Brown et al v. Transurban USA, Inc. et al
Filing
65
MEMORANDUM OPINION. Signed by District Judge James C. Cacheris on 11/02/2015. (jlan)
IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF VIRGINIA
Alexandria Division
JO-ANN BROWN, et al.
Plaintiffs,
v.
TRANSURBAN USA, INC., et al.
Defendants.
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M E M O R A N D U M
1:15cv494(JCC/MSN)
O P I N I O N
This case involves Virginia’s hotly contested “PublicPrivate” toll lane scheme.
Plaintiffs in this case seek class
action status, and are all users of the High-Occupancy Toll
Roads operated by Defendants in Northern Virginia.
This matter
is before the Court on three motions to dismiss Plaintiffs’
Amended Complaint, filed by (1) Defendants Transurban (USA),
Inc., Transurban (USA) Operations, Inc., Capital Beltway
Express, LLC, 95 Express Lanes, LLC (the “Transurban”
Defendants) [Dkt. 41]; (2) Defendant Faneuil, Inc. (“Faneuil”)
[Dkt. 44]; and (3) Defendant Law Enforcements Systems, LLC
(“LES”) [Dkt. 49].
For the following reasons, the Court grants
Transurban, Faneuil, and LES’s motions with respect to
Plaintiffs’ substantive due process and unjust enrichment
claims; grants Faneuil and LES’s motions with respect to
1
Plaintiffs’ Maryland Consumer Protection Act and Virginia
Consumer Protection Act claims; and denies Transurban, Faneuil,
and LES’s motions with respect to Plaintiffs’ Eighth Amendment,
procedural due process, Fair Debt Collection Practices Act, and
tortious interference with contract claims.
I. Background
At the motion to dismiss stage, the Court must read
the amended complaint as a whole, construe the amended complaint
in a light most favorable to the plaintiff, and accept the facts
alleged in the amended complaint as true.
556 U.S. 662, 678 (2009).
Ashcroft v. Iqbal,
Thus, the following facts taken from
the amended complaint are only accepted as true for purposes of
the three motions now before the Court.
Pursuant to the Public-Private Transportation Act
(“PPTA”),1 passed by the Virginia General Assembly in 1995,
Transurban contracted with the Commonwealth of Virginia to
maintain and operate high-occupancy toll lanes (“HOT lanes”) on
1
“There is a public need for timely development and/or operation
of transportation facilities within the Commonwealth that
address the needs identified by the appropriate state, regional,
or local transportation plan by improving safety, reducing
congestion, increasing capacity, enhancing economic efficiency,
or any combination thereof and that [because] such public need
may not be wholly satisfied by existing methods of procurement
. . . private entities [are authorized] to develop and/or
operate one or more transportation facilities [that] may result
in the development and/or operation of such transportation
facilities to the public in a more timely, more efficient, or
less costly fashion, thereby serving the public safety and
welfare.” Va. Code Ann. §§ 33.2-1801(A)(1), (3).
2
the Capital Beltway, Interstate 495 (“I-495”), which opened on
November 17, 2012, and on Interstate 95 (“I-95”) and Interstate
395 (“I-395”), which opened on December 29, 2014.
[Dkt. 36] ¶¶ 24-27.)
(Am. Compl.
The HOT lanes on I-495 are colloquially
known as the “495 Express Lanes” and the HOT lanes on I-95 and
I-395 are colloquially known as the “95 Express Lanes.”
¶ 25.)
(Id. at
Both the 495 Express Lanes and the 95 Express Lanes
collect HOT lane tolls through the use of an E-ZPass transponder
mounted on the inside of the vehicle’s windshield, which is
linked to the driver’s bank account or credit card; no cash toll
booths are offered and instead, an E-ZPass transponder is
required.
(Id. at ¶¶ 26-27.)
HOT lane prices on the 495
Express Lanes and the 95 Express Lanes vary dynamically
“according to real-time traffic conditions: the more drivers
using the HOT Lanes, the more expensive the toll, and viseversa.”
(Id. at ¶ 26.)
When an E-ZPass account is out of money
to pay tolls, the bank account or credit card is automatically
charged to reload the E-ZPass account.
(Id. at ¶ 27.)
An E-
ZPass account can become inadequately funded if the linked
credit card expires or is otherwise cancelled.
(Id. at ¶ 59.)
A. Virginia’s HOT Lanes Law
Virginia law governs the creation of HOT lanes
(hereinafter collectively referred to as the “HOT lanes law”).
(Am. Compl. ¶ 42 (citing Va. Code Ann. §§ 33.2-502, 503).)
3
The
operator of a motor vehicle “shall make arrangements with the
HOT lanes operator for payment of the required toll prior to
entering such HOT lanes.”
Va. Code Ann. § 33.2-503.
Failure to
make such arrangements, i.e., failure to pay the required toll,
violates Virginia law and such a violation is subject to civil
penalties, including payment of the unpaid toll, fines, fees,
and costs.
Id.
Enforcement of this statutory provision is
accomplished by issuance of a summons for a civil violation,2
which can occur one of two ways.
First, if a law-enforcement officer observes an HOT
lane violation, the officer may execute a summons for the
violation.
Va. Code Ann. § 33.2-503(1).
Second, a summons may
be executed if a violation is evidenced by information obtained
from a photo-enforcement system, which the HOT lane operator is
required to install and operate at all toll-collection
locations.
Id. §§ 33.2-503(2)(a)-(b).
“A certificate, sworn to
or affirmed by a technician employed or authorized by the HOT
lanes operator, or a facsimile of such certificate, based on
2
All summonses for civil violations must be executed on a form
prescribed by the Supreme Court of Virginia. See generally Va.
Code Ann. § 33.2-503. A summons issued for a violation may be
executed by first-class mailing to the address of the owner of
the vehicle as shown by records maintained by the Department of
Motor Vehicles. Va. Code Ann. § 33.2-503(2)(c) (citing Va. Code
Ann. § 19.2-76.2). “HOT lanes operator personnel or their
agents mailing such summons shall be considered conservators of
the peace for the sole and limited purpose of mailing such
summons.” Id.
4
inspection of photographs, microphotographs, videotapes, or
other recorded images produced by a photo-enforcement system,
shall be prima facie evidence of the facts contained therein.”
Id. § 33.2-503(2)(b).
This second enforcement mechanism,
whereby a summons is issued based on evidence obtained from a
photo-enforcement system, is the enforcement mechanism primarily
at issue in this litigation.
The summons shall provide the registered owner of the
vehicle with “reasonable notice” that the vehicle was used in
violation of this statute, and provide “notice of the time and
place of the hearing and notice of the civil penalty and costs
for such offense.”
Va. Code Ann. § 33.2-503(2)(d).
The HOT
lanes operator may impose an administrative fee in addition to
the unpaid toll, “so as to recover the expenses of collecting
the unpaid toll, [but the] administrative fee shall be
reasonably related to the actual cost of collecting the unpaid
toll.”
Id. § 33.2-503(3)(a).
The summons shall contain an
option for the driver or registered owner of the vehicle to
prepay the unpaid toll and all penalties, administrative fees,
and costs.
Id. § 33.2-503(2)(c).
If the operator of the
vehicle pays the administrative fee and unpaid tolls within 30
days of notification, the administrative fee shall not exceed
$25.
Id. § 33.2-503(3)(a).
shall not exceed $100.
Id.
Otherwise, the administrative fee
If the operator of the vehicle
5
contests the violation but a court of competent jurisdiction3
finds that the operator of the vehicle did violate the statute,
the court shall impose a civil penalty payable to the HOT lanes
operator as follows:
“for a first time offense, $50; for a
second offense, $250; for a third offense within a period of two
years of the second offense, $500; and for a fourth and
subsequent offense within a period of three years of the second
offense, $1,000, together with, in each case, the unpaid toll,
all accrued administrative fees imposed by the HOT lanes
operator . . . and applicable court costs.”
503(3)(b).
Id. § 33.2-
Failure to pay the required penalties, fees, and
costs can result in suspension of the operator’s vehicle
registration and license.
Id. § 33.2-503(3)(c).
B. Defendants’ Alleged Enforcement Procedure
As the HOT lanes operator, Transurban enforces civil
violations4 of the HOT lanes law and attempts to collect payment
3
“Any action under this section shall be brought in the general
district court of the county or city in which the violation
occurred.” Va. Code Ann. § 33.2-503(7). Any appeal as a matter
of right is heard de novo by the circuit court. Va. Code Ann. §
16.1-106.
4
Practically speaking, a “violation” of the HOT lanes law could
occur for a variety of reasons. (See Am. Compl. ¶¶ 55-58
(alleging a violation could occur because the electronic toll
reading equipment (hereinafter referred to as a “gantry”) simply
fails to register a valid E-ZPass, or because of a tinted
windshield, position of the car in the HOT lane, a dead E-ZPass
battery, or cancelled credit card account).) A violation could
also occur if the vehicle does not have an E-ZPass transponder,
does not have an active E-ZPass account, or has allowed funding
6
for unpaid tolls by providing notice to the registered operator
of the motor vehicle.
(Am. Compl. ¶¶ 45, 59.)
Once an alleged
“violation” occurs, the operator of the motor vehicle does not
immediately receive notice of the infraction.
58.)
(Id. at ¶¶ 57-
Instead, an operator of a motor vehicle in violation of
the HOT lanes law “may not find out for months (or even over a
year)” until Transurban mails the notice or summons.
58.)
(Id. at ¶
“If a driver somehow ‘knows’ that she has committed a toll
violation, within 5 days of that violation, she can pay the toll
and a[n administrative] fee of $1.50 per trip through the
‘Missed a Toll’ process on Defendant Transurban’s website.”
(Id. at ¶ 60.)
Otherwise, the unknowing violator will not
become aware of the violation until Transurban issues a notice
through the mail.
(Id.)
Specifically, Transurban will first mail an “unpaid
toll notice” to the registered owner of the motor vehicle
requesting payment of the unpaid tolls, plus a $12.50
administrative fee that is assessed for each violation
(hereinafter “the first notice”).
(Am. Compl. ¶ 60.)
The first
notice requests payment or notice that the driver disputes the
to the E-ZPass account to expire. However, “[t]he underlying
reason for any particular purported toll violation is irrelevant
for the purposes of the claims herein. Regardless of the reason
for the violation, the Transurban Defendants’ enforcement
procedures for purported toll violations are contrary to law.”
(Id. at ¶ 54.)
7
violation within 30 days.
(Id.)
If the toll remains unpaid
after 30 days, Transurban issues a “final toll invoice” that
requests payment of the unpaid tolls, plus a $25 administrative
fee for each violation (hereinafter “the final notice”).
at ¶ 61; see also Transurban’s Mem. [Dkt. 42] Ex. C.)
(Id.
The final
notice requests payment within 30 days and states that
Transurban will refer any failure to pay to its debt collection
agency, LES.
(Id.)
Transurban takes “no efforts to ensure or
confirm that the invoices they mail actually reach their
intended recipients . . . even when these invoices are returned
as undeliverable.”
(Am. Compl. ¶ 71.)
If Transurban refers the
account for debt collection, LES will issue a collection notice
to the driver that requests payment of the unpaid tolls, plus a
$100 administrative fee for each violation (“the collection
notice”).
(Id. at ¶¶ 74-84.)
“LES regularly tells consumers in
correspondence that ‘this is an attempt to collect a debt and
any information obtained will be used for that purpose’ and/or
that the communication is from a debt collector.”
75.)
(Id. at ¶
LES attempts to make debt validation disclosures in the
collection notice pursuant to the Fair Debt Collection Practices
Act (“FDCPA”), but “does not comply with the FDCPA in several
respects.”
(Id. at ¶¶ 77-84 (alleging that LES fails to
identify the creditor, Transurban, fails to include any of the
8
statutory disclosures, and falsely represents the character and
amount of the debt).)
If the toll is still unpaid, Transurban engages the
services of Faneuil, which initiates collection lawsuits by
executing a summons through first-class mail to the registered
owner of the motor vehicle.
(Am. Compl. ¶¶ 3, 85.)
Either
Transurban or Faneuil issues “electronically-produced summonses
robo-signed by machines.
They do not issue summonses sworn to
or affirmed by humans, as required by Virginia law.”
86, 88-89, 118.)
(Id. at ¶¶
Moreover, it is alleged that Transurban or
Faneuil issues summonses that “include an identical pre-printed
signature, placed and proportioned on the forms in the same
manner for all summonses.”
(Id. at ¶ 89.)
And in some cases,
Transurban or Faneuil issues summonses more than one year after
the purported toll violation, in violation of Virginia law.
(Id. at ¶¶ 92-94.)
Plaintiffs also allege that Transurban has
failed to appear in court, but instead sends a non-lawyer
independent contractor for Faneuil to make court appearances.
(Id. at ¶¶ 95-96 (“Defendant Transurban sent Alexis Brach (a
non-lawyer) to appear on its behalf.
Because Ms. Brach is an
independent contractor for Defendant Faneuil, [the court] ruled
she could not and cannot represent the Transurban Defendants in
court.”).)
9
On October 27, 2014, approximately two years after the
opening of the 495 Express Lanes and prior to the opening of the
95 Express Lanes, Transurban announced the implementation of a
“First-Time Forgiveness” program for HOT lane violations.
Compl. ¶ 97.)
(Am.
This program includes:
(a)
If
a
consumer
contacts
Defendant
Transurban within 60 days of toll violation,
the
company
will
remove
automaticallyassessed administrative fees, where toll
violation arose from insufficient funds in
an E-ZPass account, failure to link a
license plate to the E-ZPass account or an
incorrectly mounted E-ZPass;
(b) In the event that Defendant Transurban
sends an E-ZPass customer an invoice and the
letter is returned with an unknown address,
Defendant Transurban will send the invoice
to a debt collection agency but will waive
all fees if the customer contacts it and
provide[s]
evidence
the
customer
has
resolved the account issues with E-ZPass and
has paid his tolls; and
(c) Defendant Transurban will continue to
collect through court action, but “will put
a cap on the number of trips sent to court
and pursue a maximum of $2,220 (which
includes the administrative fee + civil
penalties), plus tolls and court fees,
regardless of the number of violations.
(Id.)
Plaintiffs allege that this new policy nonetheless fails
to resolve the problem of “excessive, illegal, and unreasonable
fees and fines” for various reasons.
10
(Id. at ¶¶ 98-102.)
C. Class Representatives
Seven individual Plaintiffs bring this lawsuit against
Defendants and claim, generally, that they were assessed massive
fees and penalties for minor toll violations on the 495 Express
Lanes and 95 Express Lanes that were unreasonable and improper.
(Am. Compl. ¶¶ 109-219.)
At all relevant times, each Plaintiff
had previously signed up for an E-ZPass account,5 his or her EZPass transponder was mounted on the windshield of the vehicle,
and the E-ZPass account was linked to a valid payment method for
automatic replenishment.6
175, 191, 204.)
