Reyes et al v. North Texas Tollway Authority (NTTA) et al

Filing 83

Memorandum Opinion and Order: The defendant's 76 motion for summary judgment is DENIED as to the NTTA's reading of pre-amendment Texas Transportation Code § 366.178, DENIED as to the plaintiffs' substantive due process claim, and GRANTED as to the plaintiffs' procedural due process claim. (Ordered by Senior Judge A. Joe Fish on 6/12/2014) (axm)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

MIRNA REYES, ET AL.,
Plaintiffs,
VS.
NORTH TEXAS TOLLWAY
AUTHORITY (NTTA),
Defendant.

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CIVIL ACTION NO.
3:10-CV-0868-G

MEMORANDUM OPINION AND ORDER

Before the court is the defendant’s motion for summary judgment on threshold
legal issues (docket entry 76). For the reasons stated below, the motion is denied on
the defendant’s reading of pre-amendment Texas Transportation Code § 366.178 and
on the plaintiffs’ substantive due process claim, but granted on the plaintiffs’
procedural due process claim.
I. BACKGROUND
A. Factual Background
This case concerns fees charged for unpaid tolls. In 1997, the Texas
Legislature authorized the establishment of the North Texas Tollway Authority

(“NTTA”) via the Regional Tollway Authority Act. See Plaintiffs’ Second Amended
Complaint (“Complaint”) ¶ 11 (docket entry 72); Defendant’s Answer to Plaintiffs’
Second Amended Complaint (“Answer”) ¶ 11 (docket entry 75); TEX. TRANSP. CODE
§§ 366.001-366.409. At all times relevant to this litigation -- May 1, 2008 to
August 31, 2011 -- drivers on NTTA roads had three different payment options: a toll
booth for cash and coins, a TollTag account, and the ZipCash program. Complaint
¶¶ 12, 35-37. The TollTag is a transponder that drivers can obtain from the NTTA
and affix to the inside of their vehicles. Answer ¶ 22. The TollTag is linked to a
payment account and the appropriate toll is deducted from the account each time the
TollTag passes through a toll point. Id. In the ZipCash program, on the other hand,
the NTTA records the license plate number of any vehicle passing through the toll
point and mails a monthly invoice to the registered owner of the vehicle. Complaint
¶¶ 12, 23. The plaintiffs allege that the NTTA charged ZipCash customers fifty
percent more than TollTag customers per toll to cover the cost of collecting the toll.
Complaint ¶ 12 n.5; Plaintiffs’ Brief in Response to Defendant’s Motion for
Summary Judgment on Threshold Legal Issues (“Plaintiffs’ Response”) at 20 (docket
entry 80). The NTTA admits that it charged ZipCash customers more than TollTag
customers, but denies that the difference was fifty percent. Answer ¶ 12 n.4.
Furthermore, the plaintiffs allege, but the NTTA denies, that the NTTA billed

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TollTag customers as ZipCash customers in the event that any problems arose with
the payment accounts linked to the TollTags. See Complaint ¶ 23; Answer ¶ 23.
The named class representatives for the plaintiffs are Mirna Reyes, Jennifer
Bunch, Greg Williams, Deborah Gilbert, and Emanuel Lewis. Complaint ¶¶ 25-33.
These named plaintiffs, and the classes they seek to represent, did not pay their tolls
and were charged administrative fees of $25 per unpaid toll before March 2010 and
$8.33 per unpaid toll after March 2010. Brief in Support of the NTTA’s Motion for
Summary Judgment on Threshold Legal Issues (“Defendant’s Brief”) at 2-3 (docket
entry 77). The plaintiffs do not dispute that the NTTA was allowed to charge fees -they acknowledge that at all times relevant to this litigation, section 366.178 of the
Texas Transportation Code authorized the NTTA to charge fines and administrative
fees to drivers who failed to pay the full amount of tolls that they were charged in
their invoices and subsequent notices of nonpayment. See Complaint ¶ 14 n.6; Act of
June 6, 2007, 80th Leg., R.S., ch. 258, § 4.03 (amended June 19, 2009); Act of June
19, 2009, 81st Leg., R.S., ch. 770, § 1 (amended Sept. 1, 2009); Act of June 19,
2009, 81st Leg., R.S., ch. 918, § 5 (amended Sept. 1, 2011) (current version at TEX.
TRANSP. CODE § 366.178).1 Rather, the plaintiffs allege that these administrative
1

