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Veritext Corp. v. Bonin

United States District Court, E.D. Louisiana

April 10, 2017

VERITEXT CORP.
v.
PAUL A. BONIN, ET AL.

         SECTION "B"(2)

          ORDER AND REASONS

         I. NATURE OF MOTION AND RELIEF SOUGHT

         Before the court are Defendants' “Motion to Dismiss Amended Complaint for Declaratory Relief, Injunctive Relief, and Damages Under Federal Rule of Civil Procedure 12 (b)(6)” (Rec. Doc. 22), Plaintiff's “Opposition to Motion to Dismiss Amended Complaint for Declaratory Relief, Injunctive Relief, and Damages Under Federal Rule of Civil Procedure 12 (b)(6)” (Rec. Doc. 30) and Defendants' “Reply Brief in Support of Motion to Dismiss Amended Complaint Under Federal Rule of Civil Procedure 12 (b)(6) (Rec. Doc. 43); and Defendants' “Motion to Dismiss Claims for Damages Against Members CSR Board in their Official Capacities Under Rule of Federal Civil Procedure 12(b)(1) (Rec. Doc. 20), Plaintiff's “Opposition to Motion to Dismiss Claims for Damages Against Members of CSR Board in their Official Capacities Under Federal Rule of Civil Procedure 12 (b)(1)” (Rec. Doc. 31) and “Reply in Support of Motion to Dismiss Claims for Damages Against Members of the CSR Board in their Official Capacities Under Federal Rule of Civil Procedure 12(b)(1)” (Rec. Doc. 42). For the reasons set forth below, IT IS ORDERED that the Defendants' Motion to Dismiss Pursuant to Federal Rule and 12(b)(6) is GRANTED IN PART AND DENIED IN PART and the Motion to Dismiss Pursuant to 12 (b)(1) is DISMISSED AS MOOT.

         II. FACTS AND PROCEDURAL HISTORY

         Plaintiff, Veritext Corp., is a Delaware corporation that provides court-reporting services to clients in depositions, arbitrations and other legal proceedings in Louisiana and across the United States (Rec. Doc. 4). In the instant lawsuit the Plaintiff challenges a state statute, La. Code. Civ. Proc. Art. 1434(A)(2), which prevents court reporters from entering into long term or volume based contracts with frequent users of court reporting services (Rec. Doc. 4). The law creates two categories of court reporting firms: court reporting firms that regularly contract with party litigants and court reporting firms that do not regularly contract with party litigants. The law is concerned with potential bias issues relating to court reporting firms who hold contracts with lawyers and the judiciary and may feel a conflict of interest when creating work product (Rec. Doc. 4). Plaintiff claims that this law impermissibly prohibit its ability to enter into contracts in Louisiana (Rec. Doc. 4).

         Plaintiff also alleges that it faces the threat of prosecution as the Louisiana Board of Examiners of Certified Shorthand Reporters began an investigation of it as a prelude to enforcement of Article 1434 after it attempted to contract in violation of the law (Rec. Doc. 4). The Board has the authority to suspend or revoke the certified court reporter certificate that a person must hold to practice court reporting in Louisiana (Rec. Doc. 4). The Plaintiff currently has a pending hearing regarding suspending or revoking their certification that has been continued without date (Rec. Doc. 4). Plaintiff sues defendants Paul A. Bonin, Vincent P. Borrello, Jr., Milton Donegan, Jr., Suzette Magee, Kimya M. Holmes, John H. Andressen, May F. Dunn, Elizabeth C. Methvin, and Laura Putnam in their official capacities as members of the Louisiana Board of Examiners of Certified Shorthand Reporters (Rec. Doc. 4). Plaintiff also sues defendants Borrello, Donegan, Andressen, Dunn, Magee, and Methvin in their individual capacities (Rec. Doc. 4).

