A unified front of Texas court reporters say the Texas Judicial Branch Certification Commission is not doing its job regulating the court reporting industry and is letting bad actors run afoul of the law.
One certified shorthand reporter, Jo Holmgren, has taken the JBCC to court, with the support of a statewide advocacy group of court reporters, after the commission dismissed her complaint against a now defunct digital deposition recording company.
In another case that has ended up in the courts, certified shorthand reporter Lorrie Schnoor, past president of the Texas Court Reporters Association, complained to the JBCC about an Austin videographer who advertised transcription services. The videographer sued Schnoor, the state court reporters association she led and others alleging they were blackballing his businesses. In that case, a federal judge found his transcription service was illegal under the Texas Government Code section that regulates the court reporting industry, even though the JBCC had dismissed Schnoor’s complaint.
The Texas Deposition Reporters Association, which has thrown support behind Holmgren and Schnoor, said the judge’s opinion affirms their interpretation of the law governing court reporters.
“It is not hyperbole to say that this is the most profoundly important decision ever rendered in a court of record impacting Texas freelancer reporters,” the association said.
Lawyers for the JBCC, represented by the Texas attorney general’s office, did not respond to requests for comment.
In response to aggressive marketing from vendors amid a shortage of human court reporters in some parts of the country, court reporters have warned of perceived legal, ethical, security and accuracy concerns with artificial intelligence and automatic speech recognition. Such technologies “have no loyalty to the rule of law,” said the National Court Reporters Association in a white paper Holmgren contributed to.
“A BLIND EYE”
In 2019, a budding San Diego-based digital deposition reporting services company called StoryCloud was looking to expand to Texas. It went to register with the state’s Judicial Branch Certification Commission, the agency charged with overseeing court-related industries including court reporters and interpreters.
Seeing no option that described StoryCloud’s exact business model and technology, the company opted to register as a court reporting firm out of an abundance of caution, its chief executive officer would later swear in a declaration that’s been included in the Holmgren litigation.
“If that registration was inappropriate because StoryCloud does not perform ‘court reporting’ or ‘shorthand reporting’ services, then StoryCloud is prepared to surrender its registration on terms acceptable to the Commission,” StoryCloud’s lawyer, Amy Ruhland, wrote in an Oct. 30, 2020, letter included in the same litigation. At the time, Ruhland was with DLA Piper. She is now at Reichman Jorgensen Lehman & Feldberg.
StoryCloud gained clients in Texas, including Farmers Insurance Group, which expressed satisfaction with its services and technology, according to Kenneth Kalb, StoryCloud’s CEO. So satisfied were its customers that many of them kept coming back to StoryCloud for its digital audio deposition recording and transcription services, Kalb said.
As the Covid-19 pandemic crept toward Texas, Holmgren, the certified shorthand reporter, caught wind of this new digital company. Fellow court reporters told her they were seeing StoryCloud’s presence more and more. Holmgren researched StoryCloud online. Its website touted transcription services that sounded just like what certified shorthand reporters produce. But unlike certified stenographers, StoryCloud created the transcripts largely using artificial intelligence and used only notaries to administer oaths. Yet the JBCC had given StoryCloud a firm number just like court reporting firms get from the state commision, Holmgren said.
It seemed to Holmgren that StoryCloud was “obviously violating the rules.”
“Well this will be like shooting fish in a barrel,” Holmgren recalled thinking. “We’ll just file a complaint with the JBCC.”
On March 4, 2020, Holmgren brought a complaint under her name and her court reporting firm, Preferred Legal Services, Inc. Holmgren alleged StoryCloud was in violation of numerous provisions of Section 154 of the Texas Government Code which dictates the law for court reporter certification and shorthand reporting firm registration. Holmgren alleged, among other things, that StoryCloud was using notaries, who aren’t required to follow Section 154.
“To be certified as a shorthand reporter, one must undergo significant education and training.
Prospective shorthand reporters are background checked and must pass rigorous tests in order to be certified in Texas,” Holmgren wrote in her complaint. “It is not an easy process and is far more difficult than simply filling out an application and posting a bond, which is all that is required to become a notary public. Many prospective shorthand reporters invest considerable time and money training to become a court reporter only to fail the test and never be certified.”
