Reyes v. N. Tex. Tollway Auth., 16-10767

• Decision Date: 27 June 2017
• Docket Number: No. 16-10767,16-10767
• Parties: Mirna REYES; Emmanuel Lewis; Jennifer Bunch ; Deborah Gilbert, Plaintiffs–Appellants v. NORTH TEXAS TOLLWAY AUTHORITY, (NTTA), Defendant–Appellee
• Court: U.S. Court of Appeals — Fifth Circuit

861 F.3d 558

Mirna REYES; Emmanuel Lewis; Jennifer Bunch ; Deborah Gilbert, Plaintiffs–Appellants
v.
NORTH TEXAS TOLLWAY AUTHORITY, (NTTA), Defendant–Appellee

No. 16-10767

United States Court of Appeals, Fifth Circuit.

FILED June 27, 2017

Steven Dominic Sanfelippo, Cunningham Swaim, L.L.P., Elton Joe Kendall, Jody Lynn Rudman, Kendall Law Group, L.L.P., Walt D. Roper, Roper Firm, P.C., Dallas, TX, Plaintiffs–Appellants.

W. Scott Hastings, Esq., Paul Edward Coggins, Jr., Jeffrey B. Mead, Thomas George Yoxall, Attorney, Locke Lord, L.L.P., Nina Cortell, Jeremy Daniel Kernodle, Haynes & Boone, L.L.P., Dallas, TX, for Defendant–Appellee.

Before STEWART, Chief Judge, and HIGGINBOTHAM and COSTA, Circuit Judges.

GREGG COSTA, Circuit Judge:

Gated toll booths are becoming a thing of the past. Their reign had one big advantage: drivers could not pass through the gate without paying. But they also caused traffic backups as drivers scrounged their vehicles for quarters, handed them over to an attendant or tossed them into a bucket, and then waited for the gate to lift after the payment registered.

The North Texas Tollway Authority has been a trendsetter in the move away from gated booths. It created the first system in the country that allowed drivers without either change in their pockets or TollTags (sometimes called EZTAGs) affixed to their windshields to still use toll roads. Of course, those drivers are supposed to pay their share at some point, so the Authority used cameras to take pictures of the vehicles' license plates and mailed a bill to the owners. If the drivers did not pay the tolls within 35 days of the invoice, administrative fees started to accrue. The fees increased to $25 per violation once the Authority sent a third bill to the driver. The Plaintiffs in this case, who were assessed fees totaling hundreds and in some cases thousands of dollars after they repeatedly refused to pay tolls, contend that the $25 administrative fee violates their right to substantive due process under the Fourteenth Amendment. The district court held that the fee is not unconstitutional. We agree.

I.

The North Texas Tollway Authority is a regional agency established to administer toll roads in north Texas. See TEX. TRANSP. CODE ANN. § 366.032. Among other roads in the Dallas-Fort Worth metroplex, it oversees the Dallas North Tollway, President George Bush Turnpike, Sam Rayburn Tollway, and Chisholm Trail Parkway. When it was established in 1997, all toll booths were manned and gated, and drivers paid tolls either in cash or using a TollTag. A TollTag is a transponder attached to a vehicle that is linked to a driver's account funded in advance. Each time the driver travels through a toll point, the toll is deducted from the account. Under the old system, the only way for a driver to jump the toll was to tailgate behind another vehicle that had paid. If caught, the offender was charged a $10 administrative fee along with the unpaid toll. The authority to collect these fees

861 F.3d 560

comes from section 366.178 of the Regional Tollway Authority Act. TEX. TRANSP. CODE ANN. § 366.178(c) (2009) ("[A]n authority may charge an administrative fee of no more than $100 to recover the cost of collecting the unpaid toll.").¹

In 2000, hoping to ease congestion at toll plazas, the Authority opened TollTag—Only lanes, stopped manning all toll booths on a 24-hour basis, and removed gates from booths. Although these changes were expected to help with traffic, they would also make it easier for free riders to shirk tolls. Drivers no longer had to contend with gates or guards; they could simply drive through the unguarded, ungated booths of the TollTag-only lanes and hope they were not discovered. In a bid to keep drivers honest, the Authority installed high-speed cameras above these lanes, which could photograph drivers who refused to pay. A bill was then sent requesting payment of the toll plus an administrative fee. The Authority determined that the old $10 administrative fee was insufficient to cover costs incurred in installing new cameras and the increase in drivers who would refuse to pay. The Authority ultimately decided to increase the administrative fee to $25, though Plaintiffs allege this decision was made without deliberation.

