Court Opinion

ID: 21143
Source: CourtListenerOpinion
Date Created: 2010-04-25 07:41:50+00
Date Added: 2024-06-11T16:46:57.770341
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS

                              FOR THE FIFTH CIRCUIT

                                    No. 99-50811

NELL NEINAST,
                                                    Plaintiff-Appellant,

                                       versus

STATE OF TEXAS; TEXAS DEPARTMENT
OF TRANSPORTATION; DAVID M. LANEY;
ROBERT NICHOLS; JOHN W. JOHNSON;
CHARLES W. HALD; JERRY DIKE; VEHICLE
TITLES AND REGISTRATION DIVISION,
                                                    Defendants-Appellees.

             Appeal from the United States District Court
                   For the Western District of Texas

                                    June 26, 2000

Before REYNALDO G. GARZA, HIGGINBOTHAM, and BENAVIDES, Circuit

Judges.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

     Today    we     review     a    challenge   under   the   Americans    with

Disabilities Act (“ADA”) to Texas’s fee for handicapped parking

placards in light of jurisdictional and immunity defenses by the

State.    Texas asserts that Nell Neinast cannot bring this suit in

federal court because the placard charge is a tax, barring our

review under the Tax Injunction Act, 28 U.S.C. § 1341, and because

the ADA regulation at issue does not validly abrogate Texas’s
immunity from suit under the Eleventh Amendment.                 We hold that the

charge is a fee unaffected by the Tax Injunction Act.                     We also

conclude that because an administrative creature of Congress may

not have greater power than the Congress to abrogate the states’

immunity,    a    challenged         regulation    must   be   proportionate    and

congruent to the constitutional wrongs identified by the agency’s

enabling statute.       Finding that the regulation does not do so, we

hold that Neinast’s suit is barred by the Eleventh Amendment.

                                           I

     This    putative        class    action1     seeks   injunctive   relief   and

monetary damages for a $5 fee charged by Texas for handicapped

placards.2   These placards enable disabled individuals to park in

specially designated parking spaces; an individual need obtain one

only if she does not own a car or wishes to ride in the vehicle of

a non-disabled individual.3             The Texas Transportation Code states

that the fees will be “deposited in the state highway fund to

defray the       cost   of    providing    the     disabled parking     placard.”4

     1
      As the district court decided the dispositive motion on
review at the outset of the lawsuit, the class has not yet been
certified.
     2
      See TEX. TRANS. CODE ANN. §§ 681.002, 681.003.
     3
      If the individual owns a car, she would have a license plate.
The handicapped symbol on a license plate also authorizes parking
in handicapped spaces, and such license plates cost no more than a
regular license plate. See § 502.253(a), (d).
     4
      § 681.005.

                                           2
Neinast, who is disabled, paid the five dollar fee and obtained a

placard.

     Neinast filed suit in federal court, arguing that the fee

charged violates an ADA regulation prohibiting a governmental

entity from placing a surcharge on an individual with a disability

to cover the costs of measures required under the Act.5      Twenty

days after Neinast filed suit, Texas filed a motion to dismiss on

the ground that the federal court lacked jurisdiction pursuant to

the Tax Injunction Act.    The district court granted that motion,

and Neinast appealed.    On appeal, Texas contends not only that the

Tax Injunction Act but also the Eleventh Amendment bars the federal

suit.

                                  II

     First, the question before the district court: whether federal

jurisdiction is barred by the Tax Injunction Act.6     That statute

prevents federal courts from enjoining, suspending or restraining

the assessment, levy or collection of any tax under state law as

long as a plain, speedy and efficient remedy may be had in the

     5
        See 28 C.F.R. § 35.130(f) (2000).
     6
      We first address the statutory jurisdiction question in order
to, if possible, avoid a constitutional question.      See Vermont
Agency of Natural Resources v. United States ex rel. Stevens, 2000
WL 646252 (S. Ct. 2000); Steel Co. v. Citizens for a Better Env’t,
523 U.S. 83, 97 n.2 (1998) (noting Supreme Court’s choice of order
between statutory and constitutional jurisdictional questions).

