Case Title: In the Matter of Ivey Walton v. New York State Department of Correctional Services

Citation: 

Docket Number: Case No. 03

State: new-york

Court: New York Appellate Court

Date: 2009-11-23T00:00:00Z

Document:
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This opinion is uncorrected and subject to revision before
publication in the New York Reports.
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No. 149  
In the Matter of Ivey Walton, et 
al.,
            Appellants,
        v.
New York State Department of 
Correctional Services,
            Respondent,
et al.,
            Respondent.
Rachel A. Meeropol, for appellants.
Victor Paladino, for respondent New York State
Department of Correctional Services.
The Sentencing Project et al.; The Legal Aid Society;
Innocence Project et al., amici curiae.
GRAFFEO, J.:
Between 1996 and 2007, the Department of Correctional
Services (DOCS) contracted with MCI Worldcom Communications Inc.
(MCI) for the provision of telephone services in state prisons. 
Under the agreement, MCI charged the recipients of inmate collect
calls a certain rate and paid a percentage of the revenues
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generated on each call to DOCS as a commission.  The payment of
these commissions was later restricted by statute.  But this
proceeding was commenced by petitioners -- family members and
legal services providers of inmates incarcerated in DOCS
facilities -- before such legislative action.  Their verified
petition and complaint alleges that the portion of the telephone
charge allocated as a DOCS commission constituted an illegal tax
or fee, amounted to a government taking without just compensation
and violated petitioners' equal protection and free speech and
association rights.  We agree with the Appellate Division that
petitioners' allegations fail to assert cognizable claims under
the New York Constitution and we therefore affirm.
As detailed in our prior decision (see Walton v New
York State Dept. of Correctional Servs., 8 NY3d 186
[2007]["Walton I"]), this controversy arises from DOCS'
implementation of a telephone calling system that allowed inmates
to contact family, friends and legal services providers using
coinless pay telephones without operator assistance.  To
establish the system, DOCS issued requests for proposals to
prospective providers in 1996 and again in 2001 detailing the
appropriate security features needed in the prison setting,
including technology permitting DOCS to monitor and record calls
indefinitely, providing DOCS the capability to restrict access to
particular telephone numbers and bar certain users from calling
specified numbers, limiting the length of calls and preventing
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No. 149
1 Different but similarly-situated litigants pursued state-
court challenges to the 1996 contract but their claims were
dismissed (see Bullard v State of New York, 307 AD2d 676 [3d Dept
2003]).  
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inmate calls from being forwarded by call recipients.  As a
result of the competitive bidding process, MCI won the contract
in both 1996 and 2001.  In exchange for receiving exclusive
access to inmates and their call recipients, MCI agreed to pay
DOCS a commission on each call.  During the relevant time frame,
the payment of commissions in return for acquiring access to a
customer base was common in inmate calling plans in other states
as well as in telephone services contracts outside the prison
context.  DOCS used the commission revenues to fund a variety of
different programs supported by its Family Benefit Fund, such as
health care services for inmates, bus services for family
visitation programs, free inmate postage and expenses at its
visitor centers.  Only a small portion of the commission
represented the actual costs DOCS incurred in administering the
inmate calling program. 
Because MCI is a telephone services provider, the rates
or tariffs it charges customers require approval from the Federal
Communication Commission (interstate calls) and the New York
Public Service Commission (PSC) (intrastate calls).  In 1998, the
PSC approved in their entirety the variable rates that DOCS and
MCI had agreed to in their 1996 contract, including a 60% per-
call commission payment.1  DOCS and MCI subsequently entered into
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a similar contract in 2001 that continued the prior tariff
schedule but reduced the DOCS commission to 57.5%.  
In 2003, DOCS concluded that the existing variable rate
structure was unfair to most families receiving calls and, as a
result, DOCS and MCI amended their contract to provide for a flat
rate (a $3.00 surcharge per call plus $0.16 per minute) but
continued the DOCS commission at 57.5%.  MCI submitted a revised
tariff filing with the PSC and a rate review proceeding ensued in
which petitioners challenged the total rate as unjust and
unreasonable, particularly the portion attributable to the DOCS
commission.  The PSC approved MCI's rate change in October 2003
but, because DOCS is a government agency and not a telephone
services provider, the PSC concluded that it lacked jurisdiction
to assess the propriety of the DOCS commission.  Thus, it
reviewed only the "jurisdictional portion" of the rate -- i.e.,
the 42.5% retained by MCI -- and determined that it was just and
reasonable.  In doing so, the PSC referenced the fact that,
outside the prison context, AT&T assessed a $2.25 surcharge plus
a flat rate of $0.30 per minute for station-to-station collect
calls -- a rate resulting in substantially greater call costs
than the MCI "jurisdictional rate."  The PSC therefore directed
that MCI file the new rate in a bifurcated form that made clear
to customers which part of the rate would be retained by MCI and
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No. 149
2 Because petitioners did not sue the PSC, the propriety of
that agency's decision not to review the total rate to assess
whether it was just and reasonable is not before this Court for
review.
3 Petitioners have expressed an intent to seek class action
certification.
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which would be forwarded to DOCS.2  
In this action, petitioners are two legal services
providers who represent prisoners and three individuals who have
accepted collect-calls from family members incarcerated in DOCS
facilities and paid the total rate charged by MCI under the
inmate calling plan, including the DOCS commission.3  They
commenced this combined declaratory judgment and article 78
proceeding against DOCS and MCI within four months of the PSC
determination.  In the verified petition and complaint,
petitioners challenged DOCS' collection of the commission on a
variety of legal theories, including four state constitutional
rationales.  
First, petitioners alleged that, by collecting a
commission, DOCS was taxing them to pay for Family Benefit Fund
services without legislative authorization to impose such a tax. 
Second, they characterized the DOCS commission as a governmental
taking of property (money) without just compensation.  Third,
they argued that the inclusion of the commission in the rates
charged for telephone services violated their right to the equal
protection of the law.  Finally, they claimed that the call
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No. 149
4 Petitioners articulated seven causes of action in their
complaint.  The Appellate Division rejected three of those -- the
claims for "enforcement" of the PSC determination, an accounting
and for relief under General Business Law § 349 -- on additional
grounds unrelated to timeliness and this Court upheld the
dismissal of those claims (Walton I, 8 NY3d at 194).
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system impeded their freedom to associate with and speak to their
loved ones and clients.  Based on these causes of action,
petitioners sought an injunction precluding MCI from charging
more than the 42.5% "jurisdictional rate" reviewed by the PSC; a
declaration that DOCS' actions were illegal; and refunds from
DOCS for the commissions that had been collected by MCI and
forwarded to DOCS. 
