JAMES LONG VS. NEW JERSEY TURNPIKE AUTHORITY (NEW JERSEY TURNPIKE AUTHORITY)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1557-17T4
JAMES LONG and HOMER
WALKER,
Petitioners-Appellants,
v.
NEW JERSEY TURNPIKE
AUTHORITY,
Respondent-Respondent.
______________________________
Argued February 4, 2019 – Decided March 8, 2019
Before Judges Messano, Fasciale and Gooden Brown.
On appeal from the New Jersey Turnpike Authority.
Matthew Faranda-Diedrich argued the cause for
appellants (Royer Cooper Cohen Braunfeld LLC,
attorneys; Matthew Faranda-Diedrich, of counsel and
on the briefs; Alexander J. Nassar, on the briefs).
Christopher R. Paldino argued the cause for respondent
(Chiesa Shahinian & Giantomasi, PC, attorneys;
Ronald L. Israel, Christopher R. Paldino, and Ryan P.
O'Connor, on the brief).
PER CURIAM
James Long and Homer Walker (petitioners), two E-ZPass toll violators,
filed a petition for rulemaking with the New Jersey Turnpike Authority (NJTA).
They had argued that a $50 administrative fee, which N.J.A.C. 19:9-9.2(b) (the
regulation) permitted, was excessive and violated N.J.S.A. 27:23-34.3(a) (the
authorizing statute). Petitioners now appeal from an October 18, 2017 final
decision by the NJTA, which denied their petition for a rule change and related
relief.
We reject petitioners' contention that NJTA violated the Administrative
Procedures Act (APA), N.J.S.A. 52:14B-4, or notions of due process or
fundamental fairness, when it initially promulgated the regulation in 2011, and
in 2017, when it considered the petition, but we remand for further proceedings
consistent with this opinion.
We therefore affirm in part and remand in part.
I.
In May 2017, approximately six years after NJTA raised the fee from $25
to $50, and almost two years after petitioners had paid their respective fees, they
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filed their petition. 1 The petition, entitled "Petition for Rule Change,
Refund/Disgorgement and Cause of Action for Unjust Enrichment," challenged
the regulation on two grounds. Petitioners' first and primary objection is that
NJTA used the fee to generate revenue for its operating fund and that the fee
was unrelated to the actual costs of enforcement. They therefore contend that
the fee was unreasonable and contravened the authorizing statute. Second,
petitioners challenge the use of a fifteen-day notice provision to avoid
incarceration and other penalties, which they asserted had violated the
authorizing statute. NJTA has since ceased employing this provision.
On appeal, petitioners argue six points, which we have renumbered:
POINT [I]
THE $50 ADMINISTRATIVE FEE SHOULD BE SET
ASIDE BECAUSE THE 2011 RULEMAKING
PROCESS VIOLATED THE REQUIREMENTS OF
THE ADMINISTRATIVE PROCEDURES ACT, AND
OTHERWISE LACKED BASIC TENETS OF DUE
PROCESS AND FAIRNESS.
1
NJTA's counsel, not counsel for petitioners, pointed out that in December
2017, petitioners filed their Notice of Appeal and petitioners' counsel filed a
proposed class action lawsuit in the United States District Court for the District
of New Jersey. That lawsuit challenges the reasonableness of the administrative
fee and asserts claims for violating the Excessive Fines Clause of the Eighth
Amendment of the United States Constitution, violating the Fair Debt Collection
Practices Act, unjust enrichment/disgorgement, and rescission of E-ZPass
contracts. The federal court stayed that matter pending the outcome of this
appeal.
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1. NJTA's Lack Of Candor To The Public
During The Rulemaking Process.
2. The Truth – Profoundly Different Than
What NJTA Disclosed To The Public.
3. NJTA's Lack of Candor During The
Rulemaking Process Violated: (i) The
APA, (ii) Basic Tenets of Due Process And
(iii) Fundamental Principles Of Fairness.
