566 (7th Cir. 2001). But Johnson
expressly holds that inmates do have such a First Amendment right, rendering these cases
inapposite.
5
See also e.g., Keenan v. Hall, 83 F.3d 1083, 1092 (9th Cir. 1996) (“Prisoners have a
First Amendment right to telephone access, subject to reasonable security limitations”)
(emphasis added); Stanburg v. City of Helena, 791 F.2d 744, 747 (9th Cir. 1986) (same);
Washington v. Reno, 35 F.3d 1093, 1100 (6th Cir. 1994); Johnson v. Galli, 596 F.Supp.
135, 138 (D. Nev. 1984).
6
Defendants cite to several decisions that used this exact quote to summarily dismiss
First Amendment challenges based on the cost of the phone calls. However, none of these

4

1

phone rates, but challenge the burden on first amendment rights that the County

2

Defendants’ policies and practices impose. Plaintiffs contend that the amount of the

3

telephone charges given to the County Defendants must not prohibit reasonable

4

telephone access and must be related to legitimate penological interests of the

5

prison system, namely security. 7

6

Plaintiffs have alleged that the commissions imposed by the County

7

Defendants “fleece” those who have to pay, are “unconscionable,” are mere

8

“money-making schemes,” constitute a form of “extortion,” are “unreasonable,

9

unjust and exorbitant,” and are “not reasonably related to their costs.” Whether the

10

charges constitute “reasonable limitations arising from the legitimate penological

11

and administrative interests” (Johnson) requires a factual record not yet before the

12

Court. See, e.g., McGuire v. Ameritech Servs, Inc., 253 F.Supp.2d 988, 1001-02

13

(2003) (it would be improper to dismiss the First Amendment and equal protection

14

claims in similar case on a motion to dismiss).8

15
16
17
18
19
20
21
22
23
24
25
26
27
28

decisions followed the Ninth Circuit’s mandate to consider whether the rates were
“reasonable” and related to “legitimate penological and administrative interests of the
prison system.” See Shakur v. Schriro, 514 F.3d 878, 885 (9th Cir. 2008) (noting that a
court must balance the four Turner factors and it is “insufficient” to simply rely on other
decisions holding that the same prison regulation was rationally related to legitimate
penological interests).
7
Moreover, there is a class of call recipient inmates, largely family members, to whom
no penological considerations apply. The Court must also consider the burden on them,
too, as they must have the ability to “exercise[e] their own constitutional rights by
reaching out to those on the inside.’” Thornburgh v. Abbott, 490 U.S. 401, 407 (1989).
8
; See also, e.g., Nelson v. City of Los Angeles, 2015 WL 1931714, at *14 (C.D. Cal.
2015) (denying Motion to Dismiss claim that Defendant’s policy of limiting mail to
postcards violated First Amendment rights; “[nothing in the [Complaint] indicate[d] that
any penological interest was furthered by the… policy or shows that the policy was
reasonably related to that interest”); Riker v. Lemon, 798 F.3d 546, 553 (7th Cir. 2015)
(quoting Van Den Bosch v. Raemisch, 658 F.3d 778, 785 (7th Cir. 2011) (while prisoner
has the burden of persuasion “to disprove validity of a legitimate governmental interest in
the regulation,’ prison officials ‘must still articulate their legitimate governmental interest
in the regulation’ and provide some evidence supporting their concern’”); Beerheide v.

5

1

Plaintiffs intend to prove, as shown below, that the increase in rates based on

2

the commissions have no reasonable relationship to “legitimate penological and

3

administrative interests of the prison system,” Johnson, 207 F.3d at 656, including

4

any security concerns. Keenan v. Hall, 83 F.3d at 1092 , opinion amended on

5

denial of reh'g, 135 F.3d 1318 (9th Cir. 1998). Indeed, jail administrators have no

6

input on the rates. Rather, the rates are set by some combination of the phone

7

companies and the County Boards of Supervisors, not the jails. The phone

8

companies are selected by the respective County’s Board of Supervisors based

9

solely on which company offers the highest commission. On its face, this carries an

10

initial burden of persuasion to establish that the rates and commissions are not

11

based on legitimate penological interests.

12

Further, the Complaint unequivocally alleges that the rates are not

13

“reasonable,” including that the Federal Communications Commission itself has

14

expressly concluded that the phone rates at issue were not reasonable, and that the

15

site commissions were a significant factor causing the high rates. Complaint, ¶¶ 4,

16

32, 82. None of the cases relied upon by Defendants had the benefit of the FCC’s

17

definitive conclusions that the charges were unjust and unreasonable.

18

An “excessive fee that is used to generate general revenue becomes a tax.”

19

Morning Star Co. v. Bd. of Education, 201 Cal.App.4th 737, 751 (2011). The

20

Complaint also alleges that the commission is a tax under California law. See

21

Article IV, infra. Therefore, this case presents an issue not presented in Johnson or

22

any other First Amendment challenges to inmate phone service charges: Whether,

23

as a tax, the commissions impose an unconstitutional burden upon Plaintiffs’ First

24

Amendment rights even if it would not so qualify if it were not a tax.

25
26
27
28

Suthers, 286 F.3d 1179, 1189 (10th Cir. 2002) (“prison officials must present credible
evidence to support their stated penological goals”) (emphasis in original).

6

1

A.

2

THE COMMISSION IS AN IMPERMISSIBLE TAX IMPOSED ON
PLAINTIFFS’ FIRST AMENDMENT RIGHTS TO FREE SPEECH.

3

“A tax that burdens rights protected by the First Amendment cannot stand

4

unless the burden is necessary to achieve an overriding governmental interest.”

5

Minneapolis Star & Tribune Co. v. Minnesota Commissioner of Revenue, 460 U.S.

6

575, 582 (1983) (emphasis supplied).9 Therefore, the government may not impose

7

a fee not reasonably related to the regulatory costs incurred in regulating

8

expressive activity. Murdock v. Pennsylvania, 319 US 105 (1943).
In Murdock, the Supreme Court struck down a licensing fee for distributing

9
10

literature because it was not “imposed as a regulatory measure to defray the

11

expenses of policing the activities in question,” but rather served as “a flat license

12

tax levied and collected as a condition to the pursuit of activities whose enjoyment

13

is guaranteed by the First Amendment.” Id. at 113-14. Since Murdock, courts have

14

consistently struck down taxes that go beyond defraying related costs, and actually

15

tax speech. 10 Here, the tax is unrelated to the government’s cost to provide inmate

16
17
18
19
20
21
22
23
24
25
26
27
28

9

Even in Arsberry v. Illinois, supra, Judge Posner acknowledged that Minneapolis Star
applies if there is a First Amendment right at issue. Arsberry, 244 F.3d at 564 (the “vital
distinction” between Minneapolis Star and Arsberry is that the newspaper
communications at issue in Minneapolis Star were protected by the First Amendment
while the telephone calls in Arsberry were not”). Unlike the Seventh Circuit, the Ninth
Circuit has held that there is such a right.
10
See, e.g., Baldwin v. Redwood City, 540 F2d 1360, 1371 (9th Cir. 1976) (striking down
fees on postering; the fee is not in fact reimbursement for the cost of inspection but an
unconstitutional tax upon the exercise of First Amendment rights”); TK’s Video, Inc. v.
Denton County, TX, 24 F.3d 705 (5th Cir. 1994) (“Government can’t tax first amendment
rights, but it can extract narrowly tailored fees to defray administrative costs of
regulation”) (emphasis supplied); Nat’l Awareness Found. v. Abrams, 50 F.3d 1159, 1165
(2d Cir. 1995) (“Thus, fees that serve not as revenue taxes, but rather as means to meet
the expenses incident to the administration of a regulation and to the maintenance of
public order in the matter regulated are constitutionally permissible”); Sentinel
Communications Co. v. Watts, 936 F2d 1189, 1205 (11th Cir. 1991) (holding that “[t]he
government may not profit by imposing licensing or permit fees on the exercise of First
Amendment rights”); Eastern Conn. Citizen Action Group v. Powers, 723 F2d 1050,
1056 (2d Cir. 1983).

7

1

phone services, taxes speech and passes the tax revenue through to each respective

2

County for their Inmate Welfare Funds.
Furthermore, this tax was not passed legally or through any democratic

3
4

process at all. By circumventing Proposition 26, the County imposed a tax that

5

only applies to a constituency, inmates and their families, who are without the

6

popular support to fight back through the political process. Cf., e.g., Battle v.

7

Anderson 564 F.2d388, 398 (10th Cir. 1977) (plaintiffs in prisoner class actions

8

“are generally a feared and despised class”). 11 This concern has been

9

acknowledged by the Supreme Court. See Leathers v. Medlock, 499 U.S. 439, 445

10

(1991) ( “[T]he general applicability of any burdensome tax law helps to ensure

11

that it will be met with widespread opposition. When such a law applies only to a

12

single constituency, however, it is insulated from the political constraint”).12

13

Finally, the impact on Plaintiffs’ First Amendment rights is correlated with

14

their financial means. Those with more money can absorb the cost of the tax and

15

enjoy more phone communication than the poor, who compose the majority of the

16

inmate population and are disproportionately affected by this tax. This is a

17

recognized consideration when adjudicating First Amendment rights. See, e.g.,

18

Martin v. Struthers, 319 U.S. 141, 146 (1943) (striking down ban on door-to-door

19

distribution of circulars in part because it was “essential to the poorly financed

20

causes of [the speakers”); Marsh v. Alabama, 326 U.S. 501 (1946).
B.

22

THE COURT SHOULD REVIEW THE TAX UNDER HEIGHTENED
SCRUTINY.

23

Federal law provides deference to correctional authorities when it comes to

21

24
25
26
27
28

security and maintaining order. However, that deference is not absolute, and the
11

Morales Feliciano v. Hernandez Colon, 697 F.Supp.51, 60 (D. Puerto Rico 1988)
(“The general population's attitude toward those who commit or are accused of
committing crimes is understandably one bordering in despise”).
12
Cf. Romer v. Evans, 517 U.S. 620, 634, 116 S. Ct. 1620, 1628, 134 L. Ed. 2d 855
(1996) (laws aimed at gays and lesbians “raise the inevitable inference that the
disadvantage imposed is born of animosity toward the class of persons affected”).

8

1

reasons for that deference are not present in this case. The commissions, which are

2

admittedly for the purpose of raising funds to support the jails’ operation, do not

3

further a penological interest at all. See Turner v. Safley, 482 U.S. 78, 107 (1987)

4

(must be a “logical connection between the regulation and the asserted

5

[penological] goal”).13 Simply stated, the tax does not implicate security needs or

6

intrude into the “day to day” judgments of prison officials. In fact, as discussed

7

above, prison officials do not make any determination concerning the commissions

8

or phone rates. Therefore, this tax burdening First Amendment rights should not be

9

analyzed under the more deferential Turner standard, in which the court

10

determined that “[s]ubjecting the day-to-day judgments of prison officials to an

11

inflexible strict scrutiny analysis would seriously hamper their ability to anticipate

12

security problems and to adopt innovative solutions to intractable problems of

13

prison administration.” Turner v. Safley, 482 U.S. at 89 (emphasis added).
In Thornburgh v. Abbott, 490 U.S. 401, 407 (1989), the Supreme Court

14
15

explained that the Turner rule was founded on the courts’ sensitivity “to the

16

delicate balance that prison administrators must strike between order and security

17

… and the legitimate demands of those on the ‘outside’ who seek to enter that

18

environment, in person or through written word.” Thus, “certain proposed

19

interactions, though seemingly innocuous to laymen, have potential significant

20

implications for the order and security of prison” and warranted deference to

21

prison officials “who, in the interest of security, regulate the relations between

22

prisoners and the outside world.” Id. at 408. (emphasis added).14

23
24
25
26
27
28

13

The fact that Plaintiffs are in county jails, and many are pretrial detainees, not
convicted felons, is relevant. Coronel v. State of Hawaii, Dept. of Corrections, 1993 WL
147318 at *2 (9th Cir. 1993) (distinguishing First Amendment right to telephone access
by pretrial detainees from more limited rights afforded to convicted felons).
14
See also Keenan, 83 F.3d at 1092 (“Prisoners have a First Amendment right to
telephone access, subject to reasonable security limitations”); Hutchings v. Corum, 501
F.Supp. 1276, 1296 (W.D. Mo. 1980) (“[i]t has been long held that inmates have the First
Amendment right to communicate with friends and relatives by means of visits,

9

1

In Pitts v. Thornburgh, 866 F.2d 1450 (D.C. Cir. 1989), plaintiffs challenged

2

prison policies involving “general budgetary and policy choices,” not security

3

concerns or “regulations that govern the day-to-day operations of prisons” Id. at

4

1454. Traditional intermediate scrutiny, not Turner deference, applied in analyzing

5

the validity of the regulation. Id. See also Jordan v. Gardner, 986 F.2d 1521, 1530

6

(9th Cir. 1993); Beauchamp v. Murphy, 37 F.3d 700, 704 (1st Cir. 1994). Indeed,

7

this very issue was correctly resolved in Byrd v. Goord, 2005 WL 2086321

8

(S.D.N.Y. 2005), where the Court found that phone commissions were not a prison

9

regulation related to the functioning of a prison and did not involve matters

10

“relating to security or safety.” Thus, Turner deference did not apply. The Court

11

denied motions to dismiss plaintiffs’ First Amendment, due process and equal

12

protection challenges. 2005 WL 2086321 at *8-9.

13

Defendants will have the opportunity to present evidence regarding the

14

relationship of the commissions to security and order; it is inappropriate at the

15

pleading stage. Defendants’ contention that deferential review applies to any prison

16

revenue-raising scheme would be a significant departure from the rationale of

17

Turner and Thornburgh.

18
19
20

C.

EVEN UNDER THE MORE DEFERENTIAL TURNER STANDARD, THE
TAX IS STILL UNCONSTITUTIONAL

Even applying the Turner standard, the charges/tax at issue is not reasonably

21

related to legitimate penological interests. Turner articulates four factors: (1)

22

whether the regulation is rationally related to a legitimate and neutral governmental

23

objective; (2) whether there are alternative avenues that remain open ... to exercise

24

the right; (3) the impact that accommodating the asserted right will have on other

25
26
27
28

correspondence and telephone calls,” subject only to “rational limitations in the face of
legitimate security interests of the penal institution”). Similarly, the cases relied on by
Turner and Thornburgh involved prison regulations promulgated for security reasons.
See Block v. Rutherford, 468 U.S. 576 (1984); Bell v. Wolfish, 441 U.S. 520, 548-49
(1979); Jones v. N.C. Prisoners’ Labor Union, Inc., 433 U.S. 119, 126-27 (1977).