Respondents DOCS and MCI moved to dismiss the verified
petition and complaint as untimely and asserted that the causes
of action failed to state cognizable claims for relief.  As a
separate ground for dismissal, respondents contended that
petitioners' challenge to the rate collected by MCI was barred by
the Filed Rate Doctrine, which constituted a total defense even
if petitioners allegations would otherwise be actionable. 
Supreme Court and the Appellate Division dismissed petitioners'
constitutional causes of action as time-barred4 but, in Walton I,
this Court reinstated those claims as timely.
While Walton I was pending in this Court, Governor
Eliot Spitzer announced a change in executive policy and required
DOCS to discontinue the practice of collecting commissions on
inmate calls.  The Legislature also acted, adopting Correction
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Law § 623 which, effective April 1, 2008, made it unlawful for
DOCS to accept or receive revenue in excess of its reasonable
operating costs for administering an inmate calling system (see L
2007, ch 240).  The parties agree that these executive and
legislative actions render petitioners' claims for injunctive
relief academic and that any decision in this case will affect
the rights and liabilities of these parties only to the extent of
determining petitioners' entitlement to refunds. 
After we decided Walton I, this matter was remitted to
Supreme Court to address the arguments raised in the motions to
dismiss that had not been reached due to the dismissal on the
threshold statute of limitations issue.  Supreme Court reviewed
each of petitioners' state constitutional arguments -- the
assertion that the DOCS commission constituted an unlawful tax,
that it amounted to a governmental taking without just
compensation, that it violated petitioners' equal protection and
free speech/association rights -- but concluded that petitioners
failed to state cognizable claims for relief, warranting
dismissal of the verified petition and complaint.  The Appellate
Division unanimously agreed with Supreme Court's treatment of the
constitutional claims and also addressed DOCS' alternative
argument that the refund claims would, in any event, be barred by
the Filed Rate Doctrine, rejecting that defense.  The case
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No. 149
5 Since only the constitutional claims were reinstated and
the relief potentially available was limited to refunds from
DOCS, MCI ceased participating in this case and has not filed a
brief in this appeal.
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proceeded to this Court as of right.5
We begin by clarifying what issues are not before us. 
Petitioners and the amicus curiae urge that DOCS' decision to
seek a commission on calls made by inmates was, to say the least,
ill-advised.  They contend that the inclusion of a commission
inflated the cost of inmate telephone calls to such an extent
that it limited the ability of inmates to maintain family and
community ties, with significant public safety and policy
consequences since it is well-established that recidivism rates
are higher for incarcerated individuals who lack those ties. 
They claim that DOCS -- the agency charged with the care and
rehabilitation of inmates -- should have adopted an inmate
calling system that maximized call affordability to encourage
greater communication between inmates and the outside world.  
With the caveat that, by its nature, incarceration
restricts the ability of a prisoner to associate with family and
friends, petitioners' public policy arguments are clearly
substantial.  But the expedience of the contract design by this
executive agency is not before us for review; our task is limited
to determining whether our State Constitution precluded DOCS from
entering into a telephone services arrangement that included a
commission.  Petitioners and the amici appropriately presented
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their concerns to the other branches of government and
successfully influenced a change in state policy, first by
gubernatorial directive and then by statute.  Petitioners were
therefore able to achieve the primary relief they sought in this
litigation -- a change in the inmate calling system, resulting in
a significant reduction in costs incurred by call recipients.
The issue that remains for us to decide is whether the
now-defunct DOCS policy violated the New York Constitution, a
determination that is necessary because petitioners continue to
seek refunds for the commission portion of the telephone charges
they paid while the former plan was in effect.  In reviewing a
motion to dismiss, "the court will accept the facts as alleged in
the complaint as true, accord plaintiffs the benefit of every
possible favorable inference, and determine only whether the
facts as alleged fit within any cognizable legal theory" (Nonnon
v City of New York, 9 NY3d 825, 827 [2007]).  Applying this
standard, we address each cause of action in turn.  
I.  The Illegal Tax or Fee Claim
Petitioners begin with the premise that the DOCS
commission is a tax and, since taxes can be levied only by
legislative bodies, DOCS' contractual decision to collect a
commission was illegal as it violated the Separation of Powers
Doctrine embedded in the New York Constitution (see generally, NY
Const, art III, § 1; art XVI, § 1).  In the same vein,
petitioners assert that, even if not a tax, the commission
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charges were unlawful because they amounted to fees imposed by a
regulatory body that bore no reasonable relationship to the cost
of regulation.  
A tax is a charge that a government exacts from a
citizen to defray the general costs of government unrelated to
any particular benefit received by that citizen (see generally,
American Ins. Assn. v Lewis, 50 NY2d 617, 623 [1980]).  Only
legislative bodies have the power to impose taxes (see NY Const,
art III, § 1).  Municipalities and administrative agencies
engaged in regulatory activity can assess fees that need not be
legislatively authorized as long as "the fees charged [are]
reasonably necessary to the accomplishment of the regulatory
program" (Suffolk County Bldrs. Assn. v County of Suffolk, 46
NY2d 613, 619 [1979]).  In the regulatory arena, fees must bear
at least "a rough correlation to the expense to which the State
is put in administering its licensing procedures or to the
benefits those who make the payments receive" (see American Ins.
Assn., 50 NY2d at 622; see generally, National Cable Television
Assn. v United States, 415 US 336 [1974]).  Typically, fees are
paid to obtain access to a government service or benefit, such as
the fees paid to obtain licenses to practice professions in
particular jurisdictions.  
Beyond imposing taxes and engaging in regulatory
activities that generate fees, governmental entities can and do
participate in other economic activities through voluntary
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No. 149
6 The decision to implement a collect-call system was
plainly within DOCS' authority.  Although, by enacting Correction
Law § 623, the Legislature has foreclosed DOCS from collecting a
commission that exceeds the costs incurred for operation of an
inmate telephone service, it has clarified that DOCS has the
discretion to determine whether to employ "a 'prepaid' or
'collect call' system, or a combination thereof" (Correction Law
§ 623[2]).  
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contractual arrangements with the private sector.  For instance,
they buy, sell and lease real property, they purchase furniture,
computers and other commodities, they sell surplus goods, they
operate hospitals and colleges, and they enter into agreements
with consultants, contractors and service providers.  Although
petitioners contend that the DOCS commission constituted exaction
of a tax or fee, we conclude that MCI's contractual obligation
fell into this other permissible category of governmental
activity. 
