Bancpass, Inc. v. Highway Toll Admin., L.L.C.

• Decision Date: 13 July 2017
• Docket Number: No. 16-51073,16-51073
• Citation: 863 F.3d 391
• Parties: BANCPASS, INCORPORATED, Plaintiff–Appellee v. HIGHWAY TOLL ADMINISTRATION, L.L.C., Defendant–Appellant
• Court: U.S. Court of Appeals — Fifth Circuit

863 F.3d 391

BANCPASS, INCORPORATED, Plaintiff–Appellee

v.HIGHWAY TOLL ADMINISTRATION, L.L.C., Defendant–Appellant

No. 16-51073

United States Court of Appeals, Fifth Circuit.

FILED July 13, 2017

Ethan G. Gibson, Nicholas Michael Brown, Fulkerson Lotz, L.L.P., Houston, TX, for Plaintiff–Appellee.

Jonathan Freiman, David R. Roth, Esq., New Haven, CT, James Bicks, Stamford, CT, Wiggin & Dana, L.L.P., Ethan L. Shaw, Shaw Cowart, L.L.P., Austin, TX, for Defendant–Appellant.

Before WIENER, CLEMENT, and HIGGINSON, Circuit Judges.

STEPHEN A. HIGGINSON, Circuit Judge:

Defendant–Appellant Highway Toll Administration, L.L.C., ("HTA") appeals the district court's denial of its summary judgment motion based on Texas's judicial proceedings privilege. HTA argues that, under Texas law, it is absolutely immune from a defamation action brought by its competitor, Plaintiff–Appellee BancPass, Inc., because the communications at issue were related to judicial proceedings contemplated in good faith. BancPass filed a motion to dismiss the appeal, arguing that this court is without jurisdiction to hear the interlocutory appeal or, alternatively, urging that this court dismiss HTA's appeal on the ground that HTA forfeited its right to a pre-trial determination of the privilege question. We DENY BancPass's motion to dismiss and AFFIRM the district court's denial of HTA's motion for summary judgment.

I

This interlocutory appeal arises out of litigation between rival companies that specialize in highway toll collection technology. In lieu of cash collection, many state tolling authorities—including the Texas Department of Transportation (TxDOT)—now collect highway tolls either partially or entirely through electronic tolling lanes. This generally is accomplished either through use of a "toll tag"—a windshield-mounted transponder that automatically deducts the toll from the owner's account—or through technology that captures a vehicle's license plate, allowing the state to bill the vehicle's registered owner by mail.

HTA is a private company that contracts with rental-car agencies to manage the billing and payment of electronic highway tolls incurred by their rental cars. HTA registers the license plate numbers of rental cars on its "fleet list" and then pays the tolling authority directly for tolls incurred by those cars. Although the vehicles remain registered to the rental-car companies, the state tolling authority permits the license plates of designated vehicles to be listed on HTA's fleet list solely for tolling purposes. When one of the registered rental cars passes through a toll site, the tolling authority bills HTA's fleet account. HTA then bills the rental car customer for the cost of the customer's accrued tolls, plus a fee for HTA's services.

Appellee BancPass is a competing toll services company. In 2014, BancPass began marketing a cellphone application, the "PToll App," which allows users to photograph their license plates and send those photographs directly to BancPass through the App. BancPass then registers the associated vehicles on its own fleet list. When a covered vehicle passes through a toll site, BancPass pays the tolling authority for the incurred toll and then deducts the cost of the toll from the user's account. One of the benefits of the PToll App is that it allows rental-car customers to add their rental vehicles' license plates to BancPass's fleet list for only the limited pendency of the rental term. By doing so, customers are able to opt out of the default toll-payment systems provided by rental-car companies and thus avoid the associated fees charged by toll servicing companies such as HTA.

In April 2014, BancPass announced that it would officially launch its PToll App at the September 2014 International Bridge, Tunnel, and Turnpike Association's national conference, the most influential annual conference in the tolling industry. However, after learning that rental-car customers could use the PToll App to pay their incurred tolls, HTA took action to block BancPass's planned launch.

First, on August 13, 2014, HTA's CEO sent a letter to TxDOT's legal counsel expressing the company's "concern" about BancPass's efforts to register with TxDOT the license plates of vehicles owned by rental-car agencies and TxDOT's apparent willingness to prioritize BancPass's registrations over HTA's. The letter additionally notified TxDOT that HTA intended to work with "outside counsel to take any and all legal actions necessary to protect [HTA's] rights under our agreement with TxDOT or Texas Law, and intend[ed] to hold BancPass or its customers responsible with regard to any such actions involving the rental agency vehicles." HTA did not provide a copy of the letter to BancPass or otherwise communicate to BancPass the concern expressed in the letter.