10

1

guards and prisoners, and on the allocation of prison resources; and (4) whether the

2

existence of easy and obvious alternatives indicates that the regulation is an

3

exaggerated response by prison officials. Prison Legal News v. Cook, 238 F.3d

4

1145, 1149 (9th Cir. 2001) (citing Turner, 482 U.S. at 89).15
Turner requires “considerable deference to the expertise and decision-

5
6

making of prison administrators.” Id. (emphasis added). 16 However, Turner’s

7

“reasonableness standard is not toothless,” Thornburgh, 490 U.S. at 414. Prison

8

authorities must “show more than a formalistic logical connection between a

9

regulation and a penological objective.” Beard v. Banks, 548 U.S. 521, 535 (2006).

10

The level of scrutiny to be applied depends on the circumstances in each case.

11

Frost v. Symington, 197 F.3d 348 (9th Cir.1999). In Frost, the Ninth Circuit

12

explained that, where the inmate presents sufficient evidence to refute “a common-

13

sense connection between a legitimate objective and a prison regulation,” the

14

burden shifts to the prison, which must then “present enough counter-evidence to

15

show that the connection is not so remote as to render the policy arbitrary or

16

irrational.” Id. at 357. If the inmate fails to carry that initial burden, Turner’s first

17

prong (“reasonably related to legitimate penological interests”) is met, presuming

18

the governmental objective is legitimate and neutral. Id. But, “if the prison fails to

19

show that the regulation is rationally related to a legitimate penological objective,

20

[the court does] not consider the other factors.” Hrdlicka, 631 F.3d at 1051

21

(quoting Ashker v. Cal. Dep’t of Corr., 350 F.3d 917, 922 (9th Cir. 2003).

22
23
24
25
26
27
28

15

Most decisions applying Turner are rendered via a motion for summary judgment, not
a motion to dismiss. See, e.g., Prison Legal News, 238 F.3d at 1145 (denying Defendants’
Motion for Summary Judgment because Defendants presented no evidence that ban on
standard mail was rationally related to their purported legitimate penological objectives);
Hrdlicka v. Reniff, 631 F.3d 1044, 1050-51 (9th Cir. 2001) (same); Nelson, 2015 WL
1931714, at *14.
16
Defendants’ decision of which phone company to contract with is not based on the
expertise and decision making of prison administrators; it is based on which company is
willing to pay the highest kickback.

11

1

Here, there is no logical connection between the tax on phone calls that goes

2

to the Inmate Welfare Fund and furthering a legitmate penological objective.

3

Getting money for the jail is not a penological objective. Any connection is

4

arbitrary; the phone company is simply selected based on who offers the highest

5

commission. Finally, the tax is indisputably unrelated to security or other

6

functioning of the jail. Byrd, 2005 WL 2086321 at *9.

7

The second Turner factor (alternative means available to the prisoner) is also

8

not met. Although other mediums may play a part in free speech balancing, that

9

does not mean “the existence of other alternatives extinguishes altogether any

10

constitutional interest on the part of the [plaintiffs] in this particular form of

11

access.” Kleindiest v. Mandel, 408 U.S. 753, 765 (1972) (limitations on face-to-

12

face communications implicated the First Amendment even though books,

13

speeches, telephones and tapes provided other means of communication).

14

In 2016, the telephone is an irreplaceable means of communication and is

15

often the only means whereby Plaintiffs and class members are able to maintain

16

familiar relationships and effective counsel. Cf. In re Grimes, 208 Cal.App.3d

17

1175, 1182 (1989) (“telephone communications is essential for inmate contact with

18

attorneys.” (citing Johnson v. Galli, 596 F.Supp. at 138). The same applies to

19

personal and family contacts, especially since many inmates here are pre-trial

20

detainees. Johnson, 596 F.Supp. at 138 (“Often times use of a telephone is

21

essential for a pretrial detainee…”).

22

Letter writing is not an adequate alternative in today’s world. Today, letters

23

are rarely if ever used to communicate. “Mail service …is often ineffective,

24

particularly where an inmate requires immediate contact with an attorney.” In re

25

Grimes, 208 Cal.App.3d at 1183. Furthermore, for many people with disabilities

26

and conditions that affect their ability to write, letter writing is not an option. It is

27

not an option for the 40% of the national prison population that is illiterate. See

28

The Center on Crime, Communities & Culture, Education as Crime Prevention:

12

1

Providing Education to Prisoners 3 (Sept. 1997), available at

2

http://www.prisonpolicy.org/scans/research_brief_2.pdf.

3

Finally, “the family of a detainee or inmate may live so far away [as to make

4

personal visitation impractical.” Johnson, 596 F.Supp. 138. For example, here,

5

Plaintiff Ronnie Salazar is incarcerated in Los Angeles, but his wife and their

6

children live in Sacramento for work and child care reasons. With the distance and

7

cost of travel, the telephone is the only practical way for Star Salazar and her

8

children to hear Ronnie Salazar’s voice. Unable to yet read and write due to their

9

young age, this is the only way for their children to speak with their father.
The third Turner factor is the impact that accommodation of the

10
11

constitutional right will have on guards and other inmates. Id. Eliminating the tax

12

will have no adverse impact on the guards or inmates since it is entirely unrelated

13

to security or day to day operations at the jails; by law, all of the money must be

14

transferred to the Inmate Welfare Fund. Penal Code § 4025. Making the cost of

15

calls reasonable would, if anything, further security, improve prisoner’s behavior

16

and rehabilitation, and lead to fewer disciplinary incidents. 17 Furthermore, neither

17

administrative inconvenience nor lack of resources provide justification for

18

deprivation of constitutional rights. See Rufo v. Inmates of Suffolk County Jail, 502

19

U.S. 367, 392, 112 S.Ct. 748, 116 L.Ed.2d 867 (1992) (“financial constraints may

20

not be used to justify the creation or perpetration of Constitutional violations.”). 18

21
22
23
24
25
26
27
28

17

See Bureau of Prisons Program Statement No. 5264.07, Telephone Regulations for
Inmates (2002) (“Telephone privileges are a supplemental means of maintaining
community and family ties that will contribute to an inmate’s personal
development….Contact with the public is a valuable tool in the overall correctional
process”).
18
. See also, e.g., Bounds v. Smith, 430 U.S. 817, 825 (1977) (“the cost of protecting a
constitutional right cannot justify its total denial”); Stone v. City and County of San
Francisco, 968 F.2d 850, 858 (9th Cir.1992) (“federal courts have repeatedly held that
financial constraints do not allow states to deprive persons of their constitutional rights”);
N.G. v. Connecticut, 382 F.3d 225, 234 (2d Cir.2004) (“[m]ere convenience…cannot …
justify such a serious impairment of privacy”).

13

1

The fourth Turner factor (existence of ready alternatives that the prison

2

administrators can use to achieve the same goals) is not applicable because, as

3

explained, jail regulations are not at issue. Even if this factor were applicable, there

4

is an easy alternative – appropriations from the County’s budget just as the County

5

is responsible for funding the rest of the jail. Instead, for political reasons,

6

Defendants raise revenue disproportionately on the backs of Plaintiffs and the

7

class, an overwhelming low-income, minority group that is unpopular with the

8

community at large. If the County needs to raise additional money, it can do so by

9

seeking to raise taxes on the entire County rather than Plaintiffs and the Class.
Because of its organic connection to this First Amendment argument, we

10
11

now explain why the commissions are a tax under California law.

12

IV.

13

THE COMMISSIONS ARE AN ILLEGAL TAX IN VIOLATION OF
CAL. CONST. ART. XIII C (PROPOSITIONS 218 AND 26).

14

A.

15

California voters adopted Proposition 13 in 1978 (Cal. Const., art XIII A) to

BACKGROUND ON PROPOSITIONS 218 AND 26

16

require inter alia that any “special taxes” for cities, counties, and special districts

17

be approved by two thirds of voters. (Art. XIII A, § 4.). Many local government

18

entities began charging new or higher taxes, fees, charges, and assessments in an

19

effort to circumvent Prop. 13. See Tiburon v. Bonander, 180 Cal.App.4th 1057,

20

1072-74 (2009). In response, in 1996, California voters adopted Proposition 218

21

(Art. XIII D). One of its aims was “to tighten the two-thirds voter approval

22

requirement for ‘special taxes’ and assessments imposed by Proposition 13.”

23

Brooktrails Township Community Services Dist. v. Board of Supervisors of

24

Mendocino County, 218 Cal.App.4th 195, 197 (2013). Proposition 218 added

25

Article XIII C to require that new taxes imposed by a local government be subject

26

to vote by the electorate. (Art. XIII A, § 4, Art. XIII C, § 1; see also 2B West’s

27
28

14

1

Ann. Cal. Codes (2013) pp. 362-363.) General taxes require a simple majority, but

2

special taxes require two-thirds voter approval. (Art. XIII C, § 2, subds. (c) & (d).)

3

Proposition 218 was designed to “make it easier for taxpayers to win

4

lawsuits; and limit the methods by which local governments exact revenue from

5

taxpayers without their consent.” Silicon Valley Taxpayers Ass’n, Inc. v. Santa

6

Clara Open Space Authority, 44 Cal.4th 431, 448 (2008). Its provisions “shall be

7

liberally construed to effectuate its purposes of limiting local government revenue

8

and enhancing taxpayer consent.’” Id. (quoting voter pamphlet).

9

Local governments again sought to circumvent constitutional restrictions on

10

revenue generation and began broadening the scope of fees, leading to the passage

11

of Proposition 26 in 2010. Schmeer v. County of Los Angeles, 213 Cal.App.4th

12

1310, 1322 (2013). Proposition 26 added subdivision (e) to section 1 of article XIII

13

C, which expanded the definition of a “tax” to include “any levy, charge, or

14

exaction of any kind imposed by a local government.” Art. XIII C, § 1, subd. (e).)

15

(emphasis added).

16
17
18

Subdivision (e) incorporated seven exceptions to this definition of tax. Id.
Defendants assert that the following three of the seven exceptions apply:
 “A charge imposed for a specific benefit conferred or privilege granted

19

directly to the payor that is not provided to those not charged, and which

20

does not exceed the reasonable costs to the local government of conferring

21

the benefit or granting the privilege.” Art. XIII C, § 1, subd. (e) (1)

22

(emphasis added).

23

 “A charge imposed for a specific government service or product provided

24

directly to the payor that is not provided to those not charged, and which

25

does not exceed the reasonable costs to the local government of providing

26

the service or product.” Art. XIII C, § 1, subd. (e) (2) (emphasis added).

27
28

15

 “A charge imposed for entrance to or use of local government property, or

1
2

the purchase, rental, or lease of local government property.” Art. XIII C, § 1,

3

subd. (e) (4).

4

Article XIII C § 1 concludes, following the list of exceptions, by stating the

5

government’s burden of proof as follows:
Furthermore, “the local government bears the burden of proving by a
preponderance of the evidence that its levy, charge, or other exaction is
not a tax, that the amount is no more than necessary to cover the
reasonable costs of the governmental activity, and that the manner in
which those costs are allocated to a payor bear a fair a reasonable
relationship to the payor’s burdens on, or benefits received from, the
governmental activity.”

6
7
8
9
10
11

(Art. XIII C, § 1 [last para.]) (emphasis added).

12

B.

13

THE COMMISSIONS DO NOT FALL WITHIN ANY OF THE
EXCEPTIONS IN PROPOSITION 26 (ART. XIII C, § 1, SUBD. (E)).

14

Defendants do not deny that the commissions at issue constitute a levy,

15

charge or exaction. Instead, Defendants argue that the commissions are not taxes

16

because they fall into three of Article XIII C, section 1, subdivision (e)’s seven

17

exceptions: (e)(1)19; (e)(2); and (e)(4). Mot. at 38:21-25.
The first and second exceptions—for a specific benefit conferred or

18
19

privilege granted directly to the payor, or for a specific government service or

20

product provided directly to the payor (subds. (e)(1) & (e)(2))—do not apply since

21

the commissions are not capped so that they “do[] not exceed the reasonable costs

22

to the local government” of conferring the benefit, granting the privilege, or

23

providing the service or product. In short, the amount paid to the Counties has no

24

relation to the reasonable costs to the local government of providing the telephone

25

service. Each county agreed on an arbitrary percentage of the customers’ money to

26

be passed through to the Counties for their Inmate Welfare Funds, essentially

27
28

19

Defendants reference subdivision (e) (1) and state that it completely overlaps with
subdivision (e) (2). Mot. at 37., fn. 6.

16

1

guided by the principle of “as much as the traffic will bear.” Cf. Citizens for Fair

2

Reu Rates v City of Redding, 182 Cal.Rptr.3d 722, 729 (2015) (quoting Howard

3

Jarvis Taxpayers Assn v. City of Roseville, 97 Cal.App.4th 637, 648 (2002) (“It

4

cannot be said that this flat fee on budgets coincides with these costs”).
Under any reasonable reading of the language added by Prop. 26, the only

5
6

potentially applicable exceptions are (e)(1) or (2), both of which involve “charges

7

imposed for a specific…benefit [or]…privilege granted [or]…service or product

8

provided,” and both of which must “not exceed the reasonable costs to the local

9

government” of conferring the benefit/privilege or providing the service/product.

10

They do not qualify as an exception, and are taxes, because they do not bear a

11

reasonable relationship to costs incurred or services provided.
Rather than acknowledge that these are the relevant exceptions, Defendants

12
13

argue primarily that the “site commissions are a charge for use of local government

14

property” (Mot. at 38:39:3) under subdivision (e)(4), namely the “telephone

15

equipment at the jail.” Mot. at 38:27.20 But this is not true. First, it is the Plaintiffs

16

that pay the fees that are passed through to the Counties, and they do not receive

17

rights to enter or use government property. Second, even if the telephone

18

companies are considered the “user” under subdivision (e)(4), they do not pay

19

money to the County; they essentially collect the money for the County from the

20

County’s captive consumer. And third, the primary, if not sole, purpose of the

21

money is to raise revenue for the Counties’ respective Inmate Welfare Funds.