POINT [II]
ALTERNATIVELY, THE $50 ADMINISTRATIVE
FEE SHOULD BE SET ASIDE BECAUSE (i) IT
VIOLATED THE AUTHORIZING STATUTE WHEN
IMPLEMENTED IN 2011, (ii) IT WAS OTHERWISE
AN ABUSE OF NJTA'S RULEMAKING POWER,
AND (iii) NJTA HAS CONSISTENTLY APPLIED
THE REGULATION IN A WAY THAT CLEARLY
VIOLATES THE AUTHORIZING STATUTE.
1. The 2003 Version Of The Authorizing
Statute Set Two Guiderails On NJTA's
Discretionary Setting Of The Fee –
Reasonableness and Actual Cost.
2. A $50 Fee Is Not "Reasonable" Because
It Is Grossly Disproportionate To Identical
Fees Charged By Other Tolling
Authorities.
3. As Admitted By NJTA, When The
Regulation Was Enacted, Expected
Revenues From The $50 Fee Far Exceeded
NJTA's Actual Cost of Collecting and
Processing Violations.
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4. NJTA's Enforcement Scheme For
Collecting Fees Has Consistently Violated
The Authorizing Statute.
POINT [III]
THE $50 ADMINISTRATIVE FEE SHOULD BE SET
ASIDE BECAUSE NJTA HAS FAILED TO ADAPT
IT TO CHANGING CONDITIONS AT ANY TIME
SINCE 2011, IN VIOLATION OF THE
AUTHORIZING STATUTE.
POINT [IV]
THE $50 ADMINISTRATIVE FEE SHOULD BE SET
ASIDE BECAUSE NJTA'S 2017 NOTICE OF
ACTION VIOLATED THE REQUIREMENTS OF
THE ADMINISTRATIVE PROCEDURES ACT, AND
OTHERWISE LACKED BASIC TENETS OF DUE
PROCESS, AND WAS OTHERWISE DEFECTIVE.
1. The 2017 Final Action Constituted A
Rule Under The APA, Particularly Because
No Other Rulemaking Had Previously
Been Validly Accomplished.
2. The 2017 Final Action Was Improperly
Issued Without Compliance With The
APA, And Was Otherwise Invalid.
3. Even If Not A Rule, The Figures And
Explanations Offered In The 2017 Final
Action Violate The Authorizing Statute
And Otherwise Are An Abuse Of
Discretion.
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POINT [V]
THE $50 ADMINISTRATIVE FEE SHOULD BE SET
ASIDE BECAUSE IT IS BASED ON A NON-
UNIFORM AND IRRATIONAL APPLICATION OF
THE AUTHORIZING STATUTE.
POINT [VI]
THIS COURT SHOULD INVALIDATE THE
REGULATION AND ORDER A DISGORGEMENT,
OR AT A MINIMUM THIS COURT SHOULD
REMAND FOR FURTHER PROCEEDINGS
CONSISTENT WITH THE APA'S REQUIREMENTS.
II.
The doctrine of laches bars petitioners from attacking NJTA's 2011
rulemaking under the APA. More than six years elapsed between the
promulgation of the regulation and the filing of the petition in 2017. The
conditions that existed during that timeframe have changed significantly, and it
would be inequitable to allow a 2011 APA challenge after this substantial
passage of time.
"Laches is an equitable defense that may be interposed in the absence of
the statute of limitations, and has been defined as an inexcusable delay in
asserting a right." Nw. Covenant Med. Ctr. v. Fishman, 167 N.J. 123, 140 (2001)
(citations and quotation marks omitted). It "involves more than mere delay,
mere lapse of time. There must be delay for a length of time which, unexplained
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and unexcused, is unreasonable under the circumstances and has been
prejudicial to the other party." Ibid. "Factors considered in determining whether
to apply laches include '[t]he length of delay, reasons for delay, and changing
conditions of either or both parties during the delay.'" Id. at 141 (alteration in
original) (quoting Lavin v. Bd. of Educ. of Hackensack, 90 N.J. 145, 152
(1982)). "The primary factor to consider when deciding whether to apply laches
is whether there has been a general change in condition during the passage of
time that has made it inequitable to allow the claim to proceed." Ibid.Between 2011 and 2017, a number of important rulemaking
considerations have substantially changed. The contract supporting the E-ZPass
system, pricing under that contract, and the responsibilities and costs for which
NJTA bears direct accountability have changed. Moreover, evaluation of the
2011 rulemaking is extremely difficult since the pricing parameters for
collection of E-ZPass toll violations are different, expenses from external to
internal NJTA budget items have shifted, and because of the general evolution
associated with toll collection costs for NJTA roadways. Therefore, laches bars
a challenge to the 2011 rulemaking, particularly when – in our view – the
primary focus of petitioners' appeal from the denial of their 2017 petition is on
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NJTA's refusal to make a new rule and its determination that the $50
administrative fee should remain unchanged.
