In a 19-page complaint filed Tuesday, former Los Angeles County jail inmate Gregory Johnson and Jacqueline Murillo Castro, who regularly paid fees to call inmates, say the commissions collected by the county from jail service providers — including private equity firm Ascribe Capital LLC's Global Tel*Link Corp. and private equity firm H.I.G. Capital LLC's Keefe Commissary — constitute illegal taxes and come at the expense of inmates and their families, who are often relatively poor and from minority communities.
"The millions of dollars in commissions that the companies agree to pay the county annually in exchange for these exclusive contracts are completely passed through to inmates, their families, friends and attorneys in the form of extortionate and outrageous prices, which are then used by the county to fund its jails," the complaint says.
The lawsuit argues that inmates are "literally a captive market with no ability to choose another company," and as a result, inmates and their loved ones are forced to pay the excessive fees for a wide range of jail services, including when they use jail vending machines and telephone services and when they purchase items at the commissary.
The complaint specifically targets jail phone service provider Global Tel*Link, which gave the county "at least" $15 million in 2020, and Keefe Commissary, which sells inmates items like coffee, soup, beans, rice, stationery and hygiene products, and gave the county more than $29 million that same year.
Keefe's 2007 contract with Los Angeles County — which has the largest jail population in the nation with an average 17,000 daily population — provides that Keef would pay the county 53% of all gross revenue received from sales, according to the complaint. But a 2019 county inspector general report showed inmates bore the costs in overcharges, the suit claims.
For example, the actual cost of "Keefe's Instant Coffee" is $3.51, but inmates were charged $7.47, and an 8-ounce bag of "Flamin' Hot Cheetos" cost $2.51, but inmates paid $5.33 — or 47% markups on the products, according to the complaint.
The report found similar 47% markups on hygiene products, as well as a 61% markup on certain food items, like Snickers bars and Diet Coke, according to the lawsuit.
Meanwhile, under a 2011 contract, GTL agreed to pay the county 67.5% of its jail revenues, but it amended its agreement in 2021, lowering the minimum annual guarantee for the contract from $15 million annually to $6 million, the complaint says.
The suit claims the problem has been exacerbated by the COVID-19 pandemic, and the county's commission-based contracts "stand in stark contrast" to the state of California, which in 2010 eliminated commission-based contracts for phone calls in its prisons where inmate calls are now free.
The lawsuit also cites former Los Angeles County Supervisor Zev Yaroslavsky who acknowledged, "everyone's making a lot of money at the expense of inmates' families," and that companies don't have the right to "fleece" inmates who are serving time. It also referred to former Federal Communications Commissioner Mignon Clyburn, who said the prison system's phone charges prey on the most vulnerable and perpetuate the cycle of poverty.
Johnson and Castro argue in their suit that the commissions charged by the companies technically constitute taxes under California law, but those taxes were not approved by county voters as required by Article 13C of the California Constitution. The pair also allege that the fees inmates and their families pay exceed the costs of the services in violation of a government code limiting certain telecommunication fees to their costs.
The complaint seeks restitution and economic damages, attorney fees, costs plus interest and a court order blocking the renewal of the contracts. It additionally seeks to certify a class and subclasses of individuals who, since October 11, 2021, paid for jail telephone, commissary or vending services in which money is passed through to the county.
The Los Angeles County District Attorney's Office declined to comment Wednesday, and counsel for the plaintiffs didn't immediately respond to requests for comment Wednesday.
The lawsuit notes that class counsel previously filed similar proposed class actions challenging the telephone contract commissions in Los Angeles County and other California counties, and those cases were coordinated in the litigation County Inmate Telephone Cases
in the Los Angeles County Superior Court.The trial judge eventually threw the litigation out for lack of standing, finding that the inmates did not pay the charges directly to the counties and instead paid the money to the telephone companies which, in turn, paid the money to the counties. An appeals court affirmed the dismissal in 2020, according to the instant complaint.
However, Johnson and Castro note that last year, the California Supreme Court issued its decision in Zolly v. City of Oakland
, which rejected the standing ruling in County Inmate and held that a plaintiff does not need to be "directly obligated" to pay the fees in order to challenge them, the suit says.Johnson and Castro are represented by Barrett S. Litt of McLane Bednarski & Litt LLP and Michael Rapkin and Scott Rapkin of Rapkin & Associates LLP.
Counsel information for the county wasn't immediately available Wednesday.
The case is Gregory Johnson et al. v. County of Los Angeles, case number 23STCV07316, in the Superior Court of the State of California, County of Los Angeles.
--Editing by Kristen Becker.