During the relevant time period of May 1, 2008 to August 31, 2011,
section 366.178 underwent two amendments, but neither affected the portions of the
statute at issue in this case. The statute was not materially changed for purposes of
this case until it was amended on September 1, 2011. The previous versions of the
statute at issue in this case will hereinafter be collectively referred to as “pre(continued...)
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fees were entirely disproportionate to the tolls they failed to pay. Complaint ¶¶ 2533. Specifically, the plaintiffs allege that the NTTA charged Bunch $350 in
administrative fees for less than $20 in unpaid tolls, and charged Lewis over $10,000
in administrative fees for unpaid tolls totaling $300. Id. ¶¶ 27, 33. The named
plaintiffs, and the classes they seek to represent, include drivers who paid the
administrative fees and drivers who refused to pay the fees. See id. ¶¶ 25-33.
B. Procedural Background
The plaintiffs originally filed this suit in the 191st Judicial District Court of
Dallas County on March 31, 2010. See Defendants’ Notice of Removal at 1-2
(docket entry 1). The defendants removed the case to this court on April 30, 2010
on the grounds that the case presents a federal question. Id. at 2. On November 14,
2011, the court dismissed the plaintiffs’ claims against six individual defendants and
also dismissed all of the claims against the NTTA except for the plaintiffs’ federal
constitutional claim under the Due Process Clause of the Fourteenth Amendment.
See Memorandum Opinion and Order of November 14, 2011 at 31-32 (docket entry
31). On December 6, 2012, the court received notice that the plaintiffs’ attorney had
been disbarred, and the court ordered the plaintiffs to retain new counsel or proceed
pro se by January 7, 2013. See Order of December 6, 2012 at 1-2 (docket entry 49).

1

(...continued)
amendment section 366.178.”
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After the plaintiffs had retained new counsel, they filed their second amended
complaint on November 13, 2013. See generally Complaint. At the heart of the
plaintiffs’ second amended complaint are the assertions that (1) pre-amendment
section 366.178(c) required a correlation between the cost of recovering unpaid tolls
and the administrative fees charged by the NTTA, and (2) the administrative fees
charged by the NTTA greatly exceeded the cost of recovering unpaid tolls. Complaint
¶¶ 14-16. The plaintiffs further allege that because the NTTA exists under color of
state law, and the NTTA’s authority is defined by state law, the administrative fees in
excess of statutory authorization violated due process. Complaint ¶¶ 59-61. The
plaintiffs also set forth a new class (and claim) in the second amended complaint
made up of TollTag customers whom the NTTA converted to using ZipCash after
payment issues with their TollTag accounts arose. Id. ¶ 36. They argue that by
unilaterally converting TollTag customers to ZipCash customers whenever there was a
problem with a TollTag payment account, the NTTA violated the due process rights
of the TollTag customers. Id. ¶¶ 36, 63.
The court granted the NTTA leave to move for summary judgment on two
threshold legal issues. See Order of November 5, 2013 (docket entry 68). The
defendant’s motion for summary judgment lists the threshold legal issues as:
(1)

Did the former version of Section 366.178 of
the Transportation Code require a correlation
between the administrative fee charged by the

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NTTA and “the cost of collecting the unpaid
toll?”; and
(2)

If Section 366.178 required a correlation, did
a lack of correlation constitute a violation of
due process?

The NTTA’s Motion for Summary Judgment on Threshold Legal Issues
(“Defendant’s Motion”) at 1 (docket entry 76). In moving for summary judgment,
the defendant argues that if the court answers no to either of the threshold legal
questions, then the defendant is entitled to judgment as a matter of law. Id.
The NTTA also moves for summary judgment on the issue of whether
converting TollTag customers to ZipCash customers violated procedural due process.
Id. at 2. Since that issue was not raised until the plaintiffs filed their second amended
complaint, the issue was not originally listed as a threshold legal issue to be included
in the defendant’s motion for summary judgment. See Order of November 5, 2013 at
2. However, in the NTTA’s motion for summary judgment, the NTTA argues that
the issue is primed for summary disposition without the need for any further factual
development. See Defendant’s Brief at 4. The court agrees, and will consider this
third threshold question below.
The plaintiffs filed a response to the defendant’s motion for summary
judgment, see Plaintiffs’ Response, and the NTTA filed a reply in support of its
motion. See Defendant’s Reply to Plaintiff’s Response to the NTTA’s Motion for

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Summary Judgment on Threshold Legal Issues (“Defendant’s Reply”). The motion is
now ripe for decision.
II. ANALYSIS
A. Summary Judgment Standard
Summary judgment is proper when the pleadings, depositions, admissions,
disclosure materials on file, and affidavits, if any, “show[] that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” FED. R. CIV. P. 56(a), (c)(1).2 A fact is material if the governing substantive
law identifies it as having the potential to affect the outcome of the suit. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue as to a material fact is
genuine “if the evidence is such that a reasonable jury could return a verdict for the
nonmoving party.” Id.; see also Bazan ex rel. Bazan v. Hidalgo County, 246 F.3d 481,
489 (5th Cir. 2001) (“An issue is ‘genuine’ if it is real and substantial, as opposed to
merely formal, pretended, or a sham.”). To demonstrate a genuine issue as to the
material facts, the nonmoving party “must do more than simply show that there is
some metaphysical doubt as to the material facts.” Matsushita Electric Industrial
Company v. Zenith Radio Corporation, 475 U.S. 574, 586 (1986). The nonmoving