(Am. Compl. ¶¶ 109, 124, 138, 152,
Each Plaintiff also alleges that at the time he
or she entered the HOT lanes, no indication was given that the
E-ZPass was unread or maintained an insufficient balance.
at ¶¶ 111, 126, 140, 154, 177, 193, 206.)
(Id.
Moreover, each
Plaintiff alleges that any eventual summons he or she received
was “signed” by an automated computer program, in violation of
Virginia law.
(Id. at ¶¶ 119, 133, 147, 159, 186, 199, 214.)
Each Plaintiff, and the facts specific to his or her claim, is
summarized briefly below.
1. Plaintiff Jo-Ann Brown
5
Plaintiffs signed up for an E-ZPass account through various
states, including New York, Maryland, or Virginia. This
distinction is irrelevant for purposes of the motions now before
the Court.
6
Plaintiff Jocelyn Chase does not allege that her E-ZPass
account was linked to a valid payment method for automatic
replenishment. (Am. Compl. ¶ 204.)
11
Between October 4 and October 12, 2013, Transurban
determined that Plaintiff Jo-Ann Brown (“Brown”) violated the
HOT lanes law on five separate occasions, totaling $4.15 in toll
violations.
(Am. Compl. ¶¶ 110-114.)
Brown did not receive
notice of the toll violations until sixty (60) days later, when
she received a letter from “495 Express Lanes” stating that she
owed $4.15 in tolls and $100 in administrative fees.
115.)
(Id. at ¶
Brown protested but nonetheless agreed to pay the amount
due, but 495 Express Lanes declined to accept Brown’s payment.
(Id. at ¶¶ 116-117.)
In October of 2014, Transurban served
Brown with several summonses, which indicated that it was
seeking $3,413.75 in total as a result of the $4.15 cumulative
toll violation.
(Id. at ¶ 118 (breaking down the administrative
fee, cost amount, and civil penalty sought for each violation).)
Transurban assessed a $100 administrative fee and $72 in costs
for each of the five toll violations.
(Id.)
The first toll
violation was accompanied by a $50 civil penalty; the second
toll violation was accompanied by a $250 civil penalty; and the
third toll violation was accompanied by a $500 civil penalty;
and the fourth and fifth toll violations were each accompanied
by a separate $1,000 civil penalty.
(Id.)
Prior to the
issuance of the summons, Brown had no meaningful or adequate
means to contest the fines and fees, and no judgment has been
entered against her to date.
(Id. at ¶¶ 122-123.)
12
2. Plaintiff Anna Stanfield
Between June 18 and July 3, 2013, Transurban
determined that Plaintiff Anna Stanfield (“Stanfield”) violated
the HOT lanes law on ten separate occasions, totaling $32.70 in
toll violations.
(Am. Compl. ¶¶ 126-128.)
In October of 2014,
Transurban served Stanfield with several summonses, which
indicated that it was seeking $8,380.70 in total as a result the
total $32.70 toll violation.
(Id. at ¶ 129 (breaking down the
administrative fee, cost amount, and civil penalty sought for
each violation).)
Transurban assessed a $100 administrative fee
and $72 in costs for each of the ten toll violations.
(Id.)
And as with Brown, Transurban assessed escalating civil
penalties, starting at $50 for the first violation, rising to
$250 for the second violation, $500 for the third violation, and
$1,000 for each of the subsequent violations.
(Id.)
Transurban
issued all of the summonses more than one year after the date of
the purported toll violations.
(Id. at ¶ 134.)
Prior to the
issuance of the summons, Stanfield had no meaningful or adequate
means to contest the fines and fees.
(Id. at ¶ 135.)
After
receiving the summonses, Stanfield contacted Transurban, and
after feeling enormous pressure to resolve the matter, Stanfield
was pressured into paying Transurban $2,200.
137.)
13
(Id. at ¶¶ 136-
3. Plaintiff Rachel Amarti
Between June 3 and July 22, 2013, Transurban
determined that Plaintiff Rachel Amarti (“Amarti”) violated the
HOT lanes law on twenty-six separate occasions, with total toll
violations in excess of $100.
(Am. Compl. ¶¶ 139-142.)
In
2014, Transurban served Amarti with several summonses, which
indicated that it was seeking over $25,000 as a result these
toll violations.
(Id. at ¶ 143 (breaking down the
administrative fee, cost amount, and civil penalty sought for
each violation).)
Transurban assessed a $100 administrative fee
and $72 in costs7 for each of the ten toll violations.
(Id.)
And as with Brown and Stanfield, Transurban assessed escalating
civil penalties, starting at $50 for the first violation, rising
to $250 for the second violation, $500 for the third violation,
and $1,000 for each of the subsequent violations.
(Id.)
Transurban issued all of the summonses more than one year after
the date of the purported toll violations.
(Id. at ¶ 148.)
Prior to the issuance of the summons, Amarti had no meaningful
or adequate means to contest the fines and fees.
149.)
(Id. at ¶
After receiving the summonses, Amarti contacted
Transurban, and after feeling enormous pressure to resolve the
7
Amarti claims that Transurban assessed $82 in costs for the
first toll violation in the amount of $4.80. (Am. Compl. ¶
143(a).) Otherwise, Transurban assessed $72 in costs for each
subsequent toll violation. (Id. at ¶ 143(b)-(y).)
14
matter, Amarti was pressured into paying Transurban $3,600.
(Id. at ¶¶ 150-151.)
4. Plaintiff Mary Elise Pizarro
Between May 8 and May 28, 2013, Transurban determined
that Plaintiff Mary Elise Pizarro (“Pizarro”) violated the HOT
lanes law on seven separate occasions, totaling $20.50 in toll
violations.
(Am. Compl. ¶¶ 153-156.)
Pizarro received
additional notices of violations in July.
(Id. at ¶ 156.)
Pizarro first received notice of purported toll violations one
month after the alleged violation, when she received four “Final
Notices” stating that she owed tolls and associated fees.
(Id. at ¶ 157.)
Pizarro regularly used the 495 Express Lanes to
commute to and from work, but the invoices indicated violations
for only part of a round trip, allegedly a clear indication that
some sort of equipment failure was to blame for the violations.
(Id. at ¶ 158.)
Pizarro immediately contacted Transurban to
challenge the violations, and the Transurban representative
stated that the toll violations may have resulted from how the
E-ZPass transponder was mounted on the windshield.
159.)
(Id. at ¶
Pizarro requested that Transurban debit the toll amounts
from her E-ZPass account and understood that the tolls and fees
would be assessed in this manner.
(Id.)
After this telephone
call, Pizarro received two additional “Final Notices” from
Transurban.
(Id. at ¶ 160.)
Pizarro immediately disputed these
15
and all other violations on the Transurban website.
(Id. at ¶
161.)
On July 18, 2013, Transurban e-mailed Pizarro and
denied her request due to insufficient funds, even though
Pizarro maintained a sufficient balance on her E-ZPass account.
(Am. Compl. ¶ 162.)
In January of 2014, Pizarro ceased using
the 495 Express Lanes and closed her account.
(Id. at ¶ 163.)
Shortly thereafter, E-ZPass refunded her approximately $83,
which was the positive balance on her account.
(Id. at ¶ 164.)
In September of 2014, Transurban served Pizarro with ten
summonses, which indicated that it was seeking $9,440.90 for ten
purported toll violations totaling approximately $20.
(Id. at
¶¶ 165-166 (breaking down the administrative fee, cost amount,
and civil penalty sought for each violation).)
Transurban
assessed a $100 administrative fee and $72 in costs for each of
the ten toll violations.
(Id.)
And as with the previously
mentioned Plaintiffs, Transurban assessed escalating civil
penalties, starting at $50 for the first violation, rising to
$250 for the second violation, $500 for the third violation, and
$1,000 for each of the subsequent violations.
(Id.)
Transurban
issued all of the summonses more than one year after the date of
the purported toll violations.
(Id. at ¶ 170.)
Prior to the
issuance of the summons, Pizarro had no meaningful or adequate
means to contest the fines and fees.
16
(Id. at ¶ 171.)
After
receiving the summonses, Pizarro contacted Transurban, and after
feeling enormous pressure to resolve the matter, Pizarro was
pressured into paying Transurban $1,513.90.8
(Id. at ¶¶ 172-
174.)
5. Plaintiff Duane Hale
Between July 6 and November 11, 2013, Transurban
determined that Plaintiff Duane Hale (“Hale”) violated the HOT
lanes law on sixteen separate occasions, totaling $30.65 in toll
violations.
(Am. Compl. ¶¶ 176-179.)
Hale received notices
demanding payment for unpaid tolls, despite having a positive
balance on his E-ZPass account, and promptly disputed these
initial notices but Transurban “persisted.”
(Id. at ¶ 181.)
In
October of 2014, Transurban served Hale with sixteen summonses,
which indicated that it was seeking over $15,000 for toll
violations totaling $30.65.
(Id. at ¶¶ 182-183 (breaking down
the administrative fee, cost amount, and civil penalty sought
for each violation).)
Transurban assessed a $100 administrative
fee and $72 in costs for each of the sixteen toll violations.
(Id.)
And as with the previously mentioned Plaintiffs,
Transurban assessed escalating civil penalties, starting at $50
8
After contacting Transurban, the Transurban employee advised
that Pizarro had committed four additional toll violations in
July of 2013 that she was not yet aware of, and offered to
settle these charges for 413.90 to avoid having them go to
court. (Am. Compl. ¶ 173.)
17
for the first violation,9 rising to $250 for the second
violation, $500 for the third violation, and $1,000 for each of
the subsequent violations.
(Id.)
Transurban issued all of the
summonses more than one year after the date of the purported
toll violations.
(Id. at ¶ 187.)
Prior to the issuance of the
summons, Hale had no meaningful or adequate means to contest the
fines and fees.
(Id. at ¶ 171.)
Hale had a court date in
Fairfax County General District Court on March 16, 2014 at which
all of the summonses were “null processed.”
(Id. at ¶ 189.)
judgment has been entered against Hale to date.
No
(Id. at ¶ 190.)
6. Plaintiff Michelle Osborne
Between November 13 and November 21, 2013, Transurban
determined that Plaintiff Michelle Osborne (“Osborne”) violated
the HOT lanes law on four separate occasions, totaling $16.75 in
toll violations.
(Am. Compl. ¶¶ 192-196.)
Four months later,
Osborne first received notice of the purported violations
through a “Demand for Payment and Credit Bureau Warning Letter”
from LES, stating that she owed $312.20 for three toll
violations.
(Id. at ¶ 197.)
In December of 2014, Transurban
served Osborne with summonses, which indicated that it was
seeking $2,293.30 for toll violations totaling $16.75.
(Id. at
¶ 198 (breaking down the administrative fee, cost amount, and
9
Transurban allegedly assessed a $50 civil penalty for the
second violation, but escalated from there. (Am. Compl. ¶
182(b).)
18
civil penalty sought for each violation).)
Transurban assessed
a $100 administrative fee and $77 in costs for each of the four
toll violations.
(Id.)
And as with the prior Plaintiffs,
Transurban also assessed escalating civil penalties, starting at
$50 for the first violation, rising to $250 for the second
violation, $500 for the third violation, and $1,000 for the
fourth violation.
(Id.)
Prior to the issuance of the summons,
Osborne had no meaningful or adequate means to contest the fines
and fees.
(Id. at ¶ 202.)
Osborne to date.
No judgment has been entered against
(Id. at ¶ 203.)
7. Plaintiff Jocelyn Chase
Between June 23 and September 4, 2014, Transurban
determined that Plaintiff Jocelyn Chase (“Chase”) violated the
HOT lanes law on twenty-nine separate occasions, totaling $30.95
in toll violations.
(Am. Compl. ¶¶ 205-209.)
Chase did not
receive a notice until more than two months after the first
purported toll violation, when she received an “Unpaid Toll
Invoice” letter from Capital Beltways Express, LLC.
210.)
(Id. at ¶
Between September and November of 2014, Chase received a
total of six of these “Unpaid Toll Invoice” letters seeking
payment for twenty-three of the twenty-nine toll violations, but
never received this initial notice for six of the violations.
(Id.)
The first time Chase received notice of these six
additional violations was on March 3, 2015, when LES sent a
19
credit bureau warning letter for two of the violations, and on
December 11, 2014, when LES sent a notice of assignment on the
remaining four violations.
(Id. at ¶ 211.)
By March 3, 2015,
LES was seeking a total of $1,817.85 for eighteen alleged toll
violations, but by the time LES reported these violations to the
credit bureaus, the total had grown to $1,919.10.
212.)
(Id. at ¶
On May 25, 2015, Transurban served Chase with summonses,
which indicated that it was seeking $2,512.10 for only four toll
violations totaling $4.10.
(Id. at ¶ 213 (breaking down the
administrative fee, cost amount, and civil penalty sought for
each violation).)
Transurban assessed a $100 administrative fee
and $77 in costs for each of the four toll violations.
(Id.)
And just as with the prior Plaintiffs, Transurban also assessed
escalating civil penalties, starting at $50 for the first
violation, rising to $100 for the second violation, $250 for the
third violation, and $500 for the fourth violation.
(Id.)
Prior to the issuance of the summons, Chase had no meaningful or
adequate means to contest the fines and fees.
(Id. at ¶ 217.)
Chase had a court date in Fairfax County General District Court
on June 24, 2015, but no judgment has been entered against her
to date.
(Id. at ¶¶ 218-219.)
D. Claims Raised in the Amended Complaint
The seven individual Plaintiffs bring this action on
behalf of themselves and all others similarly situated pursuant
20
to Rule 23 of the Federal Rules of Civil Procedure.10
Compl. ¶ 220.)
(Am.
Plaintiffs set forth eight claims for relief,
and ultimately ask the Court to (1) declare Defendants’ fee
policies and collection methods to be wrongful, unfair, and
unconscionable, and enjoin any such future collections; (2)
order restitution of fees and penalties paid by Plaintiffs to
Defendants; (3) order disgorgement of ill-gotten gains derived
from Defendants’ conduct; (4) award actual damages; (5) award
punitive and exemplary damages; and (6) award pre-judgment
interest and costs as applicable.
(Id. at ¶¶ 235-312.)
Specifically, Plaintiffs, by their applicable classes, bring the
10
Plaintiffs propose three “classes.” (Am. Compl. ¶ 221.) Class
One, the “Outstanding Fee or Civil Penalties Class,” constitutes
all users of HOT lanes in Virginia who held an E-ZPass account
at the time of the purported violation and who have been
assessed fees or penalties by Transurban but who have not
executed a release or had judgments entered against them. (Id.)
Class Two, the “Settlement/Judgment Class,” constitutes all
users of HOT lanes in Virginia who held an E-ZPass account at
the time of the purported violation and who have been assessed
fees or penalties by Transurban, have been issued a summons by
Transurban, and who have resolved the summons by settlement or
judgment. (Id.) And Class Three, the “LES Fair Debt Collection
Practices Class,” constitutes all natural persons who received
correspondence from LES (1) in an attempt to collect a debt on
behalf of Transurban; (2) that was incurred primarily for
personal, household, or family purposes; and (3) during the one
year period prior to the filing of this Complaint, and all
natural person who received correspondence from LES stating, “If
you wish to dispute the validity of this debt or any portion
thereof, you must notify this office, in writing, using the
affidavit on the reverse side of this notice. Otherwise, we
will assume the debt is valid and will pursue all means
available for its collection.” (Id.)
