# Veritext Corp. v. Bonin

> District Court, E.D. Louisiana · April 8, 2021

URL: https://www.frixlaw.com/law-library/cases/10186535

## Case

- **Court:** District Court, E.D. Louisiana
- **Decided:** April 8, 2021
- **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/10186535

## How later opinions describe it (automated extraction)

- applying McKennon’s rationale in a Title VII matter
- applying McKennon’s rationale in a Title VII matter

## Opinion text

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
VERITEXT CORP., ET Al. CIVIL ACTION
VERSUS NO. 16-13903
C/W 17-9877
REF: ALL CASES
PAUL A. BONIN, ET AL. SECTION: “B”(2)
REASONS
This court previously granted plaintiffs’ motion for partial
summary judgment on the affirmative defenses of unclean hands and
allocation of fault, and mooted the affirmative defenses in pari
delicto, indemnification, and contribution (Rec. Doc. 123) for the
following reasons.
On February 25, 2019, this court consolidated plaintiff
Esquire Deposition Solutions, LLC, “Esquire” and plaintiff
Veritext Corp.’s actions against defendants Paul A. Bonin, Vincent
P. Borrello, Jr., Milton Donegan, Jr., Suzette Magee, Kimya M.
Holmes, John H. Anderssen, May F. Dunn, Elizabeth C. Methvin, John
J. Lee, Jr., and Laura Putnam. See Rec. Doc. 91. Veritext and
Esquire are both Delaware corporations providing court-reporting
services to clients across the United States, including in
Louisiana, in depositions, arbitrations, and other proceedings;

both are also consumers of court reporting services in Louisiana.
Rec. Docs. 1 at 5, 117 at 5. Plaintiffs’ businesses provide
negotiated rates and discounts for court reporting services to
frequent customers who agree to utilize plaintiffs’ services for
all or some of their court reporting need. Rec. Doc. 4 at 5.
Defendants are current and former members of the Louisiana
Board of Examiners of Certified Shorthand Reporters the “Board”

—a regulatory body created “for the purpose of encouraging
proficiency in the practice of shorthand reporting as a profession,
promoting efficiency in court and general reporting, and …
establishing a standard of competency for those persons engaged in
it.” LA. STAT. ANN. §37:2551(A) (2020). The Board is vested with
enforcement authority of the provision under scrutiny in this
matter, Louisiana Code of Civil Procedure Article (1434), which
prohibits
…a person who has a contractual relationship with a party
litigant to provide shorthand reporting or other court reporting
services…[or] a person employed part or full time under contract
or otherwise by a person who has a contractual relationship with
a party litigant to provide shorthand reporting or other court
reporting to services… LA. CODE CIV. PRO. ANN. art. 1434(A)(2) (2020).
In 2012, the Board began enforcing Article 1434 more
aggressively, declaring that the law prohibits all contracts
between court reporters and party litigants, including volume-
based discounts and concessions to frequent customers. Veritext
consequently brought a variety of claims under the Constitution—
under the dormant Commerce Clause, the Due Process Clause, and the
Equal Protection Clause of the Fourteenth Amendment—and under
Section 1 of the Sherman Act, 15 U.S.C. § 1. Rec. Doc. 4. This
court dismissed plaintiff’s constitutional challenges, and
subsequently dismissed the Sherman Act claim on reconsideration.
Veritext Corp. v. Bonin, 259 F. Supp. 3d 484 (E.D. La. 2017), on
reconsideration, 2017 WL 3279464 (E.D. La. Aug. 2, 2017). On

appeal, the Fifth Circuit confirmed the dismissal of Veritext’s
constitutional claims but reversed the dismissal of its Sherman
Act claim because it found “clear[ly] from the record that the
members of the Board qualify as active market participants.”
Veritext Corporation v. Bonin, 901 F.3d 287, 293 (5th Cir. 2018).
On May 5, 2020, defendants filed a motion to compel Veritext
to identify all instances in which Veritext provided court
reporting services to party litigants from January 1, 2007 to the
present after Veritext objected to the interrogatory as overbroad,
unduly burdensome, and interposed for the improper purpose of
defendants investigating “compliance with the anticompetitive

rules and regulations challenged by this lawsuit.” Rec. Doc. 215-
4 at 85. The Magistrate Judge overruled the objection and granted
defendants’ motion to compel. Rec. Doc. 228. Plaintiffs then filed
the instant motion for partial summary judgment on the affirmative
defenses of unclean hands, in pari delicto, indemnification,
contribution, and allocation of fault. Rec. Docs. 229, 231, 234.
I. PARTIES’ CONTENTIONS
Plaintiffs contend that defendants are prohibited from
alleging in pari delicto and unclean hands as affirmative defenses
and that this court would be undermining antitrust laws in allowing
them to do so. Rec. Doc. 229-4 at 3-5. Further, plaintiffs argue
a hypothetical Article 1434 violation has nothing to do with
whether defendants engaged in price fixing or other conduct in
violation of the Sherman Act. Id. at 5. In fact, in their reply to