Notwithstanding the application of this equitable doctrine, on the merits,
we conclude petitioners' arguments – that in 2011, NJTA violated the APA, due
process, and fundamental fairness – are without sufficient merit to warrant
further attention in this opinion. R. 2:11-3(e)(1)(E). We add these brief
remarks.
NJTA complied with N.J.A.C. 19:9-6.5 (governing NJTA's rulemaking
requirements) and N.J.S.A. 52:14B-4 (imposing additional requirements under
the APA). The NJTA published the proper notice in the New Jersey Register of
the rulemaking in 2011, which contained a sufficient explanation of the basis
for the regulation. NJTA afforded all interested persons the proper period for
public comment. The NJTA received no comments about the proposed fee
increase or requests for a hearing. Four months after publishing the notice,
NJTA published the adoption of the fee increase from $25 to $50 in the New
Jersey Register.
III.
As to the 2017 final action by NJTA, we see no APA violations.
Petitioners certainly have the right to petition NJTA to adopt a new rule, or
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amend an existing rule. N.J.A.C. 19:9-6.2 and N.J.S.A. 52:14B-4(f) permit that
right and provide procedural safeguards applicable to such petitions. Here,
NJTA met those requirements. Moreover, NJTA satisfied N.J.A.C. 19:9-6.3(c)
by timely deliberating and issuing its written decision.
NJTA denied the petition and gave a written statement of reasons, which
it had the right to do. According to that decision, NJTA concluded the $50 fee
"continues to be reasonably related to the actual cost of processing and
collecting toll violations." 49 N.J.R. 3623(b) (Nov. 20, 2017). In fact, NJTA
explained that the costs associated with its toll collection system "well exceed
$50[] per violation." Ibid. In support of those assertions, and others in its
written decision, NJTA prepared a "2017 Toll Collection Budget Chart," which
it contends estimates that the 2017 costs per violation is $80, not $50. Ibid.Petitioners, however, disputed the NJTA's calculations and analysis.
We are constrained to conclude this record is insufficient to support the
calculation of the $50 fee as matching "the actual cost of processing and
collecting the violation" mandated by N.J.S.A.27:23-34.3(a). Accordingly, a
remand is required. Just because the administrative fee significantly exceeds
the toll, does not mean that it is automatically unreasonable. Presumably, the
need for a sophisticated system to capture toll violators exceeds the
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comparatively modest cost of any given toll. Prudently, the Legislature decided
taxpayers should not bear this burden and shifted the expense to those who
commit toll violations and fail to address their lapse. If the cost of collection is
$50, the sum does not shock the court's sense of fairness. Nevertheless, although
NJTA abided by the proper procedures necessary to increase the administrative
fee, we conclude the record remains unclear as to the reasonableness of the fee
itself.
We owe no deference to a regulation that runs contrary to its authorizing
statute. In re Regulation of Operator Serv. Providers, 343 N.J. Super. 282, 327
(App. Div. 2001). The fee imposed must properly be based on the average cost
of processing and collection of unpaid tolls and may not be an arbitrary
estimation. The basis for the fee must substantiate the need to mitigate the cost
of collection, and not to assess a disguised fine. Compare Fee, Black's Law
Dictionary (9th ed. 2009) (defining fee as "a charge for labor or services"), with
Fine, Black's Law Dictionary (9th ed. 2009) (defining fine as "a pecuniary
criminal punishment or civil penalty").