21
following claims against the following Defendants, which have
been grouped into three categories for ease.
1. Constitutional Claims against only Transurban
Claims One, Two, and Three, brought only against the
Transurban Defendants, allege that Transurban has violated 42
U.S.C. § 1983, the United States Constitution, and the Virginia
Constitution.
Specifically, in Claim One, Plaintiffs allege
that Transurban violated 42 U.S.C. § 1983 by levying excessive
fines in violation of the Eighth Amendment to the United States
Constitution.
(Am. Compl. ¶¶ 235-241.)
Separately, Claim One
also sets forth a violation of Article I, Section 9 of the
Virginia Constitution,11 which also prohibits excessive bail and
excessive fines.
(Id.)
In Claim Two, Plaintiffs again allege a
violation of 42 U.S.C. § 1983, but based upon alleged
infringements of their procedural due process rights under the
Fifth and Fourteenth Amendments to the United States
Constitution.
And again, separately, Plaintiffs also allege a
violation of Article I, Section 11 of the Virginia Constitution.
(Id. at ¶¶ 242-248.)
In Claim Three, also brought pursuant to
42 U.S.C. § 1983, Plaintiffs allege that Transurban violated
their substantive due process rights by collecting excessive and
unreasonable fees and penalties, contrary to Virginia law and to
11
Plaintiffs erroneously refer to Article I, Section 11 of the
Virginia Constitution, which discusses, inter alia, due process
of law, and is cited in Claim Two. (See Am. Compl. at 53, 54.)
22
Plaintiffs’ contract with the non-party E-ZPass entities.
(Id. at ¶¶ 249-257.)
2. State Law Claims against All Defendants
Plaintiffs assert four claims under state law against
all named Defendants.
In Claim Four, entitled “Unjust
Enrichment,” Plaintiffs allege that all Defendants knowingly
received and retained wrongful benefits as a result of their
wrongful conduct in conscious disregard of Plaintiffs’ rights.
(Id. at ¶¶ 258-267.)
In Claim Six, Maryland Plaintiffs allege
that all Defendants violated the Maryland Consumer Protection
Act, Md. Code, Com. Law §§ 13-101, et seq., by engaging in
unlawful, unfair, and deceptive trade practices.
272-282.)
(Id. at ¶¶
Similarly, in Claim Seven, Virginia Plaintiffs allege
that all Defendants violated the Virginia Consumer Protection
Act, Va. Code Ann. §§ 59.1-196, et seq., by engaging in
unlawful, unfair, and deceptive trade practices.
283-296.)
(Id. at ¶¶
And in Claim Eight, entitled “Tortious Interference
with Contract,” Plaintiffs allege that all Defendants knowingly
interfered with Plaintiffs’ contractual relationship with the EZPass entities under the E-ZPass contracts.
(Id. at ¶¶ 297-
312.)
3. FDCPA Claim against only Collection Defendants
Lastly, in Claim Five, Plaintiffs allege that Faneuil
and LES, the Collection Defendants, violated the Fair Debt
23
Collection Practices Act (“FDCPA”) by making false and
misleading representations, and by engaging in unfair and
abusive debt collection practices in violation of 15 U.S.C. §
1692g.
(Am. Compl. ¶ 269.)
Plaintiffs also allege that the
Collection Defendants attempted to collect knowingly excessive
and inflated fines and fees in violation of 15 U.S.C. §§
1692e(2), 1692f(1).
(Id. at ¶ 270.)
E. Motions Now Before the Court
Transurban, Faneuil, and LES each filed a motion to
dismiss with a memorandum in support.
(Transurban’s Mot. [Dkt.
41]; Transurban’s Mem. in Supp. [Dkt. 42]; Faneuil’s Mot. [Dkt.
44]; Faneuil’s Mem. in Supp. [Dkt. 45]; LES’s Mot. [Dkt. 49];
LES’s Mem. in Supp. [Dkt. 50] (collectively “the motions”).)
The motions raise four general issues that the Court must
address.
First, whether the Plaintiffs’ claims are justiciable
and properly before this Court of limited jurisdiction.
Transurban’s Mem. at 4-6.)
(See
Second, whether Plaintiffs
sufficiently stated a claim for relief for their constitutional
claims against Transurban.
(See Transurban’s Mem. at 8-21.)
Third, whether Plaintiffs adequately state a claim for relief
against the Collection Defendants under the FDCPA (See Faneuil’s
Mem. at 9-19; LES’s Mem. at 6-16.)
Fourth, whether Plaintiffs
state proper claims for relief under Virginia and Maryland law
against all named Defendants.
(See Transurban’s Mem. at 21-30;
24
Faneuil’s Mem. at 8-9, 20-28; LES’s Mem. at 18-27.)
Fully
briefed and argued, these issues are now properly before the
Court for disposition.
II. Legal Standard
“[I]n passing on a motion to dismiss, whether on the
ground of lack of jurisdiction over the subject matter or for
failure to state a cause of action, the allegations of the
complaint should be construed favorably to the pleader.”
Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), abrogated on other
grounds by Harlow v. Fitzgerald, 457 U.S. 800 (1982).
A motion
pursuant to Rule 12(b)(1) of the Federal Rules of Civil
Procedure challenges the Court’s subject matter jurisdiction
over the pending action.
Fed. R. Civ. P. 12(b)(1).
“Federal
courts are courts of limited jurisdiction, and we presume that a
cause lies outside this limited jurisdiction.
The burden of
establishing the contrary rests upon the party asserting
jurisdiction.”
Wheeling Hosp., Inc. v. Health Plan of the Upper
Ohio Valley, Inc., 683 F.3d 577, 583-84 (4th Cir. 2012)
(citation omitted).
Relevant here, “[a] Court is deprived of
jurisdiction over a case when the case becomes moot.”
Williams
v. Ozmint, 716 F.3d 801, 809 (4th Cir. 2013) (citing Iron Arrow
Honor Soc’y v. Heckler, 464 U.S. 67, 70 (1983)) (additional
citation omitted).
25
And while the court must accept well-pleaded
allegations as true when ruling on a Rule 12(b)(6) motion, the
court need not accept as true legal conclusions disguised as
factual allegations.
(2009).
Ashcroft v. Iqbal, 556 U.S. 662, 679-81
Therefore, a pleading that offers only a “formulaic
recitation of the elements of a cause of action will not do.”
Iqbal, 556 U.S. at 678; Bell Atl. Corp. v. Twombly, 550 U.S.
544, 557 (2007).
Nor will a complaint that tenders mere “naked
assertion[s]” devoid of “further factual enhancement.”
Iqbal,
556 U.S. at 678; Twombly, 550 U.S. at 557.
“The purpose of a Rule 12(b)(6) motion is to test the
sufficiency of a complaint; importantly, [a Rule 12(b)(6)
motion] does not resolve contests surrounding the facts, the
merits of a claim, or the applicability of defenses.”
Edwards
v. City of Goldsboro, 178 F.3d 231, 243-44 (4th Cir. 1999)
(citation omitted) (internal quotation marks omitted).
In the
instance where sufficient facts are alleged in the complaint to
rule on an affirmative defense, such as the statute of
limitations, the defense may be reached by a motion to dismiss
filed under Rule 12(b)(6).
This principle only applies,
however, if all facts necessary to the affirmative defense
“clearly appear[ ] on the face of the complaint.”
Goodman v.
Praxair, Inc., 494 F.3d 458, 464 (4th Cir. 2007) (emphasis in
original); see also 5B Wright & Miller, Federal Practice &
26
Procedure § 1357 (“A complaint showing that the governing
statute of limitations has run on the plaintiff’s claim for
relief is the most common situation in which the affirmative
defense appears on the face of the pleading and provides a basis
for a motion to dismiss under Rule 12(b)(6).”).
III. Analysis
A. Justiciability
Defendants assert a potpourri of challenges to
Plaintiffs’ Article III standing in this case.
Collection
Defendants argue that none of the named plaintiffs have standing
to sue for violations of the FDCPA. (LES’s Mem. at 11; Faneuil’s
Mem. at 10.)
Transurban argues that Plaintiffs Browne, Osborne,
Chase, and Hale’s claims are moot, and therefore they have no
standing to sue for either damages or injunctive relief.
(Transurban’s Mem. at 6.)
Additionally, Transurban urges the
Court to find that none of the named plaintiffs has standing to
seek injunctive relief against Transurban.
(Id. at 7.)
The
Court addresses each of these issues in turn, ultimately finding
that each named plaintiff has standing to assert each of their
claims, before turning to the sufficiency of the facts alleged
with regards to those claims.
The Court begins with an analysis
of the Plaintiffs’ standing to bring an action against the
Collection Defendants under the FDCPA.
1. Justiciability of FDCPA Claims
27
Article III standing requires, at a bare minimum, that
a plaintiff allege “(1) an injury in fact (i.e., a ‘concrete and
particularized’ invasion of a ‘legally protected interest’); (2)
causation (i.e., a ‘fairly ... trace[able]’ connection between
the alleged injury in fact and the alleged conduct of the
defendant); and (3) redressability (i.e., it is ‘likely’ and not
merely ‘speculative’ that the plaintiff's injury will be
remedied by the relief plaintiff seeks in bringing suit).” David
v. Alphin, 704 F.3d 327, 333 (4th Cir. 2013) (citing Sprint
Commc’ns Co., L.P. v. APCC Serv., Inc., 554 U.S. 269, 273-74
(2008)).
The Collection Defendants assert that Plaintiffs here
“have not suffered actual harm” as a result of Faneuil and LES’s
alleged FDCPA violations. (LES’s Mem. at 11.)
They argue that
Plaintiffs “are seeking remedies for mere statutory violations
of the FDCPA”, and they therefore fall at the first prong of the
standing inquiry, lacking any “injury in fact”.
at 9).
(Faneuil’s mem.
Plaintiffs respond that due to the FDCPA’s provision for
statutory damages even in the absence of an actual economic
injury, Plaintiffs do not need to suffer an economic injury in
order to bring suit under the FDCPA. (Pls.’ Opp’n. at 17.)
The Fourth Circuit has yet to address the issue of
whether a plaintiff must suffer an actual economic loss to bring
suit under the FDCPA, but several circuits which have considered
the issue have found that no actual economic loss is required in
28
order to have standing under the FDCPA.
See Keele v. Wexler,
149 F.3d 589, 593-94 (7th Cir. 1998)(“The FDCPA does not require
proof of actual damages as a precursor to the recovery of
statutory damages”); Tourgeman v. Collins Fin. Servs., Inc., 755
F.3d 1109, 1116 (9th Cir. 2014); Miller v. Wolpoff & Abramson,
L.L.P., 321 F.3d 292, 307 (2d Cir. 2003); Robey v. Shapiro,
Marianos & Cejda, L.L.C., 434 F.3d 1208, 1212 (10th Cir. 2006);
Baker v. G.C. Servs. Corp., 677 F.2d 775, 781 (9th Cir. 1982).
The Court agrees that it would be impractical to require that
Plaintiffs suffer an actual economic injury before they have
standing to sue under the FDCPA, particularly as the FDCPA “is
designed to protect consumers from the unscrupulous antics of
debt collectors, irrespective of whether a valid debt actually
exists.” Keele, 149 F.3d at 594.
The “injury in fact” suffered
by Plaintiffs under the FDCPA is not any actual economic loss,
but rather being subjected to the allegedly “unfair and abusive
practices” of the Collection Defendants.
(Am. Compl. ¶ 269.)
The Court therefore finds that Plaintiffs have standing to
pursue their FDCPA claims against the Collection Defendants.
2. Justiciability of Claims Against Transurban
Transurban also challenges the justiciability of this
case under Article III, arguing that all of Plaintiffs Browne,
Osborne, Chase, and Hale’s claims are moot, and that none of the
named Plaintiffs has standing to seek prospective relief.
29
The
two questions of mootness and standing to seek prospective
relief are closely intertwined in this case, but the Court
addresses Transurban’s mootness argument first.
An actual controversy must exist at all stages of
federal court proceedings.
DeFunis v. Odegaard, 416 U.S. 312,
316 (1974). “The inability of the federal judiciary to review
moot cases derives from the requirement of Art. III of the
Constitution under which the exercise of judicial power depends
upon the existence of a case or controversy.” Id. (citations and
internal quotation marks omitted).
Essentially, a case can
become moot if there is a change in the facts that ends the
controversy between the parties to the extent that one or both
parties no longer have a material incentive to pursue or defend
the action.
A case only truly becomes moot “when it is impossible
for a court to grant any effectual relief whatever to the
prevailing party.” Knox v. Serv. Emps. Int’l Union, Local 1000,
132 S. Ct. 2277, 2287 (2012) (omitting internal quotations and
citations).
A case is not mooted if the Court can offer
effective prospective, injunctive relief.
McLean v. City of
Alexandria, No. 1:14CV1398 JCC/IDD, 2015 WL 427166, at *3 (E.D.
Va. Feb. 2, 2015).
Nor is a case mooted if compensatory or even
nominal damages are still available. Rock for Life-UMBC v.
Hrabowski, 411 F. App'x 541, 550 (4th Cir. 2010).
30
Courts are
especially wary of attempts to force mootness on an unwilling
plaintiff by the defendant taking unilateral, voluntary action.
See Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC),
Inc., 528 U.S. 167, 170-71, (2000) (“A defendant's voluntary
cessation of a challenged practice ordinarily does not deprive a
federal court of its power to determine the legality of the
practice.”).
When the defendant voluntarily has voluntarily
ceased the conduct which has created the controversy, “the heavy
burden of persuading the court that the challenged conduct
cannot reasonably be expected to recur lies with the party
asserting mootness.”
Id.
This is especially true when, as
here, the defendant maintains the legality of the challenged
practice despite their voluntary abandonment of a course of
conduct.
Knox 132 S. Ct. at 2287.
Transurban argues that Plaintiffs Brown, Osborne and
Hale’s claims are moot as a result of Transurban’s dismissals of
its state court actions against these Plaintiffs.
Mem. at 6.)
(Transurban’s
Plaintiffs point out that “these ‘dismissals’ were
all ‘voluntary’ and occurred after Plaintiffs filed the instant
action.”
(Pls.’ Opp’n. at 11.)
In light of the voluntary
nature of Transurban’s dismissals, the “heavy burden of
persuading the Court that the challenged conduct cannot
reasonably be expected to recur” lies on Transurban.
31
Friends of
the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S.
167, 170-71 (2000).
Transurban does not carry its heavy burden in
attempting to persuade the court that it will not resume the
challenged toll violation enforcement scheme with regards to
either its specific claims against Plaintiffs Osborne, Chase,
and Hale, let alone with regards to its general toll enforcement
practices.