2

Disposition of a case through summary judgment “reinforces the
purpose of the Rules, to achieve the just, speedy, and inexpensive determination of
actions, and, when appropriate, affords a merciful end to litigation that would
otherwise be lengthy and expensive. Fontenot v. Upjohn Company, 780 F.2d 1190,
1197 (5th Cir. 1986).
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party must show that the evidence is sufficient to support the resolution of the
material factual issues in his favor. Anderson, 477 U.S. at 249 (citing First National
Bank of Arizona v. Cities Service Company, 391 U.S. 253, 288-89 (1968)).
When evaluating a motion for summary judgment, the court views the
evidence in the light most favorable to the nonmoving party. Id. at 255 (citing Adickes
v. S.H. Kress & Company, 398 U.S. 144, 158-59 (1970)). However, it is not
incumbent upon the court to comb the record in search of evidence that creates a
genuine issue as to a material fact. See Malacara v. Garber, 353 F.3d 393, 405 (5th
Cir. 2003). The nonmoving party has a duty to designate the evidence in the record
that establishes the existence of genuine issues as to the material facts. Celotex
Corporation v. Catrett, 477 U.S. 317, 324 (1986). “When evidence exists in the
summary judgment record but the nonmovant fails even to refer to it in the response
to the motion for summary judgment, that evidence is not properly before the district
court.” Malacara, 353 F.3d at 405.
B. Interpretation of Section 366.178
At all times relevant to this case, section 366.178(b)-(c) read as follows:
(b) A person who fails or refuses to pay a toll provided for
the use of a project is liable for a fine not to exceed $250,
plus an administrative fee incurred in connection with the
violation.
(c) If a person fails to pay the proper toll:

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(1) on issuance of a notice of nonpayment,
the registered owner of the nonpaying vehicle
shall pay both the proper toll and the
administrative fee; and
(2) an authority may charge an
administrative fee of not more than $100 to
recover the cost of collecting the unpaid toll.
TEX. TRANSP. CODE § 366.178(b)-(c) (pre-amendment). The plaintiffs insist that the
statute requires a correlation between the administrative fees charged under section
366.178(c)(2) and “the cost of collecting the unpaid toll.” See Complaint ¶¶ 14-15.
The NTTA responds that no such correlation is required. See Defendant’s Brief at 57.
1. Legal Standard
“When interpreting a statute, [Texas courts] look first and foremost to the
plain meaning of the words used.” First American Title Insurance Company v. Combs,
258 S.W.3d 627, 631 (Tex. 2008), cert. denied, 556 U.S. 1221 (2009). When the
court finds that “a statute is unambiguous, rules of construction or other extrinsic
aids cannot be used to create ambiguity.” Fitzgerald v. Advanced Spine Fixation Systems,
Inc., 996 S.W.2d 864, 865-66 (Tex. 1999). Furthermore, when a “‘statute is clear
and unambiguous, [the court] must apply its words according to their common
meaning’ in a way that gives effect to every word, clause, and sentence.” First
American Title Insurance, 258 S.W.3d at 631 (quoting State v. Shumake, 199 S.W.3d
279, 284 (Tex. 2006)). Therefore, only when a court finds the language of a statute
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to be ambiguous will the court apply rules of construction. See Texas Water
Commission v. Brushy Creek Municipal Utility District, 917 S.W.2d 19, 21 (Tex. 1996).
“One of those ‘dominant rules of construction’ requires [the court] to give ‘serious
consideration’ to the ‘[c]onstruction of a statue by the administrative agency charged
with its enforcement.’” First American Title Insurance, 258 S.W.3d at 632 (quoting
Tarrant Appraisal District v. Moore, 845 S.W.2d 820, 823 (Tex. 1993)). However, if
the language of a statute shows that the “[l]egislature’s choice is clear,” the Texas
Supreme Court refuses to “judicially engraft” language into a statue “[u]nder the
guise of agency deference.” See Liberty Mutual Insurance Company v. Adcock, 412
S.W.3d 492, 493 (Tex. 2013). Therefore, “an agency has no authority to ‘exercise
what is effectively a new power, or a power contradictory to the statute, on the theory
such a power is expedient for administrative purposes.’” Id. at 494 (quoting Public
Utility Commission of Texas v. City Public Service Board of San Antonio, 53 S.W.3d 310,
316 (Tex. 2001)).
2. Application
The NTTA presents a two-fold argument as to why pre-amendment section
366.178 did not require its administrative fees to correlate with the cost of collecting
unpaid tolls. See Defendant’s Brief at 4-13. It first argues that the plain language of
section 366.178 does not require such a correlation. Id. at 4-7. The NTTA then
argues that even if the court finds that the statute is ambiguous, the court must give

