# Veritext Corp. v. Bonin

> District Court, E.D. Louisiana · July 10, 2020

URL: https://www.frixlaw.com/law-library/cases/10185671

## Case

- **Court:** District Court, E.D. Louisiana
- **Decided:** July 10, 2020
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10185671

## How later opinions describe it (automated extraction)

- holding the Sherman Act “does not authorize the States to abandon markets to unsupervised control of active market participants”
- holding “a state board on which a controlling number of decisionmakers are active market participants in the occupation the board regulates must satisfy Midcal's active supervision requirement in order to invoke state-action antitrust immunity”
- explaining that injury should reflect anti-competitive effect either of the violation itself or of anticompetitive acts enabled by the violation

## Opinion text

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

VERITEXT CORP. CIVIL ACTION

VERSUS NO. 16-13903 C/W
17-9877
REF: ALL CASES

PAUL A. BONIN, ET AL. SECTION: “B”(2)

OPINION

Before the court are defendants CSR Board’s “Motion for
Partial Summary Judgment” (Rec. Doc. 141), plaintiffs Esquire
Deposition Solutions, LLC and Veritext Corporation’s response in
opposition (Rec. Doc. 159) and defendants’ reply to plaintiffs’
opposition (Rec. Doc. 178).
I. FACTS AND PROCEDURAL HISTORY
Plaintiff, Veritext Corporation, 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. Plaintiff’s business provides
negotiated rates for court reporting services to insurance
companies, larger companies, government agencies, regulatory
authorities, educational institutions, and other high-volume
entities. Rec. Doc. 4. The negotiated rates are discounted because
customers enter into nonexclusive preferred-provider agreements
with Plaintiff. Rec. Doc. 4. The nonexclusive preferred-provider
agreements generally provide that customers agree to utilize
Plaintiff’s services for all or some of their court reporting
needs. Rec. Doc. 4.
Plaintiff Esquire is a Delaware corporation with its principal
place of business in Atlanta, Georgia. Rec. Doc. 1 at ¶ 11 (17-9877).

Esquire provides court-reporting services to several states across
the nation, including Louisiana, in depositions, arbitrations, and
other proceedings. Id.
Defendant CSR Board is a regulatory body created to maintain and
police the shorthand reporting profession as well as establish a
standard of competency for those persons engaged in the profession.
See Rec. Doc. 1 at ¶ 13 (17-9877). The CSR Board members are “active
market participants” as six of the nine members are practicing court
reporters. Id. at ¶ 15.
The court reporting profession is regulated by the Louisiana
Board of Examiners of Certified Shorthand Reporters (the “Board”).
Rec. Doc. 4. The Board is vested with enforcement authority in
addition to its regulation of court reporters. Rec. Doc. 4. In or
about 2012, the Board publicly announced its intention to begin
enforcing Article 1434(A)(2). To wit, La. Code. Civ. Proc. Art.
1434(A)(2):
(1) prevents court reporters from entering into long term
or volume-based contracts with frequent users of court
reporting services; (2) concerns potential bias issues in
connection with court reporting firms who hold contracts
with lawyers and the judiciary; and (3) attempts to
mitigate conflicts of interest when in connection with
the creation of official records.
Rec. Doc. 4. Following the announcement, many certified court
reporters refused assignments from national and regional firms out
of fear that the Board might take disciplinary action against them.

Rec. Doc. 4.
On August 17, 2016, plaintiff Veritext filed a complaint
against defendants, certain members of the Board in both their
official and individual capacities, challenging Louisiana Code of
Civil Procedure Article 1434(A)(2). Rec. Doc. 4.1 Plaintiff
specifically challenged the law’s constitutionality, alleging that
it insulates court reporters in Louisiana from competition in
violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. Rec.
Doc. 4.
On April 10, 2017, this Court granted in part and denied in
part defendant’s motion to dismiss pursuant to Federal Rule of
Civil Procedure 12(b)(6). Rec. Doc. 44. As to the constitutional

challenges, this Court dismissed plaintiff Veritext’s claims. Rec.
Doc. 44. Further, plaintiff Veritext’s claims under the Sherman
Act were found “legally viable and the Amended Complaint has
alleged facts that [were] sufficient to defeat” defendants’ motion
to dismiss. Rec. Doc. 44. On May 4, 2017, Defendants filed a motion
for partial reconsideration regarding the Sherman Act claims,

1 Plaintiff Esquire filed their respective claim against defendants on
September 29, 2017. The cases were consolidated on February 25, 2019 (Rec.
Doc. 75) (17-9877). Plaintiff Veritext subsequently amended their complaint
to mirror that of Esquire’s complaint. Rec. Doc. 117.
which this Court granted on August 2, 2017. Rec. Docs. 48,73.
Plaintiff thereafter appealed to the United States Fifth Circuit
Court of Appeals. Rec. Doc. 75.

