Neinast v. State of Texas

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 99-50811
NELL NEINAST,
Plaintiff-Appellant,
versus
STATE OF TEXAS; TEXAS DEPARTMENT
OF TRANSPORTATION; DAVID M. LANEY;
ROBERT NICHOLS; JOHN W. JOHNSON;
CHARLES W. HALD; JERRY DIKE; VEHICLE
TITLES AND REGISTRATION DIVISION,
Defendants-Appellees.
Appeal from the United States District Court
For the Western District of Texas
June 26, 2000
Before REYNALDO G. GARZA, HIGGINBOTHAM, and BENAVIDES, Circuit
Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
Today we review a challenge under the Americans with
Disabilities Act (“ADA”) to Texas’s fee for handicapped parking
placards in light of jurisdictional and immunity defenses by the
State. Texas asserts that Nell Neinast cannot bring this suit in
federal court because the placard charge is a tax, barring our
review under the Tax Injunction Act, 28 U.S.C. § 1341, and because
the ADA regulation at issue does not validly abrogate Texas’s
immunity from suit under the Eleventh Amendment. We hold that the
charge is a fee unaffected by the Tax Injunction Act. We also
conclude that because an administrative creature of Congress may
not have greater power than the Congress to abrogate the states’
immunity, a challenged regulation must be proportionate and
congruent to the constitutional wrongs identified by the agency’s
enabling statute. Finding that the regulation does not do so, we
hold that Neinast’s suit is barred by the Eleventh Amendment.
I
This putative class action1 seeks injunctive relief and
monetary damages for a $5 fee charged by Texas for handicapped
placards.2 These placards enable disabled individuals to park in
specially designated parking spaces; an individual need obtain one
only if she does not own a car or wishes to ride in the vehicle of
a non-disabled individual.3 The Texas Transportation Code states
that the fees will be “deposited in the state highway fund to
defray the cost of providing the disabled parking placard.”4
1
As the district court decided the dispositive motion on
review at the outset of the lawsuit, the class has not yet been
certified.
2
See TEX. TRANS. CODE ANN. §§ 681.002, 681.003.
3
If the individual owns a car, she would have a license plate.
The handicapped symbol on a license plate also authorizes parking
in handicapped spaces, and such license plates cost no more than a
regular license plate. See § 502.253(a), (d).
4
§ 681.005.
2
Neinast, who is disabled, paid the five dollar fee and obtained a
placard.
Neinast filed suit in federal court, arguing that the fee
charged violates an ADA regulation prohibiting a governmental
entity from placing a surcharge on an individual with a disability
to cover the costs of measures required under the Act.5 Twenty
days after Neinast filed suit, Texas filed a motion to dismiss on
the ground that the federal court lacked jurisdiction pursuant to
the Tax Injunction Act. The district court granted that motion,
and Neinast appealed. On appeal, Texas contends not only that the
Tax Injunction Act but also the Eleventh Amendment bars the federal
suit.
II
First, the question before the district court: whether federal
jurisdiction is barred by the Tax Injunction Act.6 That statute
prevents federal courts from enjoining, suspending or restraining
the assessment, levy or collection of any tax under state law as
long as a plain, speedy and efficient remedy may be had in the
5
See 28 C.F.R. § 35.130(f) (2000).
6
We first address the statutory jurisdiction question in order
to, if possible, avoid a constitutional question. See Vermont
Agency of Natural Resources v. United States ex rel. Stevens, 2000
WL 646252 (S. Ct. 2000); Steel Co. v. Citizens for a Better Env’t,
523 U.S. 83, 97 n.2 (1998) (noting Supreme Court’s choice of order
between statutory and constitutional jurisdictional questions).
