Neinast v. State of Texas

• Decision Date: 26 June 2000
• Docket Number: No. 99-50811,99-50811
• Citation: 217 F.3d 275
• Parties: (5th Cir. 2000) NELL NEINAST, Plaintiff-Appellant, v. STATE OF TEXAS; TEXAS DEPARTMENT OF TRANSPORTATION; DAVID M. LANEY; ROBERT NICHOLS; JOHN W. JOHNSON; CHARLES W. HALD; JERRY DIKE; VEHICLE TITLES AND REGISTRATION DIVISION, Defendants-Appellees
• Court: U.S. Court of Appeals — Fifth Circuit

Page 275

217 F.3d 275 (5th Cir. 2000)

NELL NEINAST, Plaintiff-Appellant, v. STATE OF TEXAS; TEXAS DEPARTMENT OF TRANSPORTATION; DAVID M. LANEY; ROBERT NICHOLS; JOHN W. JOHNSON; CHARLES W. HALD; JERRY DIKE; VEHICLE TITLES AND REGISTRATION DIVISION, Defendants-Appellees.

No. 99-50811

IN THE UNITED STATES COURT OF APPEALS, FIFTH CIRCUIT

June 26, 2000

Rehearing and Rehearing En Banc

Denied July 27, 2000.

Appeal from the United States District Court For the Western District of Texas

Before REYNALDO G. GARZA, HIGGINBOTHAM, and BENAVIDES, Circuit Judges.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

Today we review a challenge under the Americans with Disabilities Act ("ADA") to Texas's fee for handicapped parking placards in light of jurisdictional and immunity defenses by the State. Texas asserts that Nell Neinast cannot bring this suit in federal court because the placard charge is a tax, barring our review under the Tax Injunction Act, 28 U.S.C. § 1341, and because the ADA regulation at issue does not validly abrogate Texas's immunity from suit under the Eleventh Amendment. We hold that the charge is a fee unaffected by the Tax Injunction Act. We also conclude that because an administrative creature of Congress may not have greater power than the Congress to abrogate the states' immunity, a challenged regulation must be proportionate and congruent to the constitutional wrongs identified by the agency's enabling statute. Finding that the regulation does not do so, we hold that Neinast's suit is barred by the Eleventh Amendment.

I

This putative class action¹ seeks injunctive relief and monetary damages for a $5 fee charged by Texas for handicapped placards.² These placards enable disabled individuals to park in specially designated parking spaces; an individual need obtain one only if she does not own a car or wishes to ride in the vehicle of a non-disabled individual.³ The Texas Transportation Code states that the fees will be "deposited in the state highway fund to defray the cost of providing the disabled parking placard."⁴ Neinast, who is disabled, paid the five dollar fee and obtained a placard.

Neinast filed suit in federal court, arguing that the fee charged violates an ADA regulation prohibiting a governmental entity from placing a surcharge on an individual with a disability to cover the costs of measures required under the Act.⁵ Twenty days after Neinast filed suit, Texas filed a motion to dismiss on the ground that the federal court lacked jurisdiction pursuant to the Tax Injunction Act. The district court granted that motion, and Neinast appealed. On appeal, Texas contends not only that the Tax Injunction Act but also the Eleventh Amendment bars the federal suit.

II

First, the question before the district court: whether federal jurisdiction is barred by the Tax Injunction Act.⁶ That statute prevents federal courts from enjoining, suspending or restraining the assessment, levy or collection of any tax under state law as long as a plain, speedy and efficient remedy may be had in the courts of that state.⁷ The Act functions as a broad jurisdictional impediment to federal court interference with the administration of state tax systems.⁸

The applicability of the Act turns on whether the placard charge is a "tax" or instead a "fee." The leading case in this area, San Juan Cellular Telephone Company v. Public Service Commission, describes the distinction as a spectrum with the paradigmatic fee at one end and the paradigmatic tax at the other.⁹ The classic fee is imposed (1) by an agency, not the legislature; (2) upon those it regulates, not the community as a whole; and (3) for the purpose of defraying regulatory costs, not simply for general revenue-raising purposes.¹⁰ Whether a charge is a fee or a tax is a question of federal law.¹¹

Applying these factors to the Texas statute at hand, we find that the first factor, whether the charge is imposed by the legislature or an agency, suggests that the charge is a tax because it is imposed by the Texas legislature. The second factor, on whom the charge is imposed, suggests that the charge is a fee: the charge is imposed only on a narrow class of persons, disabled people wanting a placard, not the public at large.

