Are Private Prison Companies Using Forced Labor?

Bloomberg Business Week Josh Eidelson
November 8, 2017

On Nov. 15 the 10th Circuit Court of Appeals in Denver will hear arguments in a case that could change the future of the $5 billion private prison industry. Judges will decide whether a district court was correct in February when it certified a class action on behalf of around 60,000 current and former detainees who are suing Geo Group Inc., one of the largest U.S. private prison companies, for allegedly violating federal anti-trafficking laws by coercing them to work for free under threat of solitary confinement.

The case was first filed in 2014 by a group of immigrants who had been detained at an Immigration and Customs Enforcement facility run by Geo in Aurora, Colo. Their key claim rests on the assertion that Geo violated the Trafficking Victims Protection Act, a law designed to stop human trafficking a scourge many associate with sexual exploitation by gangs, not with government contractors’ treatment of detained immigrants. Their lawsuit argues that Geo violated the law’s prohibition on using threats to obtain labor.

It would be forced labor for someone to say, “We’ll arrest you for not working for me,’ “‰ ” says David Seligman, who represents the plaintiffs. It’s similarly forced labor to say, “We’re going to remove you from all contact with other people.’ “‰ ” The lawsuit also argues that Geo, through an optional work program that pays $1 a day, violated common law against unjust enrichment, ” since extensive use of low-paid detainee labor has saved the company money; it employs only one janitor in Aurora who isn’t in custody, the plaintiffs say.

Geo says the case lacks merit and that it’s being scapegoated over what’s really a public-policy dispute. Geo’s status as a government contractor puts it in the position of having to answer for what are essentially grievances against congressional and DHS/ICE policies, ” the company said in a March court filing. In a 2015 motion, Geo said the trafficking claim was absurd, ” because the anti-trafficking law wasn’t meant to apply to federal detainees who are lawfully kept in the custody ” of the government. In its motion for an appeal, Geo wrote that the class certification poses a potentially catastrophic risk to Geo’s ability to honor its contracts with the federal government. ”

The lawsuit is one front in a long-running battle over the existence of private prisons. Critics say letting companies run detention centers and prisons reduces accountability for potential abuses and that the profit motive encourages excessive cost-cutting. There is, almost by definition, a focus on maximizing profits and shareholder value at any publicly held private business, ” says David Lopez, who served as general counsel of the Equal Employment Opportunity Commission under President Obama and will argue for the plaintiffs before the 10th Circuit. I don’t think the private prison industry really is different it’s just its product is different. ”

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In August 2016, President Obama’s Department of Justice said it would phase out its use of privately run federal prisons. The next day, a Geo subsidiary donated $100,000 to a super PAC supporting Donald Trump. This year Trump reversed Obama’s private prison policy and awarded his administration’s first detention center contract to Geo. The company’s stock price has risen about 70 percent since Trump’s election. If the case proceeds as a class action, it will threaten other private prison companies that use inmate labor. This case is what we call a business model case, ” says Brandt Milstein, who represents the plaintiffs. Another way to say that would be an “existential threat.’ “‰ ”

BOTTOM LINE – Private prison companies have flourished under President Trump, but a class action could undermine their access to cheap labor provided by detainees.