3
courts of that state.7 The Act functions as a broad jurisdictional
impediment to federal court interference with the administration of
state tax systems.8
The applicability of the Act turns on whether the placard
charge is a “tax” or instead a “fee.” The leading case in this
area, San Juan Cellular Telephone Company v. Public Service
Commission, describes the distinction as a spectrum with the
paradigmatic fee at one end and the paradigmatic tax at the other.9
The classic fee is imposed (1) by an agency, not the legislature;
(2) upon those it regulates, not the community as a whole; and (3)
for the purpose of defraying regulatory costs, not simply for
general revenue-raising purposes.10 Whether a charge is a fee or
a tax is a question of federal law.11
Applying these factors to the Texas statute at hand, we find
that the first factor, whether the charge is imposed by the
legislature or an agency, suggests that the charge is a tax because
it is imposed by the Texas legislature. The second factor, on whom
the charge is imposed, suggests that the charge is a fee: the
7
28 U.S.C. § 1341 (2000).
8
See Home Builders Assoc. of Miss., Inc. v. City of Madison,
143 F.3d 1006, 1010 (5th Cir. 1998).
9
San Juan Cellular Tel. Co. v. Public Serv. Comm’n, 967 F.2d
683, 685 (1st Cir. 1992) (Breyer, C.J.).
10
Home Builders, 143 F.3d at 1011.
11
Id. at 1010 n.10.
4
charge is imposed only on a narrow class of persons, disabled
people wanting a placard, not the public at large.
The third factor, the ultimate use of the funds, thus becomes
our critical question.12 The relevant provision in the Texas
Transportation Code requires that the placard charges go into the
general highway fund to help defray the cost of the program.13
Texas argues that the funds will more likely provide a benefit to
the community in the highway fund than actually defray the cost of
the program. According to this interpretation, however, no charges
would be fees unless they are funneled into a segregated account.
If the costs of the placard program are paid out of the general
highway fund, then charges paid back into the fund do help defray
the program’s costs.
Texas also argues that the charge is a tax because it first
goes to the tax collector, then the highway fund. This formalism
is unhelpful. The opinion on which Texas relies, Hexom v. Oregon
Department of Transportation, specifically rejected this analysis:
it declined to characterize the fee based on the initial fund it
goes to, observing that the question is not where the money is
deposited, but the purpose of the assessment.14
12
See Marcus v. Kansas, 170 F.3d 1305, 1311 (10th Cir. 1999).
13
TEX. TRANS. CODE ANN. § 681.005(1).
14
See 177 F.3d 1134, 1138 (9th Cir. 1999).
5
The purpose here is described narrowly as being for the
benefit of the program itself. This fact distinguishes this case
from Home Builders Association of Mississippi, Inc. v. Madison,
cited by Texas. There, a municipality imposed an assessment on
developers and builders to “pay a fair share of providing and
maintaining . . . essential municipal services.” The collected
funds would be used for a variety of municipal services, including
streets, fire and police departments, and parks and recreation.15
Several recent opinions have examined handicap placard
surcharges and found them to be “fees” where the funds were to be
spent for narrowly defined purposes. For example, in Marcus v.
Kansas, the fee went into a special fund for the administration of
the motor vehicle registration program, with excess funds at the
end of the year channeled into the state’s highway fund. The court
held that the funds were primarily regulatory and thus “fees” for
purposes of the Tax Injunction Act.16 The cases in which courts
have found placard charges to be taxes were ones in which the funds
went for general revenue purposes.17 As the Texas statute applies
15
Home Builders, 143 F.3d at 1012.
16
Marcus v. Kansas, 170 F.3d at 1311-12. See also Hexom, 177
F.3d at 1138 (holding surcharge was a fee where it went into a
general fund but was used to defray costs of program); Thorpe v.
Ohio, 19 F. Supp.2d 816, 823 (S.D. Ohio 1998) (same).
17
See Hedgepeth v. Tennessee, 33 F. Supp. 2d 668, 671-73 (W.D.
Tenn. 1998) (funds went into highway fund, general fund, policy pay
supplemental fund, trooper safety fund; no evidence of relationship
to placard program); Lussier v. Florida, 972 F. Supp. 1412, 1420
(M.D. Fla. 1997) (holding that funds that went to defray costs of
6
the charges toward the cost of the program, the district court
erred in holding that the placard funds were a tax and thus within
the scope of the Tax Injunction Act.