                                  3
courts of that state.7      The Act functions as a broad jurisdictional

impediment to federal court interference with the administration of

state tax systems.8

     The applicability of the Act turns on whether the placard

charge is a “tax” or instead a “fee.”            The leading case in this

area,     San   Juan   Cellular   Telephone    Company   v.   Public   Service

Commission, describes the distinction as a spectrum with the

paradigmatic fee at one end and the paradigmatic tax at the other.9

The classic fee is imposed (1) by an agency, not the legislature;

(2) upon those it regulates, not the community as a whole; and (3)

for the purpose of defraying regulatory costs, not simply for

general revenue-raising purposes.10           Whether a charge is a fee or

a tax is a question of federal law.11

     Applying these factors to the Texas statute at hand, we find

that the first factor, whether the charge is imposed by the

legislature or an agency, suggests that the charge is a tax because

it is imposed by the Texas legislature.          The second factor, on whom

the charge is imposed, suggests that the charge is a fee: the

     7
        28 U.S.C. § 1341 (2000).
     8
      See Home Builders Assoc. of Miss., Inc. v. City of Madison,
143 F.3d 1006, 1010 (5th Cir. 1998).
     9
      San Juan Cellular Tel. Co. v. Public Serv. Comm’n, 967 F.2d
683, 685 (1st Cir. 1992) (Breyer, C.J.).
     10
          Home Builders, 143 F.3d at 1011.
     11
          Id. at 1010 n.10.

                                       4
charge is imposed only on a narrow class of persons, disabled

people wanting a placard, not the public at large.

     The third factor, the ultimate use of the funds, thus becomes

our critical question.12        The relevant provision in the Texas

Transportation Code requires that the placard charges go into the

general highway fund to help defray the cost of the program.13

Texas argues that the funds will more likely provide a benefit to

the community in the highway fund than actually defray the cost of

the program. According to this interpretation, however, no charges

would be fees unless they are funneled into a segregated account.

If the costs of the placard program are paid out of the general

highway fund, then charges paid back into the fund do help defray

the program’s costs.

     Texas also argues that the charge is a tax because it first

goes to the tax collector, then the highway fund.     This formalism

is unhelpful.      The opinion on which Texas relies, Hexom v. Oregon

Department of Transportation, specifically rejected this analysis:

it declined to characterize the fee based on the initial fund it

goes to, observing that the question is not where the money is

deposited, but the purpose of the assessment.14

     12
          See Marcus v. Kansas, 170 F.3d 1305, 1311 (10th Cir. 1999).
     13
          TEX. TRANS. CODE ANN. § 681.005(1).
     14
          See 177 F.3d 1134, 1138 (9th Cir. 1999).

                                      5
     The purpose here is described narrowly as being for the

benefit of the program itself.       This fact distinguishes this case

from Home Builders Association of Mississippi, Inc. v. Madison,

cited by Texas.      There, a municipality imposed an assessment on

developers and builders to “pay a fair share of providing and

maintaining . . . essential municipal services.”          The collected

funds would be used for a variety of municipal services, including

streets, fire and police departments, and parks and recreation.15

     Several     recent   opinions   have   examined   handicap    placard

surcharges and found them to be “fees” where the funds were to be

spent for narrowly defined purposes.          For example, in Marcus v.

Kansas, the fee went into a special fund for the administration of

the motor vehicle registration program, with excess funds at the

end of the year channeled into the state’s highway fund.          The court

held that the funds were primarily regulatory and thus “fees” for

purposes of the Tax Injunction Act.16         The cases in which courts

have found placard charges to be taxes were ones in which the funds

went for general revenue purposes.17        As the Texas statute applies

     15
          Home Builders, 143 F.3d at 1012.
     16
      Marcus v. Kansas, 170 F.3d at 1311-12. See also Hexom, 177
F.3d at 1138 (holding surcharge was a fee where it went into a
general fund but was used to defray costs of program); Thorpe v.
Ohio, 19 F. Supp.2d 816, 823 (S.D. Ohio 1998) (same).
     17
      See Hedgepeth v. Tennessee, 33 F. Supp. 2d 668, 671-73 (W.D.
Tenn. 1998) (funds went into highway fund, general fund, policy pay
supplemental fund, trooper safety fund; no evidence of relationship
to placard program); Lussier v. Florida, 972 F. Supp. 1412, 1420
(M.D. Fla. 1997) (holding that funds that went to defray costs of

                                     6
the charges toward the cost of the program, the district court

erred in holding that the placard funds were a tax and thus within

the scope of the Tax Injunction Act.