While Transurban has voluntarily dismissed its
state-court enforcement actions against Plaintiffs Osborne,
Chase, and Hale, Transurban’s claim against Chase was clearly
dismissed without prejudice, and it is unclear if Transurban’s
claim against Hale has been dismissed with or without prejudice.
(Transurban’s Mem. at Ex. H & G.)
The Court is therefore not
satisfied that Transurban is precluded from bringing these
claims again.
Absent an order to the contrary in this case,
Transurban could simply renew its actions for penalties against
Chase and Hale at any time.
The dismissal with prejudice of Transurban’s state
court claims against Brown and Osborne does preclude Transurban
from resurrecting that particular claim for damages, but for the
reasons laid down below, Brown and Osborne still have standing
to sue for injunctive relief from Transurban’s enforcement
policies.
This potential prospective relief, in addition to the
possibility that Brown and Osborne could receive at least
32
nominal damages from Transurban on a section 1983 suit for
alleged violations of their due process rights, is enough to
establish that the Court can still grant “effective relief” to
Brown and Osborne despite the fact that they no longer face
prosecution by Transurban for the previously alleged toll
violations which have been dismissed in state court.
Finally, Transurban contends that Plaintiffs lack
standing to seek prospective, injunctive relief against future
collections by Transurban.
(Transurban’s Mem. at 7.)
Standing
to sue for past damages does not necessarily grant standing to
sue for prospective relief, rather “plaintiff[s] must
demonstrate standing separately for each form of relief sought.”
DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 352 (2006).
When
seeking prospective future relief, such as an injunction, it is
insufficient to merely allege past harm.
Inc. v. Pena, 515 U.S. 200, 210-11 (1995).
Adarand Constructors,
However, Plaintiffs
here need not meet the general “actual and imminent harm”
standard first articulated by the Supreme Court in Summers v.
Earth Island Institute, 555 U.S. 488, 493 (2009), later
developed in Clapper v. Amnesty International USA, 133 S. Ct.
1138, 1147 (2013) and suggested here by Transurban.
Instead,
Plaintiffs fall neatly within the “capable of repetition yet
evading review” exception to the general “actual and imminent
harm” rule.
Two criteria must be met for a plaintiff to have
33
standing under the “capable of repetition yet evading review”
exception.
First, the injury must be likely to happen to
Plaintiffs again.
(1975).
Weinstein v. Bradford, 423 U.S. 147, 149
Specifically, there must be a “reasonable expectation
that the same complaining party would be subjected to the same
action again.”
Id.
The Court will refer to this as the
“reasonable expectation” requirement.
Second, the injury must
be of inherently limited duration so that it is likely to always
become moot before any litigation can be completed.
Fed.
Election Comm’n v. Wisconsin Right to Life, Inc., 551 U.S. 449,
462 (2007) (citations omitted).
The Court shall refer to this
second requirement as the “limited duration” requirement.
Plaintiffs allege facts in the amended complaint that, if true,
squarely place this case in the “capable of repetition yet
capable of evading review” exception to the general rule on
standing to seek prospective relief.
On the first requirement of the capable of repetition
yet evading review doctrine, the “reasonable expectation”
requirement, Transurban contends that a “highly attenuated chain
of possibilities” must occur before Plaintiffs would be likely
to suffer the same harm.
(Transurban’s Mem. at 7-8 (quoting
Clapper 133 S. Ct. at 1147-48).)
But construing all alleged
facts in the light most favorable to the Plaintiffs, as the
Court must at this stage, it is not unreasonable to conclude
34
that Plaintiffs and the other unidentified members of the
proposed classes will be subject to Transurban’s toll collection
practices if left unabated.
Only one Plaintiff, Pizarro, has
allegedly stopped using the HOT lanes.
(Am. Compl. ¶ 163.)
Otherwise, Plaintiffs generally allege that “[t]housands of
Virginia, Maryland, and DC residents have been subject to the
Transurban Defendants’ excessive fines and fees.”
(Id. at ¶¶ 4,
102 (“An average of 23,308 vehicles took the [HOT] lanes every
day in the first six weeks [they were in operation].”).)
They
further allege that in the course of one calendar year
Transurban files roughly 26,000 toll violation lawsuits, or just
over 71 per day on average.
(Id. at ¶ 225.)
Each of the named
Plaintiffs also alleges that Transurban has accused him or her
of multiple toll violations spanning periods of at least several
days and in some cases several months, further suggesting that
the alleged issues are not isolated incidents but rather a
pattern of alleged illegality.
(Id. at ¶¶ 112-219.)
At this
stage, Plaintiffs need only allege facts sufficient to
demonstrate a “reasonable expectation that [they] will again be
subjected to the alleged illegality, or will be subject to the
threat of prosecution under the challenged law.”
Wisconsin
Right to Life, Inc., 551 U.S. at 463 (citations and internal
punctuation omitted).
Based on the allegations contained in
Plaintiffs’ amended complaint, it is not unreasonable for them
35
to expect to be submitted to Transurban’s toll enforcement
policies again, so they easily clear this standard.
Turning to the second requirement of capable of
repetition yet evading review, the “limited duration”
requirement, Plaintiffs again allege facts that easily satisfy
this requirement.
The Fourth Circuit has held that the
protracted proceeding of garnishing a bank account, Harris v.
Bailey, 675 F.2d 614, 616 (4th Cir. 1982), and the presumably
longer negotiations involved in a labor contract dispute, Sinai
Hospital of Baltimore, Inc. v. Horvitz, 621 F.2d 1267, 1269 n.3
(4th Cir. 1980), both satisfy this “limited duration”
requirement.
The factual circumstances underlying this
proceeding illustrate just how short-lived Transurban’s
collection process can be.
The huge economic pressure and
potential legal ramifications of non-payment of the fines sought
by Transurban were sufficient to induce Plaintiffs Pizarro,
Stanfield, and Amarti to pay a portion of the fines claimed by
Transurban despite the fact that those Plaintiffs still
strenuously contest the legality of those penalties.
Compl. ¶¶ 137, 151, 174.)
(Am.
This kind of economic pressure is
directly analogous to the kind of economic pressure which
motivates quick resolution of labor contract disputes, which the
Fourth Circuit held satisfied the “limited duration” requirement
in Sinai Hospital.
Additionally, Transurban has dismissed toll
36
collection actions against the named Plaintiffs who resisted its
demands for payment only after this complaint was filed.
(Pls.’
Opp. at 11-12.)
If the Court accepted Transurban’s argument in this
regard, the toll collection process could theoretically evade
judicial review for perpetuity, assuming Transurban simply
pressured prospective plaintiffs into quickly settling and then
voluntarily dismissed its suits against prospective plaintiffs
with the resolve or financial means to resist settlement.
This
is precisely the kind of jurisprudential catch-22 the capable of
repetition yet evading review and voluntary cessation of illegal
activities doctrines were created to address.
Accordingly, the
Court finds that this case properly fits within the capable of
repetition yet evading review exception to the general rule on
standing to pursue prospective relief and Plaintiffs have
standing to assert the claims in the amended complaint on behalf
of themselves and those similarly situated.
The Court will now
address one final set of initial inquiries regarding
Transurban’s claims that certain named Plaintiffs are barred
from pursuing their instant claims against Transurban by either
settlement or res judicata before turning to the sufficiency of
Plaintiffs’ claims under Rule 12(b)(6).
3. Res Judicata and Alleged Settlement
37
The Court begins by noting that both res judicata and
the existence and scope of a settlement or release agreement,
are affirmative defenses.
See Arizona v. California, 530 U.S.
392, 410 supplemented 531 U.S. 1 (2000) (classifying res
judicata as an affirmative defense); Millner v. Norfolk & W.R.
Co., 643 F.2d 1005, 1007 (4th Cir. 1981) (characterizing alleged
existence of a settlement agreement as an affirmative defense);
Parker v. Prudential Ins. Co. of Am., 900 F.2d 772, 776 (4th
Cir. 1990) (“Accord and satisfaction is an affirmative
defense. . . .”).
Accordingly, in order for the court to
dismiss on any of these bases at this stage, all facts necessary
to the affirmative defense must “clearly appear[ ] on the face
of the complaint.”
Goodman, 494 F.3d 458, 464 (4th Cir. 2007)
(emphasis in original).
In support of their motion to dismiss, Transurban
alleges that Plaintiffs Stanfield, Amarti, and Pizarro are
precluded from pursuing their claims against Transurban here
because they have “resolved the summons by settlement”.
(Transurban’s Mem. at 5 (citing Am. Comp. ¶¶ 137, 151, 221).)
Plaintiffs respond that any “settlements” are in fact a
unilateral release of Transurban’s claims for fines against
Plaintiffs, but absent any “evidence of any settlement agreement
or any release executed by any Plaintiff” the proposed
settlements do not release Plaintiffs’ claims against
38
Transurban.
(Pls.’ Opp’n. at 8.)
Generally, “once a competent
party makes a settlement and acts affirmatively to enter such a
settlement, her second thoughts at a later time upon the wisdom
of the settlement do not constitute good cause for setting it
aside”.
1995).
Snyder-Falkinham v. Stockburger, 457 S.E.2d 36, 39 (Va.
However, “the scope of a release agreement, like the
terms of any contract, is generally governed by the expressed
intention of the parties.”
Richfood, Inc. v. Jennings, 499
S.E.2d 272, 275 (Va. 1998) (quoting First Security Federal
Savings Bank, Inc. v. McQuilken, 480 S.E.2d 485, 487 (Va.
1997)). While there does not need to be a signed and executed
written release for a settlement agreement to be valid, the
parties must be “fully agreed upon the terms of the settlement
and intend to be bound thereby.”
at 39.
Snyder-Falkinham, 457 S.E.2d
Where, as here, there is no evidence that Plaintiffs or
Transurban contemplated a release of Plaintiffs’ claims as
consideration for Transurban’s acceptance of a payment less than
what they claimed was owed, the Court will not imply a release
of those claims.
It would certainly be improper to do so at the
12(b)(6) stage, where the Court must interpret all alleged facts
in the light most favorable to the plaintiff.
Without evidence demonstrating that Plaintiffs and
Transurban agreed that Plaintiffs would release any potential
claims against Transurban in return for Transurban’s acceptance
39
of less than it claimed was owed, the “settlement” alleged by
Transurban is better understood as an accord and satisfaction on
the fines originally claimed by Transurban.
Accord and
satisfaction can serve to discharge a contract or a cause of
action where a partial payment is offered and accepted as
satisfaction for the full amount initially demanded.
See
Virginia-Carolina Elec. Works v. Cooper, 63 S.E.2d 717, 718 (Va.
1951).
Accord and satisfaction, like any other written or
implied release agreement, requires an agreement as to the
specific terms and scope of the release.
Id. at 719.
This
Court can find no case where accord and satisfaction of a debt
alone, without some further agreement by the parties, has been
held to moot or release other claims by the debtor or paying
party against the creditor or receiving party.
In fact, an
accord and satisfaction on one debt is generally not even held
to release the creditor’s other claims against the debtor,
unless there is some indication that the parties intended to
settle those claims.
See Brucato v. Ezenia! Inc., 351 F. Supp.
2d 464, 470 (E.D. Va. 2004).
The payments offered by Plaintiffs
Stanfield, Amarti, and Pizarro and accepted by Transurban
therefore at most constitute an accord and satisfaction on
Transurban’s original claim for fines against Plaintiffs.
They
do not preclude Plaintiffs from bringing the present action
40
challenging the legality of both the fines themselves and the
means by which Defendants have pursued the fines.
Finally, Transurban argues that because Plaintiff
Amarti has already been found liable in state court for her
first five alleged toll violations, her present claims against
Transurban ought to be barred by res judicata.
Mem. at 5)
(Transurban’s
However, this argument profoundly overstates the
breadth and effect of res judicata in Virginia. This Court gives
the same preclusive effect to prior state-court judgements as
they would receive under the law of the state in which the
judgment was rendered.
Migra v. Warren City Sch. Dist. Bd. of
Educ., 465 U.S. 75, 81, 104 S. Ct. 892, 896, 79 L. Ed. 2d 56
(1984).
In Virginia, the claim preclusive, res judicata effect
of judgments on actions commenced after July 1, 2006 is governed
by Virginia Supreme Court Rule 1:6, which reads, in relevant
part:
A party whose claim for relief arising from identified
conduct, a transaction, or an occurrence, is decided
on the merits by a final judgment, shall be forever
barred from prosecuting any second or subsequent civil
action against the same opposing party or parties on
any claim or cause of action that arises from that
same conduct, transaction or occurrence, whether or
not the legal theory or rights asserted in the second
or subsequent action were raised in the prior lawsuit,
and regardless of the legal elements or the evidence
upon which any claims in the prior proceeding
depended, or the particular remedies sought. A claim
for relief pursuant to this rule includes those set
41
forth in a complaint, counterclaim, cross-claim or
third-party pleading.
Va. Sup. Ct. R. 1:6.
The Supreme Court of Virginia has been
reluctant to interpret the finer points of Rule 1:6,
particularly its interplay with Virginia’s longstanding rule
that all counterclaims are permissive rather than compulsory.
See Va. Code Ann. § 16.1-88.01; Va. Sup. Ct. R. 3:9; Tyler v.
Berger, No. Civ.A. 605cv00030 2005 WL 2596164, at *3 n. 7 (W.D.
Va. Oct. 13, 2005).
Taken to the extreme interpretation
proposed by Defendants in this case, Rule 1:6 would rip the
heart out of Virginia’s permissive counterclaim rule by barring
any later claims by any party to the first case, including
claims that the defendant in the first case elected not to raise
as counterclaims.
Such a result would run afoul of the general
rule that “where a party ‘may interpose a claim as a
counterclaim,’ but fails to do so, that party ordinarily will
not be ‘precluded from subsequently maintaining an action on
that claim.’”
Marbury Law Grp., PLLC v. Carl, 799 F. Supp. 2d
66, 74 (D.D.C. 2011) (quoting Restatement (Second) of Judgments
§ 22(1))(Holding Rule 1:6 did not prevent a party from raising
later claims where the party could have, but did not, raise
counterclaims in a prior proceeding stemming from the same
transaction or occurrence).
42
The plain language of Rule 1:6 is readily compatible
with the voluntary counterclaim rule, as it limits the
application of res judicata to bar future claims only by a
“party whose claim for relief. . . is decided on the merits”.
Va. Sup. Ct. R. 1:6.
If, in the prior case, no counterclaim was
raised by the prior defendant, she cannot fairly be said to have
been a “party whose claim for relief… [was] decided on the
merits,” as she has made no claim for relief in the previous
case.
Id.
Defendants’ reliance on Winchester Neurological
Consultants, Inc. v. Landrio, 74 Va. Cir 480 (2008) is
misplaced, as in Landrio the prior defendant had “asserted a
counterclaim against WNC [the current defendant] in the First
Arbitration.”