III
We turn to Texas’s contention that the ADA regulation at issue
exceeds Congress’s power under § 5 of the Fourteenth Amendment to
abrogate the states’ immunity. Texas did not raise this issue
before the district court.
Although we are empowered to consider an Eleventh Amendment
defense raised for the first time on appeal,18 we must consider
whether Texas’s failure to raise the issue below effectively waived
its claim to immunity. A state’s waiver of immunity must be
unequivocal.19 It may evidence that waiver, however, through action
other than an express renunciation. Courts have found waiver in
two general varieties of cases: where the state asserted claims of
program were a “fee;” other funds, which had a mixed revenue
raising and regulatory purpose, were a tax); Rendon v. Florida, 930
F. Supp. 601, 604 (S.D. Fla. 1996) (holding that the assessment at
issue was a tax because it bore no relationship to the cost of
regulating the program).
18
See Calderon v. Ashmus, 118 S. Ct. 1694, 1697 n.2 (1998).
19
See Atascadero State Hosp. v. Scanlon, 105 S. Ct. 3142, 3147
(1985).
7
its own20 or evidenced an intent to defend the suit against it on
the merits.21
The common thread among these cases is that the state cannot
simultaneously proceed past the motion and answer stage to the
merits and hold back an immunity defense. For example, in Hill v.
Blind Industries and Services of Maryland, the state entity waited
until the first day of trial to assert its immunity. Disallowing
the defense on appeal, the Ninth Circuit noted that the wait
allowed the state to have the best of both worlds; it could monitor
how the suit was proceeding on the merits but have any adverse
ruling set aside on Eleventh Amendment grounds.22
Here, Texas’s only filing was a motion to dismiss based on the
Tax Injunction Act. Texas never filed an answer or participated in
any proceedings indicating an intent to try the matter on the
merits.23 Because the district court granted Texas’s 12(b)(6)
20
See, e.g., Dekalb County Div. of Family & Children Servs. v.
Platter, 140 F.3d 676, 680 (7th Cir. 1998) (state waived immunity
by filing an adversary proceeding in bankruptcy court); Paul N.
Howard Co. v. Puerto Rico Aqueduct Sewer Auth., 744 F.2d 880, 886
(1st Cir. 1984) (immunity waived where state filed counterclaim and
third-party complaint).
21
See Hill v. Blind Indus. & Servs. of Maryland, 179 F.3d 754,
763 (9th Cir. 1999) (collecting cases).
22
179 F.3d at 756-57.
23
As such, Texas filed no “pleading” as defined by Fed. R. Civ.
P. 12. This fact defeats Neinast’s argument that Texas waived
immunity by failing to comply with a local district court rule
imposing time requirements on immunity claims; those requirements
would only have been triggered by the filing of a pleading. See
Local Court Rule CV-12 of U.S. Dist. Ct. for Western District of
8
motion, Texas never had occasion to contest its presence in federal
court on other grounds. Texas gained no benefit by federal court
jurisdiction and did not lead Neinast to believe that it intended
to try the case in federal court.24 Texas did not unequivocally
waive its right to assert immunity from suit.
Now to the merits of Texas’s Eleventh Amendment challenge.
The Eleventh Amendment secures the states’ immunity from private
suits for monetary damages filed in federal court.25 Congress has
the power to abrogate that immunity under § 5 of the Fourteenth
Amendment, but only within its remedial powers under § 5.26
Whether Congress is exercising its remedial power or
impermissibly defining new rights is measured by the Supreme
Court’s two-part “congruence and proportionality” test. First,
there must be evidence from the legislative record or elsewhere
that Congress identified a pattern of constitutional wrongdoing.
Second, the court must consider whether the provisions are
Texas. As the rule was not triggered, we need pass no judgment as
to whether such local requirements could be evidence of waiver by
a state.
24
As we hold that Texas did not waive its immunity through its
actions, we do not reach the issue of whether the Attorney General
was authorized under Texas law to consent to federal court
jurisdiction on behalf of the State of Texas. See Ford Motor Co.
v. Department of Treasury, 323 U.S. 459, 469 (1945).
