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U.S. NEWS Thursday 28 March 2019
Judge grants class action status in

private prison lawsuit

By TRAVIS LOLLER safety and security issues
Associated Press than federally run prisons
NASHVILLE, Tenn. (AP) — without significant cost sav-
Shareholders suing private ings.
prison operator CoreCivic CoreCivic has pointed out
won class action status in court filings that the di-
Tuesday for their lawsuit rective was rescinded un-
claiming the company in- der the Trump administra-
flated stock prices by mis- tion, and the company's
representing the quality stock price went on to fully
and value of its services. recover. It also has said a
CoreCivic's public state- similar shareholder lawsuit This Aug. 16, 2018, file photo shows the Tallahatchie County
ments to shareholders have against private prison op- Correctional Facility in Tutwiler, Miss.
said the Nashville, Tennes- erator GEO Group was dis- Associated Press
see-based company pro- missed by a federal judge
vides a high quality service in Florida. their services were of a high less critical than had been
at a lower cost than gov- The company also has quality, specifically, in the expected, an executive
ernment-run facilities. The argued that statements eyes of their government wrote, "What I'm shocked
securities fraud suit claims boasting of the quality and clients." over is they totally over-
CoreCivic executives knew value of its services were of Meanwhile, executives looked the consequences
those statements were a generic nature and not knew some of those gov- of our staff vacancies. They
false. fraudulent. ernment clients were un- mentioned staffing at the
According to the suit, the Trauger addressed the is- happy with the service Co- end but could have been
company formerly called sue of the company's state- reCivic provided, Trauger much more critical."
Corrections Corporation of ments in her order Tuesday. added. CoreCivic is one of the na-
America "ran unsafe, low "CoreCivic and its execu- One example Trauger cites tion's largest private prison
quality prisons that caused tives, as might be expect- is an executive who worried operators. It owns or man-
multiple deaths and did not ed, typically portrayed its that health care problems ages 54 detention facili-
save money." services in a positive light might be putting contracts ties with a combined ca-
In a filing with the Securities to shareholders," the judge in jeopardy at two facilities pacity of over 75,000 beds
and Exchange Commis- wrote. "The statements at and wrote in an email, "this through contracts with fed-
sion, CoreCivic has said the issue here, however, fre- is going to kill us." eral, state and local gov-
shareholder lawsuit is "en- quently went beyond ge- Another example she cites: ernments, according to its
tirely without merit." neric puffery to claims that After a federal audit was website.q
U.S. District Judge Aleta
Trauger ruled Tuesday in
favor of class action status.
She relied in part on internal
communications showing
that CoreCivic executives
knew of serious problems
with at least some of their
facilities and were privately
concerned about losing
contracts.
The plaintiffs are led by
Amalgamated Bank, which
says it lost $1.2 million when
stocks fell after a 2016 U.S.
Department of Justice
memorandum directed the
Bureau of Prisons to phase
out contracts with private
operators. The memo said
private prisons have more