22

Where “revenue is the primary purpose, and regulation is merely incidental, the

23

imposition is a tax.” Sinclair Paint Co. v. State Bd. of Equalization, 15 Cal. 4th

24

866, 880, 937 P.2d 1350, 1358 (1997) (emphasis added). See also Morning Star

25

Co., 201 Cal.App.4th at 751 (“An excessive fee that is used to generate general

26
27
28

20

Plaintiffs dispute that the telephone equipment at the jail is owned by the Defendant
Counties. Rather, the telephone companies install their own equipment in each jail. If the
Court has a question on this issue, the answer will be revealed in discovery.

17

1

revenue becomes a tax”). In contrast, permissible fees “do not exceed the

2

reasonable cost of providing services necessary to the activity for which the fee is

3

charged and which are not levied for unrelated revenue purposes.” Apartment Assn.

4

of Los Angeles County, Inc. v. City of Los Angeles, 24 Cal.4th 830, 843 (2001)).

5

At minimum, it is a disputed fact whether the purpose of the surcharges

6

collected by the Counties is not for allowing the telephone companies to use

7

telephone equipment. Plaintiffs squarely allege that their purpose is to raise

8

revenue for the Counties. What’s more, it would be contrary to the voters’ intent

9

that Proposition 26 be construed so as not to inure to the benefit of the taxpayer

10

and to limit the abusive practice of mislabeling taxes as fees. See Brooktrails Twp.

11

Cmty. Servs. Dist., 218 Cal. App. 4th at 203, as modified (July 24, 2013)

12

(“Proposition 26… expanded the definition of … a ‘tax’ …. One of the declared

13

purposes of Proposition 26 was to halt evasions of Proposition 218”) (emphasis

14

added).

15

Because the only reasonably applicable provisions of subdivision (e) are (1)

16

and (2), and not (4), the Court need not reach the issue of the meaning and scope of

17

its last paragraph. In any event, the reasonable reading of that paragraph is that all

18

its enumerated exceptions are constrained by the last paragraph, which requires not

19

only that the public entity bear the burden of proving a levy etc. is not a tax, but

20

that the charges must be necessary to cover the costs or bear a reasonable

21

relationship to the burdens or benefits of the government activity. “Proposition 26

22

requires by its terms an allocation method that bears a reasonable relationship to

23

the payor’s burdens on or benefits from the Agency’s activity.” Newhall County

24

Water District v. Castaic Lake Water Agency, 243 Cal.App.4th 1430, 1446 (2016).

25

Thus, if the Court were to conclude that subdivision (e)(4) is the relevant potential

26

exception, that “reasonable relationship” standard applies to it as well.

27
28

Defendants contend that the last paragraph of Art. XIII (e) cannot apply
because, for example, “what cost is to be recovered from use of a parking meter”

18

1

or to “use a paddle boat in a pond” if they are on government property. Mot. at 40.

2

First, costs can be determined, and it is an evidentiary question not to be answered

3

at this stage. Second, the last paragraph’s reference to “burdens” and “benefits”

4

provides an additional gauge that is applicable across the board.
Defendants ask the Court to conclude that this last paragraph is superfluous.

5
6

When “interpreting a voter initiative, including one amending the state

7

Constitution,” the Court applies “the same principles governing statutory

8

construction.” Santos v. Brown, 238 Cal. App. 4th 398, 409, (2015). The Court

9

must give the initiative’s “words their ordinary meaning” and construe the

10

“language in the context of the statute and initiative as a whole.” If there are

11

ambiguities, “courts may consider ballot summaries and arguments in determining

12

the voters' intent and understanding of a ballot measure.” People v. Superior Court

13

(Pearson), 48 Cal.4th 564, 571, (2010) (citations omitted).

14

The court’s “task is simply to interpret and apply the initiative’s language so

15

as to effectuate the electorate’s intent.” Hi-Voltage Wire Works, Inc. v. City of San

16

Jose, 24 Cal.4th 537, 576 (2000). Effectuating the voters’ intent includes “giv[ing]

17

meaning to each word and phrase.” People v. Stringham, 206 Cal.App.3d 184,

18

196–197, 253 Cal.Rptr. 484 (1988) (citations omitted) (emphasis supplied).21 In

19

contradiction to this teaching, Defendants write the last paragraph out of the law.

20
21
22
23
24
25
26
27
28

21

As relevant to this case, Proposition 26’s findings and declaration of purpose state that
Proposition 218 provided that voters must approve tax increases, which have nonetheless
“continued to escalate.” It discussed, inter alia, “use taxes” as well as “recent
phenomenon whereby the Legislature and local governments have disguised new taxes as
‘fees’” and fees “couched as ‘regulatory but which exceed the reasonable costs of actual
regulation or are simply imposed to raise revenue for a new program and are not part of
any licensing or permitting program are actually taxes and should be subject to the
limitations applicable to the imposition of taxes.” Thus, Proposition 26 defined tax “so
that neither the Legislature nor local governments can circumvent these restrictions
on increasing taxes by simply defining new or expanded taxes as ‘fees.’” (Prop. 26, §
1, subds. (b), (c), (e), (f), reprinted at Historical Notes, 2B West’s Ann. Cal. Codes (2013)
foll. Art 13A, § 3, pp. 296-297 (emphasis added); see also, e.g. Professional Engineers in

19

1

Defendants bear the burden both on the applicability of the exceptions and

2

this trailing paragraph. Newhall County Water District, 243 Cal.App.4th at 1441

3

(challenged rates are not a tax under Prop 26 if rates fall within one of the seven

4

exceptions of Art. XIII C § 1 (in that case Art. XIII C § 1(e)(2); and Defendant

5

“bears the burden of proving by a preponderance of the evidence” that its charges

6

are not a tax under the final paragraph of Art. XIII C § 1(e)).

7

Contrary to Defendants’ claim that this last paragraph is superfluous, it is

8

independently substantive. Art. XIIIC, § 1(c) begins with the statement that a tax

9

means “any levy, charge, or exaction of any kind” and excepts the seven

10

enumerated exceptions. It then concludes with the stand alone general paragraph

11

allocating not only the burden of proof to the government that the levy, etc. is not a

12

tax, but also to prove “that the amount is no more than necessary to cover the

13

reasonable costs of the governmental activity and that the manner in which those

14

costs are allocated to the payor bears a fair and reasonable relationship to the

15

payor’s burdens on, or benefits received from, the governmental activity.” It does

16

not say that the latter provision applies only to certain of the enumerated

17

exceptions.

18

If the obligation to limit fees were only to apply to Article XIII C (e) (1-3)

19

with their necessary or reasonable relationship limitation language, it would have

20

been very simple to say so. This conclusion is reinforced by the fact that provisions

21

that are classic illustrations of potential government abuse of fees such as charges

22

imposed as a condition of property development or property related fees

23

(subdivisions (e)(6) and (7), which, as noted in Section V, infra, have been found

24

at times to constitute a taking without just compensation and limitations on which

25

go back to Proposition 13) do not contain the Defendants’ talismanic language.

26
27
28

California Government v. Kempton, 40 Cal.4th 1016, 1037 (2007) (“[b]allot summaries
and arguments may be considered when determining the voters' intent and understanding
of a ballot measure”).

20

1

Defendants attempt to sweep away the problem of sub-sections (e) (6) and

2

(e) (7) by saying that Article XIII (D) limits such charges to costs. See Mot. at 39.

3

However, nowhere does Article XIII (C)(1) reference the limitations of Article

4

XIII (D). It is black letter law that “when two acts governing the same subject

5

matter cannot be reconciled, the later-enacted statute will prevail over the earlier-

6

enacted statute.” Stone St. Capital, LLC v. California State Lottery Comm'n, 165

7

Cal. App. 4th 109, 123, 80 Cal. Rptr. 3d 326, 336 (2008). Given the specificity of

8

sub-sections 13 (1)(e) to property related fees as an exception, the logic of

9

Defendants’ interpretation is that it modified Article XIII (D). Of course, this is

10

contrary to the purpose of Prop. 26. But that is precisely the point. It was intended

11

to place constraints on fees, an intent Defendants want to obviate.

12

Article XIII D was enacted as part of Proposition 218 and “was intended to

13

provide effective tax relief and to require voter approval of tax increases.”

14

Apartment Ass'n of Los Angeles Cty., Inc. v. City of Los Angeles, 24 Cal. 4th 830,

15

838, 14 P.3d 930, 935 (2001) (quoting voter pamphlet). Proposition 26 was

16

intended to ensure that potential loopholes in the pre-existing limitiations be

17

closed. It “defines a ‘tax’ for state and local purposes so that neither the Legislature

18

nor local governments can circumvent these restrictions on increasing taxes by

19

simply defining new or expanded taxes as ‘fees.’” (Prop. 26, § 1, subds. (b), (c),

20

(e), (f), reprinted at Historical Notes, 2B West's Ann. Cal. Codes (2013) foll. art.

21

13A, § 3, pp. 296–297.

22

Yet, because exceptions (6) and (7) do not contain the reasonable

23

relationship language, Defendants’ logic means there is absolutely no limit on

24

property related fees, contrary to the 35 year trajectory of initiatives placing

25

limitations on taxes disguised as fees, especially those related to real property.

26

Well before Prop. 26, the California Supreme Court recognized the distinction

27

between government charges that did not bear a reasonable relationship to costs

28

and those that did. The former were a tax. See Sinclair Paint Co, 15 Cal.4th at 876

21

1

(pre-Prop. 218 and 26 “fees charged in connection with regulatory activities which

2

fees do not exceed the reasonable cost of providing services necessary to the

3

activity for which the fee is charged and which are not levied for unrelated revenue

4

purposes” are not a tax). Since this was the standard distingusing taxes from

5

legitimate charges before both Prop. 218 and 26 were enacted, the logical and

6

reasonable reading of the last paragraph is that it refers to even charges that qualify

7

as an exception under Article XIII C § (1)(e). The difference is that anything that

8

does not fit within an exception is automatically a tax, whereas things that do fall

9

under the exceptions may not be a tax if they bear a reasonable relationship to cost

10
11

and benefit.
In addition to the “reasonable relationship” standard, this final paragraph of

12

Art. XIII C § 1 (e) includes another change to the law that demonstrates that the

13

paragraph was intentionally phrased. After Prop. 26, Defendants are

14

constitutionally required to prove each element of the last paragraph by a

15

preponderance of the evidence, whereas they previously only had the initial burden

16

of production of evidence to support its determination to approve the imposition of

17

a fee or charge (but not the ultimate burden of proof). Homebuilders Association of

18

Tulare/Kings Counties, Inc. v. City of LeMoore, 185 Cal.App.4th 554, 562 (2010).

19

In sum, Plaintiffs allege that there is no connection or relationship at all,

20

much less a reasonable one, between the money that flows through to the Counties

21

from purchase of telephone calls and any costs, burdens or benefits of phone

22

service to Plaintiffs and the class who use inmate phone services. The burden is on

23

the Counties to prove that such a “reasonable relationship” exists.

24
25

C.

DEFENDANTS IMPOSE A FEE ON PLAINTIFFS TO USE THE INMATE
PHONE SERVICES

26

Without meaningful authority, Defendants claim that the tax was not

27

imposed because Plaintiffs “voluntarily” chose to use the inmate telephone

28

services; thus, according to Defendants, the tax was not imposed with “authority
and force.” On the contrary, like any tax, by its nature, it is imposed (or
22

1

established) by “authority and force,” because Plaintiffs must pay it if they use the

2

respective County’s inmate phone services. See Ponderosa Homes, Inc. v. City of

3

San Ramon, 23 Cal.App.4th 1761, 1770 (1994) (to impose a fee means that it is

4

“required by authority of the government”) (cited by Defendants). Ponderosa

5

explained that “there is a logical distinction between the act of imposing something

6

and the act of complying with that which has been imposed. As applicable here,

7

the phrase [to impose] refers to the creation of a condition or fee by authority of

8

local government….” Id. (emphasis added).

9

Defendants’ narrow interpretation of “impose” would render Prop 26

10

meaningless. For example under Defendants’ interpretation, despite the plain

11

language of the statute, a tax is not really imposed on an owner of a race horse

12

because that person, surely, did not have to purchase a race horse. See Cal. Rev &

13

Tax Code § 5721 (“there is hereby imposed an annual tax on owners of racehorses

14

for such racehorses domiciled in this state”) (emphasis added). Likewise, a tax is

15

not imposed on the purchase of gasoline because one does not have to drive a car.

16

See Cal. Rev & Tax Code § 8651 (a) (“An excise tax is hereby imposed for the use

17

of fuel at the following rate per gallon”) (emphasis added).

18

Defendants’ argument is even more outlandish here because Plaintiffs have

19

no alternative but to use the respective Counties’ inmate phone services. Therefore,

20

Plaintiffs’ choice whether to use the inmate phone services is not meaningfully

21

voluntary in any sense. See Koontz v. St. Johns River Water Mgmt. Dist., supra,

22

133 S. Ct. at 2594 (land-sue permits not necessarily voluntary given that “the

23

government often has broad discretion to deny a permit”).

24

Further as discussed at Section D, the tax is not imposed on the telephone

25

companies; it is imposed on the Plaintiffs, the customers. The phone companies are

26

just a conduit through which the tax revenues flow. The Counties have a monopoly

27

on inmate phone services within their respective jails, allowing them to charge

28

23

1

whatever fees they want. The phone companies have no incentive to resist or

2

negotiate lower amounts because the fees are passed through to the customers.

3

Finally, Defendants cannot reasonably claim that the tax was not imposed in

4

violation of Prop 26. In Howard Jarvis Taxpayers Assn. v. City of La Habra, 25

5

Cal.4th 809 (2001), the California Supreme Court considered when a tax on utility

6

rates is “imposed.” Id. at 818. The Court rejected the argument that “when a city

7

disregards the approval requirements in imposing a tax, the imposition has never

8

happened and thus may not be challenged.” Id. The Court explained that,

9

Proposition 62, which added voter-approval requirements for local taxes,

10

“prohibited the imposition of a general tax ‘unless and until such general tax is

11

submitted to the electorate’ (Gove. Code, § 53723). That command is allegedly

12

violated each time the City collects its utility tax through the service providers.” Id.

13

at 823 (emphasis added). The same reasoning applies here. The Counties impose a

14

tax that is collected by the phone providers.

15

D.

PLAINTIFFS HAVE STANDING TO SUE.