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great deference to the NTTA’s interpretation of the statute because it is the
government entity charged with administering the statute. Id. at 7-13.
Importantly, the NTTA’s two-step approach ignores the possibility that the
court may find that the plain language of section 366.178 requires correlation
between the administrative fees and the cost of collecting unpaid tolls. The Supreme
Court of Texas recently held that when the legislature’s intent is clear from the plain
language of a statute, the court affords no deference to an agency’s interpretation of
that statute. Liberty Mutual Insurance, 412 S.W.3d at 493-98. Thus, if the court finds
that the plain language of section 366.178 unambiguously requires the NTTA’s
administrative fees to correlate to the cost of collecting unpaid tolls, then the court
need not give any deference to the NTTA’s interpretation.
In its plain-language argument, the NTTA contends that the language of preamendment section 366.178(c)(2) -- “an authority may charge an administrative fee
of not more than $100 to recover the cost of collecting the unpaid toll” -- means that
“the NTTA had wide discretion to determine the amount of the administrative fee, as
long as the fee did not exceed $100.” See Defendant’s Brief at 5. The NTTA offers
three main arguments in support of the “plain meaning” it gleans from section
366.178. First, it maintains that the use of the word “may” implies a grant of
discretionary power but does not entail a limitation. Id. at 6. Second, the NTTA
urges that the phrase “to recover the cost of collecting the unpaid toll” is not a

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restriction upon the administrative fee, but merely an explanation of the reason for
the fee. Id. Finally, the NTTA argues that the Texas legislature knew how to draft a
statute that clearly limited a fee to an associated cost, and that it would have done so
with section 366.178 had it actually intended to limit the administrative fee to the
cost of collecting the unpaid toll. Id.
Before addressing each of the NTTA’s arguments in turn, it is important to
recognize that the NTTA’s arguments ignore the fact that the language and structure
of section 366.178 make it clear that the administrative fee in subsection (c) is
distinctly separate from the fine that the NTTA is authorized to charge under
subsection (b). If the administrative fee is not meant to be correlated to the cost of
collecting the unpaid toll, there is no rational explanation for the distinction between
the administrative fee and the fine. The concept of an administrative fee that is not
meant to have any correlation to administrative costs, but can be set arbitrarily so
long as it below $100, is indistinguishable from a fine. If such were the case, the
statute could simply provide for a fine not to exceed $350 (i.e., the $250 fine in
subsection (b) plus the amount of up to $100 specified in subsection (c)).
As to the NTTA’s specific contentions, the court is unconvinced by the
NTTA’s argument that the word “may” implies that the NTTA has discretion in
deciding whether the administrative fee must correlate with the cost of collecting the
toll. While the word “may” does imply a grant of permission and discretion, that

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permission simply refers to the NTTA’s ability to charge an administrative fee. See
Plaintiffs’ Response at 9. If the NTTA decides to charge an administrative fee, it may
do so. However, if the NTTA does decide to charge an administrative fee, that fee
must be correlated to the cost of collecting the unpaid toll. Id.
Furthermore, the phrase “to recover the cost of collecting the unpaid toll” quite
clearly imposes a limitation on the administrative fee, and is not merely an
explanation of the fee’s purpose. The NTTA’s interpretation of section 366.178 is
effectively no different than if section 366.178(c)(2) simply read “an authority may
charge an administrative fee of not more than $100.” See Plaintiffs’ Response at 8-9.
Thus, the NTTA’s proposed interpretation of the statute renders an entire phrase
superfluous, in direct violation of the Texas Supreme Court’s instruction to “give[]
effect to every word, clause, and sentence.” See First American Title Insurance, 258
S.W.3d at 631. Furthermore, the NTTA’s argument that the phrase merely explains
the reason for the administrative fee but does not impose a limit on the fee returns us
to the confusing question: what is an administrative fee if it is not required to have
any correlation to administrative costs? Once again, under such an interpretation the
administrative fee would be indistinguishable from the fine, but the statute clearly
distinguishes between the two.
Lastly, the court acknowledges that the legislature could possibly have drafted
the statute to make the required correlation between the administrative fee and the