Then she waited. Twenty days passed, the time by which the JBCC should have required StoryCloud to provide a written response to Holmgren’s complaint. On April 13, 2020, Dennis Holmgren, Jo Holmgren’s husband and lawyer, requested an update. A JBCC compliance investigator told him the complaint was still under review. He requested another status update in May and another in July.
Sensing no movement, Dennis Holmgren, an attorney at the Dallas firm Holmgren Johnson: Mitchell Madden, threatened on Oct. 7, 2020, to file a petition with the courts, asking a judge to compel the commission to investigate Jo Holmgren’s complaint. The tactic seemed to work. On Nov. 3, 2020, the JBCC contacted the Holmgrens to schedule an interview. The interview never happened, though, because the commission determined an interview was not necessary. In a letter dated Dec. 4, 2020, the commission said it was dismissing Holmgren’s complaint for lack of jurisdiction.
Holmgren requested the commission reconsider. On Feb. 5, 2021, the majority of the commission upheld the dismissal, according to her lawsuit. Holmgren and her firm responded by filing an administrative appeal in Travis County courts against the JBCC and each of its commissioners.
“It’s kind of funny,” Dennis Holmgren said. “They’re like the only regulatory agency that really doesn’t want to do their job. Usually I deal with regulatory overreach where they’re trying to do too much. Apparently (the JBCC) is trying to do too little.”
The office of the attorney general, which is representing the JBCC, asked the Travis County judge to dismiss Holmgren’s petition “because it fails to support a claim for judicial review or a writ of mandamus,” or, alternatively, render a final judgment in favor of the JBCC. Its lawyers allege the court has no authority to determine the subject matter, and they argue sovereign immunity bars the lawsuit from being brought against the commission. They also say Holmgren lacks standing.
The judge denied the JBCC’s request and the commission appealed to the Third Court of Appeals. Chief Justice Darlene Byrne and Justices Gisela Triana and Edward Smith are set to begin reviewing the case Feb. 20. They declined to hear oral arguments.
In its appeal to the Third Court, the JBCC further explained its argument that the commission lacks jurisdiction over StoryCloud “because its activities do not meet the definition of court reporting under the Commission’s laws. This is because StoryCloud does not use stenography or oral stenography.”
It wasn’t clear based on a review of court records how StoryCloud obtained registration as a court reporting firm. Attorneys for the JBCC and StoryCloud did not respond to requests for comment.
StoryCloud’s lawyer said Holmgren misrepresented its business model and contended all its Texas offerings were lawful. StoryCloud’s main service is digital deposition reporting, Ruhland wrote, and it uses licensed notary publics to administer oaths. StoryCloud did use artificial intelligence and remote-human workers to produce transcripts, Ruhland noted. But StoryCloud never produced a deposition transcript that was certified by a certified shorthand reporter in Texas; instead StoryCloud disclosed its limitations to parties before depositions and left it to the parties to arrange for a shorthand reporter to attend, according to Ruhland.
“Texas law expressly permits non-stenographic recording of depositions, and Story Cloud is careful to ensure that it complies with those provisions of law that relate to the services provided by the company in Texas,” Ruhland wrote. StoryCloud services that don’t meet Texas’ requirements are not offered in the state, she added.
The Texas Deposition Reporters’ Association waded into the case last year, filing an amicus brief in support of Holmgren.
The JBCC “is the state agency charged with regulating court reporters and court reporting firms. Yet where ‘digital’ reporters are concerned, the JBCC turns a blind eye, allowing these individuals and their affiliated firms to perform court reporting services without becoming certified shorthand reporters,” the group wrote. “Worse, the JBCC claims it lacks jurisdiction to even enforce governing statutes and rules against individuals who perform court reporting services without the credentials required under state law — and now claims a party aggrieved by its actions may not seek judicial review when the JBCC refuses to perform its mandated functions.”
Dennis Holmgren has said he plans to file with the appeals court a finding by Senior U.S. District Judge David A. Ezra in another case for the panel to consider. In that case, the judge determined an Austin transcription service violated the Texas Government Code after its founder took certified shorthand reporters and other litigation support firms to court last year. Holmgren represents the four individual court reporters named as defendants and two companies.