16

To have standing, “a party must be beneficially interested in the controversy,

17

and have ‘some special interest to be served or some particular right to be

18

preserved or protected.’ …This interest must be concrete and actual, and must not

19

be conjectural or hypothetical.” Sipple v. City of Hayward, 225 Cal.App.4th 349,

20

358-359 (2014) (citations and quoted case omitted).

21

Here, there is no question that Plaintiffs are beneficially interested in this

22

matter and, therefore, have standing. Plaintiffs allege the concrete and actual

23

interest that they paid an illegal tax and are thus entitled to a refund. The contracts

24

required the telephone companies to pass through a specific percentage of the

25

money paid by the Plaintiffs. Thus, the telephone companies served as the conduit

26

for this money that went from Plaintiffs to the Defendants. See McWilliams v. City

27

of Long Beach, 56 Cal. 4th 613, 617, 300 P.3d 886, 887 (2013) (assuming standing

28

24

1

without discussion for taxpayers who paid taxes collected by telephone

2

companies).
Defendants’ cases do not say otherwise,22 and primarily discuss whether a

3
4

business has standing to seek tax refunds on behalf of its customers. None dispute

5

that a customer that has paid the tax has standing. See Scol Corp v. City of Los

6

Angeles, 12 Cal.App.3d 805, 808-809 (business did not have standing to seek tax

7

refunds on behalf of its customers); TracFone Wireless, Inc. v. County of Los

8

Angeles, 163 Cal.App.4th 1359, 1364 (2008) (company had standing because it

9

paid taxes from its own funds rather than funds collected from its customers).

10

Similarly, in Sipple, 225 Cal.App.4th at 358, defendant cities argued that New

11

Cingular Wireless lacked standing to recover refunds of an illegal tax because it

12

passed through the taxes paid by its customers and, thus, suffered no injury. There

13

was no dispute that the customers were the injured parties who had paid the tax.

14

New Cingular Wireless did have standing because, through a settlement

15

agreement, the customers authorized the company to seek taxes for the benefit of

16

its customers. Id. at 361. See also Decorative Carpets, Inc. v. State Board of

17

Equalization, 58 Cal.2d 252, 253 (1962) (company had standing to seek tax refund

18

on the condition that the monies be returned to the customers).
Defendants’ claim that the telephone companies are the real “taxpayer” is

19
20

wrong. Defendants cite Scol Corp v. City of Los Angeles, 12 Cal.App.3d 805, but,

21

as discussed above, Scol is inapposite. Moreover, “[t]o the extent that Scol stands

22

for the proposition that a party lacks standing to challenge a tax unless it is the

23
24
25
26
27
28

22

Torres v City of Yorba Linda, 13 Cal.App.4th 1035 (1993) involved whether a party
had standing to challenge a city redevelopment project under Cod. Civ. Proc. §§ 526a and
863. Grotenhuis v. County of Santa Barbara, 182 Cal.App.4th 1158 (2010) rejected the
Plaintiff’s attempt to use an alter ego theory to confer standing for purposes of a statutory
property tax exemption..

25

1

denominated ‘taxpayer’ under the statutory or regulatory scheme imposing the tax,

2

it is outdated.” TracFone, 163 Cal.App.4th at 1364.

3

In essence, Defendants argue that, while Propositions 218 and 26 prohibit

4

taxes without voter approval, they permit imposition of the functional equivalent of

5

a tax provided it does so with a third party accomplice who launders the tax into a

6

user fee. Aside from exemplifying exactly the sort of behavior Propositions 218

7

and 26 were meant to stop in the first place, this proposed exception would provide

8

an easily exploitable loophole. Local governments could outsource any

9

governmental function they desire packaged with fee agreements in any amount.

10

Finally, if Plaintiffs were not permitted to seek refunds of the illegal taxes

11

that they paid, their due process rights would be violated. Richards v. Jefferson

12

County, Alabama, 517 U.S. 793 (1996); TracFone, 163 Cal.App.4th at 1365-1366

13

(“because California requires payment of a tax prior to challenging it, the right to

14

due process requires some procedure affording a meaningful opportunity for

15

review”). And Defendants would be unjustly enriched. The phone companies have

16

no incentive to seek a refund that would not go to them and would undermine their

17

lucrative relationships with the Defendants. See Javor v. State Board of

18

Equalization, 12 Cal.3d 790, 800-801 (1974) (proper to add automobile purchaser

19

to join the State Board of Equalization as a party to a suit against retailers for

20

recovery of sales taxes paid to the Board; although only the retailers could obtain

21

refunds under the Board’s procedures, they had no incentive to seek refunds that

22

would be returned to the purchasers); see also TracFone, 163 Cal.App.4th at 1365

23

(“The person who paid the tax must be afforded some remedy to prevent the unjust

24

enrichment of the taxing authority”).

25
26
27
28

26

1
3

THE COUNTY VIOLATED THE UNCONSTITUTIONAL
CONDITIONS DOCTRINE BY CONDITIONING PLAINTIFFS’
ABILITY TO COMMUNICATE BY TELEPHONE UPON WAIVING
RIGHT TO RECEIVE JUST COMPENSATION.

4

“Under the well settled doctrine of ‘unconstitutional conditions,’ the

2

V.

5

government may not require a person to give up a constitutional right…in

6

exchange for a discretionary benefit conferred by the government where the benefit

7

sought has little or no relationship to the property.” Dolan v. City of Tigard, 512

8

U.S. 374, 385 (1994). In this case, the commissions result in excessive inmate

9

phone charges unrelated to the cost of the telephone calls. Indeed, most of the

10

money is passed through to the County’s Inmate Welfare Fund, and does not

11

compensate for County costs. This constitutes a taking for which Plaintiffs are

12

entitled to just compensation. Because Plaintiffs have no lower cost option, they

13

must pay far more than what they receive in exchange. As stated in Koontz v. St.

14

Johns River Water Management Dist., 133 S. Ct. 2586, 2595 (2013), “Extortionate

15

demands of this sort frustrate the Fifth Amendment right to just compensation, and

16

the unconstitutional conditions doctrine prohibits them.”

17
18
19
20
21
22
23
24
25
26

Thus, even for completely discretionary privileges or benefits, the
government “cannot grant the privilege subject to conditions that improperly
‘coerce, ‘pressure,’ or ‘induce’ the waiver of that person’s constitutional rights.”
Richard A. Epstein, Bargaining with the State 5 (1993). The doctrines enforces a
Constitutional limit on government authority. See, e.g., Frost & Frost Trucking Co.
v. Railroad Comm’n, 271 U.S. 583, 593-94 (1926) (invalidating state law under
unconstitutional conditions doctrine that required a trucking company to dedicate
personal property to public uses as a condition for permission to use highways; if
“the state may compel the surrender of one constitutional right as a condition of its
favor, it may compel a surrender of all”).

27
28

27

The doctrine has been applied in a variety of contexts. 23 See, e.g. Miami

1
2

Herald Publ’g Co. v. Tornillo, 418 U.S. 241, 255 (1974) (statute that forced a

3

newspaper to incur additional costs by adding more material to an issue or remove

4

material it desired to print); Perry v. Sinderman, 408 U.S. 593 (1972) (refusal to

5

renew professor’s employment contract in retaliation for critical testimony

6

regarding the university’s board of regents); see also James Burling & Graham

7

Owen, The Implications of Lingle on Inclusionary Zoning and other Legislative

8

and Monetary Exactions, 28 Stan.Envtl. L.J. 397, 407 (2009) (doctrine has been

9

applied where the “government has traded with people for their right to free

10

speech, their right to freedom of religion, their right to be free from unreasonable

11

searches, their right to equal protection, and their right to due process of law”).

12

The Supreme Court has applied the doctrine to invalidate laws that required

13

a waiver of the plaintiff’s right to just compensation, for real and personal

14

property, under the Takings Clause of the Fifth Amendment. See, e.g., Horne v.

15

Dept. of Agriculture, 135 S. Ct. 2419 (2015) (invalidating provision of the

16

Agricultural and Marketing Agreement Act of 1938 that required raisin growers to

17

give a certain percentage of their raisins to the government for free as a condition

18

of being able to sell the rest of their raisins); Koontz, 133 S.Ct. at 2586

19

(government cannot condition a land permit on a monetary exaction unless that

20

monetary exaction bears an “essential nexus” and “rough proportionality” to the

21

impact of the proposed development for which the permit is sought).

22
23
24
25
26
27

23

Inmate class members, as well as the call recipient class members, have such
protection. “Even in a prison setting, the Constitution places limits on a State’s authority
to offer discretionary benefits in exchange for a waiver of constitutional rights.” Vance v.
Barrett, 345 F.3d 1083, 1092 (9th Cir. 2003) (quoting Vignolo v. Miller, 120 F.3d 1075,
1078 (9th Cir. 1997) (prison officials conditioned inmate’s right to employment on
waiving inmate’s property rights to accrued interest from his inmate trust account).

28

28

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

A.

PLAINTIFFS HAVE A PROPERTY INTEREST IN THE MONEY THAT
THEY PAY FOR PHONE CALLS FOR WHICH THEY ARE ENTITLED TO
JUST COMPENSATION.

The uncompensated taking of private property for a public purpose is
prohibited by the Takings Clause, whose purpose is “to bar Government from
forcing some people alone to bear public burdens which, in all fairness and justice,
should be borne by the public as a whole.” Armstrong v. United States, 364 U.S.
40, 49 (1960); see also Monongahela Navigation Co. v. United States, 148 U.S.
312, 315 (1893) (requiring just compensation “prevents the public from loading
upon one individual more than his just share of the burdens of government”).
Defendants distort Plaintiffs’ Takings contention by characterizing the
property right at issue as the “right to make telephone calls at some unspecified but
lower price than the price actually charged.” Mot. at 21:6-7. They are wrong. The
property right is the Plaintiffs’ interest in their own money, which they must pay as
a condition of exercising their First Amendment right of communication. “Money
is certainly a property interest,” McGuire v. Ameritech Services, Inc., 253
F.Supp.2d 988, 1004 (S.D. Ohio 2003), and has long been presumptively entitled
to Takings Clause protection. Phillips v. Wash. Legal Found., 524 U.S. 156, 169,
172 (1998) (money and interest accrued thereon is property within the meaning of
the Takings Clause); Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S.
155, 163 (1980) (“exaction [of money interest] is a forced contribution to general
governmental revenues”); Schneider v. Dep’t of Corr., 151 F.3d 1194, 1201 (9th
Cir. 1998), subsequent opinion at 345 F.3d 716 (2003) (California’s failure to pay
interest on inmate funds diverted to the Inmate Welfare Fund was a taking).
The Takings Clause is also implicated where, as here, fees or conditions are

26

excessive or unrelated to what is received in exchange. See Webb’s, 449 U.S. at

27

155 (“exaction [which was] a forced contribution to general government revenues,

28

and was not reasonably related to the costs of using the courts” unconstitutional);
Parks v. Watson, 716 F.2d 646, 652 (1983) (“A condition requiring an applicant
29

1

for a governmental benefit to forgo a constitutional right is unlawful if the

2

condition is not rationally related to the benefit conferred”), U.S. v. Sperry Corp.,

3

493, U.S. 52, 62 (1989) (1.5% deduction by the United States for its expenses in

4

arbitration, administration and collection of settlement fund collected from Iran

5

was a user fee, not a taking because “a reasonable user fee is not a taking if it is

6

imposed for the reimbursement of the cost of government services”);

7

Massachusetts v. United States, 435 U.S. 444, 463, n. 19 (1978) (To qualify as a

8

user fee, the fee must be a “fair approximation of the cost of the benefits

9

supplied”).24

10

Here the complaints allege that the charges Plaintiffs pay in order to use the

11

Inmate Telephone Services are far in excess of, and unrelated to, the actual costs

12

to provide that service, and, but for the commissions at issue, these phone rates

13

would be much less, an arrangement that results in Plaintiffs being “fleece[d].” Id.

14

¶ 5 (quoting former Los Angeles County Supervisor Zev Yaroslavsky). Compare

15

Sperry, 493 U.S. at 62 (“This is not a situation where the Government has

16

appropriated all, or most, of the award to itself…”). Plaintiffs further allege that

17

most of the money that they pay to either GTL or Securus is passed through to the

18

respective County not for reimbursement of the cost of providing the service but to

19

fund the County’s Inmate Welfare Fund (Complaint, ¶¶ 7, 35-36, 86), costs which

20

“in all fairness and justice, should be borne by the public as a whole.” Armstrong,

21

364 U.S. at 49. Accordingly, the amount of the phone costs paid by Plaintiffs that

22

are passed through to the County’s Inmate Welfare Fund are a taking for which

23

they are entitled to just compensation.

24
25
26
27
28

24

See also Vance, 345 F.3d at 1090 (“Because Vance does not allege that the charges are
unreasonable or unrelated to the administration of his account, his takings claim must
fail”); Eric Kades, Drawing the Line Between Taxes and Takings: The Continuous
Burdens Principle, and Its Broader Application, 97 Nw. U. L. Rev. 189, 256 (2002) (fee
exceeding government’s cost of delivering the service or good includes an implicit tax,
and presumably is used as general revenue subject to review under the Takings Clause).

30

1

B.

PLAINTIFFS’ PAYMENTS ARE NOT VOLUNTARY

2

Defendants argue that there is no taking because Plaintiffs voluntarily

3

choose to pay for these calls: “No one forces inmates to make telephone calls or

4

non-inmate relatives to receive telephone calls.” Mot. at 21/22-25. Their argument

5

relies on a series of inapposite cases where the issue was solely whether there was

6

a taking without the imposition of a burden on a constitutional right. 25

7

In cases such as this, where Plaintiffs claim an unconstitutional condition,

8

voluntariness is not a defense because an unconstitutional condition renders the

9

conduct not truly “voluntary.” The Supreme Court explained this as early as Union

10

Pacific Railroad Co. v. Public Service Commission of Missouri, 248 U.S. 67

11

(1918). The Court overruled the Missouri Supreme Court’s decision that charges in

12

exchange for permission to issue bonds were voluntary. “[I]t always would be

13

possible for a State to impose an unconstitutional burden by the threat of penalties

14

worse than in case of a failure to accept it, and then to declare the acceptance

15

voluntary.” Id. at 70. See also Parks v. Watson, 716 F.2d at 652 (fact that Plaintiff

16

“was free to reject the terms….does not render the condition placed on obtaining

17

the street vacation any less objectionable”).