                                  III

     We turn to Texas’s contention that the ADA regulation at issue

exceeds Congress’s power under § 5 of the Fourteenth Amendment to

abrogate the states’ immunity.         Texas did not raise this issue

before the district court.

     Although we are empowered to consider an Eleventh Amendment

defense raised for the first time on appeal,18 we must consider

whether Texas’s failure to raise the issue below effectively waived

its claim to immunity.       A state’s waiver of immunity must be

unequivocal.19 It may evidence that waiver, however, through action

other than an express renunciation.       Courts have found waiver in

two general varieties of cases: where the state asserted claims of

program were a “fee;” other funds, which had a mixed revenue
raising and regulatory purpose, were a tax); Rendon v. Florida, 930
F. Supp. 601, 604 (S.D. Fla. 1996) (holding that the assessment at
issue was a tax because it bore no relationship to the cost of
regulating the program).
     18
          See Calderon v. Ashmus, 118 S. Ct. 1694, 1697 n.2 (1998).
     19
      See Atascadero State Hosp. v. Scanlon, 105 S. Ct. 3142, 3147
(1985).

                                   7
its own20 or evidenced an intent to defend the suit against it on

the merits.21

     The common thread among these cases is that the state cannot

simultaneously proceed past the motion and answer stage to the

merits and hold back an immunity defense.   For example, in Hill v.

Blind Industries and Services of Maryland, the state entity waited

until the first day of trial to assert its immunity.   Disallowing

the defense on appeal, the Ninth Circuit noted that the wait

allowed the state to have the best of both worlds; it could monitor

how the suit was proceeding on the merits but have any adverse

ruling set aside on Eleventh Amendment grounds.22

     Here, Texas’s only filing was a motion to dismiss based on the

Tax Injunction Act. Texas never filed an answer or participated in

any proceedings indicating an intent to try the matter on the

merits.23     Because the district court granted Texas’s 12(b)(6)

     20
      See, e.g., Dekalb County Div. of Family & Children Servs. v.
Platter, 140 F.3d 676, 680 (7th Cir. 1998) (state waived immunity
by filing an adversary proceeding in bankruptcy court); Paul N.
Howard Co. v. Puerto Rico Aqueduct Sewer Auth., 744 F.2d 880, 886
(1st Cir. 1984) (immunity waived where state filed counterclaim and
third-party complaint).
     21
      See Hill v. Blind Indus. & Servs. of Maryland, 179 F.3d 754,
763 (9th Cir. 1999) (collecting cases).
     22
          179 F.3d at 756-57.
     23
      As such, Texas filed no “pleading” as defined by Fed. R. Civ.
P. 12.   This fact defeats Neinast’s argument that Texas waived
immunity by failing to comply with a local district court rule
imposing time requirements on immunity claims; those requirements
would only have been triggered by the filing of a pleading. See
Local Court Rule CV-12 of U.S. Dist. Ct. for Western District of

                                 8
motion, Texas never had occasion to contest its presence in federal

court on other grounds.          Texas gained no benefit by federal court

jurisdiction and did not lead Neinast to believe that it intended

to try the case in federal court.24           Texas did not unequivocally

waive its right to assert immunity from suit.

     Now to the merits of Texas’s Eleventh Amendment challenge.

The Eleventh Amendment secures the states’ immunity from private

suits for monetary damages filed in federal court.25           Congress has

the power to abrogate that immunity under § 5 of the Fourteenth

Amendment, but only within its remedial powers under § 5.26

     Whether      Congress   is     exercising   its   remedial   power    or

impermissibly defining new rights is measured by the Supreme

Court’s two-part “congruence and proportionality” test.              First,

there must be evidence from the legislative record or elsewhere

that Congress      identified a pattern of constitutional wrongdoing.

Second,     the   court   must    consider   whether   the   provisions   are

Texas. As the rule was not triggered, we need pass no judgment as
to whether such local requirements could be evidence of waiver by
a state.
     24
      As we hold that Texas did not waive its immunity through its
actions, we do not reach the issue of whether the Attorney General
was authorized under Texas law to consent to federal court
jurisdiction on behalf of the State of Texas. See Ford Motor Co.
v. Department of Treasury, 323 U.S. 459, 469 (1945).
     25
          See Edelman v. Jordan, 415 U.S. 651, 663 (1974).
     26
      See Kimel v. Florida Bd. of Regents, 120 S. Ct. 631, 644
(2000).