For security reasons, DOCS chose to implement an inmate
calling plan facilitated by the installation of coinless
payphones used by inmates to place station-to-station collect
calls.6  Under the plan, the call recipient was advised that the
inmate was calling and then was given the option of accepting or
declining the call.  If the call was declined, no charges were
incurred by the call recipient.  If the person agreed to accept
the call, the recipient was charged the total telephone services
rate, which included the commission MCI was obligated to pay
DOCS.
In the telephone services industry, a per-call
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commission is a standard method of compensating the owner of the
property where a payphone is located.  These commissions have
been deemed "business expenses paid to compensate for the rental
and maintenance of the space occupied by the payphone and for
access to the telephone user" (Matter of AT&T's Private Payphone
Commn. Plan, 3 FCCR 5834, 5836 [1988]).  Whether the payphone is
positioned in a public airport or a private shopping mall, the
owner of the property is entitled to reasonable compensation for
allowing the telephone services provider access to its property. 
And, although other ways of calculating the value of the rent or
access charge could certainly be devised, per-call commissions
have apparently become the industry standard.  
Even though this per-call calculation methodology
invites the argument that the commission is an additional rate
that the provider will undoubtedly pass along to the consumer,
commissions have not been viewed by regulatory bodies as a
separate tariff.  Rather, they are expenses incurred by the
telephone service provider, comparable to other types of
operating costs, that are encompassed within the tariff
ultimately filed with the regulatory agencies and charged to
customers (see e.g. id.).  Not only were such commissions common
in the payphone industry but, during the period relevant to this
lawsuit, they were often included in other state inmate calling
plans where the commission typically ranged from 20% to 63%
(Matter of Implementation of the Pay Telephone Reclassification
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No. 149
7 Similar constitutional challenges to the commissions
received by prison administrators in connection with other
states' inmate calling plans have not succeeded (see e.g.
Arsberry v State of Illinois, 244 F3d 558 [7th Cir 2001], cert
denied 534 US 1062 [2001]; Johnson v State of California, 207 F3d
650 [9th Cir 2000]; Daleure v Commonwealth of Kentucky, 119
FSupp2d 683 [Dist Ct 2000], appeal dismissed 269 F3d 540 [6th Cir
2001]).  On one or two occasions, trial courts have allowed First
Amendment claims to survive a motion to dismiss (see e.g. McGuire
v Ameritech Services, Inc., 253 FSupp2d 988 [Dist Ct, S.D. Ohio
2003]), but we conclude, as does the dissent, that the free
speech and association claim lacks merit.
8 The commission has been analogized to the user charges
imposed by public airports on rental car companies and shuttle
services who seek access to the customer base provided by such
facilities.  Claims that these constitute an illegal tax or fee
have also been rejected (see e.g. A & E Parking v Detroit Metro.
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and Compensation Provisions of the Telecom. Act of 1996, 17 FCCR
3248, 3253 n 34 [2002]).7  
Under the contract at issue in this case, the
obligation to pay DOCS the commission is imposed on MCI -- not
call recipients.  Although MCI intended to collect the total rate
from call recipients (including the portion covering the
commission), it owed the commission to DOCS regardless of whether
it actually received payment from these consumers.  Despite MCI's
contractual obligation to forward the access charge to DOCS, the
per-call commission was not a "tax" imposed on the telephone
services provider.  Of course, having voluntarily participated in
the bidding process and entered into an agreement with DOCS, MCI
could not, in any event, complain that government compulsion was
involved.8
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No. 149
Wayne County Airport Auth., 271 MichApp 641 [2006]; Enter.
Leasing Com. v Metro. Airports Commn., 250 F3d 1215 [8th Cir
2001])).  The analogy is, however, somewhat inapt since, in those
cases, the user charges were not a creature of contract but were
unilaterally imposed by the airport authorities. 
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Given that no tax or fee has been imposed on MCI -- the
company that is actually obligated to pay the commission -- we
are not persuaded that the commission was transformed into a tax
or fee just because MCI passed this cost on to call recipients
along with its other reasonable operating expenses.  If the state
leased public property that it owned to a commercial retail
business at a profitable rent, would customers be able to
complain that they had been "taxed" when the business tenant
passed on its rental costs by charging higher prices for its
goods?  This Court has never held that the government is
precluded under the constitution from charging market rents for
its properties, nor have we suggested that, when it does so, its
revenues can be no greater than the amount necessary to cover the
actual costs associated with ownership or maintenance.  Moreover,
it is significant that DOCS had no "enforcement" authority vis-a-
vis the call recipient and could not attempt to collect the
commission from that consumer if MCI failed to do so, another
fact that distinguishes this scenario from a tax (see e.g. Tax
Law §§ 1133[b], [c] [allowing state to recover unpaid sales and
use taxes from consumers]).  Petitioners were given the choice of
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No. 149
9 While the dissent is correct that an expense associated
with government regulation can be transformed into a tax if it
substantially exceeds the costs incurred in administering the
program or the government benefits received by the applicant,
that analysis is inapplicable here since DOCS is not engaged in
regulation of the telephone services industry, nor are telephone
services a government benefit.  In addition, DOCS has not imposed
the commission -- it was the product of a voluntary contractual
arrangement.  This case is therefore unlike the precedent relied
on by the dissent involving fees imposed by a state or municipal
agency engaged in regulatory activity (see American Ins. Assn.,
supra ["capping" fee imposed on insurers as a condition of doing
business in New York constituted an unlawful tax where it bore no
relationship to cost of administering licensing program or the
benefits received by insurers]; Suffolk County Bldrs. Assn.,
supra [inspections fees imposed by Health Department with respect
to issuance of permits were legitimate because there was a
reasonable concurrence between the fees and regulatory program
expenses]; Jewish Reconstructionist Synagogue of N. Shore v
Incorporated Vil. of Roslyn Harbor, 40 NY2d 158 [1976] [fees
imposed on applicants for zoning variances and special use
permits were invalid where Village failed to demonstrate any
correspondence between fees and regulatory costs]). 
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accepting or rejecting the calls and were charged only if they
decided to receive telephone services from MCI.  
Certainly, the contractual arrangement relates to DOCS'
performance of a governmental function -- the administration of
the prison system -- but it lacks the hallmarks of a tax or fee
because DOCS has not compelled petitioners to purchase services
from MCI, nor are telephone services a government benefit (see
generally, Valdez v State of New Mexico, 132 NM 667, 673 [2002]
[where call recipients voluntarily accepted inmate calls, rate
charged for telephone service was not a tax but was "a price at
which and for which the public utility service or product is
sold"]).9  There was nothing unusual or unique about the
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10 The dissent's list of hypothetical examples of
circumstances when the State might abuse its authority
(dissenting op at 6) misses the mark since there is no analogy in
the private sector for any of the hypothetical charges.  In
contrast, commissions on telephone services are a standard means
of calculating rental costs in the payphone services industry --
a private-sector business -- and, in this case, MCI voluntarily
entered into a contractual agreement to pay them to DOCS.  