18

This position was reiterated in Horne, where the Government insisted that

19

there was no taking because raisin growers voluntarily choose to participate in the

20

market and could have instead “‘plant[ed] different crops,’ or ‘[sold] their raisin-

21

variety grapes as table grapes or for use in juice or wine.” 135 S.Ct. at 2430. The

22
23
24
25
26
27
28

25

For example, Defendants rely on Walton v. DOCS, 921 N.E.2d 145 (2009), which
relied solely on New York case law to find no taking and that the calls were voluntary.
Plaintiffs contend that the analytical approach of this case was abrogated by Koontz and
Horne. Regardless, where there is an unconstitutional conditions challenge, Walton is
inapplicable and as applied to this case, “wrong as a matter of law.” Horne, 135 S.Ct. at
2430. Finally, unlike here, the Walton Plaintiffs did not allege that the rates charged were
higher than calls outside the inmate calling context. The conclusion there that the
Plaintiffs received “just compensation” in the form of telephone services does not apply
where the allegation is the charges are excessive and unrelated to reasonable costs.

31

1

Court rejected this argument “as a matter of law.” It cited Loretto v. Teleprompter

2

Manhattan CATV Corp., 458 U.S. 419, 439, n. 17 (1982)), which “rejected the

3

argument that a New York law was not a taking because a landlord could avoid the

4

requirement by ceasing to be a landlord” and found that “a landlord’s ability to rent

5

his property may not be conditioned on his forfeiting the right to compensation for

6

a physical occupation.” Horne, 135 S.Ct. at 2430 (quoting Loretto).

7

Because the charges here are excessive and entirely unrelated to the cost of

8

the telephone calls, and because there are no alternative means of phone

9

communication except through the Inmate Phone Services, Plaintiffs have no

10

choice but to pay these charges if they want to exercise their right to speak on the

11

phone. Like the raisin growers in Horne or the landlord in Loretto, this “exaction”

12

is not a voluntary choice. Plaintiffs in this case, like the land use applicants in

13

Koontz, “are especially vulnerable to the type of coercion that the unconstitutional

14

conditions doctrine prohibits because the government often has broad discretion [in

15

regulating prison conditions].” Koontz, 133 S.Ct. at 2594. By conditioning the

16

ability to speak on the telephone on the Plaintiffs paying excessive fees, “the

17

government can pressure an owner into voluntarily giving up property for which

18

the Fifth Amendment would otherwise require just compensation.” Id. In sum,

19

“although certainly subject to reasonable government regulation,” the ability to

20

speak with loved ones on the telephone “may [not be held] hostage, to be ransomed

21

by the waiver of constitutional protection.” Horne, 135 S.Ct at 2430-2431.

22
23

C.

THE REQUIREMENT TO EXHAUST STATE REMEDIES IS
INAPPLICABLE.

24

Where “a State provides an adequate procedure for seeking just

25

compensation, the property owner cannot claim a violation of the Just

26

Compensation Clause until it has used the procedure and been denied just

27

compensation.” Williamson Cty. Reg'l Planning Comm'n v. Hamilton Bank of

28

Johnson City, 473 U.S. 172, 194-95, 105 S. Ct. 3108, 3121, 87 L. Ed. 2d 126

32

1

(1985). Exhaustion is essentially a question of ripeness. Until the “government

2

entity charged with implementing the regulations has reached a final decision

3

regarding the application of the regulations to the property at issue,” the claim is

4

not ripe. Id., 473 U.S. at 186. However, state procedures such as a declaratory

5

judgment would not have to be exhausted because they “clearly are remedial” and

6

“would result in a judgment whether the Commission's actions violated any of

7

respondent's rights,” which an aggrieved party is not required to pursue in state

8

court. Id. at 193. The only potential exception is where “a reasonable, certain and

9

adequate [state law] provision for obtaining compensation exists at the time of the

10

taking.” Id. at 194 (internal quotation marks omitted). The typical exception, as in

11

Williamson, is a state inverse condemnation action.

12

Here, there is no available administrative mechanism to challenge the action.

13

The Jail’s administrative remedies are not an available remedy for the reasons

14

explained in Section XII. Nor does state law provide “a reasonable, certain and

15

adequate provision for obtaining compensation.” Inverse condemnation is not

16

available for the type of taking here. See Yamagiwa v. City of Half Moon Bay, 523

17

F.Supp.2d 1036, 1088 (N.D.Cal.2007) (citing Albers v. County of Los Angeles, 62

18

Cal.2d 250, 263–264 (1965) (elements of California inverse condemnation law

19

include that a government entity “substantially participated in the planning,

20

approval, construction or operation of a public project or public improvement,”

21

which does not exist here.

22

The claims for compensation that are available under state law for the taking

23

here are a damages and/or injunctive relief action, which is unquestionably the type

24

of “remedial” action to determine whether the government’s “actions violated any

25

of respondent's rights” that a Takings plaintiff need not pursue. Any available

26

damages remedy under California law does not provide “a reasonable, certain and

27

adequate provision for obtaining compensation.” Instead, state law is riddled with

28

potential immunities that disqualify it as a “certain” avenue of compensation. See,

33

1

e.g., Government Code section 820.2 (granting immunity for the “exercise of

2

discretion vested in” a government official); People ex rel. Harris v. Rizzo, 214

3

Cal. App. 4th 921, 943, 154 Cal. Rptr. 3d 443, 463 (2013) (“the doctrines of

4

separation of powers, legislative immunity, and discretionary act immunity prevent

5

courts from considering the wisdom of legislative and executive decisions”). 26

6

This conclusion is reinforced by the fact that this case includes a parallel

7

unconstitutional conditions/takings claim under the California Constitution, a claim

8

which the California Supreme Court recognizes. See California Bldg. Indus. Assn.

9

v. City of San Jose, 61 Cal. 4th 435, 455 et seq., 351 P.3d 974, 986 (2015). Given

10

that there is no available California administrative remedy, any exhaustion

11

requirement is satisfied by the supplemental state law claim, for which the

12

standards are the same.

13

VI.

14

PLAINTIFFS HAVE SUFFICIENTLY ESTABLISHED AN EQUAL
PROTECTION AND DUE PROCESS VIOLATION.

15

Plaintiffs’ Equal Protection claim closely overlaps with their First

16

Amendment claim. Police Dep’t of City of Chicago v. Mosley, 408 U.S. 92, 94-95;

17

McGuire v. Ameritech Services, Inc., 253 F.Supp.2d at 998-1000. The Equal

18

Protection Clause protects infringements of fundamental rights, including the First

19

Amendment. Id. at 999 (“Obviously the rights of free speech and free association

20

are fundamental in our society”). As explained, the Ninth Circuit has held that

21

inmates (and call recipients) have a First Amendment right to reasonable telephone

22

access. Plaintiffs have sufficiently pled an Equal Protection claim for the same

23
24
25
26
27
28

26

The Ninth Circuit, in applying Williamson, has accordingly found that exhaustion “is
not relevant to a physical taking claim because there are no administrative avenues of
relief to exhaust: the taking itself firmly establishes the extent of the deprivation.”
Sinaloa Lake Owners Ass'n v. City of Simi Valley, 882 F.2d 1398, 1407 (9th Cir. 1989)
overruled on other grounds by Armendariz v. Penman, 75 F.3d 1311 (9th Cir. 1996).
It has also concluded that Williamson’s exhaustion requirement does not apply where
substantive due process is implicated because the government conduct is “arbitrary and
capricious.” Id. Both of those considerations apply here.

34

1

reasons that they have pled a valid First Amendment claim. The impermissible tax

2

burdens Plaintiffs’ fundamental right to free speech and is “not reasonably related

3

to legitimate penological interests.” See Byrd, 2005 WL 2086321 at *9 (inmate

4

phone fees are “neither a rule nor regulation related to the functioning of a

5

prison”).

6

Similarly, Plaintiffs have sufficiently pled a due process violation. “[T]he

7

due process clause includes a substantive component which guards against

8

arbitrary and capricious government action.” Sinaloa Lake Owners Ass'n, 882 F.2d

9

at 1407. Substantive due process is violated where the government's action was

10

“clearly arbitrary and unreasonable, having no substantial relation to the public

11

health, safety, morals, or general welfare.” Village of Euclid v. Ambler Realty Co.,

12

272 U.S. 365, 395, 47 S.Ct. 114, 121, 71 L.Ed. 303 (1926) (quoted in Sinaloa

13

Lake, 882 F.2d at 1407). Government power “wielded in an abusive, irrational or

14

malicious fashion … can cause grave harm.” Id. at 1408. Because the commissions

15

bear no reasonable relationship to “public health, safety, morals, or general

16

welfare,” plaintiffs have adequately alleged a violation of due process.

17

VII. DEFENDANTS HAVE VIOLATED THE SHERMAN ANTITRUST
ACT.

18
19

A.

STATE ACTION IMMUNITY DOES NOT APPLY.

20

“The state-action immunity doctrine is ‘disfavored,’ and is to be interpreted

21

narrowly, as a ‘broad interpretation of the doctrine may inadvertently extend

22

immunity to anticompetitive activity which the states did not intend to sanction.’”

23

Cost Mgmt. Servs., Inc. v. Wash Nat. Gas Co., 99 F.3d 937, 941 (9th Cir. 1996)

24

(citing FTC v. Ticor Title Ins. Co, 504 U.S. 621, 636 (1992). State-action immunity

25

does not apply directly because Defendants are not states. See Columbia v. Omni

26

Outdoor Advertising, Inc., 499 U.S. 365, 370 (1991). Accordingly, “ ‘[c]loser

27

analysis is required.’” Phoebe Putney, 122 S. Ct., 1003, 1010 (2013) (quoting

28

Hoover v. Ronwin, 466 U.S. 558, 568 (1984).

35

1

To receive immunity, Defendants’ activities must be “undertaken pursuant

2

to a ‘clearly articulated and affirmatively expressed’ state policy to displace

3

competition.” Phoebe Putney, 122 S.Ct. at 1011 (quoted citation omitted). To pass

4

the clear articulation test, the anticompetitive effect must at least be the

5

“foreseeable result of what the State authorized.” Hallie v. Eau Claire, 471 U.S.

6

34, 42 (1985) (citations and internal quotation marks omitted). “[S]tate-law

7

authority to act is insufficient to establish state-action immunity; the sub-state

8

governmental entity must also show that it has been delegated authority to act or

9

regulate anticompetitively.” Phoebe Putney, 122 S.Ct. at 1012. Thus, “the State

10

must have foreseen and implicitly endorsed the anticompetitive effects as

11

consistent with its policy goals.” Id. at 1012-1013 (emphasis added).

12

In Phoebe Putney, a county purchased the only two hospitals in the county,

13

thereby lessening competition, pursuant to a law allowing political subdivisions to

14

create “hospital authorities” with the power to acquire and lease hospitals and other

15

public health facilities. Id. at 1007-08. The Supreme Court rejected the argument

16

that the anticompetitive conduct was a foreseeable result of the law, finding that

17

the law was a grant of general corporate power to act, often provided to local

18

authorities, and there was no evidence that the State affirmatively contemplated

19

that hospital authorities would use these corporate powers to displace competition

20

by consolidating hospital ownership. Id. at 1011-1012. Accordingly, the law did

21

“not clearly articulate and affirmatively express a state policy empowering the

22

Authority to make acquisitions of existing hospitals that will substantially lessen

23

competition.” Id. at 1012.

24

Similarly, and directly applicable here, in McGuire , 253 F. Supp. 2d at

25

1017-1018 , the defendant counties invoked a series of state laws giving counties

26

the power to provide for the operation of their jails, including laws requiring the

27

counties to equip their jails with collect calling phone systems and, as in the instant

28

case, dictating how the commission revenue is to be spent. Id. at 1002, 1017-1018.

36

1

The court held that it was a question of fact whether the State of Ohio

2

“contemplated” that the authority provided authorized the counties to “establish

3

their collect calling phone systems on a monopolistic basis.” Id. at 1018.

4

Accordingly, the court declined to find state action immunity at the pleading stage,

5

noting that “exactly how County Defendants actually procured their inmate

6

telephone service systems is a question of fact which the Court may not address at

7

this juncture…. [T]he counties of Ohio are not on equal sovereign footing as the

8

State itself.” Id.

9

Here, Defendants invoke Penal Code § 4025 (d) as a clearly articulated and

10

affirmatively expressed state policy to displace competition. However, as

11

explained in McGuire, this code section merely provides that any commission

12

received from a telephone company must be deposited into the Inmate Welfare

13

Fund. This code section says nothing about counties being able to establish their

14

inmate calling systems on a monopolistic basis. Therefore, at this stage, as in

15

McGuire, it is a question of fact whether this code section constitutes an

16

affirmatively expressed state policy to allow the monopolistic contracts, policies

17

and practices at issue here. Nothing in the statute indicates that these commissions

18

should be monopolistic, anti-competitive, egregious or borne solely by the inmates

19

and call recipients on top of substantial telephone company profits. The State’s

20

own actions in ending commissions belies the contention that the State “endorse[s]

21

Defendants’ activities as consistent with its policy goals.” Phoebe Putney, 122

22

S.Ct. at 1013. See Compl., ¶ 7 (in 2007, the State eliminated commissions entirely

23

from state prisons, resulting in significantly lower telephone rates).

24
25
26

B.

THE ONLY COURTS TO HEAR SIMILAR CLAIMS HAVE OVERRULED
DEFENDANTS’ MOTIONS TO DISMISS.

Plaintiffs’ antitrust contentions have not been rejected in other cases,

27

contrary to Defendants’s contentions. Mot. at 26:13. In comparable antitrust claims

28

against non-state entities like the Defendants in this case, the courts declined to

37

1

invoke the state action immunity doctrine to dismiss the claims against the

2

counties. See Daleure v. Kentucky, 119 F.Supp.2d 683 (W.D. Ky. 2000); McGuire,

3

253 F. Supp. 2d 988.

4

In the two cases cited by Defendants, the defendants were states, not

5

counties. This distinction is critical because the doctrine applies only to states or to

6

sub-state polictical entities where there is a clearly articulated and affirmatively

7

expressed state policy. Thus, in McGuire, a Sherman Act claim was dismissed

8

against the State of Ohio on state immunity grounds, but not against the county

9

defendants. Id. at 1018-1019. While McGuire relied on the same language from

10

Arsberry that Defendants quote in the instant Motion, it was only relevant to

11

whether the state action immunity doctrine applied to the state, not the counties. Id

12

at 1010. Similarly, Defendants’ reliance on Arsberry, 244 F.3d at 566, is misplaced

13

because the defendant in Arsberry was solely the State of Illinois.

