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Alexander v. Global Tel Link Corp.

United States District Court, S.D. Mississippi, Northern Division

July 18, 2018

ELIZABETH ALEXANDER, individually and on behalf of all others similarly situated; et al. PLAINTIFFS



         BEFORE THE COURT is the [33] Motion to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(6) filed by Defendant Global Tel Link Corporation (“GTL”). The Motion argues that Plaintiffs' Second Amended Complaint fails to state a claim for relief and should be dismissed. The Motion is fully briefed. Having considered the submissions of the parties, the record, and relevant law, the Court concludes that Defendant's [33] Motion to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(6) should be granted. However, Plaintiffs will be granted leave to amend their Complaint. Also pending is GTL's [34] Motion to Take Judicial Notice, which the Court finds moot.

         I. BACKGROUND

         This litigation involves an alleged conspiracy on the part of all named Defendants to charge exorbitant, unfair, and unapproved prices for inmate calling services at prisons operated by the Mississippi Department of Corrections (“MDOC”) and at Mississippi county jails. (See 2d Am. Compl., ECF No. 11.) Plaintiffs, who are Mississippi inmates and family members of inmates, allege a “concerted campaign of bribery, kickbacks, and public corruption” through which “Defendants gained a long-term monopoly over telecommunications between family members and friends and their loved ones incarcerated in various facilities in the State of Mississippi.” (Id. at 2-4.) Though not presently at issue, Plaintiffs seek class certification. Named defendants include GTL, a provider of inmate calling services; GTEL Holdings, Inc., the parent company of GTL; GTEL Acquisition Corp., the parent company of GTEL Holdings, Inc.; GTEL Holding LLC, the parent company of GTEL Acquisition Corp.; Sam Waggoner, a former consultant for and agent of GTL; and Christopher Epps, the former Commissioner of MDOC. (See Id. at 5-6.) By prior [50] Order, the Court dismissed GTEL Holdings, Inc. and GTEL Acquisition Corp. for lack of personal jurisdiction. Both Waggoner and Epps are currently serving federal prison sentences related to their alleged conduct.

         According to Plaintiffs' Second Amended Complaint the State of Mississippi first awarded GTL a contract to provide inmate calling services to MDOC facilities on December 13, 2005. (2d Am. Compl. 8, ECF No. 11.) This contract has been repeatedly renewed without competing bids, and GTL remains the provider of inmate calling services to MDOC facilities despite Epps' and Waggoner's related criminal convictions. (Id. at 8, 12, 15.) The contract authorized a fixed rate structure for calls, but Plaintiffs maintain that GTL “grossly” inflated the cost to end users by including various unapproved surcharges, ancillary charges, and additional per-call fees. (Id. at 8-9, 12.) Plaintiffs allege that these inflated fees - which ran afoul of the inmate calling services contract and filed rates with the Mississippi Public Service Commission (“PSC”) - were intentionally overlooked by Epps in exchange for Epps' receipt of a share of the increased profits. (Id. at 10-11.)

         To effect this arrangement, GTL's regional manager, Robert Orso, doubled GTL's monthly payment to Waggoner in 2011, and Waggoner funneled half of that increase to Epps. (Id. at 10.) Plaintiffs state that these kickbacks to Epps were intended to “curry favor with Epps for the purpose of influencing Epps' decision regarding GTL and its contract with MDOC and with local jails subject to Epps' influence.” (Id. at 10-11.) Although Epps was only officially in charge of MDOC, Plaintiffs maintain that his “influence and ability to promote GTL's interests extended far beyond the MDOC facilities under his direct supervision and control;” Epps “strong-armed” local jails into using GTL's inmate calling services by threatening to remove state inmates - and their related per diem payments - from these jails. (Id. at 11.)

         Plaintiffs assert that this arrangement effectively ceded control of MDOC affairs to GTL, who sought every opportunity to increase the prices paid by Plaintiffs. (Id.) Plaintiffs submit that Waggoner found additional ways to increase GTL's revenue besides the inflated calling service fees: “Waggoner lobbied Epps to allow GTL to provide video communication services between inmates and their visitors, ” which would be offered at “significantly higher cost than traditional phone service.” (Id. at 12.) Epps approved this additional service, which increased both GTL's revenue and the kickbacks he received. (Id. at 13.)

         Plaintiffs allege that Waggoner paid Epps over $300, 000 in kickbacks and bribes from 2011 through 2014 with money from GTL. (Id.) They maintain that “GTL knew, or had every reason to know and should have known, that the money it was paying Waggoner was being used to pay bribes and kickbacks to Epps for the purpose of obtaining and retaining the aforementioned contract.” (Id. at 14.) Plaintiffs claim that they have suffered monetary damages as a result of this alleged scheme to impose exorbitant fees for inmate telephone calls. (Id. at 15.) Plaintiffs characterize these actions in furtherance of acquiring and maintaining control of MDOC as a pattern of racketeering activity conducted by a criminal enterprise consisting of Epps, Waggoner, and GTL. (Id. at 14.) Accordingly, Plaintiffs assert claims pursuant to the Racketeer Influenced and Corruption Organizations Act (“RICO”), 18 U.S.C. §§ 1961(a)-(d), and various state law causes of action. (Id. at 19-25.)

         On September 22, 2017, Defendant GTL filed the instant Motion to Dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). The parties finished briefing the Motion on February 2, 2018.


         a. Motion to Dismiss Standard

         To survive a motion to dismiss pursuant to Rule 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

         In deciding a Rule 12(b)(6) motion to dismiss, the Court accepts all well pleaded facts as true and views them in the light most favorable to Plaintiff. New Orleans City v. Ambac Assur. Corp., 815 F.3d 196, 199 (5th Cir. 2016). But “the complaint must allege more than labels and conclusions, a formulaic recitation of the elements of a cause of action will not do, and factual allegations must be enough to raise a right to relief above the speculative level.” Jabaco, Inc. v. Harrah's Operating Co., Inc., 587 F.3d 314, 318 (5th Cir. 2009). “While legal conclusions can provide the complaint's framework, they must be supported by factual allegations.” Iqbal, 556 U.S. at 664. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. at 678.

         Generally, if a court considers materials outside of the pleadings, the motion to dismiss must be treated as a motion for summary judgment. Causey v. Sewell Cadillac-Chevrolet, Inc., 394 F.3d 285, 288 (5th Cir. 2004). However, “[d]ocuments that a defendant attaches to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to her claim.” Id. GTL has attached numerous exhibits to its Motion, of which GTL separately asks the Court to take judicial notice. (See Mot. Take Judicial Notice, ECF No. 34.) These exhibits include GTL's 2005 contract with MDOC, GTL's initial bid response, GTL's 2016 contract with MDOC, the Mississippi Attorney General's complaint against GTL in a separate state court action, the Order of Dismissal in that state court action, the settlement agreement that resolved ...

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