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commission authorized under the contract between DOCS and MCI
because payphone commissions of this type are common within the
telephone services industry.  DOCS was under no obligation to
negotiate a commission -- it could have allowed MCI to retain all
the profits generated by the calls and, if it had, no colorable
claim could have been made that call recipients were being taxed. 
Yet, it also was not constitutionally required to provide MCI or
any other telephone company free access to its facilities, when
landowners typically receive compensation for granting such
access.10  In sum, although questionable for other public policy
and penological reasons, DOCS' decision to enter into an
agreement with MCI that required the telephone services company
to pay a commission on telephone calls emanating from coinless
payphones on DOCS properties did not amount to an illegal tax or
fee.
Finally, even if the DOCS commission is viewed as a tax
as petitioners' maintain, their claim for refunds would be barred
because they failed to pay the rate under protest (Video Aid
Corp. v Town of Wallkill, 85 NY2d 663 [1995]).  In the context of
this case, the protest requirement would have been fulfilled by a
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letter to MCI and DOCS at the time the bills were paid objecting
that the charge was an illegal tax and indicating that payment
was being remitted under protest.  Petitioners' allegation that
such an obligation was excused on a "duress" rationale is not
supported by our precedent (City of Rochester v Chiarella, 58
NY2d 316, 323 [1983] ["duress . . . is present . . . where
payment of a tax is necessary to avoid threatened interference
with present liberty of person or immediate possession of
property"]).
II. The "Taking" Cause of Action
Article I, § 7(a) of the State Constitution provides
that "private property shall not be taken for public use without
just compensation."  Invoking this provision, petitioners claim
that DOCS' collection of a commission is a "taking" without just
compensation.  Petitioners do not assert that the State has
created a property interest in low-cost telephone services for
inmate call recipients or anyone else.  Rather, the property at
issue here is the money petitioners paid for the services
provided by MCI.
Petitioners' takings argument suffers from the same
disability as its illegal taxation contention -- a "taking"
cannot occur in the absence of government compulsion.  Typically,
takings claims involve the appropriation or occupation of
property without the owner's consent or, in the case of a
regulatory taking, the enactment of legislation or an ordinance
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that is alleged to have destroyed the commercial value of a
particular property (see e.g. Matter of Smith v Town of Mendon, 4
NY3d 1 [2004]; Alliance of Am. Insurers v Chu, 77 NY2d 573
[1991]).  Here, petitioners were not compelled to pay anything
either to DOCS or MCI, nor was their money or other property
confiscated by the state (cf. Alliance of Am. Insurers, supra
[where state guaranteed that insurers would receive income
generated by insurer insolvency fund to which they were required
to contribute, legislation raiding the fund amounted to an
unconstitutional taking]).  The acceptance of collect calls was
voluntary action and, by taking the calls, petitioners agreed to
pay the associated rate.  They were in control of the length of
the calls and, thus, the costs incurred.  Just like any other
consumer, petitioners purchased a service from MCI and were
billed accordingly.  
Nor was there any appropriation of private property
without "just compensation" because, in exchange for their
payments, petitioners received telephone services.  Notably,
although they assert that DOCS should have arranged for more
affordable rates, petitioners do not allege that the rate charged
by MCI was exorbitant from a market perspective.  As the PSC
determination indicated, during the same time frame and with the
approval of the PSC, another telephone services provider was
charging comparable if not higher rates for station-to-station
collect calls in New York outside the inmate calling context. 
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Essentially, petitioners' takings claim boils down to the
contention that DOCS had a constitutional obligation to ensure
that the family members and legal services providers of inmates
received telephone services at the lowest possible expense. 
While this might be a desirable policy decision, it was not an
obligation mandated by the New York Constitution. 
III. The Free Speech and Association Claim
Article I, § 8 of the New York Constitution provides:
"Every citizen may freely speak, write and publish his or her
sentiments on all subjects, being responsible for the abuse of
that right; and no law shall be passed to restrain or abridge the
liberty of speech or of the press."  Relying on this provision,
petitioners' contend that the increased cost of inmate calls
resulting from the DOCS commission impaired their
constitutionally protected right to speak to and associate with
their incarcerated loved ones or clients.
In reviewing the propriety of limitations impacting the
free speech and association rights of prisoners, we have employed
the same analysis as the United States Supreme Court (see Matter
of Lucas v Scully, 71 NY2d 399 [1988]).  The Supreme Court has
made clear that "prison walls do not form a barrier separating
prison inmates from the protections of the Constitution . . .,
nor do they bar free citizens from exercising their own
constitutional rights by reaching out to those on the 'inside'"
(Thornburgh v Abbot, 490 US 401, 407 [1989][internal quotation
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marks and citations omitted]).  But that being said, challenges
to limitations on inmate communication must account for the
reality that "[t]he very object of imprisonment is confinement .
. . An inmate does not retain rights inconsistent with proper
incarceration ... [a]nd . . . freedom of association is among the
rights least compatible with incarceration . . . Some curtailment
of that freedom must be expected in the prison context" (Overton
v Bazzetta, 539 US 126, 131 [2003][internal citations omitted]). 
For this reason, whether a claim is brought by a prisoner, a
family member or someone else who wishes to communicate with a
prisoner, the claim must be assessed using the same test applied
to constitutional restrictions on inmate rights -- the Turner v
Safley standard (482 US 78 [1987]) (see Overton, supra;
Thornburgh, supra).  Under Turner, when a policy or regulation
impinges on a prisoner's constitutional rights, the action "is
valid if it is reasonably related to legitimate penological
interests" (Turner, 482 US at 89; Lucas, 71 NY2d at 405-406).  
Thus, to state a viable claim under the free speech and
association clause in this context, petitioners must allege that
the DOCS commission was so high that it substantially impaired
the limited right of inmates to contact and associate with family
members or legal services providers and that the commission bore
no reasonable relationship to legitimate penological aims.  Even
assuming their allegations to be true, petitioners do not meet
this threshold.