defendant’s opposition, plaintiffs assert defendants failed to
submit any evidence showing that plaintiffs’ actions harmed them
or that plaintiffs would have no cause of action but for their
alleged violations of Article 1434. Rec. Doc. 234 at 3.
Plaintiffs also argue that Supreme Court precedent has
prohibited defendants from asserting indemnification,
contribution, and allocation of fault. Id. (citing Texas
Industries v. Radcliff Materials, Inc., 451 U.S. 630, 645-47
(1971)). Moreover, plaintiffs are not seeking to hold individual
defendants liable for damages if they are sued only in their
official capacities. Id. at 6.

Defendants do not oppose the dismissal of their affirmative
defenses of contribution and indemnity in light of the Supreme
Court’s decision in Texas Industries v. Radcliff Materials, Inc.
and contend they never asserted the affirmative defense of in pari
delicto. Rec. Doc. 231 at 5. However, defendants maintain that
their unclean hands defense and defense disputing joint and several
liability are legally relevant and should defeat summary judgment.
Defendants first argue that if this court grants plaintiffs’
injunction, it would “encourage and reward illegal conduct that
violates Article 1434” and that this illegal conduct is relevant
in determining whether plaintiffs are entitled to injunctive

relief. Rec. Doc. 231 at 8. Defendants claim plaintiffs
mischaracterized the holdings in Perma Life and Kiefer-Stewart and
that every other case that plaintiffs cited were either overturned
on appeal, were in pari delicto defense cases (which is not at
issue in this matter) or were inapposite. Id. at 9-15.
Finally, defendants argue that summary judgment is
inappropriate because there are genuine issues of material fact
regarding when, if at all, individual defendants participated in
the alleged conspiracy and to what extent they may be held liable.
Rec. Doc. 231 at 18. For example, some defendants are sued only in
their official capacity, while other defendants served on the Board

for only part of the duration plaintiffs’ damages allegedly
occurred.
II. LAW AND ANALYSIS
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. 56c); See also TIG Ins. Co. v.
Sedgwick James of Wash., 276 F.3d 754, 759 (5th Cir. 2002). In its
motion for summary judgment, plaintiffs do not raise any questions
of material facts, but puts at issue whether plaintiffs are

entitled to judgment as a matter of law. Defendants assert they
did not assert in pari delicto as a defense and withdrew their
“prophylactic” affirmative defenses of contribution and indemnity;
therefore, this court must only analyze the defenses of unclean
hands and allocation of fault.
A. Joint and Several Liability
Rule 12(f) of the Federal Rules of Civil Procedure provides
the court with authority to strike from any pleading “any
redundant, immaterial, impertinent, or scandalous matter” either
on its own or on a party’s motion. Section 1 of the Sherman Act
has broad sweeping language, but the remedial provisions are

detailed and specific. See 15 U.S.C.A. §15(a). In addition to
making violations of section 1 a crime, Congress has expressly
authorized a private right of action for treble damages, costs,
and reasonable attorney’s fees and has not substantially amended
these remedies since the Clayton Act was enacted in 1914. Id. The
Fifth Circuit and the Supreme Court have firmly held that
participants in an antitrust conspiracy face joint and several
liability for the damages caused by their illegal actions and
plaintiffs may recover their entire damages from a single defendant
in a multi-defendant antitrust suit. See e.g., Wilson P. Abraham
Const. Corp. v. Texas Industries, Inc., 604 F.2d 897 (5th Cir.
1979) (“[T]he denial of contribution among wrongdoers, together
with a plaintiff’s right to sue and collect from only one

defendant…[does not] offend constitutional principles.”); Texas
Industries, Inc. v. Radcliff Materials, Inc., 451 U.S. 630 (1981)
(“[D]efendants should be jointly and severally liable … [it]
ensures that the plaintiffs will be able to recover the full amount
from some, if not all, participants.).
Defendants argue and plaintiffs agree that in regard to
defendants sued in their official capacities only, allocation of
fault is irrelevant in this case. Plaintiffs are not seeking to
hold these “official” defendants liable for damages. Therefore,
there is no issue of allocation of fault to official defendants.
However, defendants argue, but provide no case law or