The present case is more analogous to the
situation addressed in Marbury Law Grp., PLLC v. Carl, where the
party raising the claims being evaluated in a later federal
court action “never filed a counterclaim in the [prior] Virginia
action.”
Marbury Law Grp., PLLC 799 F. Supp. 2d at 74.
In jurisdictions like Virginia where there is no
compulsory counterclaim rule, there is one widely recognized
exception to the general rule that res judicata will not
preclude a subsequent claim by a defendant who did not file a
counterclaim in the original action.
These are cases where
“[t]he relationship between the counterclaim and the plaintiff's
claim [in the prior action] is such that [the] successful
43
prosecution of the second action would nullify the initial
judgment or would impair rights established in the initial
action.”
Restatement (Second) of Judgments § 22(2)(b).
This
exception extends to cover both cases where one party seeks an
injunction against enforcement of a judgement against him in a
prior case.
See Valley View Angus Ranch, Inc. v. Duke Energy
Field Servs., Inc., 497 F.3d 1096, 1102 (10th Cir. 2007)
(applying Oklahoma’s permissive counterclaim law). It has also
been applied to cases where one party simply seeks the return of
a monetary award already granted by the prior decision.
See
A.B.C.G. Enterprises, Inc. v. First Bank Se., N.A., 515 N.W.2d
904, 911 (Wis. 1994).
Thus, Amarti and any other prospective
class members who have had judgments entered against them in
state court proceedings may be precluded from pursuing the
recovery of any money awarded to Transurban in a state-court
proceeding, but they are certainly not precluded from raising
any of the distinct constitutional, federal, or state law claims
presented in the amended complaint.
As all named plaintiffs
have standing to pursue each of their claims, the Court will now
address the sufficiency of Plaintiffs’ claims under Rule
12(b)(6).
B. Constitutional Claims
The first three claims in the amended complaint allege
violations of the state and federal constitution against only
44
Transurban.12
(Am. Compl. ¶¶ 235-257.)
Transurban argues that
Plaintiffs have failed to state, and indeed cannot state, claims
of federal constitutional violations because Transurban is not a
state actor.
(Transurban’s Mem. at 8-11.)
Alternatively,
Transurban argues that even if the Court finds it is a state
actor, Plaintiffs’ state and federal constitutional claims are
insufficient for a variety of reasons.
(Id. at 12-21.)
Each
argument is addressed in turn.
1. State Action
Plaintiffs bring Claims One, Two, and Three pursuant
to 42 U.S.C. § 1983,13 and in part allege violations of rights
under the United States Constitution.
“Title 42 U.S.C. § 1983
is a federal statutory remedy available to those deprived of
rights secured to them by the Constitution . . . .”
Philips v.
Pitt Cnty. Mem’l Hosp., 572 F.3d 176, 180 (4th Cir. 2009).
To
state a claim for relief under section 1983, a plaintiff must
allege that the defendant “(1) deprived plaintiff of a right
12
Plaintiffs do not bring these claims against Faneuil and LES.
(See Pls.’s Opp’n at 19 n.19 (citing Am. Compl. ¶¶ 236, 243,
253).)
13
“Every person who, under color of any statute, ordinance,
regulation, custom, or usage, of any State or Territory or the
District of Columbia, subjects, or causes to be subjected, any
citizen of the United States or other person within the
jurisdiction thereof to the deprivation of any rights,
privileges, or immunities secured by the Constitution and laws,
shall be liable to the party injured in an action at law, suit
in equity, or other proper proceeding for redress . . . .” 42
U.S.C. § 1983.
45
secured by the Constitution and laws of the United States, and
(2) that the deprivation was performed under color of the
referenced sources of state law found in the statute.”
Id.
(citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 150 (1970).
The Constitution only applies to government action, not private
conduct.
See, e.g., Rendell-Baker v. Kohn, 457 U.S. 830 (1982).
Thus, the prerequisite to a prima facie case under section 1983
is that the defendant was a “state actor,” or acted “under color
of state law.”
Philips, 572 F.3d at 180-81 (citations
omitted).14
“[T]here is ‘no specific formula’ for determining
whether state action is present . . . . ‘What is fairly
attributable [to the state] is a matter of normative judgment,
and the criteria lack rigid simplicity.’”
Id. at 182 (quoting
Holly v. Scott, 434 F.3d 287, 292 (4th Cir. 2006) (quoting, in
part, Brentwood Acad. v. Tenn. Secondary Sch. Athletic Ass’n,
531 U.S. 288, 295 (2001))).
In Lugar v. Edmonson Oil Co., the
Supreme Court set forth the standard for determining whether a
party acts under color of state law, thus exposing itself to
liability under section 1983:
First, the deprivation must be caused by the
exercise of some right or privilege created
14
“The same analysis applies to whether an action was taken
‘under color of state law’ as required by § 1983 and whether the
action was state action.” Moore v. Williamsburg Reg’l Hosp.,
560 F.3d 166, 178 (4th Cir. 2009).
46
by the State or by a rule of conduct imposed
by the State or by a person for whom the
State is responsible . . . . Second, the
party charged with the deprivation must be a
person who may fairly be said to be a state
actor.
This may be because he is a state
official, because he has acted together with
or has obtained significant aid from state
officials,
or
because
his
conduct
is
otherwise chargeable to the State.
457 U.S. 922, 937 (1982).
Determining whether the defendant
“has acted together with or obtained significant aid from state
officials,” or whether “his conduct is otherwise chargeable to
the State,” is the key issue that this Court must now address.
In other words, because there is no question that the Transurban
Defendants are private entities, and not state or public
officials in the traditional sense, the Court must determine if
Transurban’s “conduct is fairly attributable to the state.”
Arlosoroff v. Nat’l Collegiate Athletic Ass’n, 746 F.2d 1019,
1021 (4th Cir. 1984).
While merely private conduct will not qualify as state
action, the Fourth Circuit has recognized four contexts in which
a private party can be deemed a state actor.
Andrews v. Fed.
Home Loan Bank of Atlanta, 998 F.2d 214, 217 (4th Cir. 1993).
Relevant here is the “public function” theory of state action.
Id. at 218.
Specifically, a private party can act under color
of state law “when the state has delegated a traditionally and
exclusively public function to a private actor.”
47
Id. at 217.
This narrow context “encompasses the ‘exercise by a private
entity of powers traditionally exclusively reserved to the
State.’”
Id. at 218 (quoting Jackson v. Metro. Edison Co., 419
U.S. 345, 352 (1974)).
Thus, a state cannot simply evade its
constitutional obligations through delegation to a private
party.
Andrews, 998 F.2d at 218.
This context is narrowly
confined, however, to apply only to those functions that are
“traditionally exclusively reserved to the state.”
Id.
Here, as support for the proposition that it is not a
state actor, Transurban relies heavily on American Manufacturers
Mutual Insurance Co. v. Sullivan, 526 U.S. 40 (1999).
(Transurban’s Mem. at 9-11.)
There, the Supreme Court stated
that “[t]he mere fact that a business is subject to state
regulation does not by itself convert its action into that of
the State . . . .”
Am. Mfrs. Mutual Ins. Co.
(quoting Jackson, 419 U.S. at 350).
526 U.S. at 52
Instead, the Supreme Court
requires a “sufficiently close nexus between the State and the
challenged action,” so that the State is said to have “exercised
coercive power or has provided such significant encouragement,
either overt or covert, that the choice must in law be deemed to
be that of the State.”
Id. at 52 (citations omitted).
Transurban argues that because the Commonwealth has not coerced
Transurban or dominated its actions, it cannot be considered a
state actor.
(Transurban’s Mem. at 9.)
48
Transurban’s reliance
on “coercion” and “domination” is misplaced and obviates the
proper focus of the Court’s analysis.
As Transurban correctly notes, the Court must identify
“the specific conduct of which the plaintiff complains” and
determine whether it is fairly attributable to the State.
(Transurban’s Mem. at 9-10 (quoting Mentavlos v. Anderson, 249
F.3d 301, 310 (4th Cir. 2001)).
In this regard, it is clear
that the “specific conduct” at issue, i.e., enforcement of toll
collections for HOT lane violations, is fairly attributable to
the Commonwealth because the Commonwealth expressly delegated
that power to Transurban through state law.
See Va. Code §§
33.2-503(2)-(3) (“HOT Lanes operator shall install and operate
. . . a photo-enforcement system at locations where tolls are
collection for the use of such HOT lanes . . . . The HOT Lanes
operator may impose and collect an administrative fee in
addition to the unpaid toll so as to recover the expenses of
collected the unpaid toll . . . .”); see also Va. Code § 33.2503(2)(c) (“HOT lanes operator personnel or their agents mailing
such summons shall be considered conservators of the peace for
the sole purpose of mailing such summons.”).
And Virginia state
courts have found that Transurban acts in the place of the
Commonwealth when it seeks to collect unpaid tolls and
administrative fees.
See Commonwealth v. Cooley, MI-2014-2473,
2474, 2475, 2476, 2015 Va. Cir. LEXIS 65, at *5 (Va. Cir. Ct.
49
Apr. 7, 2015) (“While this may be an action with only civil
penalties, Transurban is prosecuting violators of the HOT lanes
statute in the shoes of the Commonwealth.
Government actors,
such as the Commonwealth, frequently bring prosecutions for
civil fines and penalties.”); Dulles Toll Road v. Diggs, MI2014-2511, 2517 at *4, *6 (Va. Cir. Ct. June 29, 2015) (“[W]hile
the statute does say it is to be tried ‘as a civil case,’ it
also says in the same section that ‘[s]uch action shall be
considered a traffic infraction . . . .’
A ‘traffic infraction
has far more in common with a misdemeanor than it does with a
tort lawsuit . . . [and] is brought by governmental authorities
. . . . The Court finds that the instant cases constitute a
‘prosecution’ involving a ‘pecuniary fine’ or ‘penalty.’”).
It
is also telling that the Fairfax County General District Court
has filed Transurban’s actions against Plaintiff Amarti as a
“Traffic/Criminal Case” rather than as a civil case.
(Transurban’s Mem. at Ex. D.)
For these reasons, the specific
conduct at issue, enforcement of toll collection for HOT lane
violations, can be accurately described as state action.
Mentavlos, 249 F.3d at 310.
The only question that remains is whether the
Commonwealth has delegated a function “traditionally exclusively
reserved to the state.”
Andrews, 998 F.2d at 218.
The Court
finds that Virginia has delegated such a function, because the
50
operation of, and enforcement of laws on, roads and public
highways, including toll roads, is a function traditionally
reserved to the state.
See Almond v. Day, 97 S.E.2d 824, 830
(Va. 1957) (“The authorities agree that in the construction,
maintenance and operation of a highway system the State is
performing a governmental function.”) (citations omitted); see
also Ferguson v. Bd. of Supervisors of Roanoke Cnty., 113 S.E.
860, 861 (Va. 1922) (“Voluntary contributions made by citizens
for the improvement of the public highways do not change their
character or in any way diminish the control thereof which is by
law vested in the public authorities.”); Gordon v. Nash, No.
4372, 1940 WL 958, at *3 (D. Alaska July 26, 1940) (“A toll road
is a public highway, established by public authority for public
use and is to be regarded as a public easement and not as
private property.”); Bester v. Chicago Transit Auth., 676 F.
Supp. 833, 838 (N.D. Ill. 1987) (“The toll road case is
relatively easy because building and maintaining the roads, and
indeed the toll road, has been a government function since
ancient ages.”), aff’d, 887 F.2d 118 (7th Cir. 1989).
This
conclusion is further bolstered by a close review of the
statutory scheme that gives Transurban this enforcement power,
traditionally reserved for the State.
A HOT lane violator is
also subject to receipt of a summons issued by a law enforcement
officer who witnesses the violation.
51
See Va. Code Ann. § 33.2-
503(1).
Undeniably, a police officer acting within the scope of
her official duties is a state actor.
See, e.g., West v.
Atkins, 487 U.S. 42, 49-50 (1988)(“[G]enerally, a public
employee acts under color of state law while acting in his
official capacity or while exercising his responsibilities
pursuant to state law.”).
The same must be true then for
Transurban, who effectively possesses that very same power, at
least with regard to HOT lane violations.
See Payton v. Rush
Presbyterian St. Luke’s Med. Ctr., 184 F.3d 623, 629 (7th Cir.
1999) (“[I]f the state cloaks private individuals with virtually
the same power as public police officers, and the private actors
allegedly abuse that power to violate a plaintiff’s civil
rights, that plaintiff’s ability to claim relief under § 1983
should be unaffected.”).
For these reasons, the Court finds that Transurban
acts under color of state law when collecting unpaid tolls and
associated administrative fees, penalties, and costs, and
therefore, it is subject to suit under section 1983.15
15
In a footnote, Transurban also tersely asserts that if it was
a state actor, it would be entitled to sovereign immunity under
the Eleventh Amendment. (See Transurban’s Mem. at 11 n.7.) It
elaborates, albeit briefly, in its reply brief. (See
Transurban’s Reply [Dkt. 56] at 9.) Without the benefit of full
briefing and a more complete record, the Court declines to
consider whether Transurban is entitled to sovereign immunity.
Indeed, at this early stage in the proceeding, it cannot make
such a finding without more in the record. See Pele v. Penn.
Higher Educ. Assistance Agency, 13 F. Supp. 3d 518, 528 (E.D.
52
2. Excessive Fines Claim
In Claim One, Plaintiffs allege that Transurban’s
“enforcement of the civil penalty assessments discussed above
constitutes a violation of the United States Constitution’s
Eighth Amendment’s . . . protection against excessive fines.”
(Am. Compl. ¶ 237.)
In support of its motion to dismiss for
failure to state a claim, Transurban raises two arguments: (1)
the excessive fines clause is not implicated where a private
entity seeks or retains the penalty, and (2) Plaintiffs have not
adequately alleged that the civil penalties are excessive.
(Transurban’s Mem. at 12-16.)
“Excessive bail shall not be required, nor excessive
fines imposed, nor cruel and unusual punishments inflicted.”
U.S. Const. amend. VIII.
“The Excessive Fines Clause of the
Eighth Amendment prohibits the government from imposing
excessive fines as punishment.”
U.S. ex rel. Drakeford v.
Tuomey, No. 13-2219, 2015 WL 4036166, at *17 (4th Cir. July 2,
2015) (quoting Korangy v. FDA, 498 F.3d 272, 277 (4th Cir.
2007)).
Civil fines typically do not fall within the scope of
the Eighth Amendment prohibition, “[b]ut where a civil sanction
Va. 2014). Accordingly, the Court defers ruling on the
sovereign immunity defense at this time. See Wahi v. Charleston
Area Med. Ctr., Inc., 562 F.3d 599, 607 (4th Cir. 2009); see
also U.S. ex rel. Oberg v. Penn. Higher Educ. Assistance Agency,
745 F.3d 131 (4th Cir. 2014) (discussing the arm-of-the-state
test for purposes of determining sovereign immunity).