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While inmates unquestionably have a constitutional
right to communicate with the outside world in a manner and to an
extent consistent with their incarcerative status, petitioners
point to no persuasive authority for the proposition that this
equates to a right to use a specific means for such communication
-- the telephone -- much less to guarantee telephone services at
a particular cost.  Virtually every court to have addressed this
issue has held that there is no constitutionally guaranteed right
of inmates to use a telephone (see e.g. U.S. v Footman, 215 F3d
145, 155 [1st Cir 2000]; Arsberry v Illinois, supra, 244 F3d 558
[rejecting First Amendment challenge to Illinois inmate calling
plan]).  Only one appellate court has indicated in dicta that
such a right might exist but it rejected a challenge similar to
the one pursued in this case, noting that an inmate has no right
to low cost telephone access and that a rate-based challenge to
an inmate calling system would be cognizable only where "the rate
charged is so exorbitant as to deprive prisoners of phone access
altogether" (see Johnson v State of California, supra, 207 F3d
650; but see Valdez v Rosenbaum, 302 F3d 1039, 1048 [9th Cir
2002], cert denied 538 US 1047 [2003] [characterizing statement
in Johnson as dictum and indicating that First Amendment protects
right to communicate, not right to use telephone as a means of
communication]; see also, Byrd v Goord, 2005 WL 2086321 [Dist Ct
2005], action dismissed as moot 2007 WL 2789505 [Dist Ct 2007]).  
Given that alternate means of communication remain
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available to New York inmates and their families (including mail
and visitation), with mail offered at low or no cost (in fact,
revenues from the DOCS commission were used to fund a free
postage program), the additional expense associated with the DOCS
commission on telephone calls did not imperil the right of
inmates to communicate with others.  Indeed, petitioners in this
case indicate that they continued to accept collect calls from
their loved ones despite the rate charged by MCI, albeit less
frequently.  Although we do not doubt that petitioners would have
engaged in more of the real-time, verbal communication afforded
by telephone technology if prices had been lower (and the value
of such personal communication was certainly a motivation for the
eventual legislation addressing this practice), the hardship they
allege is not a constitutionally significant curtailment of the
free speech and association guarantee, particularly given the
limited nature of that right in prison settings.
IV. The Equal Protection Claim
The New York Equal Protection Clause (Article I, § 11),
modeled after its federal counterpart (see Under 21, Catholic
Home Bur. for Dependent Children v City of New York, 65 NY2d 344,
360 n 6 [1985]; Dorsey v Stuyvesant Town Corp., 299 NY 512, 530,
cert denied 339 US 981 [1950]), commands that "persons similarly-
situated should be treated alike" (Cleburne v Cleburne Living
Center, 473 US 432, 439 [1985]; see Bower Assoc. v Town of
Pleasant Val., 2 NY3d 617, 631 [2004]).  Unless a suspect class
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No. 149
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or fundamental right is involved, which is not the case here,
classifications that create distinctions between similarly-
situated individuals will be upheld if they are rationally
related to a legitimate government interest (Port Jefferson
Health Care Facility v Wing, 94 NY2d 284, 289 [1999], cert denied
530 US 1276 [2000]; Golden v Clark, 76 NY2d 618 [1990]).  
Here, petitioners allege that their equal protection
rights have been violated because they have been forced to pay
DOCS commissions, which were used by DOCS to fund the New York
prison system, even though they are situated no differently from
other New York residents.  Of course, what differentiates
petitioners from the class they identify is that petitioners
accepted collect-calls from inmates and therefore purchased
telephone services from MCI, triggering MCI's obligation to pay
DOCS a commission.  The other New Yorkers they reference were not
charged because they did not receive these telephone services. 
In fact, there is no category of individuals situated
similarly to petitioners that may be used as a basis of
comparison.  This is not a case where prison administrators have
devised multiple calling programs, offering inmates in one
facility rates more favorable than another.  All recipients of
inmate calls were treated the same way under the DOCS/MCI
contract.  Even comparing petitioners to the class they most
closely resemble -- recipients of station-to-station collect
calls from non-inmates -- they fail to state a cognizable equal
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No. 149
11 This comparison is, however, also imperfect because, for
reasons unrelated to the commission, it is to be expected that
inmate calls will be more costly than non-inmate calls due to the
many security features that must be implemented -- features
petitioners have not challenged in this lawsuit.  And because
prisoners initiate the calls, their family members are
constrained by those security measures.  Petitioners do not
dispute that the bundle of security capabilities in the MCI plan
need not, and generally is not, provided in regular calling plans
involving non-inmates.  
- 24 -
protection claim.11  DOCS does not provide telephone services and
plays no role in determining the prices paid by recipients of
station-to-station collect calls from non-inmates.  Thus, even
assuming that this class of non-inmate calls is comparable to
inmate-calls, DOCS has not engaged in action that treats two
similarly-situated classes of individuals differently.  
Furthermore, petitioners have not alleged that
recipients of station-to-station collect calls from non-inmates
pay less than the rate they paid MCI.  At best, the record
suggests the costs were roughly equivalent because, when
reviewing MCI's rate, the PSC noted that AT&T imposed a surcharge
of $2.25 per call plus $0.30 per minute -- a rate comparable to
the inmate calling plan ($3.00 surcharge plus $0.16 per minute). 
Indeed, a 10 minute non-inmate collect-call on AT&T's service
would cost $5.25 -- $0.65 more than MCI charged for the same call
from an inmate.  Petitioners point out that, beyond the prison
environment, individuals can avoid the use of payphones by
purchasing calling cards, cell phones or other private telephone
services -- choices unavailable to inmates.  While this is true,
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it does not further petitioners' constitutional argument because
the limitation on the options available to inmates emanates from
the security concerns attendant their incarcerative status -- it
is not a function of the DOCS commission.  In sum, even assuming
petitioners' allegations to be true, because DOCS has not treated
two classes of similarly-situated individuals differently,
petitioners' equal protection claim was properly dismissed.
In closing, we stress that our holding that
petitioners' constitutional challenges to the inclusion of a
commission in the DOCS contract for inmate telephone services
were lacking in merit should not be misinterpreted as an
endorsement of the former DOCS policy.  The Executive and the
Legislature, the two branches of government responsible for
evaluating the penological value of the system's design and the
accompanying economic impact on call recipients, have determined
that commission charges in excess of actual expenses incurred by
DOCS are not a proper cost to be passed on to the families and
legal representatives of inmates.  We do not doubt the wisdom of
that public policy determination.
Having concluded that each of the constitutional claims
was properly dismissed, we have no occasion to address DOCS'
alternative ground for affirmance -- that petitioners' request
for refunds was barred by the Filed Rate Doctrine defense. 
Accordingly, the order of the Appellate Division should
be affirmed, without costs.