statutory authority to support their contentions, that defendants
sued in their individual capacity have “the right to assert that
he or she is not jointly and severally liable with the other
Individual Defendants until Plaintiffs satisfy their burden of
proof that each of the Individual Defendants engaged in conduct
violating the Sherman Act.” Rec. Doc. 231 at 17. Defendants
conflate two issues: whether defendant may assert an affirmative
defense and whether plaintiff can meet their burden at trial.
Neither of which is dependent on the other. Rule 8(c) requires a
party to set forth “any avoidance or affirmative defense” and
includes a non-exhaustive list of eighteen affirmative defenses.
Fed. R. Civ. Pro. 8(c) (2021). An affirmative defense is a
defendant’s assertion, if found true, will negate civil liability,

even if it is proven that the defendant committed the alleged acts.
Affirmative Defense, BLACK’S LAW DICTIONARY (9th ed. 2009). The burden
to prove an affirmative defense is solely on the party asserting
it—the defendants in this case. Plaintiffs must satisfy their
burden of proof at trial to determine whether an affirmative
defense is even necessary, but that burden is irrelevant to the
applicability of specific defenses.
Defendants, again without offering any case law or statutory
authority to support their contentions, subsequently muddies the
timing individual Board members served on the board with the extent
to which they may be held liable. Whether defendants joined the

board before or after the alleged conspiracy commenced is
irrelevant, defendants may still be liable for all damages flowing
from the alleged conspiracy. See Morton’s Mkt., Inc. v. Gustafan’s
Dairy, Inc., 198 F.3d 823, 838 (11th Cir. 1999); MM Steel, L.P. v.
JSW Steel, Inc., 806 F.3d 835, 844 (5th Cir. 2015).
To the extent that plaintiffs meet their burden at trial to
prove that individual Board members violated antitrust laws and
participated in the alleged conspiracy, defendants do not have
“the right to assert that he or she is not jointly and severally
liable.”
B. Clean Hands Doctrine
Defendants accuse plaintiffs of not citing “a single case

where private parties … sought to enjoin an arm of the state …
implicat[ing] significant policy considerations,” and plaintiffs’
unclean hands render summary judgment inappropriate. Id. at 8.
Likewise, defendants fail to cite a single case or address any
public policy considerations. Again, this argument is more
appropriate for the merits of plaintiffs’ case, and not the
applicability of an affirmative defense.
Moreover, defendants are contradictory throughout their
response to plaintiff’s motion and it is unclear what defendants
seek in their opposition to it. Defendants assert that plaintiffs
are barred from obtaining injunctive relief, yet they “seek only

to limit the quantum of damages that Plaintiffs can recover by
excluding revenue that would have been earned in violation of
Article 1434.” Rec. Doc. 231 at 9-10. Then defendants assert that
plaintiffs’ unclean hands and wrongful actions do not “completely”
bar plaintiffs’ suit, and they “seek only to limit the quantum of
damages that Plaintiffs can recover … a viable defense under Perma
Life and Kestenbaum,” Id. at 15, before concluding that the defense
is “viable in challenging Plaintiffs’ demand to enjoin enforcement
of constitutional state law…” Id. at 19. Regardless of what
defendants purportedly asked this court, plaintiffs “unclean
hands” are irrelevant to their claim for injunctive relief and the
quantum of recoverable damages.
In their memoranda, both parties argue over what a variety of

cases have held with regards to the Clean Hands Doctrine.1 Because
Congress is silent concerning defenses to private antitrust suits,
courts are compelled to determine whether common law defenses
should be available to defendants. Whether plaintiff’s illegal
conduct may defeat an injunction or limit recovery of damages
continues to perplex courts.
Courts should reject the Clean Hands Doctrine “where Congress
[has] authorized[d] broad equitable relief to serve important
national purposes.” See McKennon v. Nashville Banner Publ. Co.,
513 U.S. 352, 357 (1995) (addressing the doctrine in the context
of an AEDA claim); Vichare v. AMBAC Inc., 106 F.3d 457, 468 n.5

(2d Cir. 1996) (applying McKennon’s rationale in a Title VII
matter); Mancuso v. Douglas Elliman LLC, 808 F. Supp.2d 606, 631