We recognize that "[a] regulation adopted by a state agency is presumed
to be reasonable and valid." In re Repeal of N.J.A.C. 6:28, 204 N.J. Super. 158,
160 (App. Div. 1985). "If procedurally regular, it may be set aside only if it is
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proved to be arbitrary or capricious or if it plainly transgresses the statute it
purports to effectuate, or if it alters the terms of the statute or frustrates the
policy embodied in it." Id. at 160-61 (citations omitted). Here, the regulation
needed to meet two requirements; it had to be (1) "reasonable" and (2) "based
upon the actual cost of processing and collecting the violation." N.J.S.A. 27:23-
34.3(a).
To be sure, we accord an initial presumption of constitutionality to the
authorizing statute and the regulation. N.J. Sports & Exposition Auth. v.
McCrane, 61 N.J. 1, 8, appeal dismissed sub nom, Borough of E. Rutherford v.
N.J. Sports & Exposition Auth., 409 U.S. 943 (1972). Even so, the existing
record furnished to us on this appeal is patently insufficient for a reviewing court
to make a definitive evidentially grounded assessment of these difficult and
important issues surrounding whether continuing the $50 fee permitted by the
regulation contravenes the authorizing statute.
For these many reasons, a full evidentiary hearing is vital to explore the
foundation for NJTA's assertion that the $50 fee is a "reasonable administrative
fee considering all of the actual costs associated with the system of collecting
tolls from violators." 49 N.J.R. 3623(b). That is, whether the $50 fee is "based
upon the actual cost of processing and collecting the violation," under the
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authorizing statute. Such a hearing ideally should encompass expert testimony,
cross-examination, and neutral judicial inquiry. At such a hearing, there should
be ample findings of fact, including findings of credibility, and conclusions of
law. That amplified record will enable a reviewing court to set forth a more
informed ultimate resolution of the competing interests at stake.
The question then becomes what forum is best suited to develop such an
evidentiary record. NJTA does not appear readily equipped to conduct such
full-blown evidentiary hearings. Nor is the Office of Administrative Law the
best suited venue, where discovery rights are limited, see N.J.A.C. 1:1-10.1 to -
10.6, and the rules of evidence are relaxed, see N.J.S.A. 52:14B-10(a). We
instead conclude that the exceptional circumstances of this wide-spreading
litigation warrant referral of the necessary evidentiary hearing and fact-finding
to a trial court, pursuant to the supplementation procedures set forth in Rule 2:5-
5(b).
To the extent that we have not dealt with the remaining issues raised by
petitioners, we conclude that they are without sufficient merit to warrant further
attention in this opinion. R. 2:11-3(e)(1)(E). We add, however, these brief
comments.
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Under the facts as we know them, there is no basis to include, as part of
the petition for rulemaking, a claim for damages, refunds, disgorgement, o r
unjust enrichment. N.J.A.C. 19:9-6.1 to -6.7 governs petitions by members of
the public seeking rulemaking, and does not provide for such ancillary causes
of action. Petitioners seek damages on behalf of all motorists similarly situated
to them, but no court has certified such individuals as a class. 2 And NJTA's
counsel points out that in the federal lawsuit, petitioners' counsel did not identify
petitioners as putative class representatives. Nevertheless, any dispositive
ruling on petitioners' claim for damages is premature. Although we have serious
doubts about the propriety of such damages under these facts (because in part,
petitioners apparently paid the toll violations, failed to make a timely protest,
and then delayed filing the petition for almost two years), the record is
incomplete and must be more fully developed before a ruling is made. On
remand, therefore, the parties may address all issues related to petitioners' claim
for damages.
2
Although we are not squarely addressing the issue, we question whether class
certification is appropriate given that the facts surrounding each motorist appear
to be different (including places of residence, whether fees were paid, the total
assessed, the roadway used, etc.).
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In accordance with Rule 2:5-5(b), we therefore remand for
supplementation of the administrative record. We direct the Middlesex County
assignment judge to designate a particular judge in Middlesex County to handle
the remand proceedings.
Affirmed in part; and remanded in part for further proceedings consistent
with this opinion. We retain jurisdiction.
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