- 1 -
Walton v New York State Department of Correctional Services
No. 149 
READ, J. (CONCURRING):
I would affirm the Appellate Division's order on the
ground that petitioners' claims are barred by the filed rate
doctrine.  Thus, I do not reach the constitutional issues that
engage the majority.
"The considerations underlying the [filed rate]
doctrine . . . are preservation of the [ratesetting] agency's
primary jurisdiction over reasonableness of rates and the need to
insure that regulated companies charge only those rates of which
the agency has been made cognizant" (Arkansas Louisiana Gas Co. v
Hall, 453 US 571, 577-578 [1981], quoting City of Cleveland v
Federal Power Commn., 525 F2d 845, 854 [DC Cir 1976] [internal
quotation marks omitted]).  The doctrine thus "forbids a
regulated entity to charge rates [to customers] for its services
other than those properly filed with the appropriate . . .
regulatory authority" (id. at 577).  A customer may sue the
agency to obtain judicial review of a rate, but may not
collaterally attack the rate in any other type of lawsuit to
invalidate or modify it, or seek damages based on the difference
between the filed rate and some other rate thought by the
customer to be more reasonable (see Wegoland Ltd. v NYNEX Corp.,
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No. 149
- 2 -
27 F3d 17, 19 [2d Cir 1994]).  This rule is "undeniably strict
and . . . may work hardship in some cases," but is necessary to
further the legislative goal of preventing unreasonable and
discriminatory charges (AT&T v Central Office Tel., Inc., 524 US
214, 222 [1998], quoting Lousiville & Nashville R.R. Co. v
Maxwell, 237 US 94, 97 [1915] [internal quotation marks
omitted]).
On October 30, 2003, the Public Service Commission
(PSC) approved a modified rate structure permitting MCI WorldCom
Communications, Inc. (MCI) to charge specified rates for inmate
collect calls.  As a result, petitioners paid the only rate that
MCI was legally authorized to charge for these calls (see Public
Service Law § 92 [2] [d] [utilities may collect only charges that
are filed with the PSC and in effect]).  On the importance of the
PSC's action, the Appellate Division's decision in Bullard v
State of New York (307 AD2d 676 [3d Dept 2003]) is instructive. 
There, the court affirmed the trial judge's dismissal of a claim
for damages -- which arose from the New York State Department of
Correctional Services (DOCS)'s 1996 contract with MCI (the
predecessor to the contract involved in this lawsuit) -- because
the statute of limitations had lapsed, and "[a]dditionally . . .
the alleged injury . . . arose directly from [claimants'] payment
of the filed rate approved by the PSC" (id. at 678; see also Porr
v NYNEX Corp., 230 AD2d 564, 568 [2d Dept 1997], lv denied 91
NY2d 807 [1998] ["It has repeatedly been held that a consumer's
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No. 149
1The dissent suggests that the PSC did not act within its
"jurisdiction" as required by the filed rate doctrine because it
did not have the "power to decide" whether DOCS's commission was
reasonable or lawful (dissenting op at 1-2).  But whether or not
the PSC possessed this particular "power to decide" makes no
difference: the PSC clearly acted within its jurisdiction to
approve telephone tariffs -- which is to say it acted within its
jurisdiction for purposes of the filed rate doctrine -- when it
ordered MCI to file the total rate.
- 3 -
claim, however disguised, seeking relief for an injury allegedly
caused by the payment of a rate on file with a regulatory
commission, is viewed as an attack upon the rate approved by the
regulatory commission.  All such claims are barred by the 'filed
rate doctrine'"]).
Here, the PSC declined to review and approve the
portion of the inmate collect call rate attributable to DOCS's
commission when it ruled on MCI's proposed modified rate
structure.  This fact does not cut the ground from under the
filed rate doctrine in this case, though, because the PSC
nonetheless directed MCI to file the total rate -- including the
commission -- which thereby became binding law and "the only
lawful charge" that MCI could impose for inmate collect calls
(AT&T v Central Office Tel., Inc., 524 US at 222 [internal
quotation marks and citation omitted]).  As the majority observed
in Walton v New York State Dept. of Correctional Servs. (8 NY3d
186, 196 [2007] [Walton I]), "[w]hile the PSC concluded that it
did not have jurisdiction over DOCS, it could have [rejected]
MCI's call rate and surcharge as a whole" (emphasis added).1  It
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No. 149
- 4 -
was for this reason alone that the Walton I court found
petitioners' lawsuit to be timely, reckoning that their claims
accrued on October 30, 2003 because up until the point of the
PSC's order their alleged injuries might have been ameliorated
(id.).  Thus, as in other filed rate cases, petitioners'
ostensible damages arise from a rate duly filed with and
authorized by the ratesetting agency.
Further, the PSC, in fact, established the
reasonableness of the total rate despite its disclaimer with
respect to DOCS's commission.  In reviewing and approving just
that portion of the rate to be retained by MCI, the PSC
considered the rates charged by AT&T for non-inmate station-to-
station collect calls.  The evidence showed that the total cost
of a 10-minute inmate collect call (including the commission) was
$4.60 ($3.00 surcharge plus 16¢ per minute), which was
significantly less than the $5.25 that AT&T charged for a ten-
minute station-to-station collect call outside the prison context
($2.25 surcharge plus 30¢ per minute).  As one of the amici
points out, there are good reasons to encourage inmates to
maintain their ties to family and the community, and an
economical inmate call rate makes this easier.  But an inmate
call rate is not unreasonable just because it is not as low as it
might be.
The dissent appears troubled by the notion that the
filed rate doctrine might mandate dismissal of what remains of
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No. 149
- 5 -
this lawsuit -- a claim for refunds of the commissions (the
allegedly excessive portion of the rate) from October 30, 2003
onward.  I am hardly the first judge to understand the filed rate
doctrine to preclude claims against state-operated prisons or
telephone companies arising from the rates charged for inmate
collect calls (see e.g. Valdez v State of New Mexico, 54 P3d 71,
75 [Sup Ct N Mex 2002] [filed rate doctrine barred claims for
damages, restitution, or imposition of constructive trust on
account of commissions on inmate collect calls where regulatory
agency had "exempted inmate telephone services from several of
its regulations and [had] authorized the rates at issue"]; see
also Severin, Is There a Winning Argument Against Excessive Rates
for Collect Calls from Prisoners?, 25 Cardozo L Rev 1469, 1483-
1490 [2004] [discussing cases where filed rate doctrine prevented
litigants from successfully challenging prison phone rates that
include commissions]).