On appeal, the Fifth Circuit affirmed this Court’s dismissal
of plaintiff Veritext’s constitutional law claims. Rec. Doc. 82-
1. However, the panel reversed the dismissal on reconsideration of
plaintiff Veritext’s Sherman Act claims and remanded the matter
for further proceedings. Id. Thereafter, defendants CSR filed
instant motion for partial summary judgment on October 14, 2019,
requesting “dismiss[al] [of] all Sherman Act claims of
[plaintiffs] seeking to enjoin the enforcement of [La. Code Civ.
Proc. Art.] 1434” and “all Sherman Act claims seeking to recover
alleged monetary damages resulting from the enforcement of Article
1434.” Rec. Doc. 141-1 at 1.
II. PARTIES’ CONTENTIONS

In their motion, defendants reiterate this Court’s and the
Fifth Circuit’s findings that Article 1434 is constitutional and
clearly prohibits “all contractual agreements between party
litigants and court reports.” Rec. Doc. 141-1, at 5,10. In light
of these constitutional findings, defendants contend that Article
1434 is not subject to scrutiny under the Sherman Act and the Board
“cannot run afoul of the Sherman Act.” Id. at 9-12. Defendants
also contend that the CSR Board is the appropriate state agency
vested with regulatory jurisdiction and enforcement authority
pertaining to the court reporting profession. See id. at 11-12.
Accordingly, defendants assert that the CSR Board “cannot be
subject to scrutiny under the Sherman Act . . . and . . . cannot

be enjoined or cause damages recoverable under the Sherman Act.”
Id. at 2. Thus, defendants assert that damages sought by plaintiffs
are not recoverable damages due the CSR Board’s authority to
enforce Article 1434, which renders the purported damages
“illicit.” Id. at 11.
In its opposition, plaintiffs assert that defendants “do not
seek summary judgment on liability, but rather argue that
[p]laintiffs would not be entitled to damages or injunctive relief
even if they prevailed on liability.” Rec. Doc. 159 at 6.
Plaintiffs argue that defendants have merely reasserted their
previous immunity defense, despite the Fifth Circuit’s ruling that
defendants have not fully satisfied the standard. Rec. Doc. 159 at

6-8. Moreover, plaintiffs contend that Article 1434 generally does
not prohibit “all contracts between court reporters and out-of-
state court reporting firms.” Rec. Doc. 159 at 9.
III. LEGAL STANDARD
Under Federal Rule of Civil Procedure 56, summary judgment is
appropriate when “the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to judgment as
a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986) (quoting Fed. R. Civ. P. 56(c)); see also TIG Ins. Co. v.
Sedgwick James of Wash., 276 F.3d 754, 759 (5th Cir. 2002). “As to

materiality, the substantive law will identify which facts are
material. Only disputes over facts that might affect the outcome
of the suit under the governing law will properly preclude the
entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986). A genuine issue of material fact exists if
the evidence would allow a reasonable jury to return a verdict for
the non-moving party. Anderson, 477 U.S. at 248. “When reviewing
a summary judgment, we construe all facts and inferences in favor
of the nonmoving party.” Deshotel v. Wal-Mart Louisiana, LLC, 850
F.3d 742, 745 (5th Cir. 2017). Mere conclusory allegations are
insufficient to defeat summary judgment. Eason v. Thaler, 73 F.3d
1322, 1325 (5th Cir. 1996).

The movant must point to “portions of ‘the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any,’ which it believes
demonstrate the absence of a genuine issue of material fact.”
Celotex, 477 U.S. at 323. If and when the movant carries this
burden, the non-movant must then go beyond the pleadings and
present other evidence to establish a genuine issue. Matsushita
Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586
(1986). However, “where the non-movant bears the burden of proof
at trial, the movant may merely point to an absence of evidence,
thus shifting to the non-movant the burden of demonstrating by
competent summary judgment proof that there is an issue of material
fact warranting trial.” Lindsey v. Sears Roebuck & Co., 16 F.3d

616, 618 (5th Cir. 1994). “This court will not assume in the
absence of any proof that the non-moving party could or would prove
the necessary facts and will grant summary judgment in any case
where critical evidence is so weak or tenuous on an essential fact
that it could not support a judgment in favor of the [non-movant].”
McCarty v. Hillstone Rest. Grp., 864 F.3d 354, 357 (5th Cir. 2017).
IV. LAW AND ANALYSIS
A. Scrutiny under the Sherman Act
Defendants fail to demonstrate an absence of a genuine issue
of material fact pertaining to the Sherman Act claims against them.
Section 1 of the Sherman Act provides that “every contract,