53
can only be explained as serving in part to punish, then the
fine is subject to the Eighth Amendment.”
Tuomey, 2015 WL
4036166, at *17 (citations and internal quotation marks
omitted).
Excessive fines are infrequent and must be “grossly
disproportional to the gravity of the offense.
omitted).
Id. (citations
The Eighth Amendment prohibits the government from
imposing excessive fines.
Korangy, 498 F.3d at 277.
However,
“it does not constrain an award of money damages in a civil suit
when the government has neither prosecuted the action nor has
any right to receive a share of the damages awarded.”
Browning-
Ferris Indus. of Vt., Inc. v. Kelco Disposal, Inc., 492 U.S.
257, 264 (1989).
Transurban first argues that because the civil
penalties16 are sought by, and subsequently paid to, a private
16
Transurban argues that Plaintiffs do not assert that the
administrative fees violate the Eighth Amendment, only the civil
penalties. (Transurban’s Mem. at 13.) But Plaintiffs are
challenging the toll collection process in its entirety, which
necessarily includes all associated fees, penalties, and costs.
(Am. Compl. ¶¶ 10-16, 237.) At this stage, the Court accepts
this allegation as true. Whether Plaintiffs can ultimately
prove this claim and prevail after a period of discovery is
another question left for another time. See Austin v. United
States, 509 U.S. 602, 610 (1993) (holding the Eighth Amendment
prohibits excessive punishment and not excessive remedial
goals). Moreover, the remedial amount sought here, i.e., the
unpaid toll, is a fraction of the total amount sought, which
gets exponentially larger with each violation due to the
combined fees and penalties. Thus, any suggestion that the toll
collection process is purely remedial also fails at this stage.
See United States v. Bajakajian, 524 U.S. 321, 329 (1998)
54
entity, the Eighth Amendment prohibition does not apply.
(Transurban’s Mem. at 12-13.)
The Court does not agree with
Transurban’s argument primarily for two reasons.
First, the
Court has already found that Transurban is a state actor for
purposes of section 1983 when collecting unpaid tolls and
associated fees, thus, it is not a “private entity” as
Transurban contends.
See supra, sec. III.B.1.
Second, under
the statutory scheme at issue, upon a finding of a violation by
a state court of competent jurisdiction, the state locality
initially receives any unpaid tolls or associated penalties and
fees before those payments are transferred to the statutory HOT
lanes operator, Transurban.17
See Va. Code Ann. § 33.2-503(3)(b)
(“The court shall remand penalties, the unpaid toll, and
administrative fees assessed for violation of this section to
the treasurer or director of finance of the county or city in
which the violation occurred for payment to the HOT lanes
operator for expenses associated with operation of the HOT lanes
and payments against any bonds or other liens issued as a result
of the construction of the HOT lanes.”).
Thus, it cannot be
(suggesting that remedial actions are brought to obtain
compensation or indemnification for lost revenues).
17
In oral argument on this motion, Mr. Kidney, attorney for
Transurban, admitted that “if you go to trial [challenging the
alleged toll violation], you would pay the court. The statute
says that the court should then direct that money to the county
where the violation has occurred, and then the county directs
that money to Transurban.” Transcript of Motions Hearing at 24.
55
said that under the facts alleged in the amended complaint that
“the government neither has prosecuted the action nor has any
right to receive a share of the damages awarded.”
Disposal, Inc., 492 U.S. at 264.
Kelco
Instead, when viewing the
facts in a light most favorable to Plaintiffs at this stage,
Plaintiffs have sufficiently stated a claim for relief under the
Excessive Fines Clause of the Eighth Amendment for the
collection of unpaid tolls, penalties, fees, and costs by
Transurban, a state actor executing a traditionally exclusive
state function.
See Lewis v. Village of Hanover Park, No.
12C7904, 2012 WL 6755094, at *2 (N.D. Ill. Dec. 31, 2012) (“The
Court will permit the case to proceed on these [Eighth
Amendment] claims and these claims alone.
This does not
constitute approval of these claims on their merits, but rather
simply a determination that the lawsuit may proceed to the next
step with regard to these claims.”).
Accordingly, the Court
also denies Transurban’s motion on this basis.
Transurban’s second argument for dismissal of Claim
One is that Plaintiffs have not adequately alleged that the
civil penalties are “excessive.”
(Transurban’s Mem. at 13-16.)
“The touchstone of the constitutional inquiry under the
Excessive Fines Clause is the principle of proportionality: The
amount of the forfeiture must bear some relationship to the
gravity of the offense that it is designed to punish.”
56
United
States v. Bajakajian, 524 U.S. 321, 329 (1998) (citations
omitted).
In making such a determination, the Supreme Court has
cautioned that deference is owed to the legislature that
determines the appropriateness of a given punishment.
Id. at
336. Courts addressing this issue have not fixed a bright-line
ratio of unconstitutionality, however.
See, e.g., Tuomey, 2015
WL 4036166, at *19.
Here, Plaintiffs have alleged that Transurban seeks
penalties and fees that are several hundred times the underlying
dollar value of the unpaid toll violation.
(Pl.s’ Opp’n at 29.)
Transurban sought $3,413.75 from Brown based on a cumulative
unpaid toll in the amount of $4.95, which is approximately 821
times the unpaid toll.
(Am. Compl. ¶ 10.)
Transurban argues
that the repeated nature of Plaintiffs’ wrongful conduct
justifies this facially disproportionate penalty.
(See
Transurban’s Mem. at 14 (citing BMW of N. Am., Inc. v. Gore, 517
U.S. 559, 577 (1996) (“[R]epeated misconduct is more
reprehensible than an individual instance of malfeasance.”).
But in Gore, a national BMW distributor knowingly failed to
advise its dealers, and as a result, its customers, of predelivery damage to new cars when the cost of repair was less
than 3% of the suggested retail price of the car.
Id. at 562.
Thus, the question presented in Gore was whether a $2 million
punitive damages award exceeded the constitutional limits of the
57
Due Process Clause of the Fourteenth Amendment.
Id. at 562-63.
Here, Plaintiffs allege that they had no knowledge or immediate
notice of the underlying toll violation.
(Am. Compl. ¶ 58.)
Stated differently, unlike the car distributor in Gore,
Plaintiffs claim that they did not knowingly violate or
intentionally fail to pay the toll.
And in the most egregious
set of allegations, Plaintiffs did not receive notice of the
underlying toll violation until over one year after the initial
violation.
Therefore, Plaintiffs’ allegations and factual
circumstances are different from those of the individual who
knowingly and repeatedly engages in prohibited conduct subject
to penalty.18
Accepting Plaintiffs’ allegations as true, their claim
bears a striking resemblance to the successful claim in
Bajakajian.
An unwitting toll road violation is, if anything, a
less culpable act than a willful failure to report otherwise
legally possessed currency.
Bajakajian, 524 U.S. at 337-338.
Under the facts alleged, Plaintiffs are not habitual, scofflaw
toll violators, but rather bona fide victims of a mechanical
glitch, and thus, like the plaintiff in Bajakajian, they “[do]
not fit into the class of persons for whom the statute was
principally designed.”
Id.
The Supreme Court in Bajakajian was
18
Similarly, Plaintiffs are also easily distinguishable from the
violating homeowners in Moustakis v. City of Fort Lauderdale,
338 F. App’x 820 (11th Cir. 2009).
58
primarily concerned with proportionality between the alleged
harm and the financial penalty.
Id. at 334.
Here, Plaintiffs
have sufficiently alleged that Transurban sought penalties and
fees that were grossly disproportionate to the miniscule
underlying toll violation.
(See Am. Compl. ¶¶ 10-16.)
Therefore, the Court denies Transurban’s motion to dismiss Claim
One on this basis.
3. Due Process Claims
Transurban next challenges Plaintiffs’ procedural due
process claim (Claim Two) and Plaintiffs’ substantive due
process Claim (Claim Three).
(Transurban’s Mem. at 16-21.)
The
sufficiency of each claim is addressed in turn.
a. Procedural Due Process (Claim Two)
Transurban argues that Plaintiffs fail to state a
proper procedural due process claim because Plaintiffs fail to
plead a lack of adequate notice and a lack of an opportunity to
be heard.
“At bottom, procedural due process requires fair
notice of impending state action and an opportunity to be
heard.”
Snider Int’l Corp. v. Town of Forest Heights, Md., 739
F.3d 140, 146 (4th Cir. 2014) (citations omitted), cert. denied,
134 S. Ct. 2667 (2014).
“Proper notice is ‘an elementary and
fundamental requirement of due process,’ and must be reasonably
calculated to convey information concerning a deprivation.”
(citations omitted).
And to determine whether there is an
59
Id.
adequate opportunity to be heard, the Court balances “the
private interest and the public interest, along with ‘the risk
of erroneous deprivation of such interest through the procedures
used, and the probable value, if any, of additional or
substitute procedural safeguards.’”
Id. (quoting Mathews v.
Eldridge, 424 U.S. 319, 335 (1976)).
Here, Plaintiffs have sufficiently alleged both a lack
of proper notice and an inadequate opportunity to be heard.
Even though the Fourth Circuit upheld a similar statutory scheme
in Snider regarding photo-enforced speed cameras, here,
Plaintiffs are not challenging the constitutionality of the
statutory scheme.
Instead, Plaintiffs take issue with
Transurban’s implementation and enforcement, and argue that
Transurban’s procedures violate Plaintiffs’ constitutional
rights.
At this stage, Plaintiffs’ allegations in this regard
are sufficient.
Quite simply, Plaintiffs challenge the adequacy
of Transurban’s notice because there is no immediate
notification that a toll violation has occurred.
(See Am.
Compl. ¶¶ 111-13, 126-27, 154-55, 177-78, 193-95.)
Additionally, aside from lacking immediate notice, Plaintiffs
have alleged that at times, Transurban provides no subsequent
notice of unpaid toll amounts before assessing excessive
penalties and fees.
(See Am. Compl. ¶ 173 (“During this
conversation [in or around September of 2014], Ms. Pizarro was
60
informed by a Transurban employee that she allegedly committed
four additional toll violations in July 2013 that she was not
yet aware of.”); ¶ 210 (“Ms. Chase never received this initial
notice from the Transurban Defendants for 6 of the tolls.”).)
Otherwise, Plaintiffs allege that even when they have received
notice of an alleged toll violation, the notice is still
inadequate because it fails to properly advise Plaintiffs of the
escalating penalties and fees under the statutory scheme.
(Pls.’ Opp’n at 33-34 (citing Ex. B).)
These allegations,
assumed to be true at this stage, are sufficient because
Transurban’s notice is not “reasonably certain to inform those
affected.”
See Jones v. Flowers, 547 U.S. 220 (2006); see also
Snider, 739 F.3d at 146 (quoting Mullane v. Cent. Hanover Bank &
Trust Co., 339 U.S. 306, 314-15 (1950)).
Accordingly, the Court
denies Transurban’s motion on this basis.
The Court need not address the sufficiency of
Plaintiffs’ allegations regarding an opportunity to be heard,
having already determined that Plaintiffs have sufficiently
alleged inadequate notice.
However, under the statute, toll
violators who have received a summons are given an opportunity
to be heard to challenge the violation through a hearing in
state court, instead of just paying the fees and penalties.
Va. Code Ann. §§ 33.2-503(2)(c)-(d), (3)(b).
See
This opportunity
to be heard is sufficient to comport with procedural due process
61
regardless of the increasing amount of civil penalties and fees
that attach to such a right.
See United States v. Bolding, 876
F.2d 21, 22-23 (4th Cir. 1989) (holding that mandatory penalty
schemes do not violate the Due Process Clause).
Of course, this
opportunity to be heard is presumably infringed upon if
Plaintiffs are not provided adequate notice.
Thus, for the
reasons stated above, the Court denies Transurban’s motion to
dismiss Claim Two.
b. Substantive Due Process (Claim Three)
Plaintiffs allege that Transurban has violated their
substantive due process rights by acting unreasonably,
arbitrarily, and irrationally in seeking excessive penalties and
administrative fees that are contrary to the authority granted
under Virginia law.
(Am. Compl. ¶¶ 249-257.)
Because
Plaintiffs claim a substantive due process violation under a
legislative enactment, the Court employs a two-step inquiry.
Hawkins v. Freeman, 195 F.3d 732, 739 (4th Cir. 1999).
“The
first step in this process is to determine whether the claimed
violation involves one of those fundamental rights and liberties
which are, objectively, deeply rooted in this Nation’s history
and tradition, and implicit in the concept of ordered liberty,
such that neither liberty nor justice would exist if they were
sacrificed.”
omitted).
Id. (citations and internal quotation marks
The second step is dependent on the outcome of the
62
first step.
If the interest at issue is “fundamental,” it is
entitled to strict scrutiny review.
Id.
If it is not
“fundamental,” it is only entitled to rational basis review.
Id.
[C]ourts must be reluctant to expand the
concept of substantive due process because
guideposts for responsible decision-making
in this uncharted area are scarce and openended, which means that the courts must
exercise the utmost care whenever we are
asked to break new ground in this field,
less the liberty protected by the Due
Process Clause be subtly transformed into
the policy preferences of judges.
Id. at 738 (citations and international quotation marks and
punctuation omitted).
Here, the parties have not suggested, and the Court
indeed cannot find, that any fundamental right or liberty
interest is at issue.
Instead, at issue is Plaintiffs’ use of
toll roads and the Commonwealth’s interest in recouping unpaid
tolls and penalizing those violators to deter future misuse.
(Am. Compl. ¶ 250 (“Plaintiffs and the class members are
entitled to, inter alia, use toll roads and may be assessed
tolls and reasonable administrative fees and civil penalties
where appropriate.”).)
Thus, Transurban’s action has a strong
presumption of validity and is constitutional so long as it is
“rationally related to a legitimate government purpose.”
Tri
Cnty. Paving, Inc. v. Ashe Cnty., 281 F.3d 430, 440 (4th Cir.
63
2002).
Even though Plaintiffs have made the conclusory
allegation that Transurban acts “arbitrarily” and “irrationally”
when seeking unpaid tolls and associated penalties, the amended
complaint is devoid of any additional factual support that would
overcome the strong presumption of validity to which Transurban,
as a state actor, is entitled.
(See Am. Compl. ¶¶ 254-55.)
Plaintiffs take issue with Transurban’s toll and penalty
collection process, and indeed, the Court has found that
Plaintiffs properly state a claim for relief under a procedural
due process violation.
“Substantive due process violations run
only to state action so arbitrary and irrational, so unjustified
by any circumstance or governmental interest, as to be literally
incapable of avoidance by any pre-deprivation procedural
protections or of adequate rectification by any post-deprivation
remedies.”
Snider Int’l Corp. v. Town of Forest Heights, 906 F.
Supp. 2d 413, 432-33 (D. Md. 2012) (citation and internal
quotation marks omitted), aff’d, 739 F.3d 140 (4th Cir. 2014).
With proper procedural protections in place, it cannot be said
that Transurban’s actions are alleged to be so arbitrary and
irrational to support a substantive due process violation.
