JAMES C. CACHERIS, District Judge.
This case involves Virginia's hotly contested "Public-Private" 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 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.
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. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). 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"),
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).) 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,
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 inspection of photographs, microphotographs, videotapes, or other recorded
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). Otherwise, the administrative fee shall not exceed $100. Id. If the operator of the vehicle contests the violation but a court of competent jurisdiction
As the HOT lanes operator, Transurban enforces civil violations
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 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"). (Id. at ¶ 61; see also Transurban's Mem. [Dkt. 42] Ex. C.) 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." (Id. at ¶ 75.) 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 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." (Id. at ¶¶ 86, 88-89, 118.) 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.").)
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. (Am. Compl. ¶ 97.) This program includes:
(Id.) Plaintiffs allege that this new policy nonetheless fails to resolve the problem of "excessive, illegal, and unreasonable fees and fines" for various reasons. (Id. at ¶¶ 98-102.)
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,
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. (Id. at ¶ 115.) 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
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. (Id. at ¶¶ 136-137.)
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 costs
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
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. (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.
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,
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 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.) No judgment has been entered against Osborne to date. (Id. at ¶ 203.)
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. (Id. at ¶ 210.) 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 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. (Id. at ¶ 212.) 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
The seven individual Plaintiffs bring this action on behalf of themselves and all others similarly situated pursuant to Rule 23 of the Federal Rules of Civil Procedure.
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,
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. (Id. at ¶¶ 272-282.) 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. (Id. at ¶¶ 283-296.) And in Claim Eight, entitled "Tortious Interference with Contract," Plaintiffs allege that all Defendants knowingly interfered with Plaintiffs' contractual relationship with the E-ZPass entities under the E-ZPass contracts. (Id. at ¶¶ 297-312.)
Lastly, in Claim Five, Plaintiffs allege that Faneuil and LES, the Collection Defendants, violated the Fair Debt 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.)
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. (See Transurban's Mem. at 4-6.) 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; 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.
"[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
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. Ashcroft v. Iqbal, 556 U.S. 662, 679-81, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). 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, 129 S.Ct. 1937; Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Nor will a complaint that tenders mere "naked assertion[s]" devoid of "further factual enhancement." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937; Twombly, 550 U.S. at 557, 127 S.Ct. 1955.
"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 & 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).").
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.
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, 128 S.Ct. 2531, 171 L.Ed.2d 424 (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". (Faneuil's mem. at 9). 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 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.
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. 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, 94 S.Ct. 1704, 40 L.Ed.2d 164 (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
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, ___ U.S. ___, 132 S.Ct. 2277, 2287, 183 L.Ed.2d 281 (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, 86 F.Supp.3d 475, 478-79 (E.D.Va.2015). Nor is a case mooted if compensatory or even nominal damages are still available. Rock for Life-UMBC v. Hrabowski, 411 Fed. Appx. 541, 550 (4th Cir.2010). 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, 120 S.Ct. 693, 145 L.Ed.2d 610 (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. (Transurban's Mem. at 6.) Plaintiffs point out that "these `dismissals' were all `voluntary' and occurred
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 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
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, 126 S.Ct. 1854, 164 L.Ed.2d 589 (2006). When seeking prospective future relief, such as an injunction, it is insufficient to merely allege past harm. Adarand Constructors, Inc. v. Pena, 515 U.S. 200, 210-11, 115 S.Ct. 2097, 132 L.Ed.2d 158 (1995). 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, 129 S.Ct. 1142, 173 L.Ed.2d 1 (2009), later developed in Clapper v. Amnesty International USA, ___ U.S. ___, 133 S.Ct. 1138, 1147, 185 L.Ed.2d 264 (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 standing under the "capable of repetition yet evading review" exception. First, the injury must be likely to happen to Plaintiffs again. Weinstein v. Bradford, 423 U.S. 147, 149, 96 S.Ct. 347, 46 L.Ed.2d 350 (1975). 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, 127 S.Ct. 2652, 168 L.Ed.2d 329 (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 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
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. (Am. Compl. ¶¶ 137, 151, 174.) 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 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).
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, 120 S.Ct. 2304, 147 L.Ed.2d 374 supplemented 531 U.S. 1, 121 S.Ct. 292, 148 L.Ed.2d 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
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 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". Snyder-Falkinham v. Stockburger, 249 Va. 376, 457 S.E.2d 36, 39 (1995). 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, 255 Va. 588, 499 S.E.2d 272, 275 (1998) (quoting First Security Federal Savings Bank, Inc. v. McQuilken, 253 Va. 110, 480 S.E.2d 485, 487 (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." Snyder-Falkinham, 457 S.E.2d at 39. 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 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, 192 Va. 78, 63 S.E.2d 717, 718 (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
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. (Transurban's Mem. at 5) 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:
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).
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
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 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., 184 Wis.2d 465, 515 N.W.2d 904, 911 (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).
The first three claims in the amended complaint allege violations of the state and federal constitution against only Transurban.