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cost of collecting the unpaid toll even clearer, as the NTTA argues. See Defendant’s
Brief at 6. However, for the above reasons, the court concludes that regardless of
these hypothetical alternatives, the plain language of section 366.178 could only lead
to one reasonable interpretation -- that administrative fees must be tied to the cost of
collecting unpaid tolls.
Therefore, while the NTTA is correct in asserting that its interpretation
deserves deference if section 366.178 is ambiguous, the court concludes that section
366.178 is not ambiguous and that its plain meaning requires a correlation between
the administrative fee and the cost of collecting an unpaid toll. The court need not
engage in the deferential analysis proposed by the defendant. See Defendant’s Brief
at 7-13. Summary judgment on the NTTA’s first threshold question, relating to the
NTTA’s interpretation of pre-amendment Texas Transportation Code § 366.178, is
therefore denied.
C. Substantive Due Process Claim
Because the court concludes that pre-amendment section 366.178 required a
correlation between administrative fees and the cost of collecting unpaid tolls, it must
now address the NTTA’s second threshold question -- that is, whether charging
administrative fees that do not correlate to collection costs could constitute a
violation of due process.

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1. Legal Standard
The Fourteenth Amendment to the United States Constitution prohibits states
from depriving “any person of life, liberty, or property, without due process of law.”
U.S. CONST. amend. XIV. In Texas, money is considered property for purposes of the
Fourteenth Amendment. Canal Insurance Company v. Hopkins, 238 S.W.3d 549, 568
(Tex. App.--Tyler 2007, pet. denied) (citing Norris v. City of Waco, 57 Tex. 635, 643
(Tex. 1882)). As a result, the state cannot deprive people of their money without due
process. See Woodard v. Andrus, 419 F.3d 348, 353-54 (5th Cir. 2005). Plaintiffs
can sue under 42 U.S.C. § 1983 for violations of the constitution, including the
Fourteenth Amendment, if they can prove that a defendant deprived them of a
constitutional right or privilege while acting under color of state law. See 42 U.S.C.
§ 1983.
The Supreme Court of the United States has recognized that “due process
protection in the substantive sense limits what the government may do in both its
legislative and its executive capacities.” County of Sacramento v. Lewis, 523 U.S. 833,
846 (1998) (internal citation omitted). While the central concern of due process is
protecting individuals against any type of arbitrary government action, the “criteria to
identify what is fatally arbitrary differ depending on whether it is legislation or a
specific act of a government officer that is at issue.” Id. at 845-46. The Court held
that “only the most egregious official conduct” is so fatally arbitrary that it violates

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due process. Id. at 846. While the Court in Lewis endorsed a test that asks whether
executive conduct “‘shocks the conscience’” and “violates the ‘decencies of civilized
conduct,’” the situation before the Court in that case involved a high speed police
chase. Id. at 836-37, 846 (quoting Rochin v. California, 342 U.S. 165, 172-73
(1952)). The Court went on to distinguish between situations that require fast action
on behalf of the executive, like police chases, and those that afford the executive time
for deliberation and forethought. Id. at 850-53.
In cases where a plaintiff alleges a violation of substantive due process by
executive or quasi-legislative action in a situation that affords a government actor
time for deliberation, the government action is subject to a rational basis test. See
Vineyard Investments, L.L.C. v. City of Madison, Mississippi, 440 F. App’x 310, 313 (5th
Cir. 2011), cert. denied,

U.S.

, 132 S.Ct. 1865 (2012); Mikeska v. City of

Galveston, 451 F.3d 376, 379 (5th Cir. 2006); FM Properties Operating Company v. City
of Austin, 93 F.3d 167, 174 (5th Cir. 1996). Under the rational basis test, the
“government action comports with substantive due process if the action is rationally
related to a legitimate government interest.” FM Properties, 93 F.3d at 174. The
effect of this rational basis review is that substantive due process is not violated
merely because government executive or quasi-legislative action violates a state statute
-- rather, due process is only implicated if the government action was also not
rationally related to a legitimate government interest. See id. The determination of

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whether such government action “has the requisite rational relationship to a
legitimate government interest is a question of law.” Mikeska, 451 F.3d at 379
(quoting FM Properties, 93 F.3d at 172 n.6) (internal quotation marks omitted).
2. Application
The NTTA has moved for summary judgment on the ground that even if
section 366.178 requires a correlation between administrative fees and costs of
collection, a lack of correlation does not constitute a violation of due process. A lack
of correlation would constitute a violation of due process if the NTTA’s
administrative fees (1) deprived the plaintiffs of a constitutional right, and (2) were
not rationally related to a legitimate government interest. The first question must be
answered in the affirmative, as the NTTA deprived plaintiffs of their money, which is
considered property for the purposes of the Fourteenth Amendment under Texas law.
See Canal Insurance Company, 238 S.W.3d at 568. The court must therefore turn to
the second question and determine whether the NTTA has established that its
administrative fees were rationally related to a legitimate government interest.
Before pursuing that inquiry, it is important to clarify the significance of the
court’s finding, and the assumption included within this summary judgment question,
that section 366.178 did not authorize the NTTA to charge administrative fees not
correlated with the cost of recovering unpaid tolls. If the court had found that the
statute allowed such fees, then any due process complaint would have to be directed