1 Defendants consistently confuse issues and manipulate case law to make
unsound arguments that are devoid of any merit. E.g., In defendants’
opposition, defendants write “Plaintiffs’ illegal conduct, unclean hands, and
fault ‘can of course be taken into consideration in computing damages,’ as
made clear by the Supreme Court in Perma Life…Plaintiffs’ Motion should be
denied to the extent it seeks dismissal of Defendants’ Unclean Hands
Defense.” Rec. Doc. 231 at 19 (citing Perma Life, 392 U.S. at 140; U.S.
Football League, 842 F.2d at 1369, etc.). But in U.S. Football League, the
court asserts, “Neither Perma Life nor Kiefer-Stewart suggests that otherwise
readily admissible evidence must be excluded because it might be relevant to
an in pari delicto or unclean-hands defense. In fact, Perma Life explicitly
states that such evidence “can of course be taken into consideration in
computing damages.” The court is discussing evidence relevant to causation
and damages, not, as defendants imply, to allow them to assert unclean hands
as a defense.
(S.D.N.Y. 2011) (finding the doctrine is inapplicable in FHA
cases). A review of congressional intent and public policy can
help resolve the perplexity in antitrust cases. The underlying
policy of antitrust laws is the encouragement of competition.
Standard Oil Co. v. United States, 221 U.S. 1, 61 (1911) (the

purpose of the Sherman Act is to prevent “monopoly and the acts
which produce the same result as monopoly”). Courts have recognized
that private suits against violators play a vital role in the
promotion of competition because they help deter antitrust
violations and protect the public interest at large. Moreover,
treble damages serve as a deterrence because awards are notoriously
larger compared to other civil actions and have exceeded $1 billion
dollars in recent history. See In re Urethane Antitrust Litigation,
768 F.3d 1245 (10th Cir. 2014) (treble damages totaled $1.2
billion); Conwood Co. v. U.S. Tobacco Co., 290 F.3d 768 (6th Cir.

2002) (treble damages totaled $1.05 billion).
Moreover, the Clean Hands Doctrine is an equitable defense
and even though “He who comes into equity must come with clean
hands,” equity “does not demand that its suitors shall have led
blameless lives.” Loughran v. Loughran, 292 U.S. 216 (1934). Courts
“apply the maxim requiring clean hands only where some
unconscionable act of one coming for relief has immediate and
necessary relation to the equity that he seeks.” Keystone Driller
Co. v. General Excavator Co., 290 U.S. 240, 245 (1933). This maxim
“does not mean that courts must always permit a defendant wrongdoer
to retain the profits of his wrongdoing merely because the
plaintiff himself is possibly guilty of transgressing the law in
the transactions involved.” Johnston v. Yellow Cab Transit Co.,

321 U.S. 383, 387 (1944) (emphasis added). The court may employ
the doctrine to deny injunctive relief “where the party applying
for such relief is guilty of conduct involving fraud, deceit,
unconscionability, or bad faith related to the matter at issue to
the detriment of the other party.” Performance Unlimited v. Questar
Publishers, 52 F.3d 1373, 1383 (6th Cir. 1995) (emphasis added).
But
[E]ver since the Supreme Court in Perma Life, rejected the
defense of in pari delicto2
in antitrust cases, it has been
clear that whenever some maxim of equity (such as that to get
equitable relief you must have “clean hands”) collides with
the objectives of the antitrust laws, the equity maxim must
give way.

General Leaseways, Inc. v. National Truck Leasing Ass’n, 744 F.2d
588, 597 (7th Cir. 1984). And in Kiefer-Stewart, the plaintiff’s
alleged unclean hands “could not legalize the unlawful combination
by respondents nor immunize them against liability to those they
injured.” Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, 340 U.S.

2 In pari delicto bars plaintiffs from recovering damages when both parties
are equally at fault, but the Supreme Court in Perma Life held that it “is
not to be recognized as a defense to an antitrust action.” Perma Life
Mufflers, Inc. v. Intern. Parts Corp., 392 U.S. 134, 140 (1968). If
plaintiffs have “unclean hands” but are at less-than equal fault, it stands
to reason that plaintiffs should not be barred from bringing their antitrust
action or recover damages.
211, 214 (1951). Because the policy for enacting antitrust laws is
to promote competition and Congress enacted private actions to
protect the public from monopolies, defendants’ alleged conspiracy
outweighs any “unclean hands” the plaintiffs may bring to court.

Further, case law analyzing the Clean Hands Doctrine in
antitrust cases, supra, scrutinized plaintiffs that also violated
antitrust laws—not state statutes as the defendants allege in the
current matter. Reason dictates that if this court finds that the
statute in question violates the Sherman Act, the plaintiffs would
not be coming to court with “unclean hands” for any violations of
that statute. Therefore, defendants may not assert the Clean Hands
Doctrine to bar plaintiffs from seeking injunctive relief or to
limit the quantum of damages3.
New Orleans, Louisiana, this 7th day of April, 2021

___________________________________
SENIOR UNITED STATES DISTRICT JUDGE

3 There has been continuous discussion about whether courts have authority to
invoke an equitable defense like unclean hands to bar an action for damages
since the courts of law and equity merged. But because the plaintiffs would
not have “unclean hands” if the court rules in their favor on the merits of
this case, that discussion is unnecessary.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10186535. Public record. Not legal advice.