Plaintiffs bring Claims One, Two, and Three pursuant to 42 U.S.C. § 1983,
"[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, 121 S.Ct. 924, 148 L.Ed.2d 807 (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:
457 U.S. 922, 937, 102 S.Ct. 2744, 73 L.Ed.2d 482 (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." 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, 95 S.Ct. 449, 42 L.Ed.2d 477 (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
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 § 33.2-503(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 WL 2456507, at *2, 2015 Va. Cir. LEXIS 65, at *5 (Va.Cir.Ct. 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, MI-2014-2511, 2517 at *4, *6, 2015 WL 4501967 (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 operation of, and enforcement of laws on, roads and public highways, including toll
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.
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,
"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, 792 F.3d 364, 387 (4th Cir.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 can only be explained as serving in part to punish, then the fine is subject to the Eighth Amendment." Tuomey, 792 F.3d at 387 (citations and internal quotation marks omitted). Excessive fines are infrequent and must be "grossly disproportional to the gravity of the offense. Id. (citations omitted). 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, 109 S.Ct. 2909, 106 L.Ed.2d 219 (1989).
Transurban first argues that because the civil penalties
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." United States v. Bajakajian, 524 U.S. 321, 329, 118 S.Ct. 2028, 141 L.Ed.2d 314 (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, 118 S.Ct. 2028. Courts addressing this issue have not fixed a bright-line ratio of unconstitutionality, however. See, e.g., Tuomey, 792 F.3d at 389-90.
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, 116 S.Ct. 1589, 134 L.Ed.2d 809 (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 pre-delivery damage to new cars when the cost of repair was less than 3% of the suggested retail price of the car. Id. at 562, 116 S.Ct. 1589. Thus, the question presented in Gore was whether a $2 million punitive damages award exceeded the constitutional limits of the Due Process Clause of the Fourteenth Amendment. Id. at 562-63, 116 S.Ct. 1589. 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
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, 118 S.Ct. 2028. 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 primarily concerned with proportionality between the alleged harm and the financial penalty. Id. at 334, 118 S.Ct. 2028. 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.
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.
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, ___ U.S. ___, 134 S.Ct. 2667, 189 L.Ed.2d 210 (2014). "Proper notice is `an elementary and fundamental requirement of due process,' and must be reasonably calculated to convey information concerning a deprivation." Id. (citations omitted). And to determine whether there is an 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, 96 S.Ct. 893, 47 L.Ed.2d 18 (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 informed
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. See Va.Code Ann. §§ 33.2-503(2)(c)-(d), (3)(b). This opportunity to be heard is sufficient to comport with procedural due process 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.
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." Id. (citations and internal quotation marks omitted). The second step is dependent on the outcome of the 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.
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
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. (Am. Compl. ¶ 269.) 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). (Id. at ¶ 270.) 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 defined by the FDCPA, and (3) the defendant has engaged in an act or omission prohibited by the FDCPA." Dikun v.
15 U.S.C. § 1692a(5). Congress did not expressly define "transaction." 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 consumer-related 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 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." (Id. ¶ 55.) 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 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. (Faneuil's Mem. at 9; LES's Mem. at 6.) 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
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 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.
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.
In Claim Four, Plaintiffs claim that "Defendants knowingly received and retained wrongful benefits and funds from
Here, the Court must dismiss Claim Four against the 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." 2013 WL 6039040, at *5. 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 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." Nossen v. Hoy, 750 F.Supp. 740, 744-45 (E.D.Va.1990). 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
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, 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., 88 F.Supp.3d 588, 591 (W.D.Va.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 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
Plaintiffs Amarti and Pizarro, under the VCPA, must also demonstrate that Transurban is a "supplier" with whom they have engaged in a "consumer transaction". Nahigian, 684 F.Supp.2d at 741. 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.
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. Hamilton, 88 F.Supp.3d at 591-92; Goss, 917 F.Supp.2d at 451. 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 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 misrepre-sentations
Again, the Court understands that Plaintiffs disagree with the exorbitant nature of the fine amount and with 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. Hamilton, 88 F.Supp.3d at 591-92; Goss, 917 F.Supp.2d at 451. 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 Defendants Faneuil and LES, and denies Defendants' Motion to Dismiss Counts Six and Seven with respect to Defendant Transurban.
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
To state a claim under Virginia law for tortious interference with contract, Plaintiffs must allege sufficient facts that establish the following elements:
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, 287 Va. 207, 754 S.E.2d 313, 318 (2014) (quoting Chaves v. Johnson, 230 Va. 112, 335 S.E.2d 97, 102 (1985); Dunn, McCormack & MacPherson v. Connolly, 281, Va. 553, 708 S.E.2d 867, 870 (2011))). It is irrelevant whether a defendant 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, 262 Va. 5, 546 S.E.2d 440, 444 (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." (Am. Compl. ¶ 55.) 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 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
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.
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." Fed.R.Civ.P. 15(a). "[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. 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.
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.
For the reasons stated in the accompanying Memorandum Opinion, it is HEREBY ORDERED that:
This matter is continued.
It is SO ORDERED.