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against the legislative action behind the passage of section 366.178, rather than the
executive or quasi-legislative actions of the NTTA in deciding how to apply section
366.178. That is, the plaintiffs would have to allege that the statute itself
unconstitutionally deprived them of their property. Instead, the focus of the
plaintiffs’ due process claim is on whether the NTTA’s violation of that statute could
constitute a violation of due process. To make that showing, the plaintiffs will need
to establish that the fees that the NTTA charged in excess of the cost of collecting
unpaid tolls were not still “rationally related to some other independent and
legitimate [government] interest.” See Mikeska, 451 F.3d at 380.
The NTTA confuses this issue in its briefing. Most of the rationales that it
proffers are irrelevant, as they are presented as possible reasons that the Texas
legislature would have drafted a statute that allowed the NTTA to charge fees in
excess of the cost of recovering unpaid tolls. For instance, the defendant argues that
“[t]he Texas Legislature had multiple conceivable rational bases for allowing the
NTTA to charge an administrative fee up to $100,” and that “[t]he Court can easily
conceive of multiple rational bases to support the Legislature’s decision to allow the
NTTA to charge an administrative fee up to $100.” Defendant’s Brief at 15-16. In
another section of its motion, the NTTA claims to be arguing that “even if an
[uncorrelated] administrative fee . . . violates Section 366.178, there is no violation of
substantive due process,” but in support of that assertion, it again simply states that

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“there are at least two conceivable rational bases for the Legislature’s decision to allow
the NTTA to charge up to $100.” Id. at 18 (emphasis added).
However, the court has already decided, and the defendant’s threshold
summary judgment question assumes arguendo, that the legislature did in fact not
authorize the NTTA to charge these uncorrelated fees. The distinction between
possible rationales that the Texas legislature could have for passing a piece of
legislation and those that the NTTA could have for taking a certain course of action is
far from a mere “quibble,” as the defendant flippantly asserts in its reply. See
Defendant’s Reply at 17. Rather, the court’s inquiry must focus solely upon the
NTTA’s possible justifications for violating the state statute and charging higher fees
than were necessary to recover unpaid tolls -- theoretical justifications for why the
Texas legislature could have passed a statute that allows such fees are irrelevant.3
The NTTA makes only one argument, in its reply, explaining why it could have
reasonably believed that uncorrelated fees were rationally related to a legitimate
government interest. There, the NTTA asserts that “[a] rational decision-maker
could have theoretically concluded that, if the NTTA added all of its direct and

3

This is not to say that the NTTA could not have had the same reasons
for charging uncorrelated fees that the Texas legislature could have had for passing a
statute that allowed the NTTA to do so. The NTTA did not make such an argument.
Instead, it offered a number of possible rationales for a theoretical legislative act that
would have allowed the NTTA to charge uncorrelated fees, but, as discussed infra,
only offered one rationale for why the NTTA itself could have thought that charging
such fees was rationally related to a legitimate government interest.
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indirect costs of collecting tolls (including overhead, hardware, software, etc.) and
divided that number by the number of unpaid tolls it actually successfully collects,
$25 would be a reasonable estimate.” See Defendant’s Reply at 17.
In reviewing this proffered rationale, the court does not “sit as a
superlegislature to judge the wisdom or desirability of state legislative policy
determinations.” FM Properties, 93 F.3d at 175. However, the court still must ensure
that the government is not “arbitrarily abus[ing] its power,” Simi Investment Company,
Inc. v. Harris County, Texas, 236 F.3d 240, 249 (5th Cir. 2000), cert. denied, 534 U.S.
1022 (2001), and must protect against government action that is “‘clearly arbitrary
and unreasonable.’” FM Properties, 93 F.3d at 174 (quoting Village of Euclid, Ohio v.
Ambler Realty Co., 272 U.S. 365, 395 (1926)). The court concludes that on its face,
the NTTA’s stated reason for the uncorrelated fees is not reasonable. Rather, the size
of these fees -- $25 (and then $8.33 after March 2010), not just per notice, but per
toll on each notice, resulting in $350 in administrative fees for less than $20 in
unpaid tolls, and over $10,000 in administrative fees for $300 in unpaid tolls, see
Complaint ¶¶ 27, 33 -- strikes the court not as a reasonable calculation related to
operating expenses, but as an arbitrary and irrational state action. This rationale
becomes even more dubious in light of the plaintiffs’ assertion that the NTTA
charged the habitual violator list alone more than $400 million in administrative fees,
while the entire operating expenses of the NTTA from 2009 to 2011 were $292.2