                                        9
proportional to the remedial goal.27            In fashioning a remedy for

constitutional     violations,       Congress   has   latitude   to   prohibit

conduct which in itself is not unconstitutional.28

     Texas argues that the regulation at issue exceeds Congress’s

remedial     authority   under   §    5.    Circuit    precedent      bars   our

consideration of whether the ADA as a whole exceeds Congress’s

power to abrogate under § 5.29 Texas, however, presents a different

theory: foreclosed from arguing to this court that the entire ADA

exceeds the congressional power of abrogation, it contends that we

at least must confront whether the regulation exceeds those powers.

     Two of our sister Circuits have considered this method and

have focused on different lines of analysis.             The Fourth Circuit

     27
      See Kimel, 120 S. Ct. at 645; Florida Prepaid Postsecondary
Educ. Expense Bd. v. College Sav. Bank, 119 S. Ct. 2199, 2207
(1999).
     28
          See City of Boerne v. Flores, 117 S. Ct. 2157, 2163 (1997).
     29
       See Coolbaugh v. Louisiana, 136 F.3d 430, 438 (5th Cir.
1998).   It is unclear to what extent Coolbaugh blessed the ADA
insofar as it commands access rather than simply barring
discrimination, the less problematic issue; we assume without
deciding that it found both regulatory thrusts constitutional. We
note that Coolbaugh was decided before Kimel v. Florida Board of
Regents, 120 S. Ct. 631 (2000), which held that the Age
Discrimination in Employment Act exceeded Congress’s abrogation
powers and possibly suggests a more vigorous application of the
congruence and proportionality test than the Coolbaugh court
gleaned from City of Boerne. The Supreme Court has now three times
granted certiorari to address the § 5 issue in the ADA context; two
cases have settled, and one remains pending. See University of
Ala. at Birmingham Bd. of Trustees v. Garrett, 120 S. Ct. 1669
(2000); 68 U.S.L.W. 3649 (April 17, 2000).

                                       10
decided in Brown v. North Carolina Division of Motor Vehicles30 that

a challenged regulation must independently meet the proportional

and congruent test.31      The Ninth Circuit looks instead at the

statutory scheme as a piece to determine whether it falls under

Congress’s powers; if it does, the regulation is constitutional and

subject to review only under the Chevron32 standard.33

     Chevron involves a two-step inquiry.      First, the court must

address whether Congress has clearly spoken on a precise issue; if

it has, then the agency’s interpretation must conform to that

policy.     If it has not, the court moves to the second step, which

defers to the agency’s policy-making interpretation of the statute

unless that answer is arbitrary, capricious, or manifestly contrary

to the statute.34    We are persuaded that in a challenge such as this

one, which questions only the power of Congress to regulate the

states, not an agency’s power to implement by rule and interpret

     30
          166 F.3d 698 (4th Cir. 1999).
     31
      See Brown, 166 F.3d at 703-04. Since then, another Fourth
Circuit panel upheld the constitutionality of the ADA as a
statutory scheme but affirmed the court’s authority to pass on the
constitutionality of individual regulations. See Amos v. Maryland
Dept. of Public Safety & Correctional Serv’s, 178 F.3d 212, 221 &
n.8 (4th Cir. 1999), reh’g en banc granted, judgment vacated,
December 28, 1999.
     32
      Chevron, U.S.A., Inc. v. Natural Resources Defense Council,
Inc., 467 U.S. 837 (1984).
     33
          Dare v. California, 191 F.3d 1167, 1176 & n.7 (9th Cir.
1999).
     34
       See Chevron, 467 U.S. at 842-43; KENNETH CULP DAVIS & RICHARD J.
PIERCE, JR., I ADMINISTRATIVE LAW TREATISE § 3.2 (3d ed. 1994).

                                   11
congressional mandates, Chevron can suggest the wrong question if

we move too quickly to its second step.    Whether the Department of

Justice has rationally or arbitrarily interpreted the ADA in

promulgating the regulation at issue does not answer whether

Congress could constitutionally have made a certain policy choice.