And to be clear, I am not somehow taking the position
that "a rate . . . placed in a regulatory agency's file [is]
unchallengeable, whether the agency has authority to regulate
that rate or not" (dissenting op at 2).  I am simply saying that
petitioners were required to raise their constitutional and any
other objections to the inmate collect call rate in a CPLR
article 78 proceeding brought against the PSC to challenge its
October 30, 2003 order.  If successful, they would have been
entitled to prospective relief only (see Matter of Burke v New
- 6 -
No. 149
2Petitioners participated extensively in the administrative
proceedings before the PSC, which culminated in the October 30,
2003 order (see MCI WorldCom Communications, Inc., Case No. 03-C-
1058, 2003 NY PUC LEXIS 616, 2003 WL 22495521 [Oct. 30, 2003]). 
They raised the same constitutional objections to MCI's proposed
revised tariff as they press in this lawsuit against DOCS (id. at
*12-*15, 2003 WL 22495521 at *4-*5; cf. Feigley v Pennsylvania
Pub. Util. Commn., 794 A2d 428 [Pa. Commw. Ct. 2002] [affirming
public utility commission's disposition of administrative
complaint brought by inmate's wife and a citizen's group alleging
that inmate collect call rates violated federal constitutional
free speech rights and equal protection guarantee]).  The PSC
declined to address petitioners' constitutional objections, but
this only gave them an additional argument on appeal; it did not
somehow supply a ground for petitioners to contest the rate in a
lawsuit against DOCS rather than the PSC.
- 6 -
York State Pub. Serv. Commn., 47 AD2d 91, 95-96 [3d Dept 1975],
affd, 39 NY2d 766 [1976]; Matter of Long Is. Light. Co. v Public
Serv. Commn., 80 AD2d 977, 978 [3d Dept. 1981], lv denied, 54
NY2d 601 [1981]).2  Once petitioners chose not to contest the
PSC's October 30, 2003 order, the filed rate doctrine kicked in
to bar them from launching this collateral attack on the rate.
- 1 -
Walton v New York State Department of Correctional Services
No. 149 
 
SMITH, J.(dissenting):
In Arsberry v Illinois (244 F3d 558, 566 [7th Cir
2001]), a case much like the present one, Judge Posner explained
what the state was doing:
"[T]he State . . . exercising as it does an
iron control over access to the inmate
market, has rented pieces of the market to
different phone companies . . . ."
Judge Posner explained that the state was in substance "charging
fees or taxes that exploit the monopoly of force that is the
definition of government" (id.).  But he, like today's majority,
thought there was no constitutional problem in the government's
making money by renting out its police power.  I think there are
very serious problems.  Before discussing them, however, I will
address the idea advanced by the concurrence that it does not
matter whether the state has acted constitutionally or not,
because the "filed rate" doctrine bars any review of the
question.
I
The Public Service Commission (PSC) held that it had no
power to decide whether DOCS acted reasonably or unreasonably,
lawfully or unlawfully, in demanding that MCI pay to the state an
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No. 149
- 2 -
extortionate commission on inmates' telephone calls.  The portion
of MCI's rates that resulted from the State's commission was
labeled by the PSC as "non-jurisdictional."  This ruling seems
right to me; why should the constitutionality of the State's
practice be a matter for the PSC to decide?  And if the PSC was
right to disclaim jurisdiction, it seems obvious that the filed
rate doctrine has no application here.
That doctrine states that a regulated entity may not
"charge rates for its services other than those properly filed
with the appropriate . . . regulatory authority" (Arkansas
Louisiana Gas Co. v Hall (453 US 571, 577 [1981])  And of course,
in Arkansas Louisiana Gas Co., as in every other case applying
the filed rate doctrine that I am aware of, the "appropriate"
regulatory authority was one that had jurisdiction over the rate. 
If that were not so -- if the word "filed" were taken literally,
so that a rate that is placed in a regulatory agency's file were
unchallengeable, whether the agency has authority to regulate
that rate or not -- the result would be intolerable.  The filed
rate doctrine would give state officials an all-purpose shield
against any independent scrutiny of their behavior.  A state
could nullify anyone's constitutional right, simply by demanding
a commission from the telephone company on calls made by the
person the state wanted to victimize -- and the resulting
telephone rate would be immune from challenge if it was on file
with a regulatory agency that had no jurisdiction to alter or
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No. 149
- 3 -
reject it.
Surprisingly, my concurring colleague never says
whether she thinks the PSC's disclaimer of jurisdiction in this
case was right or wrong.  But I infer that she thinks it was
wrong -- that the PSC did have jurisdiction to consider
petitioner's constitutional arguments -- partly because, as I
have explained, I think it obvious that if the PSC was right, the
filed rate doctrine cannot apply.  Indeed, the concurrence says
that "petitioners were required to raise their constitutional . .
. objections to the inmate collect call rate in a CPLR article 78
proceeding brought against the PSC" (concurring op at 5)-- a
strange thing to do if the PSC acted properly in ignoring those
constitutional objections.
If I have correctly understood the concurrence's
position, I disagree with it because, as I have said, the
constitutional issues seem inappropriate for PSC consideration. 
Walton I provides no support for the contrary view, despite our
remark, to which the concurrence refers (con op at 3), that the
PSC "could have determined that MCI's call rate and surcharge as
a whole" were unlawful (Walton v New York State Dept. of
Correctional Servs., 8 NY3d 186, 196 [2007]).  What we meant, as
we explained in the next sentence, was that "it was reasonable
for petitioners to believe that the PSC could have rejected MCI's
rate and surcharges in their entirety" (id.).  We did not imply
that the PSC erred by refusing to examine the entire rate and
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No. 149
- 4 -
surcharge.  It did not err; it properly found the portion of the
rate attributable to the State's commission to be beyond its
jurisdiction; and the filed rate doctrine is inapplicable to this
case.
II
It is plain from the complaint that the State charged
petitioners -- indirectly, through MCI -- sums far in excess of
what it cost the State to provide the service from which
petitioners benefitted.  The complaint says that the costs of
maintaining and operating the prison telephone system were less
than 8% of the money the State received from it.  A document in
the record suggests that the disproportion was even greater --
that costs were less than 2% of revenues.  It is also plain that
the State was able to make this huge profit because it had
imprisoned the people that petitioners wanted to talk to -- that
the State was, as Judge Posner put it, exploiting its monopoly of
the "inmate market."  I think these allegations are sufficient to
sustain plaintiffs' claims of unconstitutional taxation, unlawful
taking, and denial of equal protection.  (I agree with the
majority that plaintiffs' free speech and association claims are
legally insufficient.)
Usurpation of the Power to Tax
It is undisputed that if the payments at issue in this
case are properly characterized as taxes, the State has violated
the Constitution.  Taxation is the province of the Legislature
- 5 -
No. 149
- 5 -
(see NY Const, art III § 1, art XVI § 1) and DOCS makes no claim
that it may levy taxes without legislative authorization.