Moreover, “the fact that state courts are available to redress
and correct violations of state law belies the existence of a
substantive due process claim.”
F.3d at 441.
Tri Cnty. Paving, Inc., 281
Accordingly, the Court will grant Transurban’s
64
motion in this regard and dismiss Count Three of the amended
complaint in its entirety.19
C. FDCPA Claims
In Claim Five, Plaintiffs allege that Faneuil and LES,
the Collection Defendants, violated the FDCPA by making false
and misleading representations, and by engaging in unfair and
abusive practices in violation of 15 U.S.C § 1692g.
¶ 269.)
(Am. Compl.
Plaintiffs also allege that the Collection Defendants
attempted to collect knowingly excessive and inflated fines and
fees in violation of sections 1692e(2) and/or 1692f(1).
¶ 270.)
(Id. at
The Court will deny Defendants’ motions with regard to
Claim Five because under the facts alleged, the payments sought
by Defendants are properly considered “debts”, these debts are
subject to the FDCPA, and Plaintiffs allege facts which if true
would constitute a violation of the FDCPA.
To state a claim for relief under the FDCPA,
Plaintiffs must allege facts that, if true, would show: “(1) the
plaintiff has been the object of collection activity arising
from consumer debt, (2) the defendant is a debt[] collector as
19
The Due Process clauses of the United States Constitution are
co-extensive with those in the Virginia Constitution. See Solem
v. Helm, 463 U.S. 277, 285 n.10 (1983); see also Shivaee v.
Commonwealth, 613 S.E.2d 570, 574 (Va. 2005) (“Because the due
process protections afforded under the Constitution of Virginia
are co-extensive with those of the federal constitution, the
same analysis will apply to both.”). Accordingly, claims
brought under the Virginia Constitution in Claim Two will
remain, while those in Claim Three will be dismissed.
65
defined by the FDCPA, and (3) the defendant has engaged in an
act or omission prohibited by the FDCPA.”
Dikun v. Streich, 369
F. Supp. 2d 781, 784-85 (E.D. Va. 2005) (citation omitted).
The term ‘debt’ means any obligation or
alleged obligation of a consumer to pay
money arising out of a transaction in which
the money, property, insurance, or services
which are the subject of the transaction are
primarily for personal, family, or household
purposes, whether or not such obligation has
been reduced to judgment.
15 U.S.C. § 1692a(5).
“transaction.”
Congress did not expressly define
However, the majority of federal courts that
have interpreted this provision have required the “transaction”
to be consensual, where the parties negotiate or contract for
consumer-related goods or services.
See, e.g., Franklin v.
Parking Revenue Recovery Servs., Inc., No. 13 C 02578, 2014 WL
6685472, at *3 (N.D. Ill. Nov. 25, 2014) (defining “transaction”
as “those obligations to pay arising from consensual
transactions, where parties negotiate or contract for consumerrelated goods or services”) (quoting Bass v. Stolper,
Koritzinsky, Brewster & Neider, S.C., 111 F.3d 1322, 1324 (7th
Cir. 1997); see also Hawthorne v. Mac Adjustment, Inc., 140 F.3d
1367, 1371 (11th Cir. 1998)); Yazo v. Law Enforcement Sys.,
Inc., No. CV 08-03512 DDP (AGRx), 2008 WL 4852965, at *2 (C.D.
Cal. Nov. 7, 2008).
Plaintiffs do not suggest an alternate
definition, and indeed, the Court cannot find one that is more
66
widely accepted than the definition from Franklin.
Plaintiffs allege that all named plaintiffs were, at
all relevant times, validly enrolled in a state E-ZPass program.
(Am. Compl. ¶¶ 10-16.)
Furthermore, Plaintiffs allege that they
have acted pursuant to the requirements of the program in
properly mounting the E-ZPass device on their windshields and
linking their E-ZPass accounts to a valid credit card. (Id.)
Finally, Plaintiffs allege that “in many cases, the Transurban
Defendants’ equipment registers a “violation” even where a
valid, fully funded E-ZPass account is in existence.”
55.)
(Id. ¶
Therefore, the Court, accepting the facts alleged as true
for the purposes of this Motion to Dismiss, concludes that the
alleged toll violations at issue here are properly understood as
“consensual transactions.”
Plaintiffs have contracted with E-ZPass for a
transponder that communicates with toll collection booths across
the country.
In most regions of the country, this allows for
more efficient travel.
Indeed, motorists with an E-ZPass
transponder need not wait in the “cash only” lines at toll
booths, but instead, can continue driving through the “E-ZPass”
lane, typically without delay.
Under the facts of this case,
Transurban, as the HOT operator, has installed E-ZPass gantries
as the only toll collection method for the HOT lanes.
At this
stage, assuming that the allegations of the Amended Complaint
67
are true, Plaintiffs have not in fact committed a toll
infraction, but rather Transurban has simply neglected to
collect the toll at the moment of entry.
Their later actions in
assigning fees and fines do not change this fact, nor do they
alter the nature of the underlying debt.
The Collection Defendants also argue that Plaintiffs
have failed to allege facts which, if true, would constitute
behavior prohibited by the FDCPA.
Mem. at 6.)
(Faneuil’s Mem. at 9; LES’s
However, Plaintiffs allege facts which, if true,
could constitute a violation of the FDCPA.
For purposes of
assessing the validity of an FDCPA claim, the Court examines the
representations made by the debt collector “from the vantage of
the least sophisticated consumer.”
Russell v. Absolute
Collection Servs., Inc., 763 F.3d 385, 394 (4th Cir. 2014).
With respect to Defendant Faneuil, Plaintiffs allege that
Transurban has sent a contractor employed by Faneuil, “Alexis
Brach (a non-lawyer) to appear on its [Transurban’s] behalf.”
(Am. Compl. ¶
95.)
Plaintiffs further allege that “Ms. Brach
still regularly negotiates with driver. . . in the Virginia
courthouses,” and “regularly appears for Defendant Transurban in
such proceedings.” (Id. ¶ 96.)
A legally un-sophisticated
consumer could very reasonably imply from Ms. Brach’s
representation of Transurban in negotiations over legal actions
that allegedly took place in courthouses that Ms. Brach was in
68
fact an attorney employed by Faneuil, representing Transurban.
This conclusion is even more understandable as, on at least one
occasion, Ms. Brach is alleged to have attempted to “appear on
[Transurban’s] behalf” in court.
(Id. ¶ 95.)
A jury could find
this to be a violation of 15 U.S.C.A. § 1692e, prohibiting
“[t]he false representation or implication that any individual
is an attorney.” (emphasis added).
This behavior would satisfy
the requirement that “defendant has engaged in an act or
omission prohibited by the FDCPA.”
Dikun v. Streich, 369 F.
Supp. 2d 781, 784-85 (E.D. Va. 2005). Defendant Faneuil’s Motion
to Dismiss Claim Five therefore fails, and the Court need not
address the sufficiency of Plaintiffs’ alternative allegations
of § 1692e or
§ 1692f violations at this stage.
Defendant LES admits that the Fourth Circuit has held
in Clark v. Absolute Collection Serv., Inc., 741 F.3d 487 (4th
Cir. 2014). that a notice requiring the recipient to submit her
dispute in writing was a violation of § 1692g(3) of the FDCPA.
Plaintiffs allege that the notice mailed by LES regularly
contains language purporting to require disputes to be submitted
to LES in writing. (Am. Compl. ¶ 77.) In light of the Clark
decision, any such language would certainly satisfy the
requirement that “defendant has engaged in an act or omission
prohibited by the FDCPA.” Dikun v. Streich, 369 F. Supp. 2d 781,
784-85 (E.D. Va. 2005).
Therefore Defendant LES’s Motion to
69
Dismiss also fails with regard to Claim Five.
Accordingly, because the object of the alleged
collection activity is a debt for purposes of the FDCPA and
Plaintiffs allege facts which, if true, would constitute acts or
omissions prohibited by the FDCPA, Plaintiffs state a proper
claim for relief and the Court denies the Collection Defendants
Motions to Dismiss with respect to Claim Five.
D. State Law Claims20
Plaintiffs bring four causes of action under state law
against all Defendants: unjust enrichment (Claim Four),
violation of the Maryland Consumer Protection Act (“MCPA”)
(Claim Six), violation of the Virginia Consumer Protect Action
(“VCPA”) (Claim Seven), and tortious interference with contract
(Claim Eight).
(Am. Compl. ¶¶ 258-267, 272-312.)
Each claim
and each Defendant is addressed in turn.
1. Unjust Enrichment
In Claim Four, Plaintiffs claim that “Defendants
20
All parties seem to agree that Virginia law applies to Claims
Four, Seven, and Eight, while Maryland law applies to Claim Six.
Therefore, the Court applies Virginia law to Claims Four, Seven,
and Eight, and Maryland law to Claim Six for purposes of
resolving these motions and without completing a choice of law
analysis. Cf. G4I Consulting, Inc. v. Nana Servs., LLC, No.
1:11cv810 (LMB/TCB), 2012 WL 1677985, at *4 (E.D. Va. May 14,
2012) (“Because the rule of lex loci delicti, or the law of the
place of the wrong, applies to choice-of-law decision in tort
actions, and the site of the alleged wrong in this instance was
the Commonwealth, Virginia law governs the unjust enrichment
claim . . . .”).
70
knowingly received and retained wrongful benefits and funds from
Plaintiffs . . . with conscious disregard for the rights of
Plaintiffs.”
(Am. Compl. ¶ 261.)
To recover under a theory of
unjust enrichment, Plaintiffs must demonstrate that: (1)
Plaintiffs conferred a benefit on Defendants; (2) Defendants
knew of the benefit and should reasonably have expected to repay
Plaintiffs; and (3) Defendants accepted or retained the benefit
without paying for its value.
Schmidt v. Household Fin. Corp.,
II, 661 S.E.2d 834, 838 (Va. 2008).
“Generally, an action for
unjust enrichment lies when one has money of another that he has
no right to retain.”
Butts v. Weltman, Weinberg & Reis Co.,
LPA, No. 1:13cv1026 (JCC/IDD), 2013 WL 6039040, at *2 (E.D. Va.
Nov. 14, 2013) (citing Robertson v. Robertson, 119 S.E. 140
(1923)).
Under a theory of unjust enrichment, the Court will
recognize an implied contract, or a quasi-contract, which
requires the party accepting the benefit to make reasonable
compensation for it.
Id.
Therefore, “[a] condition precedent
to the assertion of such a claim is that no express contract
exists between the parties.”
Id.
This is not a “blanket rule,”
however, and under Virginia law, the fact that an express
contract does exist between at least one of the parties and a
non-party does not bar all subsequent implied contracts
regarding the same subject matter.
Id.
Here, the Court must dismiss Claim Four against the
71
Collection Defendants.
Aside from conclusory and boilerplate
allegations (see Am. Compl. ¶¶ 258-267), there is no specific
allegation that any of the named Plaintiffs conferred a benefit
upon Faneuil or LES.
Butts is distinguishable from the facts as
alleged here, and does not alter this outcome.
In Butts,
Plaintiff specifically alleged “that she paid $2,691.03 to
Defendant despite the absence of any valid obligation.”
6039040, at * 5.
2013 WL
Here, such a specific, but necessary,
allegation is lacking as to Faneuil and LES.
Accordingly, the
Court dismisses Claim Four against the Collection Defendants.
Whether Plaintiffs have sufficiently stated a claim
for unjust enrichment against Transurban is a closer call.
Transurban first argues that the “settlement agreements” between
various Plaintiffs and Transurban foreclose any implied contract
under a theory of unjust enrichment.
(See Am. Compl. ¶ 266
(“Certain Defendants may be protected by settlement or judgments
with class members, but all Defendants are not party to such
settlements or judgments.”).)
Specifically, Plaintiffs
Stanfield, Amarti, and Pizarro made payments to Transurban.
(See Am. Compl. ¶¶ 137, 151, 174.)
Otherwise, Plaintiffs Brown,
Hale, Osborne, and Chase made no payments to Transurban.
All
Plaintiffs, however, fail to sufficiently allege facts that
would support a claim for the following reasons.
Plaintiffs Stanfield, Amarti, and Pizarro’s unjust
72
enrichment claim fails because even though they conferred a
benefit on Transurban, at the time, there is no allegation that
Transurban should have reasonably been expected to repay
Plaintiffs.
Stated differently, there is no allegation that
“retention of the benefit by the defendant . . . render[s] it
inequitable for the defendant to retain the benefit without
paying for its value.”
(E.D. Va. 1990).
Nossen v. Hoy, 750 F. Supp. 740, 744-45
Instead, as discussed above, it appears these
payments were made to settle an outstanding claim by Transurban
for an amount substantially smaller than the amount Transurban
originally sought.
Transurban’s practices in this regard are
not at issue in Claim Four.
It is apparent as a matter of law, from a fair reading of
the amended complaint that an unjust enrichment claim cannot
move forward as to these three Plaintiffs.
Moreover, the same
is true for the remaining four Plaintiffs, Brown, Hale, Osborne,
and Chase, who are never alleged to have conferred a benefit on
Transurban.
Butts, 2013 WL 6039040, at *5.
Therefore, this
claim fails against Transurban as a matter of law, for the same
reasons it did against the Collection Defendants.
Ultimately,
the allegations in the amended complaint fail to satisfy the
requirements to state a claim for unjust enrichment, an
equitable remedy that the Court imposes when no other remedy at
law will do.
See Nossen, 750 F. Supp. at 745.
73
Accordingly, the
Court will dismiss Claim Four in its entirety against all
Defendants.
2. Maryland and Virginia Consumer Protection Acts
Plaintiffs bring a claim under the Maryland Consumer
Protection Act (“MCPA”) in Claim Six, and a claim under the
Virginia Consumer Protection Act (“VCPA”) in Claim Seven.
“To
properly state a cause of action under the VCPA, Plaintiff must
allege (1) fraud, (2) by a supplier, (3) in a consumer
transaction.”
Nahigian v. Juno Loudon, LLC, 684 F. Supp. 2d
731, 741 (E.D. Va. 2010).
Similarly, to state a claim under the
MCPA, Plaintiffs “must show that they reasonably relied to their
detriment on some promise or misrepresentation made by
[Defendants].”
Green v. Wells Fargo Bank, N.A., 927 F. Supp. 2d
244, 253-54 (D. Md. 2013) (citing Goss v. Bank of Am., N.A., 917
F. Supp. 2d 445, 451 (D. Md. 2013) (“To state a claim under the
MCPA, ‘the consumer must have suffered an identifiable loss,
measured by the amount the consumer spent or lost as a result of
his or her reliance on the sellers’ misrepresentation.’”)
(quotation omitted)).
Because claims under the VCPA and MCPA
involve allegations of fraud, such claims must be pled with
heightened particularity.