The third factor, the ultimate use of the funds, thus becomes our critical question.¹² The relevant provision in the Texas Transportation Code requires that the placard charges go into the general highway fund to help defray the cost of the program.¹³ Texas argues that the funds will more likely provide a benefit to the community in the highway fund than actually defray the cost of the program. According to this interpretation, however, no charges would be fees unless they are funneled into a segregated account. If the costs of the placard program are paid out of the general highway fund, then charges paid back into the fund do help defray the program's costs.

Texas also argues that the charge is a tax because it first goes to the tax collector, then the highway fund. This formalism is unhelpful. The opinion on which Texas relies, Hexom v. Oregon Department of Transportation, specifically rejected this analysis: it declined to characterize the fee based on the initial fund it goes to, observing that the question is not where the money is deposited, but the purpose of the assessment.¹⁴

The purpose here is described narrowly as being for the benefit of the program itself. This fact distinguishes this case from Home Builders Association of Mississippi, Inc. v. Madison, cited by Texas. There, a municipality imposed an assessment on developers and builders to "pay a fair share of providing and maintaining . . . essential municipal services." The collected funds would be used for a variety of municipal services, including streets, fire and police departments, and parks and recreation.¹⁵

Several recent opinions have examined handicap placard surcharges and found them to be "fees" where the funds were to be spent for narrowly defined purposes. For example, in Marcus v. Kansas, the fee went into a special fund for the administration of the motor vehicle registration program, with excess funds at the end of the year channeled into the state's highway fund. The court held that the funds were primarily regulatory and thus "fees" for purposes of the Tax Injunction Act.¹⁶ The cases in which courts have found placard charges to be taxes were ones in which the funds went for general revenue purposes.¹⁷ As the Texas statute applies the charges toward the cost of the program, the district court erred in holding that the placard funds were a tax and thus within the scope of the Tax Injunction Act.

III

We turn to Texas's contention that the ADA regulation at issue exceeds Congress's power under § 5 of the Fourteenth Amendment to abrogate the states' immunity. Texas did not raise this issue before the district court.

Although we are empowered to consider an Eleventh Amendment defense raised for the first time on appeal,¹⁸ we must consider whether Texas's failure to raise the issue below effectively waived its claim to immunity. A state's waiver of immunity must be unequivocal.¹⁹ It may evidence that waiver, however, through action other than an express renunciation. Courts have found waiver in two general varieties of cases: where the state asserted claims of its own²⁰ or evidenced an intent to defend the suit against it on the merits.²¹

The common thread among these cases is that the state cannot simultaneously proceed past the motion and answer stage to the merits and hold back an immunity defense. For example, in Hill v. Blind Industries and Services of Maryland, the state entity waited until the first day of trial to assert its immunity. Disallowing the defense on appeal, the Ninth Circuit noted that the wait allowed the state to have the best of both worlds; it could monitor how the suit was proceeding on the merits but have any adverse ruling set aside on Eleventh Amendment grounds.²²

Here, Texas's only filing was a motion to dismiss based on the Tax Injunction Act. Texas never filed an answer or participated in any proceedings indicating an intent to try the matter on the merits.²³ Because the district court granted Texas's 12(b)(6) motion, Texas never had occasion to contest its presence in federal court on other grounds. Texas gained no benefit by federal court jurisdiction and did not lead Neinast to believe that it intended to try the case in federal court.²⁴ Texas did not unequivocally waive its right to assert immunity from suit.

Now to the merits of Texas's Eleventh Amendment challenge. The Eleventh Amendment secures the states' immunity from private suits for monetary damages filed in federal court.²⁵ Congress has the power to abrogate that immunity under § 5 of the Fourteenth Amendment, but only within its remedial powers under § 5.²⁶

Whether Congress is exercising its remedial power or impermissibly defining new rights is measured by the Supreme Court's two-part "congruence and proportionality" test. First, there must be evidence from the legislative record or elsewhere that Congress identified a pattern of constitutional wrongdoing. Second, the court must consider whether the provisions are proportional to the remedial goal.²⁷ In fashioning a remedy for constitutional violations, Congress has latitude to prohibit conduct which in itself is not unconstitutional.²⁸

Texas argues that the regulation at issue exceeds Congress's remedial authority under § 5. Circuit precedent bars our consideration of whether the ADA as a whole exceeds Congress's power to abrogate under § 5.²⁹ Texas, however, presents a different theory: foreclosed from arguing to this court that the entire ADA exceeds the congressional power of abrogation, it contends that we at least must confront whether the regulation exceeds those powers.

Two of our sister Circuits have considered this method and have focused on different lines of analysis. The Fourth Circuit decided in...