NEW ORLEANS – The Louisiana Board of Examiners of Certified Shorthand Reporters is bound by a decades-old law prohibiting the use of high-volume contracts by reporting firms, according to the attorney representing the board in an anti-competition lawsuit filed by Veritext Corp.
“The CSR Board has relied for more than two decades on authority derived from Code of Civil Procedure Article 1434; plaintiffs have challenged the constitutionality of Article 1434 in the pending federal litigation,” David Marcello, who is representing the board in the lawsuit, told the Louisiana Record.
New Jersey-based court reporting firm Veritext filed a complaint Aug. 17 alleging that the board and its member court reporters are working together to make sure out-of-state competition stays out of Louisiana.
Veritext said in the complaint that its effort to bring its services to prospective clients such as insurance companies, government agencies, regulatory authorities and educational institutions in Louisiana has been hindered by anti-competitive actions taken by the board and its members. The firm alleges that the board went as far as to promote an increase of court reporting rates in Louisiana in an effort to keep out-of-state competition from working there.
Veritext’s complaint calls into question the Louisiana statute in question, which the company said prohibits court reporters in the state from agreeing to long-term or volume-based contracts with repeat customers.
“As a state agency, the CSR board is required to follow state law,” Marcello said. “The board will continue to act in accordance with the requirements found in the Code of Civil Procedure Article 1434, because the board is governed by Louisiana’s laws.”
Veritext said in its complaint that the restriction established by the statute “was not designed or intended to advance a legitimate state interest, but rather to protect the self-interest of court reporters at the expense of consumers and the administration of justice by limiting competition and promoting artificially high prices for court reporter services in Louisiana.”
In addition, Veritext alleged that the board members have illegally attempted to prevent and discourage court-reporting firms from other states from offering their services in Louisiana by sending notices threatening cease and desist proceedings, conducting investigations, discouraging in-state court reporters from working with the outside companies and issuing a show cause ruling against Veritext.
Veritext said it routinely enters “preferred-provider” contracts with companies that utilize a lot of court-reporting services and allows its clients to cut costs by eliminating the need to find and work with more than one reporting firm.
According to Veritext’s complaint, the board announced in 2012 that it would begin to enforce the no-contracting regulation. As a result, the company said a lot of court reporters were afraid to contract with the out-of-state firms.
“In due course we will have the benefit of a judicial ruling on this question,” Marcello said. “But for now and since 1995, when the provision was last amended, Article 1434 has been the law in Louisiana.”
Veritext said Article 1434 exists only to keep the rates charged by Louisiana court reporters artificially high and to stifle innovation in the court-reporting industry.
Veritext attorney Robert Bieck Jr. of Jones Walker LLP said he did not want to comment on the lawsuit before the board files its response to the lawsuit.
“At this point, we’ll stand on the complaint,” Bieck said.