Second, on September 3, 2014, HTA's outside counsel sent letters to Google and Apple, two companies that sold the PToll App in their online stores. The two letters, which were entitled "Illegal ‘PToll’ App by BancPass," demanded that Google and Apple remove the PToll App from their stores, because it allegedly violated each companies' internal policies and allowed users to "engage in unlawful activities." The letters accused BancPass and its users of a wide array of illegal conduct. For example, the letters claimed that, by allowing users to upload a photo of a rental car license plate and register that vehicle on BancPass's fleet, the PToll App was requiring its users "to assist in the violation of state vehicle registration laws by falsely representing—or enabling BancPass to represent—that the license plate assigned to the vehicle belongs to the user." The letter claimed:

[T]his action is in violation of the laws of most (if not all) states prohibiting false statements to the State Authorities in conjunction with the registration of a vehicle or license plate .... By misrepresenting, or assisting BancPass in misrepresenting, that a particular rental car and its license plate are part of BancPass's fleet when, in fact, they are not, PToll App users are unwittingly committing a felony.

The letter further warned that the technology would cause a "procedural and financial nightmare" for subsequent users of the rental vehicles, HTA, rental agencies, and state authorities. HTA's outside counsel accused Google and Apple of "facilitating ... tortious conduct," and warned that, by giving the App "an air of legitimacy," their sale of the App was "intentionally deceptive and unfairly induce[d] users of the PToll App to participate in BancPass's unlawful schemes" in violation of California law. While the letters mentioned that BancPass was "intentionally interfering with the contract between the Rental Agencies and drivers ," it did not refer to any tortious interference with HTA's own contractual relationships, nor did it allude to the possibility that HTA would pursue legal action against BancPass. The letter merely closed with a demand that Google and Apple remove the PToll App from their online stores, based on its illegality. As with the letter to TxDOT, HTA did not provide a copy of these letters to BancPass or otherwise communicate to BancPass the concerns expressed in the letters.

Finally, on September 30, 2014, HTA contacted BancPass directly and threatened legal action unless BancPass agreed to stop marketing the PToll App to rental-car customers. BancPass declined and instead filed suit in October 2014, seeking a declaratory judgment that its app did not tortiously interfere with HTA's contractual rights. Upon obtaining HTA's letters to TxDOT, Apple, and Google through discovery, BancPass amended its complaint to add a defamation claim based on the content of the three letters. HTA counterclaimed, seeking a declaratory judgment that the PToll App tortiously interferes with HTA's current and prospective contracts.

In its summary judgment briefing, HTA argued for the first time that it was entitled to summary judgment on BancPass's defamation claim, because all three letters were absolutely privileged under Texas law. HTA claimed that Texas's judicial proceedings privilege protected the communications from a defamation claim, as they were made preliminary to a contemplated judicial proceeding. The district court denied summary judgment on the defamation claim, holding that the statements contained in the letters were not covered by absolute privilege under Texas law. The court additionally held that BancPass was entitled to a declaration that the PToll App does not tortiously interfere with HTA's contractual rights.

HTA filed an emergency motion to stay further proceedings pending its anticipated appeal of the district court's denial of its summary judgment motion. In its order denying the motion, the court acknowledged that "HTA is free to file a notice of appeal ... at which point this Court will be deprived of jurisdiction." The court noted, however, that it "view[ed] HTA's conduct in waiting to advance the absolute immunity defense until summary judgment ... as a litigation tactic designed to avoid trial." This admonition was based on "HTA's conduct in waiting to advance the absolute immunity defense until summary judgment (which took place unusually late in these proceedings given HTA's motion for continuance of the dispositive motions deadline), [and] then announcing its intention to appeal only two days before the docket call and after unsuccessfully moving for a continuance of the trial date."

HTA appealed the district court's order to this court, arguing that its motion for summary judgment based on absolute immunity was "immediately appealable ... under the collateral order doctrine." BancPass moved to dismiss the appeal on two grounds. First, BancPass argued that this court lacks jurisdiction over an appeal of denial of Texas's judicial proceedings privilege that is based on out-of-court statements made in the absence of an ongoing judicial proceeding. Second, BancPass argued that...