By David Madden

TRENTON, NJ (CBS) — A law in New Jersey that limits what phone companies can charge for phone service for prison inmates has led to a court fight between the state and a Texas firm that has contracts with county jails in Cape May and Passaic Counties.

A Mercer County Superior Court judge dismissed the suit filed by Securus Technologies, a decision now under appeal. The state’s stance is being backed by several groups, including the American Civil Liberties Union.

“These private phone vendors were charging absolutely astronomical rates for folks to call loved ones on the outside,” attorney Liza Weisberg told KYW Newsradio, “and the facilities themselves were collecting kickbacks from these phone vendors.”

The law caps rates at 11 cents a minute on future contracts and those kickbacks are prohibited going forward. The suit contends that the law prohibits Securus from making a fair profit by what it considers an unconstitutional taking of private property.

“The government is not taking private property when it legislates to curb abusive, predatory and exploitative practices,” Weisberg countered. “That’s just the government doing its job.”

Securus attorneys declined an opportunity to discuss their action.