combination in the form of trust or otherwise, or conspiracy, in
restraint of trade or commerce among the several States, or with
foreign nations, is declared to be illegal.” 15 U.S.C. § 1. In
order to prevail under a Section 1 violation, a plaintiff “must
show a contract, combination, or conspiracy that imposed an
unreasonable restraint on trade.” Veritext Corp. v. Bonin, 901
F.3d 287, 291 (5th Cir. 2018) (citing Am. Needle, Inc. v. Nat’l
Football League, 560 U.S. 183, 189 (2010)); see also Abraham &
Veneklasen Joint Venture v. Am. Quarter Horse Ass'n, 776 F.3d 321,
327 (5th Cir. 2015) (“plaintiffs must show that the defendants (1)
engaged in a conspiracy (2) that produced some anticompetitive
effect (3) in the relevant market”). Further, a plaintiff must

demonstrate an injury-in-fact (e.g., an injury to plaintiff
proximately caused by defendant's conduct) and an antitrust injury
resulting from an anticompetitive effect. See Jebaco, Inc. v.
Harrah's Operating Co., Inc., 587 F.3d 314, 318 (5th Cir.
2009)(explaining that injury should reflect anti-competitive
effect either of the violation itself or of anticompetitive acts
enabled by the violation) (citing Zenith Radio Corp. v. Hazeltine
Research, Inc., 395 U.S. 100, 125 (1969)).
Defendants have merely reasserted an identical state action
immunity defense. On appeal, the Fifth Circuit held that
Plaintiff’s Sherman Act claim should proceed on remand. Veritext
Corp., 901 F.3d at 291. In its reasoning, the Fifth Circuit

concluded that this Court “was correct the first time when it
observed that Veritext alleged sufficient facts that ‘the board’s
actions do not resemble a municipality under active supervision
but instead represent an unbridled regulatory environment.’” Id.
at 293. The Fifth Circuit further stated:
Veritext pled facts sufficient to support a finding that
the Board’s conduct does indeed restrain trade. Among
other allegations, Veritext argued that the Board is
composed of active market participants who “are highly
engaged in setting the agenda of the Board and its
committees and in directing the Board’s business,” who
actively sought to “discourage a perceived trend of
freelance court reporters leaving the profession,” and
who took regulatory actions calculated to “deter[ ] and
delay[ ] entry by national and regional court reporting
firms.” On the record before us, we agree with the
district court that Veritext has alleged facts
sufficient to make out a prima facie Sherman Act claim.

Id. at 292 (emphasis added).
Defendants argue that Article 1434 “prohibits all contractual
agreements between party litigants and court reporters.” Rec. Doc.
141-1 at 10. Whereas plaintiffs assert that Article 1434 does not
prohibit contracts generally, provided that the firm “has no
agreement with the party-litigant,” and point to the former chair
of the CSR Board’s deposition testimony to support this contention.
Rec. Doc. 159 at 8-9. Moreover, as articulated by the Fifth
Circuit, the CSR Board is composed of active market participants
who “are highly engaged” in perceived anticompetitive conduct,
which reveals the presence of a genuine issue of material fact
concerning the conspiracy element of the Sherman Act claim in the
instant lawsuit. Veritext Corp., 901 F.3d at 287.
Accordingly, parties to the current motion clearly dispute
the existence of a contract, combination, or conspiracy that
restrains the court reporting profession. Rec. Doc. 141-1; Rec.
Doc. 159. Thus, whether a contract, combination, or conspiracy
restraining the profession presents a genuine issue of material
fact, regarding the CSR Board, and does not support a finding that
defendant is judgment as a matter of law.
B. Immunity
Defendants are not entitled to immunity from the Sherman Act.
Anticompetitive conduct by the State generally is immune from the

liability under the Sherman Act, but this immunity is not absolute.
Veritext Corp. v. Bonin, 901 F.3d 287, 292 (5th Cir. 2018)(citing
Parker v. Brown, 317 U.S. 341, 351 (1943)). A defendant’s ability
to avail themselves of this type of state action immunity is
contingent on whether anticompetitive conduct is performed by
sovereign or non-sovereign actors. N. Carolina State Bd. of Dental
Examiners v. FTC, 135 S.Ct. 1101, 1111-12 (2015) (“The question is
not whether challenged conduct is efficient, well-functioning, or
wise. Rather, it is whether anticompetitive conduct engaged in by
nonsovereign actors should be deemed state action and thus shielded
from the antitrust laws.”)(internal citations and quotations
omitted). “The resulting asymmetry between a state policy and its
implementation can invite private-self dealing.” Id. at 1112.