14

C.

15

Plaintiffs seek injunctive relief under the Antitrust Cause of Action (Compl.,

16

¶ 110, ¶ 4(a) of the Prayer for Relief) and, if the Court so determines, restitution. (¶

17

2 of the Prayer). Plaintiffs maintain that restitution qualifies as injunctive relief

18

because it is commonly considered a form of equitable relief. See, e.g., Chauffeurs,

19

Teamsters & Helpers, Local No. 391 v. Terry, 494 U.S. 558, 570, 110 S. Ct. 1339,

20

1348, 108 L. Ed. 2d 519 (U.S. 1990) (“we have characterized damages as equitable

21

where they are restitutionary”); FTC v. Mylan Labs., Inc., 62 F. Supp. 2d 25, 36-37

22

(D.D.C. 1999) (FTC has authority under equitable remedies of the Sherman Act to

23

seek monetary equitable relief, including disgorgement and restitution). In any

24

event, even if the Court were to conclude that restitution is not available here,

25

Plaintiffs would still be entitled to injunctive relief to prohibit the illegal activity on

26

a going forward basis. Thus, this is not a reason to dismiss the claim.

PLAINTIFFS DO NOT SEEK ANTITRUST DAMAGES.

27

Defendants’ contention that an “indirect purchaser” cannot sue for damages

28

(citing Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S. Ct. 2061, 52 L. Ed. 2d 707

38

1

(1977)) is misplaced. First, as indicated, Plaintiffs do not seek damages, and the

2

“reason for the standing limitation in antitrust cases brought under section 4 is to

3

avoid overdeterrence resulting from the use of the somewhat draconian treble-

4

damage award.” Todorov v. DCH Healthcare Auth., 921 F.2d 1438, 1449 (11th

5

Cir. 1991). Thus, the appropriate analysis is to “to evaluate the plaintiff's harm, the

6

alleged wrongdoing by the defendants, and the relationship between them.”

7

Associated Gen. Contractors of California, Inc. v. California State Council of

8

Carpenters, 459 U.S. 519, 535, 103 S. Ct. 897, 907, 74 L. Ed. 2d 723 (1983). As

9

one Court well explained,

10

17

[T]wo factors emerge as tests for the standing of antitrust plaintiffs: First, the
plaintiff's status, and second, the plaintiff's proximity or remoteness from the
center of the alleged conspiracy. Thus, as to status, in each case the plaintiff
which was held to lack standing suffered injury which was “derivative”, that
is, one suffered not because of the plaintiff's role in the market but because
of its status as a “ creditor, stockholder, employee, subcontractor, or supplier
of goods and services,” [citation omitted], or something of the like….As to
proximity or remoteness, the injury of the plaintiff in the cited cases was
found to be several steps removed from the immediate impact of the alleged
violation.
Reading Indus., Inc. v. Kennecott Copper Corp., 477 F. Supp. 1150, 1160

18

(S.D.N.Y. 1979), aff'd, 631 F.2d 10 (2d Cir. 1980); see also, e.g., In re Flash

19

Memory Antitrust Litig., 643 F. Supp. 2d 1133, 1151 (N.D. Cal. 2009) (reciting

20

standing facts and finding that indirect purchasers there qualified).

11
12
13
14
15
16

21

Here, the telephone companies are not the ones affected; the charges have no

22

financial effect on them. It is those who pay the telephone companies who are

23

directly affected. They are not remote. Unless they have standing, no one does.

24

D.

25

PLAINTIFFS HAVE STANDING BECAUSE THE ACTIVITIES AT ISSUE
HAVE AN EFFECT ON INTERSTATE COMMERCE.

26

Courts have liberally construed the commerce clause requirements under

27

antitrust laws, recognizing that Congress intended to exercise its jurisdictional

28

powers to the fullest extent possible. See, e.g., Musick v. Burke, 913 F.2d 1390,

39

1

1395 (9th Cir. 1990). The “focus of the [jurisdictional] inquiry is the defendant’s

2

business activities.” Western Waste Service Systems v. Universal Waste Control,

3

616 F.2d 1094 (9th Cir. 1980) (citing McLain v. Real Estate Bd., 444 U.S. 232, 242

4

(1980)).27 To satisfy this requirement, the relevant activities either must be in

5

interstate commerce or, even if intrastate in nature, have an effect on interstate

6

commerce. Summit Health, Ltd. v. Pinhas, 500 U.S. 322, 331 (1991) (allegations

7

that hospital, its owner, and medical staff conspired to exclude duly licensed and

8

practicing physician and surgeon from market for ophthalmological services in Los

9

Angeles sufficient); McLain, 444 U.S. 232 at 242, 245 (substantial effect on

10

interstate commerce generated by defendants' brokerage activity sufficient,

11

pointing to interstate commerce “involved in the financing of residential property

12

in the Greater New Orleans area and in the insuring of titles to such property”

13

where out of state funds were raised and mortgages were traded on the secondary

14

market). The in-commerce test requires proof that a transaction involves a

15

substantial volume of interstate commerce and that the challenged activity is an

16

integral part of the transaction and indispensable from interstate aspects. Id. A

17

transaction must involve an appreciable amount of commerce which has a “not

18

insubstantial” effect on interstate commerce. Id. There does not need to be an

19

actual, demonstrable effect on interstate commerce. Summit Health, 500 U.S. at

20

331. It is sufficient to “demonstrate a substantial effect on interstate commerce”

21

and a “more particularized showing of an effect on interstate commerce caused by

22

the alleged conspiracy” is not required McLain, 444 U.S. at 242-243.

23
24

Here, the activities satisfy the interstate commerce jurisdiction requirement.
First, Defendants’ contracts are with GTL and/or Securus, both nationwide

25
26
27
28

27

See also Cardio-Medical Associates, Ltd. v. Crozer-Chester Medical Center, 721 F.2d
68 (3d. Cir. 1983) (there is no reason a defendant engaged in nationwide anticompetitive
conduct should not be subject to suit by a local victim simply because the defendant’s
conduct as it affects the local victim does not affect interstate commerce).

40

1

companies, and headquartered in Alabama and Texas, respectively. Compl., ¶ 108.

2

These companies headquartered in other states pay millions derived from the

3

commissions to the Defendants in California. If this lawsuit is successful, this

4

revenue will significantly decrease. See Hospital Bldg. v Co. v. Trustees of Rex

5

Hosp., 425 U.S. 738, 744 (1976) (acts affecting out-of-state purchases, financing,

6

and revenues of intrastate businesses provide a sufficient basis for Sherman Act

7

jurisdiction); Summit Health, 500 U.S. at 329; Western Waste Service Systems, 616

8

F.2d at 1098 (company’s business substantially affected interstate commerce

9

where company spent hundreds of thousands of dollars for out of state equipment).

10

Furthermore, regardless of where the physical telephones are located, people

11

in different states, including California, pay money to GTL and Securus. Compl., ¶

12

108. Indeed, there are different phone rates when inmates make intrastate calls

13

versus interstate calls. Id., ¶ 88. If the commissions are eliminated, the cost of

14

these interstate phone calls will likely decrease. Id., ¶¶ 7, 82. See Summit Health,

15

Ltd., 500 U.S. at 329-30 (ophthalmological “services are regularly performed for

16

out-of-state patients and generate revenues from out-of-state sources”).

17

Defendants claim that the payments from California occurred only in

18

California, but this is false. Payments from California residents flow to companies

19

headquartered out of state and then back to the California counties. The elimination

20

of commissions would likely result in lower rates, and GTL and Securus will

21

receive less revenue from out of state sources. See Summit Health, 500 U.S. at 329

22

(hospital’s services generated revenues from out-of-state sources); Rex Hospital,

23

425 U.S. at 744 (interstate commerce would be affected by successful lawsuit

24

leading to reduced fees that plaintiff would pay to its out of state corporate parent);

25

Western Waste Service Systems, 616 F.2d at 1099. Defendants seem to

26

acknowledge that these out of state transactions are interstate commerce, but

27

wrongly contend that Plaintiffs do not have standing to sue on behalf of non-

28

California. Commerce can be interstate regardless of how local the activity: See,

41

1

e.g., United States v. Women's Sportswear Mfg. Ass'n (U.S. Reports Title: U.S. v.

2

Women's Sportswear Mfrs. Ass'n), 336 U.S. 460, 464, 69 S. Ct. 714, 716, 93 L. Ed.

3

805 (1949) (“If it is interstate commerce that feels the pinch, it does not matter

4

how local the operation which applies the squeeze”) (emphasis supplied); Rex

5

Hospital, 425 U.S. at 744 (purchase of out of state medicine and payment by out of

6

state insurers established effect on interstate commerce; “indirect” effect on

7

commerce is sufficient).

8

The complaint more adequately alleges an effect on interstate commerce,

9

including that 1) GTL and Securus are national companies headquartered out of

10

state, 2 ) they hire on a nationally centralized basis, 3) their human resources

11

operations are nationally centralized, 4) their technology is centralized, 5) their

12

equipment is purchased in the stream of interstate commerce, and 6) each County

13

and County Jail regularly orders equipment and services from the stream of

14

interstate commerce, including materials associated with the challenged contracts.

15

Further, the complaint alleges that, at the time it was filed, the Plaintiffs were

16

victims of the challenged conduct, which is all that is required to establish standing

17

to seek injunctive relief. See Cty. of Riverside v. McLaughlin, 500 U.S. 44, 51, 111

18

S. Ct. 1661, 1667, 114 L. Ed. 2d 49 (1991) (allegation that Plaintiffs “were

19

suffering a direct and current injury as a result of” Defendants’ conduct, and

20

“would continue” to do so established standing).

21

Defendants assert that, “[a]lthough Plaintiffs allege that unidentified

22

proposed class members are outside California, a person does not have standing to

23

sue based on a proposed class if the plaintiff is not a member of the class.” Mot. at

24

29. They never explain why such class members lack standing. If the contention is

25

that the named plaintiffs cannot represent out of state class members, it is flat out

26
27
28

42

1

wrong. 28 The fact that the class is composed of persons from different states is of

2

no moment in the standing analysis. See Wal-Mart Stores, Inc. (rejecting

3

nationwide class not on standing grounds but because Rule 23 standards were not

4

met); 1 McLaughlin on Class Actions § 4:28 (12th ed.) (distinguishing “the

5

threshold issue of whether the named plaintiff has individual standing from the

6

inquiry into whether the named plaintiff can satisfy the requirements to certify a

7

class under Rule 23”). Here, the class definition includes any person who paid

8

money for a telephone account of an inmate within Defendants’ jails, and is not

9

limited to only those in California. Compl., ¶ 48. Therefore, named Plaintiffs have

10

standing to sue on behalf of unnamed class members, whether they reside in

11

California or not.

12

E.

13

THE TURNER STANDARD HAS NO BEARING ON PLAINTIFFS’
ANTITRUST CLAIM.

Defendants do not cite one case – and Plaintiffs are not aware of any - in

14
15

support of their argument that they can violate the Sherman Antitrust Act because

16

of alleged security concerns. The only immunity for violation of the antitrust laws

17

is the state immunity discussed supra at Section A. Furthermore, the Ninth Circuit

18

has often refused to stay antitrust actions on primary jurisdiction grounds when the

19

agency's expertise is not essential to resolving the antitrust issues. See, e.g., Cost

20

Management, 99 F.3d at 948-49; Pinhas v. Summit Health, Ltd., 894 F.2d 1012,

21
22
23
24
25
26
27
28

28

The claims here meet Rule 23’s typicality and commonality standards (which “tend to
merge”, General Telephone Co. of Southwest v. Falcon, 457 U.S. 147, 157 (1982)),
qualifying them to represent the class. Commonality exists where, as here, “examination
of all the class members' claims for relief will produce a common answer” to a central
common question. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 131 S. Ct. 2541, 2552,
180 L. Ed. 2d 374 (2011), Typicality is met where, as here, “other members have the
same or similar injury, … the action is based on conduct which is not unique to the
named plaintiffs, and …. other class members have been injured by the same course of
conduct.” Hanon v. Dataproducts Corp., 976 F. 2d 497, 508 (9th Cir. 1992). Plaintiffs
have clearly alleged that “they personally have been injured.” Lierboe v. State Farm Mut.
Auto Ins. Co., 350 F3d 1018, 1022 (9th Cir. 2003).

43

1

1031 (9th Cir. 1989), aff’d 500 U.S. 322 (1991); Farley Transp. Co. v. Santa Fe

2

Trail Transp. Co., 778 F.2d. 1365, 1370-71 (9th Cir. 1985). Thus, even if jail

3

administrators’ decisions were at issue, and they are not, they have no bearing on

4

the antitrust issues here. Certainly, the Court cannot not simply accept Defendants’

5

factual claim at the pleading stage.

6

F.

7

Defendants wrongly state that Plaintiffs’ allegations of antitrust injury are

PLAINTIFFS’ ALLEGE AN ANTITRUST INJURY.

8

“vague” and “abstract.” Mot. at 32:10-15. To the contrary, Plaintiffs’ antitrust

9

injury is straightforward and “flows from that which makes defendants’ acts

10

unlawful.” Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489

11

(1977). See also In re Online DVD-Rental, 779 F.3d 914, 922 (9th Cir. 2015)

12

(explaining that antitrust injury “can be established by showing that consumers

13

paid higher prices for a product due to anticompetitive actions of a defendant....”).

14

Plaintiffs allege that they “have been injured by being charged supra-

15

competitive prices for use of inmate phone services within the County’s jails.”

16

Compl., ¶¶ 99-104. Plaintiffs’ contention is not speculative. Indeed, as an example,

17

they describe the significant decrease in charges when California prison

18

commissions were eliminated. Id., ¶ 7. In addition, the FCC has concluded that

19

“where site commission payments exist, they are a significant factor contributing

20

to high rates.” Id., ¶ 82; accord Daleure, 119 F. Supp. 2d at 692 (“awarding

21

contracts based on the highest commission… all but require[s] the Telephone

22

Companies to take advantage of their market power” to obtain a non-competitive

23

price).

24
25

VIII. THE TELEPHONE COMPANIES ARE NOT NECESSARY PARTIES
AND, THUS, ARE NOT INDISPENSABLE PARTIES.

26

This lawsuit does not seek an order setting aside the current contracts

27

between the Defendants and telephone companies. Nor does it seek an order

28

44

1

reducing any phone rates. 29 Rather, Plaintiffs seek an order (1) finding the

2

commissions paid to Defendants illegal; (2) prohibiting Defendants from renewing

3

current contracts, or entering into new contracts, that provide for these illegal

4

commissions; and (3) restitution (with interest).