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million. See Plaintiff’s Response at 4-5. The court concludes that the decision to
charge such fees cannot be supported by the NTTA’s proffered justification without
the submission of some supporting evidence.
In so holding, the court finds the current position of this case analogous to the
situation before the Fifth Circuit in Mikeska v. City of Galveston. In that case, the city
of Galveston used a statute related to the maintenance of beaches to justify refusing
to connect utilities to beach houses that, as the result of a storm that destroyed much
of the beachfront vegetation, were now beyond the beach vegetation line. Mikeska,
451 F.3d at 378-79. The court held that:
The rational basis test requires not only a legitimate
state interest, but also that the government action is
rationally related to furthering that interest. There is
indeed a legitimate interest at stake -- the protection of
public access to the public beach -- but, at this stage, the
government fails to provide any rational reason why
refusing to reconnect utilities to houses found on a public
beach furthers the end of protecting public access to public
beaches.
Id. at 380. The court went on to state that “[a]fter further development of the
record, facts may come to light that indeed serve to indicate that there was a rational
basis for the government’s action.” Id. As hypothetical examples of the sort of
factual showing that could satisfy the state’s burden, the court reasoned that the state
could attempt to show that “reconnecting the utilities involved hanging obtrusive

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wires or placing unsightly water meters that would discourage public use of the
beach.” Id. at 381.
Like the Fifth Circuit in Mikeska, the court concludes that more factual
development is necessary here before it can determine whether the NTTA’s actions
were rationally related to a legitimate government interest. It appears to the court
that the NTTA cannot make such a showing without presenting some evidence on at
least some of the following: its budgetary calculations, the amount of administrative
fees charged to each person, the percentage of people who normally remit payment
upon notice of unpaid tolls, or the cost of collecting unpaid tolls. Because the NTTA
has not presented evidence on any of those issues, the possibility remains that if the
NTTA did in fact fail to correlate its administrative fees with the cost of recovering
unpaid tolls in violation of section 366.178, charging those fees could have
constituted an unreasonable deprivation of property and thus have violated the
plaintiffs’ substantive due process rights. As a result, the defendant’s motion for
summary judgment on this question must be denied.4
4

In their summary judgment filings, the parties dispute whether charging
uncorrelated fees could constitute a violation of procedural due process in addition to
the plaintiffs’ substantive due process claim. See Plaintiffs’ Response at 21;
Defendant’s Reply at 18-19. Because the court agrees with the defendant that the
plaintiffs’ “underlying factual allegations do not complain about the NTTA’s
procedures,” the court will consider their due process claim to be what it most
logically reads as -- a claim for violations of their substantive due process rights. The
allegations supporting the due process claim can be distinguished from the
complaint’s references to the conversion of TollTag user to ZipCash users, which
(continued...)
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D. Procedural Due Process Claim
Lastly, the NTTA moves for summary judgment against the plaintiffs’ newly
added claim on behalf of customers who were converted from being TollTag users to
using ZipCash by the NTTA after issues with their TollTag payments arose. See
Defendant’s Brief at 4. Because the court agrees with the defendant that the issue of
whether converting TollTag customers to ZipCash customers violated procedural due
process is appropriate for summary judgment, the court will address this third
threshold question now.
1. Legal Standard
“[T]he Due Process Clause provides that certain substantive rights -- life,
liberty, and property -- cannot be deprived except pursuant to constitutionally
adequate procedures.” Cleveland Board of Education v. Loudermill, 470 U.S. 532, 541
(1985). While the laws of a state create and define property interests, the
constitution guarantees that the state will not deprive the citizens of that property
without due process. Id. at 538. As discussed above, money is considered property
under Texas law, see Canal Insurance Company, 238 S.W.3d at 568, so the state
cannot deprive people of their money without due process. Woodard, 419 F.3d at
353-54.