Thus, in order to avail itself of state action immunity as a
“nonsovereign (sic) actor controlled by active market
participants,” two requirements must be satisfied: (1) “the
challenged restraint ... [must] be one clearly articulated and
affirmatively expressed as state policy” and (2) “the policy . .
. [must] be actively supervised by the State.” Dental Examiners,
135 S.Ct. at 1110.
Limitations on state action immunity are critical when the
State delegates its regulatory power to active market
participants, as “established ethical standards may blend with

private anticompetitive motives in a way difficult even for market
participants to discern.” Id. at 1111. Active market participants
might include any non-sovereign entity, public or private, or
individual decisionmakers that are participants in the market
affected by the challenged conduct. See id. at 1113-15 (holding “a
state board on which a controlling number of decisionmakers are
active market participants in the occupation the board regulates
must satisfy Midcal's active supervision requirement in order to
invoke state-action antitrust immunity”). Notably, active market
participants cannot regulate their own markets free from antitrust
accountability. Id. at 1111.
“Active supervision [by the State] might include

‘establish[ing] prices [and] review[ing] the reasonableness of the
price schedules,’ ‘regulat[ing] the terms of fair trade
contracts,’ ‘monitor[ing] market conditions,’ and ‘engag[ing] in
‘pointed reexamination’ of the program.’” Veritext Corp. v. Bonin,
901 F.3d 287, 292 (5th Cir. 2018) (citing Midcal, 445 U.S. at 105–
06). Although any inquiry into what constitutes active supervision
necessarily turns on the circumstances of a particular case, active
supervision must entail “review [of] the substance of the
anticompetitive decision, not merely the procedures followed to
produce it,” and “the power to veto or modify particular decisions
to ensure they accord with state policy.” Dental Examiners, 135
S.Ct. at 1110. Accordingly, the State must actively supervise
anticompetitive restraints in order to invoke immunity. Id. at

1117 (holding the Sherman Act “does not authorize the States to
abandon markets to unsupervised control of active market
participants”).
Defendants cannot insulate themselves from Sherman Act
liability by re-asserting state action immunity. Despite their
arguments, the Fifth Circuit held that the CSR Board satisfied the
first requirement but failed the second requirement precluding
state action immunity. Veritext Corp., 901 F.3d at 292. The Court
noted that Article 1434 clearly articulates and affirmatively
expresses as state policy that “contracts between private court
reporting services and party litigants” are barred. Rec. Doc. 82-

1. However, the court further noted that “the Board fails under
the second requirement of active state supervision.” Id. In its
assessment of the active state supervision requirement, the Fifth
Circuit reasoned:
To begin with, Louisiana law requires that six of the
Board’s nine members be “certified shorthand
reporter[s]”—the very individuals most likely to be
impacted by Veritext’s involvement in the market. La.
Rev. Stat. § 37:2551(B)(1). The Board attempts to
differentiate “freelance” and “official” court
reporters, but the boundary between these categories is
porous: an individual serving as an official court
reporter may readily go freelance if he so chooses. It
is sufficiently clear from the record that the members
of the Board qualify as active market participants. And
it strains credulity to regard the Board’s conduct as
strictly public-minded, in light of its decision to
convene a meeting that included “How to increase rates?”
as one of its agenda items.

Id. at 293. Accordingly, Six out of nine members of the CSR Board
constitute a controlling number of decisionmakers who actively
participate in the court reporting profession. See id.
In the current motion for partial summary judgment,
defendants reassert a nearly identical state action immunity
defense and fail to demonstrate that there are no genuine issues
of material fact regarding the active supervision requirement.
Instead, defendants merely assert legal conclusions that “Article
1434 is outside of the reach of antitrust law and is not preempted
by the Sherman Act.”2 Rec. Doc. 141-1 at p. 10. Notably, Defendants
did not point to any proof demonstrating that the CSR Board is
subject to active supervision that might support judgment as a
matter of law. See Rec. Doc. 141-1.
The parties clearly dispute whether the CSR Board is subject
to active supervision by the State in connection with the CSR
Board’s enforcement of Article 1434. Rec. Doc. 141-1; Rec. Doc.
159. Thus, whether the CSR Board is actively supervised by the

2 Defendants rely on First American Title Co. of S.D. v. S.D. Land Title Assoc.
714 F.2d 1439 (8th Cir. 1983) to support this conclusion. However, the Fifth
Circuit concluded that defendants failed to satisfy the state action immunity
standard by citing the Supreme Court’s decision in N. Carolina State Bd. of
Dental Examiners v. FTC, 135 S.Ct. 1101, 1111-12 (2015). Veritext Corp. 901
F.3d at 292–93.
state or subject to unsupervised control of active market
participants presents a genuine issue of material fact and
forecloses summary disposition as a matter of law.3

For the foregoing reasons,
IT IS ORDERED that CSR Defendants’ Motion for Partial Summary
Judgment (Rec. Doc. 141) is DENIED.
New Orleans, Louisiana this 10th day of July, 2020.

___________________________________
SENIOR UNITED STATES DISTRICT JUDGE

3 Considering the foregoing determination, we need not address at this time the
issue of “illicit” damages.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10185671. Public record. Not legal advice.