5

Since the telephone companies are subject to service of process, and their

6

joinder would not deprive the court of subject-matter jurisdiction, the sole issue is

7

whether they are required (necessary) parties under Rule 19(a). As the moving

8

parties, Defendants bear the burden of persuading the court that a party must be

9

joined. Makah Indian Tribe v. Verity, 910 F.2d 555, 558 (9th Cir. 1990).

10

“A party may be necessary under Rule 19(a) in three different ways.” Salt

11

River Project Agr. Imp. & Power Dist. v. Lee, 672 F.3d 1176, 1179 (9th Cir. 2012).

12

“First, a person is necessary if, in his absence, the court cannot accord complete

13

relief among existing parties.” Id. (citing Fed. R. Civ. P. 19(a)(1)(A)). “Second, a

14

person is necessary if he has an interest in the action and resolving the action in his

15

absence may as a practical matter impair or impede his ability to protect that

16

interest.” Id. (citing Fed. R. Civ. P. 19(a)(1)(B)(i)). “Third, a person is necessary if

17

he has an interest in the action and resolving the action in his absence may leave an

18

existing party subject to inconsistent obligations because of that interest.” Id.

19

(citing Fed. R. Civ. P. 19(a)(1)(B)(ii)). However, even when a party has an interest

20

in the litigation, that party may not be necessary under Rule 19(a) if it is

21

“adequately represented” by a present party. Id. at 1180-81.

22

A.

23

THE COURT CAN PROVIDE COMPLETE RELIEF WITHOUT JOINDER
OF THE TELEPHONE COMPANIES.

24

“Complete relief ‘is concerned with consummate rather than partial or

25

hollow relief …, and with precluding multiple lawsuits on the same cause of

26

action.’” Alto v. Black, 738 F.3d 111, 1126 (9th Cir. 2013) (quoting Disabled

27
28

29

Based on the experience of the State of California and findings of the FCC, Plaintiffs
anticipate that elimination of the commissions will result in a decrease in the phone rates.

45

1

Rights Action Comm. v. Las Vegas Events, Inc., 375 F.3d 861, 879 (9th Cir.

2

2004)).The issue is “whether the absence of the party would preclude the district

3

court from fashioning meaningful relief ” Disabled Rights, 375 F.3d at 879.

4

Here, Plaintiffs’ success would result in meaningful relief in the form of tax/

5

restitution refunds from Defendants, not the telephone companies. An injunction

6

would prohibit Defendants from entering into future commission contracts; it

7

would not order relief against the phone companies. Such an injunction would

8

result in the relief that Plaintiffs seek. In sum, Plaintiffs do not seek relief that

9

depends on the actions of the telephone companies. Id. at 880; see also Ass’n to

10

Protect Hammersley, Eld, & Totten Inlets v. Taylor Res, Inc., 299 F.3d 1007, 1014-

11

15 (9th Cir. 2002) (complete relief was possible where relief was available

12

regardless of the absent party’s participation); compare, e.g., Dawavendewa v. Salt

13

River Project Agric. Improvement & Power Dist., 276 F.3d 1150, 1155 (9th Cir.

14

2002) (Navajo Nation was necessary party because without its participation, the

15

relief requested, invalidation of a lease, could not be granted),

16

Finally, Defendants may file a Cross-Complaint against the telephone

17

companies for indemnification. Cf., e.g, Lennar Mare Island, LLC v. Steadfast Ins.

18

Co., 139 F.Supp. 3d 1141, 1150 (E.D. Cal. 2015). Indeed, in Disabled Rights, the

19

Ninth Circuit did not view the specter of a contract dispute between the defendant

20

and an absent party as requiring joinder. 375 F.3d at 880.

21
22
23

B.

RESOLUTION OF PLAINTIFFS’ CLAIMS WILL NOT IMPEDE THE
TELEPHONE COMPANIES’ ABILITY TO PROTECT THEIR INTERESTS.

As explained above, Defendants have misstated the relief Plaintiffs seek.

24

Defendants contend that Lomayaktewa v. Hathaway, 520 F.2 1324 (9th Cir. 1975)

25

and Dawavendewa v. Salt River Project Agr. Imp. & Power Dist., 276 F.3d 1150,

26

1157 (9th Cir. 2002), mean that the telephone companies, as contract signatories,

27

are automatically necessary parties. However, in Disabled Rights, 375 F.3d at 881,

28

the Ninth Circuit limited the scope of these cases, holding that absentee signatories

46

1

were not necessary parties if the suit was not “an action to set aside a contract,

2

…an attack on the terms of a negotiated agreement, or litigation seeking to

3

decimate a contract.” See also Lennar Mare, 139 F.Supp.3d at 1152 (noting that

4

“the Ninth Circuit has read [those cases] narrowly on this point”).

5

Because Plaintiffs do not seek an order setting aside any contract or

6

lowering the contracted rates, the telephone companies’ interests will not be

7

impaired by a favorable ruling. Assuming that the relief would affect future

8

revenues to the phone companies, a financial stake in the outcome of the litigation

9

does not give rise to Rule 19 necessity.” Disabled Rights, 375 F.3d at 883 (citing

10

Makah Indian Tribe, 910 F.2d at 558). Furthermore, where a party aware of an

11

action chooses not to claim an interest, the district court does not err by finding

12

joinder unnecessary. United States v. Bowen, 172 F.3d 682, 689 (9th Cir. 1999).

13

The telephone companies can move to intervene if they deem it in their interest.

14

If necessary, Plaintiffs are prepared to amend the complaint to allege the fact

15

that each of the contracts contains an indemnification clause by which the

16

telephone companies fully indemnify the Counties. Plaintiffs have filed a Request

17

for Judicial Notice of the relevant contracts. See Nat. Res. Def. Council v.

18

Kempthorne, 539 F. Supp. 2d 1155, 1167 (E.D. Cal. 2008) (“existence of [subject

19

government] contracts are not reasonably subject to dispute and are the proper

20

subject of judicial notice”). If granted, it would obviate any potential need to

21

amend the Complaint so as to advise the Court of the indemnification agreement.

22

C.

23

“Inconsistent obligations are not the same as inconsistent adjudications or

NO INCONSISTENT OBLIGATIONS WOULD BE CREATED.

24

results.” Cachil Dehe Band of Wintun Indians of the Colusa Indian Cmty. v.

25

California, 547 F.3d 962, 976 (9th Cir. 2008). Inconsistent obligations occur when

26

a party is unable to comply with one court's order without breaching another

27

court's order concerning the same incident. Id. A ruling in Plaintiffs’ favor will not

28

result in Defendants having such inconsistent obligations. For example, an order to

47

1

reimburse money to class members will not conflict with any contractual

2

obligation that Defendants owe the telephone companies.

3

D.

4

An absent party with an interest in the action is not a necessary party under

THE TELEPHONE COMPANIES ARE ADEQUATELY REPRESENTED.

5

Rule 19(a) “if the absent party is adequately represented in the suit.” Salt River,

6

672 F.3d at 1180 (quoted citation omitted). The adequacy analysis assesses : (1)

7

“whether the interests of a present party to the suit are such that it will undoubtedly

8

make all of the absent party’s arguments;” (2) “whether the party is capable of and

9

willing to make such arguments;” and (3) “whether the absent party would offer

10

any necessary element to the proceedings that the present parties would neglect.”

11

Salt River, 672 F.3d at 1180 (quoted citation omitted).

12

Here, Defendants’ interests are “aligned” with the telephone companies’.

13

See, e.g. Lennar Mare, 139 F.Supp.3d at 1154 (“The Navy’s rights under

14

the…policy may differ from LMI’s and CCI’s generally, but their interests all align

15

with respect to Steadfast’s counterclaim”). Defendants do not suggest otherwise.

16

There is no basis to conclude that Defendants have not made, and will not continue

17

to make, every reasonable argument that the telephone companies themselves

18

would make, particularly given the indemnifications to “indemnify and hold

19

harmless[,]…defend, at its sole expense.” (Riverside contract). The five

20

Defendants, each with separate counsel, all joined in one consolidated Motion. In

21

fact, because Plaintiffs attack the commissions, and not telephone company profits,

22

Defendants have an even greater interest in defending against these claims than do

23

the telephone companies. Further, Defendants have not suggested that the

24

telephone companies would offer any “necessary element to the proceedings that

25

[any of the Defendants] would neglect.” Salt River, 672 F.3d at 1180.

26
27
28

48

1

IX.

2

GOVERNMENT CODE SECTION 11135 DOES CREATE LIABILITY
WHERE THERE IS A DISPARATE IMPACT

3

Government Code Section 11135 does permit claims based on disparate

4

impact. See 22 Cal. Code Regs. § 98101 (i) (prohibiting “recipient[s]” of state

5

funds from, inter alia, “utiliz[ing] criteria or methods of administration that…(1)

6

have the purpose or effect of subjecting a person to discrimination….”) (emphasis

7

added). In 1999, Section 11135 et seq.was amended to provide that “[t]his article

8

and regulations adopted pursuant to this article may be enforced by a civil action

9

for equitable relief.” Gov. Code § 11139 (emphasis added). See Blumhorst v.

10

Jewish Family Servs. of Los Angeles, 126 Cal.App.4th 993, 1001 (2005) (Ҥ 11139

11

amendments “create[d] a private right of action”); Darensburg v. Metropolitan

12

Transp Com’n, 636 F.3d 511, 518 (9th Cir. 2011) (“[T]he state burden-shifting

13

framework for analyzing disparate impact cases [under § 11135] parallels the

14

federal one [for cases under Title VI]….”). 30
Government Code § 11135 does not conflict with Penal Code § 4025. 31

15
16

There is no conflict because these two statutes do not concern the same subject

17

matter. In contrast, in State Dep’t of Public Health v. Superior Court, 60 Cal.4th

18

940, 952-953 (2015) (the case Defendants cite), there was a conflict because both

19

statutes addressed the confidentiality of citations issued to long-term care facilities.

20

One appeared to declare copies of the citations to be available under the Public

21

Records Act while the other labeled them confidential. See also Marsh v. Edwards

22

Theatres Circuit, Inc., 64 Cal.App.3d 881, 890 (1976) (“A special statute dealing

23

expressly with a particular subject controls and takes precedence over a more

24

general statute covering the same subject”) (emphasis added).

25
26
27
28

30

Discriminatory intent is not required under a disparate impact theory. Darensburg v.
Metropolitan Transp. Com’n, 611 F.Supp.2d 994, 1042 (N.D. Cal. 2009) (citing Griggs
v. Duke Power Co., 401 U.S. 424, 432, 91 S.Ct. 849, 28 L.Ed.2d 158 (1971)).
31
If Defendants’ argument was accepted, it would mean that wherever a statue permitted
the state to take certain action it could do so despite the fact that it was racially
discriminatory in violation of Government Code § 11135.

49

1

A court must interpret statutes to give force to both. The applicable rules of

2

statutory interpretation include (1) “where reasonably possible, harmonize statutes,

3

reconcile seeming inconsistencies in them, and construe them to give force and

4

effect to all of their provisions; (2) when “two codes are to be construed, they must

5

be regarded as blending into each other and forming a single statute” and “read

6

together and so construed as to give effect, when possible, to all the provisions

7

thereof”; and (3) “all presumptions are against a repeal by implication.” Repeal

8

will be found “only when there is no rational basis for harmonizing” the statutes,

9

which must be“irreconcilable, clearly repugnant, and so inconsistent” as to prevent

10

“concurrent operation.” State Dep’t of Public Health, 60 Cal.4th at 955-956

11

(quoting Pacific Palisades Bowl Mobile Estates, LLC v. City of Los Angeles, 55

12

Cal.4th 783 (2012) (internal quotation marks and citations omitted).
In the instant case, harmonization is simple and straightforward: Penal Code

13
14

§ 4025 merely recognizes the existence of inmate phone commissions and directs

15

where commissions revenues go, but does not authorize discriminatory, excessive

16

or unreasonable charges, including discrimination by entities receving government

17

funds (Govt. Code § 11135). The fact that the Inmate Call Service charges may not

18

discriminate intentionally or have a discriminatory impact does not mean that they

19

cannot be charged. Under §11135, such charges are perfectly legal so long as they

20

are not discriminatory. Thus, the two statutes are not in conflict.

21

X.

22

PLAINTIFFS’ HAVE PROPERLY STATED A CLAIM UNDER CIVIL
CODE § 52.1.

23

§ 52.1 does not only include violation of constitutional rights, as the case

24

Defendants quote makes clear. See Spicer v. City of Camarillo, 195 Cal. App. 4th

25

1423, 1429 (2011) (violation of “statutory or constitutional rights) (emphasis

26

supplied).

27

Defendants contend that there is no coercion here, but that is not so. They

28

cite Shoyoye v. County of Los Angeles, 203 Cal. App. 4th 947 (2012), which was
guided in part by a federal district court case, Gant v. County of Los Angeles
50

1

(C.D.Cal.2011) 765 F.Supp.2d 1238,1253, affd. in part and revd. in part in 772

2

F.3d 608 (9th Cir.2014). Gant relied on Massachusetts authority because the Bane

3

Act “was modeled closely on” a similar Massachusetts statute (Shoyoye, 203

4

Cal.App.4th at 960.) In Buster v. George W. Moore, Inc. (2003) 438 Mass. 635

5

[783 N.E.2d 399], the Supreme Judicial Court of Massachusetts explained that

6

coercion was “the application to another of such force, either physical or moral, as

7

to constrain him to do against his will something he would not otherwise have

8

done.’” (Internal quotations and citations omitted emphasis in Buster.) Thus,

9

“coercion may be found where one party deprives another of rights due under a

10

contract.” Id. at pp. 646–647.

11

Here, the theory of coercion is that Plaintiffs (both inmates and call

12

recipients) were faced with the coercive choice of either not communicating with

13

loved ones or paying predatory charges, the lion’s share of the profits of which

14

went to the Counties. A court in this District, in an opinon post-dating Shoyoye and

15

Allen v. City of Sacramento, 234 Cal. App. 4th 41, 66-70 (2015) has determined

16

that forcing a coercive choice qualified as coercion under § 52.1. McKibben v.

17

McMahon, No. EDCV1402171JGBSPX, 2015 WL 10382396, at *3 (C.D. Cal.