4

(...continued)
repeatedly mention notice and consent. See Complaint ¶¶ 23, 29, 31, 43.
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“Due process, as [the Supreme Court] often has said, is a flexible concept that
varies with the particular situation.” Zinermon v. Burch, 494 U.S. 113, 127 (1990).
The Supreme Court has identified three factors to consider when determining “the
specific dictates of [procedural] due process” required for a given situation:
First, the private interest that will be affected by the official
action; second, the risk of an erroneous deprivation of such
interest through the procedures used, and the probable
value, if any, of additional or substitute procedural
safeguards; and finally, the Government’s interest,
including the function involved and the fiscal and
administrative burdens that the additional or substitute
procedural requirement would entail.
Mathews v. Eldridge, 424 U.S. 319, 335 (1976). Additionally, the Supreme Court has
“described ‘the root requirement’ of the Due Process Clause as being ‘that an
individual be given an opportunity for a hearing before he is deprived of any significant
property interest.’” Loudermill, 470 U.S. at 542 (emphasis in original) (quoting Boddie
v. Connecticut, 401 U.S. 371, 379 (1971)).
In situations involving contracts between individuals and the state, the Fifth
Circuit has distinguished between breach of contract claims and claims that the state
deprived the plaintiff of property without due process of law. See Braden v. Texas A &
M University System, 636 F.2d 90, 93 (5th Cir. 1981). While due process “does not
make a federal case out of every breach of contract by a state agency,” a plaintiff may
bring “claims for deprivation of property without due process even though the
property interest is alleged to be founded on a contract.” Id. Furthermore, the
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Supreme Court has held that “the property interests protected by procedural due
process extend well beyond actual ownership of real estate, chattels, or money.”
Board of Regents of State Colleges v. Roth, 408 U.S. 564, 571-72 (1972).
2. Application
The plaintiffs allege that the NTTA deprived them of procedural due process
by unilaterally extinguishing their TollTag status and charging them the ZipCash rate
for tolls. Complaint ¶¶ 23, 29, 31, 43; Plaintiffs’ Response at 21. The plaintiffs
complain that the NTTA executed this conversion without “notice,” “consent,” or “an
opportunity to rectify any billing issues.” Id. ¶¶ 29, 43, 45. They allege that the
NTTA informed TollTag customers that they would be charged a certain rate and
then unilaterally converted those customers to ZipCash customers and charged them
a fifty percent higher toll. Complaint ¶ 23.
Even if the expansive notion of property under the due process clause
encompasses the plaintiffs’ interest in their status as TollTag customers, the court
concludes that there is no violation of due process. Application of the procedural due
process factors enumerated in Mathews v. Eldridge reveals that the NTTA’s actions
provided the plaintiffs with adequate process. First, the private interest affected was
de minimis. Even if the NTTA breached a contract with TollTag customers by
converting them, the result was not the loss of some constitutional right. Rather, the
plaintiffs simply became ZipCash customers, and the NTTA thereby charged them

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with tolls in the exact manner prescribed by the legislature. Therefore, the interest
affected was merely a benefit over and beyond the default toll collection method
provided for in the Texas Transportation Code. Moreover, the plaintiffs were
notified of their conversion in their monthly invoices, so if they corrected the
problems with their TollTag payment accounts, their only losses would be the
difference between the ZipCash rate and the lower TollTag rate for one month’s
worth of tolls.
The second factor -- “the risk of an erroneous deprivation of such interest
through the procedures used, and the probable value, if any, of additional or
substitute procedural safeguards,” Mathews, 424 U.S. at 335 -- also weighs against the
plaintiffs. According to the record before the court, the NTTA converted the
plaintiffs to ZipCash customers because of problems with their personal bank
accounts or credit cards.5 See Complaint ¶ 23. The plaintiffs do not present any
arguments as to why this method of changing customers’ TollTag status somehow
created a risk of mistaken conversions. Furthermore, the plaintiffs were already in
control of the risk factor -- their bank accounts or credit cards -- and presumably
would know whether their account balances had reached zero or their cards had

5

The present record is not entirely clear on the circumstances
surrounding the conversion of TollTag customers to ZipCash users. However, the
plaintiffs’ complaint contains the language: “when the payment source linked to their
TollTags no lager worked (e.g., the linked credit card expired or was cancelled).”
Complaint ¶ 23.
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expired. As such, the court concludes that there was little probable value in any
additional or substitute procedural safeguards, such as some special reminder from
the NTTA before converting them to ZipCash customers, especially considering that
monthly invoices notified the plaintiffs of the conversion.
Finally, any additional or substitute procedural requirements would likely not
be worth the heightened “fiscal and administrative burdens” that would be placed
upon the NTTA. The monthly invoices served as a notice to the plaintiffs that they
had been converted to ZipCash customers. Any further notice requirements, such as
requiring the NTTA to compile and send letters to the plaintiffs alerting them to their
TollTag account statuses as soon as they fell into default, would have imposed
additional costs on the NTTA without adding much in the way of procedural
safeguards. Therefore, because all three of the Mathews factors weigh against the
plaintiffs’ procedural due process claim, the court concludes that summary judgment
against the plaintiffs’ procedural due process claim must be granted.
III. CONCLUSION
For the reasons stated above, the defendant’s motion for summary judgment is
DENIED as to the NTTA’s reading of pre-amendment Texas Transportation Code
§ 366.178, DENIED as to the plaintiffs’ substantive due process claim, and
GRANTED as to the plaintiffs’ procedural due process claim.

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SO ORDERED.

June 12, 2014.

___________________________________
A. JOE FISH
Senior United States District Judge

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