“ESTABLISHED LAW”
Pasqual “Trey” Perez III, of Austin, has provided videography services since 2014 through his business Austin Legal Video. In 2019, Perez began marketing a second business, Depo-Notes, that provided non-certified transcripts using a speech-to-text service.
In an online video ad, Perez offered a technological solution to a widespread shortage of court reporters.
“We’re not trying to replace court reporters, but in their absence, we can offer a rough draft, next-day transcript of the deposition,” Perez said in the video, according to documents filed in the litigation.
Another written ad claimed Austin Legal Video services included a videographer who is also a notary who could swear in witnesses, record the proceedings and produce a certified transcript.
On Feb. 5, 2020, Lorrie Schnoor, who was at the time the Texas Court Reporters Association president, filed a complaint against Perez with the JBCC. She accused Perez of violating the section of the government code that says all depositions conducted in Texas must be recorded by a certified shorthand reporter and the section that requires firms to register with the commission.
The commission dismissed the complaint and denied Schnoor’s motion for reconsideration.
Since rolling out the second business, Perez said demand began to dwindle. Court reporting firms stopped sending him work and one of the firm’s court reporters told him in an email that he was being “blackballed.”
In April, 2023, Perez filed a lawsuit in federal court accusing a group of court reporters, including Schnoor, of blackballing him because his business “cut into their business model.” He named as defendants: Deposition Solutions (also known as Lexitas), Court Reporters Clearinghouse, Alderson Reporting Company, Southwest Reporting & Video Service, Kennedy Reporting Service, Texas Court Reporters Association, Speech to Texas Institute, and court reporters Sherri Fisher, Sonia Trevino, Shelly Tucker and Schnoor.
In November, Judge Ezra determined Perez’s Depo-Notes lacked regulatory approval and was barred from entering the market under the Texas Government Code, which requires depositions be recorded by a certified shorthand reporter. Perez’s second business didn’t fall into any of the Government Code’s exceptions to the rule, Ezra noted. Perez could not hire a certified shorthand reporter to certify their transcripts without registering as a shorthand reporting firm, Judge Ezra further wrote.
“Depo-Notes is violating Section 154 of the Government Code,” Judge Ezra said.
The Texas Deposition Reporters Association issued a public statement saying the judge’s opinion affirms their interpretation of the law on court reporters.
“We believe, if upheld on appeal, this ruling will certainly be cited as precedent and established law in future cases,” the association said.
Judge Ezra allowed Perez and his first business, Austin Legal Video, to continue its litigation. As long as Judge Ezra’s decision about Perez’s second business is upheld, Dennis Holmgren said, “That puts our courts in a little bit of an interesting bind in that you have already had a court make a determination as to whether this is legal or not.”
The judge’s ruling stands to have implications on how depositions are conducted, said Dov Preminger, who represents Perez. An exception in the Government Code allows for a person who is not a state certified court reporter to produce a transcription so long as the parties stipulate before the deposition begins that a certified shorthand reporter was unavailable.
“This ruling by the judge, I think, is really important and impactful, and I don’t know that it’s been fully appreciated,” Preminger told The Lawbook. “Because if it is the case that you have to have a court reporter present in every depo in Texas and you cannot do some of these things — I think that can have a lot of significance around Texas.”
Preminger declined to comment to The Lawbook on the court reporters’ accusation against the JBCC. In court filings, Preminger wrote the JBCC “already heard and dismissed claims that [Perez and his businesses] violated the law by providing rough transcripts via Depo-Notes.” The judge should consider that the JBCC rejected Schnoor’s argument, Preminger argued.
“In sum, the JBCC, which is the Texas state entity charged with regulating these issues, saw no issue with what Plaintiffs were doing,” Preminger wrote. “The Court should not find one either.”
The state statutes would need to be amended and rules must be established by the Texas Supreme Court if the state wants to allow digital reporting, the Holmgrens contend.
“As of Sept. 1,” Jo Holmgren said, “they made it very clear that only certified shorthand reporters can take depositions.”
The cases numbers are 03-22-00245-CV and 1:23-cv-00421.