18

Apr. 17, 2015) (“Plaintiffs allege they were subjected to a coercive choice while

19

incarcerated: remain in the ALT [separate gay, bisexual and transgender housing]

20

or be placed in general population” where they were at greater risk of violence)

21

(original emphasis). Similarly here, Plaintiffs were forced with a coercive choice.

22

The Supreme Court has explained that the doctrine of unconstitutional

23

conditions encompasses “land-use permit applicants [who] are especially

24

vulnerable to the type of coercion that the unconstitutional conditions doctrine

25

prohibits because the government often has broad discretion to deny a permit that

26

is worth far more than property it would like to take.” Koontz v. St. Johns River

27

Water Mgmt. Dist., 133 S. Ct. 2586, 2594, 186 L. Ed. 2d 697 (2013) (emphasis

28

supplied). Plaintiffs’ reading of the meaning of coercion is thus consistent with

51

1

well-established statutory and constitutional authority. (Of course, Plaintiffs still

2

must establish that they were denied a statutory or constitutional right, issues

3

addressed previously.)
Finally, Defendants claim that there cannot be coercion against plaintiffs not

4
5

in custody. Of course, that would mean that the Supreme Court was wrong in

6

Koontz when it said that forcing payment of money was a type of coercion.

7

XI.

8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27

THE COURT SHOULD NOT DECLINE JURISDICTION OVER THE
STATE LAW CLAIMS BECAUSE THEY ARE NOVEL AND
COMPLEX.
Defendants contend that supplemental jurisdiction should be declined as the

state law claims are novel and complex under 28 U.S.C., 1367(C)(1). However, the
contention does not stand up to scrutiny. Beginning with Govt Code § 11135, the
Ninth Circuit has considered the statute in the past without any difficulty. See
Darensburg v. Metropolitan Transp Com’n, 636 F.3d 511, 518 (9th Cir. 2011).
As to the tax claims, the basic parameters of the limits on taxing authority
were well established long before the passage of Proposition 26. Several California
cases have addressed Proposition 26 since it passed and noted that, for the most
part (and, we contend, as relevant here), it continued (and, if anything,
strengthened), pre-existing law limiting fees to those bearing a reasonable
relationship to costs incurred/benefits provided. The primary change was to
allocate the burden of proof to Defendants and require a 2/3 approval vote for all
new taxes. See, e.g., Griffith v. City of Santa Cruz, 207 Cal. App. 4th 982,
996,(2012) (annual inspection fees where the revenues and costs of enforcement
were aligned not a tax; language of last paragraph of Prop. 26 (Article XIII C, § 1,
subd. (e)(3) “repeats nearly verbatim the language of prior cases assessing whether
a purported regulatory fee was indeed a fee or a special tax”; in California Farm
Bureau Federation v. State Water Resources Control Bd. 51 Cal.4th 421 (2011),

28

52

1

the Supreme Court analyzed language from pre-Proposition 26 cases that was later

2

adopted by drafters of Prop. 26). 32
As noted previously, Prop. 26 was intended to strengthen the reasonable

3
4

relationship language applied generally to the levy/fee issue in assessing what

5

qualifies as a tax, a standard that itself has long been in effect. Thus, the issue here

6

is the application of long recognized standards to the instant case. See, e.g.,

7

Sinclair Paint, supra, 15 Cal.4th 866 at p. 876 (fees imposed under the Childhood

8

Lead Poisoning Prevention Act on paint manufacturers and other producers

9

contributing to environmental lead contamination constituted “regulatory fees”

10

that, if they met the reasonable relationship standard, were not taxes); California

11

Assn. of Prof'l Scientists v. Dep't of Fish & Game, 79 Cal. App. 4th 935, 938-39,

12

94 Cal. Rptr. 2d 535, 538 (2000) (Department of Fish and Game flat environmental

13

review fee was a permissible regulatory fee); Schmeer v. Cty. of Los Angeles, 213

14

Cal. App. 4th 1310, 1313, 153 Cal. Rptr. 3d 352, 354 (2013), as modified (Mar. 11,

15

2013) (paper carryout bag $.10 charge is not a tax under Prop. 26). 33

16
17
18
19
20
21
22
23
24
25
26
27
28

32

See also Collier v. City and County of San Francisco, 151 Cal.App.4th 1326, 1346
(2007) (quoting San Diego & Electric Co. v. San Diego Air Pollution Control Dist., 203
Cal.App.3d 1132, 1146 (1988) (“to show a fee is a regulatory fee and not a special tax,
the government should prove (1) the estimated costs of the service or regulatory activity,
and (2) the basis for determining the manner in which the costs are apportioned, so that
charges allocated to a payor bear a fair or reasonable relationship to the payor's
burdens on or benefits from the regulatory activity”) (emphasis added).
33
There is one Prop 218 case and one Prop. 26 case pending before the California
Supreme Court. See Jacks v. City of Santa Barbara, 349 P.3d 1066 (Cal. 2015) (Prop
218) (granting review of appellate reported at 49 P.3d 1066 (Cal. 2015) and Citizens for
Fair Reu Rates v. City of Redding, 347 P.3d 89 (Cal. 2015) (Prop 26) (granting review of
appellate reported at 233 Cal. App. 4th 402 (2015). Neither case involves the
straightforward issues here. Jacks in the intermediate opinion held that a 1% utility
surcharge, characterized as a franchise fee, was a tax masquerading as a franchise fee.
Citizens held that a pre-Prop. 26 annual City discretionary reauthorization line item
transferring 1% of revenues from the City’s municipally owned utility to its general fund
was a tax unless the City could demonstrate that it did not exceed reasonable costs. Both
cases thus involve the reach of either Prop 218 or Prop. 26 to relatively low fees (1%).

53

1
2
3
4

XII. INMATE PLAINTIFFS WERE NOT REQUIRED TO PLEAD
EXHAUSTION AND, IN THE CONTEXT OF THIS CASE, WERE
NOT REQUIRED TO EXHAUST ADMINISTRATIVE REMEDIES,
TO PURSUE THEIR STATE LAW CLAIMS.
A.

5
6

FEDERAL PLEADING RULES PROCEDURE DO NOT REQUIRE THAT
EXHAUSTION BE PLED.

Federal law applies to procedural issues in supplemental claims. In re Exxon

7

Valdez, 484 F.3d 1098, 1100 (9th Cir. 2007) (Erie Railroad Co. rule that federal

8

courts apply “state substantive law and federal procedural law” applies in both

9

diversity and supplemental jurisdiction cases) (internal quotation marks and

10
11

citations omitted).
The PLRA exhaustion requirement is an affirmative defense and does not

12

have to be pled. See Jones v. Bock, 549 U.S. 199, 212-14, 127 S. Ct. 910, 919-20,

13

166 L. Ed. 2d 798 (2007) (“The PLRA … is silent on the issue whether exhaustion

14

must be pleaded by the plaintiff or is an affirmative defense. This is strong

15

evidence that the usual practice should be followed, and the usual practice under

16

the Federal Rules is to regard exhaustion as an affirmative defense”).

17
18
19
20
21
22
23
24
25

B.

Inmate Plaintiffs Were Not Required To Exhaust
Admininistrative Remedies Because The Challenged Phone
Contracts Are Not Departmental Policies Or Procedures.

Defendants cite Parthemore v. Col, 221 Cal. App. 4th 1372, 1379-80, 165
Cal. Rptr. 3d 367, 371-72 (2013) for the proposition that the inmate plaintiffs had
to exhaust state administrative remedies to pursue their state law claims.
Parthemore cites 372 Cal.Code Regs., tit. 15, §§ 3084.1–3084.7 as the source of
the requirement; but that regulation establishes “an administrative mechanism for
review of departmental policies, decisions, actions, conditions, or omissions.”
(Emphasis supplied.) It provides a mechanism for any “inmate or parolee under the

26
27
28

The amounts involved here (which indisputably have nothing to do with the cost of the
service) do not remotely fit into the relatively low charges at issue in those two cases.

54

1

department's jurisdiction [to] appeal any policy, decision, action, condition, or

2

omission by the department or its staff.”

3

While we have no doubt that the various County Jails fully support these

4

contracts, they are not departmental policies etc. nor do they fall under the Jails’

5

jurisdictions. Title 15, supra; Byrd v. Goord, supra, 2005 WL 2086321 at *9

6

(telephone fee “is neither a rule nor regulation related to the functioning of a

7

prison”). As contracts entered into by the respective Boards of Supervisors, the

8

Jails have no legal ability or authority to cancel them even if they wished to do so.

9

Further, as to the Call Recipient Class, they are not “inmates or parolee[s]” subject

10

to the regulation.

11

XIII. INMATE PLAINTIFFS ARE ENTITLED TO PURSUE CLAIMS FOR
COMPENSATORY DAMAGES, INCLUDING PRESUMED
DAMAGES, AND VIOLATION OF CONSTITUTIONAL RIGHTS

12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Defendants contend that inmate Plaintiffs’ claims, whether federal or state,
for emotional distress and general damages must be dismissed due to the absence
of physical injury. Plaintiffs recognize a split in authority on the applicability of
this principle to state law claims. While “some courts have interpreted [§ 1997e(e)]
to apply to state law claims as well as federal claims…[this Court] doubts that is
the correct reading of the statute.” Mercado v. McCarthy, 2009 WL 799465, 2
(D.Mass. March 25, 2009). See also, e.g.,; Bromell v. Idaho Dep't of Corr., 2006
WL 3197157, at *5 (D. Idaho Oct. 31, 2006) (“Defendant has not provided any
legal authority for his assertion that section 1997e(e) of the PLRA bars a state-law
claim for intentional infliction of emotional distress”); Albrecht v. Williams, 2009
WL 3296649, (D.N.J. Oct. 13, 2009) (“Defendants have provided…no authority
for the proposition that § 1997e(e) of the PLRA bars a state law claim for mental
or emotional injury without prior showing of physical injury”).
Regardless, compensatory damages for violation of constitutional rights are
available to inmates even in the absence of physical injury. Cockcroft v. Kirkland,
548 F. Supp. 2d 767, 776-77 (N.D. Cal. 2008) summarized that Ninth Circuit law

55

1

provided that the physical injury requirement of the PLRA was of “limited

2

application” and “does not bar an action for a violation of a constitutional right.”

3

Cockcroft cited Oliver v. Keller, 289 F.3d 623, 630 (9th Cir.2002) for the

4

proposition that Ҥ 1997e(e) does not apply to claims for compensatory damages

5

not premised on emotional injury,” and that, “[t]o the extent that appellant's claims

6

for compensatory, nominal or punitive damages are premised on alleged

7

Fourteenth Amendment violations, and not on emotional or mental distress

8

suffered as a result of those violations, § 1997e(e) is inapplicable and those claims

9

are not barred.” See also, e.g., Canell v. Lightner, 143 F.3d 1210, 1213 (9th Cir.

10

1998) (the deprivation of First Amendment rights entitles a plaintiff to judicial

11

relief wholly aside from any physical injury he can show, or any mental or

12

emotional injury he may have incurred”).
In particular, the claim for presumed damages (also referred to at times as

13
14

general damages) is distinct from emotional distress damages. Presumed damages

15

are a form of compensatory damages for civil rights violations not readily capable

16

of a compensatory damages calculation, including for First Amendment violations.

17

See, e.g., Carr v. Whittenburg, 2006 WL 1207286 at 3 (S.D. Ill. April 28, 2006) (a

18

First Amendment “injury is compensable through so called ‘general-damages’ or

19

‘presumed damages,’ even in the absence of proof of injury”). 34

20
21
22
23
24
25
26
27
28

34

See also, e.g., City of Watseka v. Illinois Public Action Council, 796 F.2d 1547, 1559
(7th Cir.1986) (upholding award of $5000 for violation of First Amendment rights
quoting Memphis Community School District v. Stachura, 477 U.S. 299, 310, 311 N. 14
(1986), which discussed the availability of presumed damages in voting rights cases);
Villanueva v. George, 659 F.2d 851, 855 (8th Cir. 1981) (“violations of certain
substantive constitutional rights are redressable by substantial compensatory damages
awards independent of actual injury”); Hessel v. O'Hearn, 977 F.2d 299, 302 (7th Cir.
1992) (“if your home is illegally invaded or you are illegally prevented from voting or
speaking you can seek substantial compensatory damages without laying any proof of
injury before the jury”); Walje v. City of Winchester, Ky., 773 F.2d 729, 731 (6th Cir.
1985) (finding damages were presumed from the violation of the victim's right to bodily
integrity); Brandon v. Allen, 719 F.2d 151, 154-55 (6th Cir.1983), rev’d on other issues

56

1

The presumed damages concept has specifically been applied to First and

2

Eighth Amendment violations in the prison setting despite the PLRA’s physical

3

injury limitation. See, e.g., Parrish v. Johnson, 800 F.2d 600, 609-11 (6th Cir.

4

1986) (availability of presumed damages for Eighth Amendment violations were

5

determined on a case by case basis); King v. Zamiara, 788 F.3d 207, 214 (6th Cir.

6

2015) (“When it is difficult to quantify precisely the damages caused by that

7

injury, presumed damages may be awarded”; affirming PLRA presumed

8

compensatory damages award); Carr v. Whittenburg, 2006 WL 1207286, p. 3

9

(S.D.Ill. Apr.28, 2006) (presumed damages for violation of a prisoner's First

10
11

Amendment rights were not barred by 42 U.S.C. §1997e(e)).
Thus, inmate plaintiffs may seek presumed damages, damages for violation

12

of constitutional rights, and damages not premised on emotional distress and

13

financial damages. And, of course, non-inmate Plaintiffs are not subject to the

14

PLRA at all.

15

XIV. CONCLUSION

16
17
18
19
20
21
22
23
24

For the reasons stated above, Defendants’ motion should be denied.
Dated: June 20, 2016

Respectfully submitted,
KAYE, McLANE, BEDNARSKI & LITT, LLP
RAPKIN & ASSOCIATES, LLP
By: /s/ Barrett S. Litt
Barrett S. Litt
By:
/s/ Scott Rapkin
Scott Rapkin
Attorneys for Plaintiffs

25
26
27
28

sub nom. Brandon v. Holt, 469 U.S. 464, 105 S.Ct. 873 (1985) (common law had
permitted recovery for a wide array of intangible “dignitary interests,” in which cases
injury was presumed and general as distinguished from special damages were allowed).

57

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

58