25
See Edelman v. Jordan, 415 U.S. 651, 663 (1974).
26
See Kimel v. Florida Bd. of Regents, 120 S. Ct. 631, 644
(2000).
9
proportional to the remedial goal.27 In fashioning a remedy for
constitutional violations, Congress has latitude to prohibit
conduct which in itself is not unconstitutional.28
Texas argues that the regulation at issue exceeds Congress’s
remedial authority under § 5. Circuit precedent bars our
consideration of whether the ADA as a whole exceeds Congress’s
power to abrogate under § 5.29 Texas, however, presents a different
theory: foreclosed from arguing to this court that the entire ADA
exceeds the congressional power of abrogation, it contends that we
at least must confront whether the regulation exceeds those powers.
Two of our sister Circuits have considered this method and
have focused on different lines of analysis. The Fourth Circuit
27
See Kimel, 120 S. Ct. at 645; Florida Prepaid Postsecondary
Educ. Expense Bd. v. College Sav. Bank, 119 S. Ct. 2199, 2207
(1999).
28
See City of Boerne v. Flores, 117 S. Ct. 2157, 2163 (1997).
29
See Coolbaugh v. Louisiana, 136 F.3d 430, 438 (5th Cir.
1998). It is unclear to what extent Coolbaugh blessed the ADA
insofar as it commands access rather than simply barring
discrimination, the less problematic issue; we assume without
deciding that it found both regulatory thrusts constitutional. We
note that Coolbaugh was decided before Kimel v. Florida Board of
Regents, 120 S. Ct. 631 (2000), which held that the Age
Discrimination in Employment Act exceeded Congress’s abrogation
powers and possibly suggests a more vigorous application of the
congruence and proportionality test than the Coolbaugh court
gleaned from City of Boerne. The Supreme Court has now three times
granted certiorari to address the § 5 issue in the ADA context; two
cases have settled, and one remains pending. See University of
Ala. at Birmingham Bd. of Trustees v. Garrett, 120 S. Ct. 1669(2000); 68 U.S.L.W. 3649 (April 17, 2000).
10
decided in Brown v. North Carolina Division of Motor Vehicles30 that
a challenged regulation must independently meet the proportional
and congruent test.31 The Ninth Circuit looks instead at the
statutory scheme as a piece to determine whether it falls under
Congress’s powers; if it does, the regulation is constitutional and
subject to review only under the Chevron32 standard.33
Chevron involves a two-step inquiry. First, the court must
address whether Congress has clearly spoken on a precise issue; if
it has, then the agency’s interpretation must conform to that
policy. If it has not, the court moves to the second step, which
defers to the agency’s policy-making interpretation of the statute
unless that answer is arbitrary, capricious, or manifestly contrary
to the statute.34 We are persuaded that in a challenge such as this
one, which questions only the power of Congress to regulate the
states, not an agency’s power to implement by rule and interpret
30
166 F.3d 698 (4th Cir. 1999).
31
See Brown, 166 F.3d at 703-04. Since then, another Fourth
Circuit panel upheld the constitutionality of the ADA as a
statutory scheme but affirmed the court’s authority to pass on the
constitutionality of individual regulations. See Amos v. Maryland
Dept. of Public Safety & Correctional Serv’s, 178 F.3d 212, 221 &
n.8 (4th Cir. 1999), reh’g en banc granted, judgment vacated,
December 28, 1999.
32
Chevron, U.S.A., Inc. v. Natural Resources Defense Council,
Inc., 467 U.S. 837 (1984).
33
Dare v. California, 191 F.3d 1167, 1176 & n.7 (9th Cir.
1999).
34
See Chevron, 467 U.S. at 842-43; KENNETH CULP DAVIS & RICHARD J.
PIERCE, JR., I ADMINISTRATIVE LAW TREATISE § 3.2 (3d ed. 1994).
11
congressional mandates, Chevron can suggest the wrong question if
we move too quickly to its second step. Whether the Department of
Justice has rationally or arbitrarily interpreted the ADA in
promulgating the regulation at issue does not answer whether
Congress could constitutionally have made a certain policy choice.