Taxation is, of course, the normal means by which
states raise revenue, but two others have been recognized, which
may be labeled as "user fees" (e.g., the State can charge for
licenses to defray the cost of a regulatory program) and "market
transactions" (e.g., the State can rent its unused office space,
or sell its surplus property, for whatever it can get).  (Perhaps
there are still other valid ways of raising revenue, but no one
has claimed that they are applicable in this case.)  The payments
in issue here cannot be defended as user fees, because the power
to charge such fees is limited by the rule "that the fees charged
be reasonably necessary to the accomplishment of the regulatory
program" (Suffolk County Bldrs. Assn. v County of Suffolk, 46
NY2d 613, 619 [1979]; see also Jewish Reconstructionist Synagogue
of N. Shore v Incorporated Vil. of Roslyn Harbor, 40 NY2d 158,
162-163 [1976]).
Thus, DOCS either unconstitutionally exercised the
taxing power or it engaged in legitimate market transactions.  I
conclude that it did the former.
The majority holds that DOCS was engaging in market
transactions, drawing an analogy to a per-call commission that
might be charged by an owner of real property for use of a pay
telephone "in a public airport or a private shopping mall"
(majority op at 12).  The majority overlooks an obvious
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No. 149
- 6 -
distinction: the people who use the phones at airports and
shopping malls are not prevented from leaving the premises by
armed guards.  The owner of the shopping mall is ordinarily a
private entity; the owner of the airport may be a public one, but
in allowing use of its premises for a pay telephone it is acting
essentially as a private market participant.  It is not
exploiting, to quote Judge Posner once more, "the monopoly of
force that is the definition of government" (Arsberry, 244 F3d at
566).
Here, the State has used its imprisonment of inmates as
a source of economic leverage.  I cannot accept this as
legitimate market activity.  If the State can do this, why could
it not charge for in-person visits to prison inmates -- at a rate
50 times the cost of making such visits possible?  Why could it
not charge commissions -- limited not by the State's costs, but
only by what the traffic would bear -- on sums earned by inmates
in work release programs?  Why could it not charge prisoners who
seek furloughs an amount limited only by the prisoners'
willingness to pay?  I cannot believe that the majority would
characterize any of these transactions as normal attempts by a
government agency to turn a profit in a marketplace, but the
majority offers no adequate explanation of why the transactions
in this case are different.
A tax is "a compulsory contribution for the purpose of
defraying the cost of government" (American Ins. Assn. v Lewis,
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No. 149
- 7 -
50 NY2d 617, 623 [1980]).  Our cases establish that a
contribution may be "compulsory" without being literally
compelled on pain of fine or imprisonment: thus, the fees imposed
on insurers in American Insurance Association were taxes, even
though the insurance companies were not literally compelled to
transact business in the State; the fees in Jewish
Reconstructionist Synagogue were taxes, though the synagogue was
not compelled to apply for zoning permits and variances; and the
fees in Suffolk County Builders were taxes, though the builders
were not compelled to seek licenses and approvals, or even to put
up buildings.  The question is whether the state has applied an
unacceptable degree of coercion in exacting the payments.  As
Justice Holmes explained in Federal Land Bank v Crosland (261 US
374, 378 [1923])  -- a case holding that fees charged for the
recording of deeds were an unlawful tax, to the extent they
exceeded the State's expenses of maintaining its registry: "The
State . . . cannot use its control as a means to impose a
liability that it cannot impose directly."
I would hold that where, as in this case, the State has
leveraged its police power for a profit, enough coercion is
present to make the transaction involuntary -- a tax, not an
innocent marketplace exchange.
Unconstitutional Taking
The issue of coercion is likewise critical to the
takings claim.  The majority oversimplifies in saying that "a
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No. 149
- 8 -
'taking' cannot occur in the absence of government compulsion"
(majority op at 17) -- indeed, if it means "compulsion"
literally, it misstates the law.  The United States Supreme Court
has held that surrenders of property rights not literally
compelled by the government are nevertheless "takings" if they
are exacted in exchange for benefits that do not have a nexus to,
or are not roughly proportional to, the property rights taken --
even though the benefits were ones the State was free to withhold
entirely (Dolan v City of Tigard, 512 US 374 [1994]; Nollan v
California Coastal Commn., 483 US 825 [1987]).  Particularly
relevant here is Dolan, requiring "rough proportionality" between
the exaction demanded by the State and the impact on the State of
the private activity that furnished the occasion for the demand
(Dolan, 512 US at 391).  I have explained elsewhere why I think
the "exactions" analysis of Nollan and Dolan is not limited to
the real property context in which those cases arose (Consumers
Union of U.S., Inc. v State of New York, 5 NY3d 327, 379-380
[2005] [R. S. Smith, J., dissenting]).  I do not see how the
State's conduct here, as alleged in the complaint, can withstand
an exactions analysis, and I would therefore uphold petitioners'
takings claim.
Equal Protection
If I were to view the payments made by petitioners here
as no more than voluntary payments for telephone service, I would
agree with the majority that petitioners have not been deprived
- 9 -
No. 149
- 9 -
of equal protection.  It is true that petitioners are not
similarly situated to any other group of telephone users.  But
the merit of petitioners' equal protection claim becomes apparent
when the State's conduct is viewed as a tax, an exaction of money
to defray the expenses of government.
The equal protection argument would be essentially the
same if the Legislature, seeking to raise funds to operate the
prison system, had enacted a tax payable by those people who
happened to receive telephone calls from prisoners.  I would not
think there was an equal protection violation if the State levied
such a tax (or user fee) on the prisoners themselves.  It is not
arbitrary or unfair to require those who have made an expenditure
necessary to pay the cost of it.  But a tax on everyone who
chooses to talk to an inmate on the telephone is arbitrary. 
There is no rational basis for choosing those people, rather than
either the inmates or the State's citizens in general, to keep
the prison system solvent.  The majority concludes otherwise only
by overlooking the fact that the State's practice was,
essentially, a coercive fiscal measure. 
***
Accordingly, I would reinstate petitioners' unlawful
tax, unlawful taking and equal protection claims.     
*   *   *   *   *   *   *   *   *   *   *   *   *   *   *   *  *
Order affirmed, without costs.  Opinion by Judge Graffeo.  Chief
Judge Lippman and Judges Ciparick, Pigott and Jones concur. Judge
Read concurs in result in an opinion.  Judge Smith dissents in an
opinion.
Decided November 23, 2009