         III. FACTUAL AND LEGAL FINDINGS

         Rule 12(b)(6) of the Federal Rules of Civil Procedure allows a party to move for dismissal of a complaint for failure to state a claim upon which relief can be granted. Such a motion is rarely granted because it is viewed with disfavor. See Lowrey v. Tex. A & M Univ. Sys., 117 F.3d 242, 247 (5th Cir.1997) (quoting Kaiser Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982)).

         When reviewing a motion to dismiss, courts must accept all well-pleaded facts as true and view them in the light most favorable to the non-moving party. Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996). However, “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Gonzales v. Kay, 577 F.3d 600, 603 (5th Cir. 2009)(quoting Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009))(internal quotation marks omitted). The Supreme Court in Iqbal explained that Twombly promulgated a “two-pronged approach” to determine whether a complaint states a plausible claim for relief. Iqbal, 129 S.Ct. at 1950. First, courts must identify those pleadings that, “because they are no more than conclusions, are not entitled to the assumption of truth.” Id. Legal conclusions “must be supported by factual allegations.” Id. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. at 1949.

         Upon identifying the well-pleaded factual allegations, courts “assume their veracity and then determine whether they plausibly give rise to an entitlement of relief.” Id. at 1950. A claim has facial plausibility 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. at 1949. This is a “context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. The plaintiffs must “nudge[] their claims across the line from conceivable to plausible.” Twombly, 550 U.S. at 570.

         1. EQUAL PROTECTION CLAIM

         Under the Fourteenth Amendment to the Constitution it provides that no state shall “deny to any person within its jurisdiction the equal protection of the law.” The Supreme Court has further elaborated that the Equal Protection Clause “is essentially a direction that all persons similarly situated should be treated alike.” City of Cleburne v. Cleburne Living Ctr., 473 U.S. 432, 439 (1985). Furthermore, the Supreme Court has explained, “legislatures are presumed to have acted within their constitutional power despite the fact that, in practice, their laws result in some inequality. Accordingly, this Court's cases are clear that, unless a classification warrants some form of heightened review because it jeopardizes exercise of a fundamental right or categorizes on the basis of an inherently suspect characteristic, the Equal Protection Clause requires only that the classification rationally further a legitimate state interest.” Nordlinger v. Hahn, 505 U.S. 1, 10 (1992) (internal citations and quotations omitted). In the current controversy Article 1434 creates a legislative classification that distinguishes between court reporting firms that contract with party litigants and court reporting firms that do not. Given that this distinction does not implicate fundamental rights or inherently suspect characteristics, the rational basis test is appropriate. The Supreme Court has explained that “a classification neither involving fundamental rights nor proceeding along suspect lines is accorded a strong presumption of validity” under the rational basis test. Heller v. Doe, 509 U.S. 312, 319 (1993). The Heller court further explained that a classification “must be upheld against equal protection challenge if there is any reasonably conceivable state of facts that could provide a rational basis for the classification” and that “the burden is on the one attacking the legislative arrangement to negative every conceivable basis which might support it.” Heller v. Doe, 509 U.S. 312, 320 (1993) (internal quotations and citations omitted). This is an untenable burden for the Plaintiff in this case.

         The Defendants have argued that the classifications should pass the rational basis test because they “(1) ensure that court reporters provide comparable service to all participants in a deposition and treat all parties fairly (2) ensure that court reporters maintain the confidentiality of sensitive information contained in depositions; (3) to protect the integrity of the record; (4) to maintain the court reports integrity; (4) to avoid any appearance of impropriety or bias on the court reporter's behalf.” (Rec. Doc. 22-1). These are all rationales that survive the relevant equal protection analysis. The Plaintiff argue that in the Fifth Circuit laws that are protectionist or create an economic preference cannot pass constitutional scrutiny under an equal protection analysis. St. Joseph Abbey v. Castille, 712 F.3d 215, 221 (5th Cir. 2013). However, this Court finds this case to be inapposite. The law in question may have economic implications for court reporting firms but the primary motivation is related to the professional integrity of the court reporting industry. Article 1434 may have collateral consequences on court reporting businesses but it's primary effect is one ensure that the court reporters in the state of Louisiana do not face ...


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