In making the “step one” inquiry, our operating premise must
be that an agency, or as here, an executive office with delegated
power to promulgate rules, cannot have greater power to regulate
state conduct than does Congress. An agent cannot escape the
requirements of proportionality and congruence. At the same time,
applying the proportionate and congruent test demands attention to
its context. That Congress will not have made findings regarding
every discrete topic addressed by individual regulations is the
raison d’être of administrative delegation. An agency’s
promulgation process will thus not yield a record responsive to the
inquiries of City of Boerne in isolation from the statutory scheme
under which it operates. We first must consider whether Congress,
not the agency, has satisfied City of Boerne in imposing a scheme
of regulation upon the states.
If the statute satisfies this initial inquiry, we then measure
whether the challenged regulation operates within the remedial
compass defined by Congress through valid use of § 5 powers. This
means that the agency’s action must be proportional and congruent
to the relevant constitutional wrongs identified by Congress, not
simply to other remedial steps taken by Congress directly. In
12
doing so, we do not detract from Chevron’s powerful preference that
policy choices be made by the representative branches rather than
the judiciary. Rather, we determine only whether the rulemaker has
followed the necessary limits of the statute’s regulation of the
states.
The statute enabling the Department of Justice regulation
addresses the denial of access by the states to individuals with
disabilities.35 Following Coolbaugh, we presume that Congress
properly identified unconstitutional discrimination by the states
in denying access; the support cited by that court includes
Congress’s finding that:
[I]ndividuals with disabilities . . . encounter various
forms of discrimination, including outright intentional
exclusion, the discriminatory effects of architecture,
transportation, and communication barriers . . . failure
to make modifications to existing facilities . . . .36
Assuming that such findings identify unconstitutional conduct by
the state, a statutory remedy that ensures access correlates to the
relevant harm identified by Congress.
When we turn to the regulation, we find that it falls outside
this access-granting remedial scheme and thus beyond the remedial
35
The statutory provision under which the Department of Justice
promulgated the rule reads:[N]o qualified individual shall, by
reason of such disability, be excluded from participation in or
denied the benefits of the services, programs, or activities of a
public entity, or be subjected to discrimination by any such
entity. 42 U.S.C. § 12132 (2000).
36
Coolbaugh, 136 F.3d at 435 (quoting 42 U.S.C. § 12101(a)).
13
compass Congress could constitutionally authorize against the
states. The regulation reads:
A public entity may not place a surcharge on a particular
individual with a disability or any group of individuals
with disabilities to cover the costs of such measures,
such as the provision of auxiliary aids or program
accessibility, that are required to provide that
individual or group with the non-discriminatory treatment
required by the Act or this part.37
The regulation’s scope goes further than simply requiring states to
provide access to their facilities and programs; it bars the
sharing of any costs of such measures, a highly intrusive limit on
the core state power to choose revenue sources. There is no
plausible claim that banning any fees by the state corrects past
discrimination against individuals with disabilities regarding
access or that it seeks prophylactically to prevent the state from
intentionally discouraging them from enjoying access. A
requirement as to who bears minimal costs of accommodation relates
back not to the relevant constitutional harm, but only to other
prophylactic steps. We thus distinguish this situation from
Congress’s ban through the Voting Rights Act on literacy tests,
whose use had been shown to be an effort to discriminate.38
This degree of separation leaves the regulation unanchored to
a constitutional purpose. It is an impermissible form of
regulatory creep. The regulation bears such an attenuated
37
28 C.F.R. 35.130(f) (2000).
38
See Boerne, 117 S. Ct. at 2166-67; South Carolina v.
Katzenbach, 86 S. Ct. 803, 808-11 (1966).
14
relationship to the remedial goal that it cannot be understood as
a remedial or prophylactic response to unconstitutional behavior.
We hold that 28 C.F.R. § 35.130(f) exceeds the scope of Congress’s
power to abrogate the states’ immunity under § 5 of the Fourteenth
Amendment. Texas is thus not subject to suit without its consent.
We affirm the judgment dismissing this case, albeit on different
grounds.
AFFIRMED.
15