     In making the “step one” inquiry, our operating premise must

be that an agency, or as here, an executive office with delegated

power to promulgate rules, cannot have greater power to regulate

state conduct than does Congress.       An agent cannot escape the

requirements of proportionality and congruence.       At the same time,

applying the proportionate and congruent test demands attention to

its context.   That Congress will not have made findings regarding

every discrete topic addressed by individual regulations is the

raison   d’être   of   administrative   delegation.       An   agency’s

promulgation process will thus not yield a record responsive to the

inquiries of City of Boerne in isolation from the statutory scheme

under which it operates.   We first must consider whether Congress,

not the agency, has satisfied City of Boerne in imposing a scheme

of regulation upon the states.

     If the statute satisfies this initial inquiry, we then measure

whether the challenged regulation operates within the remedial

compass defined by Congress through valid use of § 5 powers.       This

means that the agency’s action must be proportional and congruent

to the relevant constitutional wrongs identified by Congress, not

simply to other remedial steps taken by Congress directly.           In

                                 12
doing so, we do not detract from Chevron’s powerful preference that

policy choices be made by the representative branches rather than

the judiciary. Rather, we determine only whether the rulemaker has

followed the necessary limits of the statute’s regulation of the

states.

      The statute enabling the Department of Justice regulation

addresses the denial of access by the states to individuals with

disabilities.35       Following Coolbaugh, we presume that Congress

properly identified unconstitutional discrimination by the states

in   denying     access;   the   support   cited   by   that   court   includes

Congress’s finding that:

      [I]ndividuals with disabilities . . . encounter various
      forms of discrimination, including outright intentional
      exclusion, the discriminatory effects of architecture,
      transportation, and communication barriers . . . failure
      to make modifications to existing facilities . . . .36

Assuming that such findings identify unconstitutional conduct by

the state, a statutory remedy that ensures access correlates to the

relevant harm identified by Congress.

      When we turn to the regulation, we find that it falls outside

this access-granting remedial scheme and thus beyond the remedial

      35
      The statutory provision under which the Department of Justice
promulgated the rule reads:[N]o qualified individual shall, by
reason of such disability, be excluded from participation in or
denied the benefits of the services, programs, or activities of a
public entity, or be subjected to discrimination by any such
entity. 42 U.S.C. § 12132 (2000).
      36
           Coolbaugh, 136 F.3d at 435 (quoting 42 U.S.C. § 12101(a)).

                                      13
compass Congress         could    constitutionally     authorize       against    the

states.      The regulation reads:

      A public entity may not place a surcharge on a particular
      individual with a disability or any group of individuals
      with disabilities to cover the costs of such measures,
      such as the provision of auxiliary aids or program
      accessibility, that are required to provide that
      individual or group with the non-discriminatory treatment
      required by the Act or this part.37

The regulation’s scope goes further than simply requiring states to

provide access to their facilities and programs; it bars the

sharing of any costs of such measures, a highly intrusive limit on

the core state power to choose revenue sources.                    There is no

plausible claim that banning any fees by the state corrects past

discrimination against individuals with disabilities regarding

access or that it seeks prophylactically to prevent the state from

intentionally       discouraging      them    from     enjoying    access.         A

requirement as to who bears minimal costs of accommodation relates

back not to the relevant constitutional harm, but only to other

prophylactic steps.          We thus distinguish this situation from

Congress’s ban through the Voting Rights Act on literacy tests,

whose use had been shown to be an effort to discriminate.38

      This degree of separation leaves the regulation unanchored to

a   constitutional       purpose.      It    is   an   impermissible      form    of

regulatory      creep.      The    regulation     bears   such    an    attenuated

      37
           28 C.F.R. 35.130(f) (2000).
      38
      See Boerne, 117 S. Ct. at 2166-67;                   South       Carolina   v.
Katzenbach, 86 S. Ct. 803, 808-11 (1966).

                                        14
relationship to the remedial goal that it cannot be understood as

a remedial or prophylactic response to unconstitutional behavior.

We hold that 28 C.F.R. § 35.130(f) exceeds the scope of Congress’s

power to abrogate the states’ immunity under § 5 of the Fourteenth

Amendment.   Texas is thus not subject to suit without its consent.

We affirm the judgment dismissing this case, albeit on different

grounds.

     AFFIRMED.

                                15