The Authority then began moving to a system—the one challenged in this case—that went one step further in reducing traffic congestion. All booths were removed. TollTags were the only way to pay at the time the road was being used. But rather than restrict usage to those with TollTags, the Authority created a ZipCash system that opened access to all drivers. For cars without a TollTag, the camera would capture the license plate. After a sufficient number of tolls were incurred, the Authority would send an invoice for the unpaid tolls. Unlike the bills for those who violated the rules of "TollTag only lanes," no administrative fee was included in this initial bill. The Authority did, however, charge a 50% higher toll for those paying under ZipCash compared to those paying with TollTags. This premium was meant to cover the risk that many would not pay.

For those who did not pay within 35 days of the invoice issuing, administrative fees were imposed. The fees escalated if the second bill was ignored as the following table reveals:

 Invoice Due Date Administrative Fees
                Original Invoice 35 Days from Invoice $0
                Late Notice 15 Days from Notice $1.50 or $2.50 per toll
                Violation Invoice 30 Days from Invoice $25 per toll
                

Even when the third bill imposed the $25 fee, the Authority offered ways to get out of paying that amount. Paying the toll within 30 days of the violation invoice, or opening a TollTag account during that time, dropped the administrative fee by 2/3 to $8.33 a toll. During some promotional periods, the Authority would drop all administrative

861 F.3d 561

fees if the violator opened a TollTag account. The Authority also had customer service representatives available for drivers to contact about their administrative fees, and these representatives had the discretion to reduce or excuse fees. If the customer still refused to pay, their invoice was sent to a collections agency. If the agency was unsuccessful, the customer's account could be forwarded to the Texas Department of Public Safety for issuance of a criminal citation.

As expected, the cashless system led to more drivers using the toll roads. Also as expected, many of them never paid after receiving the bill. This left the Authority on the hook for tens of millions of dollars in unpaid tolls. The fees imposed for those unpaid tolls exceed $1 billion. Among those unpaid tolls and fees are amounts owed by the Plaintiffs. Mirna Reyes, for example, used toll roads 153 times without timely paying, accruing $139.25 in unpaid tolls and $3,825 in unpaid administrative fees. Emmanuel Lewis racked up $387.80 in unpaid tolls and $10,050 in administrative fees.

The drivers filed this suit alleging a violation of numerous rights, but they ended up asserting just a claim under substantive due process. They contend that the $25 administrative fee is so much higher than the cost of collecting an unpaid toll that it violates the due process rights of drivers who incur them. For that assertion, they rely on analysis a contractor hired by the Authority performed after the fees came under public scrutiny. He concluded that the marginal cost of collecting an individual toll is $0.94.

During this litigation, an expert hired by the Authority conducted a different inquiry: not how much it costs to collect a single toll, but a comparison of the total amount spent trying to collect tolls versus the fees actually collected. Under that approach, the fees collected ($41,677,514)² do not cover costs ($52,014,271).³

Relying in part on this calculation, the district court held that there was a rational relationship between the $25 administrative fee and the Authority's interest in recovering costs spent to collect unpaid tolls. The court also cited another interest—using high fees to encourage drivers to switch to the more efficient TollTag system—that allowed the fees to withstand Fourteenth Amendment scrutiny.

II.

In rejecting the substantive due process challenge, the district court applied rational basis review. The drivers urge us to apply that standard, though they disagree with the court's application of it. That level of scrutiny, which is the default for substantive due process claims that do not implicate a fundamental right, requires that the administrative fees be rationally related to a legitimate government interest. FM Props. Operating Co. v. City of Austin , 93 F.3d 167, 174 (5th Cir. 1996). Rational basis is a notoriously deferential

861 F.3d 562

standard, but the Authority argues that the drivers should face what it views as an even more daunting burden: having to show that the fee "shocks the conscience."⁴ Under that test, the drivers would have to show that the fee scheme was "so egregious, so outrageous, that it may fairly be said to shock the contemporary conscience." Conroe Creosoting Co. v. Montgomery Cty. , 249 F.3d 337, 341 (5th Cir. 2001) ; see also County of Sacramento v....