See, e.g., Fravel v. Ford Motor, Co.,
973 F. Supp. 2d 651, 656 (W.D. Va. 2013); Myers v. Lee, No.
1:10cv131 (AJT/JFA), 2010 WL 2757115, at *6 (E.D. Va. July 12,
2010) (citing Nahigian, 684 F. Supp. 2d at 741); see also Green,
74
927 F. Supp. 2d at 249.
Rule 9(b) governs the heightened
particularly pleading standard regarding claims of fraud.
See
Fed. R. Civ. P. 9(b) (“In alleging fraud or mistake, a party
must state with particularly the circumstances constituting
fraud or mistake.
Specifically, there must be allegations of
fraudulent misrepresentations of fact, which must include: “a
false representation, or material fact, made intentionally and
knowingly, with intent to mislead, reliance by the party misled,
and resulting damage.”
Hamilton v. Boddie-Noell Enter., Inc.,
No. 2:14CV00051, 2015 WL 751492, at *2 (W.D. Va. Feb. 23, 2015)
(citations omitted).
Malice, intent, knowledge, and other
conditions of a person’s mind may be alleged generally.”); see
also United States ex rel. Nathan v. Takeda Pharms. N. Am.,
Inc., 707 F.3d 451, 455-56 (4th Cir. 2013) (stating that in a
False Claims Act case, to assert a fraudulent allegation,
plaintiff “must, at a minimum describe the time, place, and
contents of the false representations, as well as the identity
of the person making the misrepresentation and what he obtained
thereby.”).
Defendants argue that Plaintiffs have failed to state
a claim for relief under the VCPA and MCPA with the requisite
particularity, that the nature of the transaction at issue falls
outside the scope of the VCPA and MCPA, Plaintiffs’ have failed
to allege reliance on the alleged misrepresentations, and that
75
Plaintiffs have failed to allege a loss in reliance on the
alleged misrepresentations. (Transurban’s Mem. at 27-28; LES’s
Mem. at 21, 23; Faneuil’s Mem. at 26-28.)
The Court will
address these arguments as they apply to each Defendant in turn.
Plaintiffs have generally met the requirements of
heightened particularity in pleading their VCPA and MCPA claims
against Transurban.
Plaintiffs describe several discrete,
specific instances where each named Plaintiff has allegedly
received a representation from Transurban claiming that it has
incurred administrative fees which are “unreasonable and are not
related to the true costs the Transurban Defendants incurred to
‘administer’ [named Plaintiff’s] file.”
145, 167, 184, 200, 215.)
(Am. Compl. ¶ 120, 131,
Plaintiffs have likewise alleged that
Plaintiffs Stanfield, Amarti, and Pizarro have made payments to
Defendant Transurban the amount of which was directly related to
the amount demanded in these letters.
174.)
(Am. Compl. ¶¶ 137,151,
Plaintiffs have therefore alleged both a
misrepresentation and a reliance on that misrepresentation to
the detriment of Plaintiffs Stanfield, Amarti, and Pizarro.
These allegations then suffice to show that Plaintiff Stanfield
has “reasonably relied to [her] detriment on some promise or
misrepresentation made by [Defendants].”
at 253-254.
Green, 27 F. Supp. 2d
Accordingly, her MCPA claim against Plaintiff
Transurban will survive the Motion to Dismiss.
76
Plaintiffs Amarti and Pizarro, under the VCPA, must
also demonstrate that Transurban is a “supplier” with whom they
have engaged in a “consumer transaction”.
Supp. 2d at 741.
Nahigian, 684 F.
For the same reasons discussed above in
determining that the debts sought by Defendants are the result
of a “consensual transaction” for purposes of the FDCPA, the
Court finds that Plaintiffs and Defendant Transurban have
engaged in a “consumer transaction” as required by the VCPA.
supra at III.C.
Transurban’s role as the operator of the HOT
Lanes and 495 Express Lanes makes it a “supplier” of toll road
services with respect to the transactions at issue.21 (Am. Compl.
¶ 289.)
Therefore, Plaintiffs Amarti and Pizarro’s VCPA claim
against Transurban will also survive the Motion to Dismiss.
With respect to the Collection Defendants, Plaintiffs’
MCPA and VCPA claims fail due to pleading deficiencies.
As
discussed in the above case law, there are at least two
important requirements under both the VCPA and MCPA: sufficient
allegations of fraudulent conduct, and reliance by plaintiffs
thereon.
451.
Hamilton, 2015 WL 751492, at *2; Goss, 917 F. Supp. at
Plaintiffs allege only that Faneuil has taken actions from
which Plaintiffs could imply that Ms. Brach is an attorney. (Am.
Compl. ¶¶ 95-96.)
Plaintiffs have not alleged that they have
21
Transurban has not challenged its status as a “supplier” in any
of its briefs or at oral argument on this motion.
77
relied on the implication that Ms. Brach is an attorney to their
detriment.
Indeed, Plaintiffs do not allege that they have
relied on any material representations by Faneuil in a way which
has caused them any material damage.
Likewise, Plaintiffs fail to allege that they have
suffered any loss from reliance on a misrepresentation of fact
by Defendant LES.
It is not clear that the language in LES’s
notices purporting to require Plaintiffs to file any dispute
with LES in writing would satisfy the requirement of a
misrepresentation of fact, but even assuming that it does,
Plaintiffs fail to allege that they have relied on that
purported requirement in any way, let alone in a way that caused
Plaintiffs harm.
As Plaintiffs fail to allege a
misrepresentation by these defendants on which they have relied
to their material detriment, the Court will dismiss Claims Six
and Seven with respect to the Collection Defendants.
Plaintiffs claim that the summonses and debt
collection letters “contain misrepresentations regarding the
amount of purported debts and the reasons for the purported
debts.”
(Am. Compl. ¶¶ 276, 291.)
It is clear that Plaintiffs
do not agree with Defendants’ procedure for collecting unpaid
tolls and any associated penalties.
It is also clear that
Plaintiffs believe that Defendants assess illegal and
unreasonable fines.
What remains unclear, however, is the exact
78
nature of the “misrepresentation” that Collection Defendants
have made by issuing summonses and collection notices regarding
underlying alleged toll violations as reported to them by
Transurban.
See Graham v. RRR, LLC, 202 F. Supp. 2d 483, 490-91
(E.D. Va. 2002) (“To recover under the VCPA, [Plaintiff] must
‘prove a false misrepresentation.’”) (quoting Nigh v. Koons
Buick Pontiac GMC, Inc., 143 F. Supp. 2d 535, 553 (E.D. Va.
2001)).
However, Plaintiffs do not allege that the Collection
Defendants have made any misrepresentations regarding the amount
Transurban claims it was owed.
In light of Rule 9(b), it is not
enough, even at this stage of the proceeding, to simply allege
conclusory buzz words associated with fraud without sufficient
factual support and specificity.
The Court is left to ask
how the summonses and debt collection letters “contain
misrepresentations,” because Plaintiffs fail to offer any
additional allegations of fact as to the true, or otherwise
correct, representation that should have been listed on those
notices.
Plaintiffs fail to allege how the documents at issue
are false.
See Nationwide Mut. Ins. Co. v. Overlook, LLC, 785
F. Supp. 2d 502, 533 (E.D. Va. 2011) (“In order to state a cause
of action for a violation of this statute, plaintiff must allege
a fraudulent misrepresentation of fact.”).
Again, the Court understands that Plaintiffs disagree
with the exorbitant nature of the fine amount and with
79
Defendants’ collection practices generally.
These harms,
however, are more appropriately addressed and remedied by the
constitutional claims regarding excessive fines and procedural
due process.
Here, Plaintiffs allegations under Claims Six and
Seven fall short against Defendants Faneuil and LES because they
fail to sufficiently plead facts supporting the existence of a
false, or misleading, representation.
at *2; Goss, 917 F. Supp. at 451.
Hamilton, 2015 WL 751492,
The amended complaint is
completely devoid of any allegation that Plaintiffs relied on
representations made by these Defendants’ misrepresentation to
their detriment.
See Fravel v. Ford Motor Co., 973 F. Supp. 2d
651, 658 (W.D. Va. 2013) (“Virginia courts have consistently
held that reliance is required to establish a VCPA claim.”).
However, Plaintiffs have sufficiently alleged a
specific misrepresentation by Defendant Transurban with respect
to the administrative fees they claimed they accrued while
processing Plaintiffs’ supposed toll violations.
These
administrative fee calculations played a significant role in
Transurban’s calculation of the amount they sought from
Plaintiffs in their summonses, and subsequently were relied on
by Plaintiffs Stanfield, Amarti, and Pizarro in their decision
to pay Transurban a certain amount in satisfaction of those
state-court claims.
Accordingly, the Court grants Defendants’
Motion to Dismiss Counts Six and Seven with respect to
80
Defendants Faneuil and LES, and denies Defendants’ Motion to
Dismiss Counts Six and Seven with respect to Defendant
Transurban.
3. Tortious Inference with Contract
Lastly, in Claim Eight, Plaintiffs claim that
Defendants have tortiously interfered with the contract between
Plaintiffs and E-ZPass by charging excessive and unreasonable
fees, and by assessing fees in excess of what is allowed under
the underlying contract.
(Am. Compl. ¶¶ 298-312.)
The Court
denies Defendants’ Motion to Dismiss with regards to this claim.
To state a claim under Virginia law for tortious
interference with contract, Plaintiffs must allege sufficient
facts that establish the following elements:
(1) the existence of a valid contractual
relationship or business expectancy; (2)
knowledge of the relationship or expectancy
on
the
part
of
the
interferor;
(3)
intentional interference inducing or causing
a breach or termination of the relationship
or expectancy; and (4) resulting damage to
the party whose relationship or expectancy
was disrupted.
Stradtman v. Republic Servs., Inc., No. 1:14cv1289 (JCC/JFA),
2015 WL 3650736, at *6 (E.D. Va. June 11, 2015) (quoting Dunlap
v. Cottman Transmission Sys., LLC, 754 S.E.2d 313, 318 (Va.
2014) (quoting Chaves v. Johnson, 335 S.E.2d 97, 102 (Va. 1985);
Dunn, McCormack & MacPherson v. Connolly, 708 S.E.2d 867, 870
(Va. 2011))).
It is irrelevant whether a defendant
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intentionally acts to induce the plaintiff to terminate or
breach the underlying contractual relationship, but instead,
“the essence of a tortious interference claim under Virginia law
is that the defendant intentionally induced the third
party . . . to breach or terminate the relationship or
expectancy with the plaintiff.”
Stradtman, 2015 WL 3650736, at
*6 (citing Rappahannock Pistol & Rifle Club, Inc. v. Bennett,
546 S.E.2d 440, 444 (Va. 2001)).
Here, Plaintiffs allege that Transurban tortiously
interfered with Plaintiffs’ contract with E-ZPass by preventing
Plaintiffs “from obtaining the full benefits of this contractual
relationship,” and that the Collection Defendants tortiously
interfered “by attempting to collect debts purportedly owing for
use of HOT lanes.”
(Am. Compl. ¶¶ 301, 307, 309.)
Plaintiffs
allege that Transurban’s equipment frequently “registers a
‘violation’ even where a valid, fully funded E-ZPass account is
in existence. . . assess[ing] fines and penalties for purported
toll violations that were not violations at all.”
55.)
(Am. Compl. ¶
The Virginia, Maryland, and New York E-ZPass contracts all
allow fees and penalties where a toll violation has actually
occurred due to “failure to maintain a positive E-ZPass
balance.” (Am. Compl. ¶¶ 50-52.)
However, none of the
applicable E-ZPass contracts provide for the possibility that
Plaintiffs could face any punitive action for using a properly
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installed transponder connected to a funded E-ZPass account
which simply is not read by the toll operator.
In fact, the
benefit conferred to Plaintiffs in return for their subscription
to the E-ZPass system in each of these states is the promise
that Plaintiffs may “use toll roads and may be assessed tolls
and reasonable administrative fees and civil penalties where
appropriate.”
(Id. ¶ 299) (emphasis added).
As Defendant
Transurban is alleged to have assessed administrative fees and
civil penalties where no violation has occurred, they have
prevented the state E-ZPass programs of Virginia, Maryland, and
New York from carrying out their promise to provide “toll road
use services.”
(Id. ¶ 298).
Thus, Defendant Transurban has
caused these state E-ZPass programs, a third party, “to breach
their contracts with Plaintiffs.”
Stradtman, 2015 WL 3650736,
at *6 (citing Rappahannock Pistol & Rifle Club, Inc. 546 S.E.2d
at 444).
Plaintiffs further allege that Transurban was “aware
of the existence of the User Agreement between… Plaintiffs. . .
and the E-ZPass.”
(Am. Compl. ¶ 300.)
This knowledge satisfies
the second of the four requirements outlined in Stradtman.
Plaintiffs allege that they were harmed by being denied the full
enjoyment of the benefits of their E-ZPass contract, thus
satisfying the fourth requirement laid out in Stradtman.
Compl. ¶ 310.)
(Am.
Finally, the third requirement set out in
Stradtman is satisfied at this stage because a reasonable jury
83
could certainly infer from the facts alleged that Transurban
knew “that the interference [was] certain or substantially
certain to occur as a result of [its] action.” Restatement
(Second) of Torts § 766 cmt. j.
Plaintiffs have therefore alleged facts which, if
true, can support a claim for tortious interference with
contract.
The Court accordingly denies Defendants’ Motion to
Dismiss Count Eight.
E. Request for Leave to Amend the Amended Complaint
In the event that the Court dismisses any of
Plaintiffs’ claims, Plaintiffs request leave to amend the
complaint for a second time.
Leave to amend a pleading “shall
be freely given when justice so requires.”
15(a).
Fed. R. Civ. P.
“[L]eave to amend a pleading should be denied only when
the amendment would be prejudicial to the opposing party, there
has been bad faith on the part of the moving party, or the
amendment would have been futile.”
Laber v. Harvey, 438 F.3d
404, 426-27 (4th Cir. 2006) (citations omitted).
The Court has
considered this request in light of the dismissed claims,
specifically, three, four, six (in part), and seven (in part).
At this stage, of course, Plaintiffs have not tendered a
proposed second amended complaint.
The Court finds that
Plaintiffs could more than likely cure the pleading defects with
regards to Claim Six and Claim Seven.
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Stated differently, an
amendment would likely save Plaintiffs’ VCPA and MCPA claims
against Defendants’ Faneuil and LES.
Accordingly, the Court
grants Plaintiffs’ request to amend the Amended Complaint.
IV. Conclusion
For the foregoing reasons, the Court grants the
motions in part as follows: Claims Three and Four are dismissed
in their entirety.
Claims Six and Seven are dismissed as
applied to The Collection Defendants, LES and Faneuil. Claims
One, Two, Six, Seven, and Eight against Transurban will remain,
as will Claims Five and Eight against LES and Faneuil.
Plaintiffs are granted leave to amend their complaint.
An appropriate Order shall issue.
/s/
November 2, 2015
Alexandria, Virginia
James C. Cacheris
UNITED STATES DISTRICT COURT JUDGE
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