Lawsuit Challenging E-ZPass Administrative Fee Revived

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

The Appellate Division’s recent decision in Long v. New Jersey Turnpike Authority dealt with a topic that is likely familiar to many New Jersey residents — the administrative fee assessed when you (allegedly) go through an E-ZPass lane without paying the toll. In the interest of full disclosure, I am very much not neutral on this issue. I recently received three notices from E-ZPass claiming that I went through toll plazas without paying. The tolls I allegedly failed to pay amounted to $20.45, but the administrative fee for each is $50, so my $20.45 in allegedly unpaid tolls may now cost me $220.45. But I digress.

First, some background. New Jersey law allows the Turnpike Authority to establish procedures for addressing “violations of [its] toll collection monitoring systems” (i.e., E-ZPass). Among other things, the Turnpike Authority may send “an advisory and payment request” to alleged toll violators, providing them “with the opportunity to resolve the matter prior to the issuance of a summons and complaint that charges a violation of the toll collection monitoring system regulations.” As part of this “advisory and payment request,” the Authority may require that the alleged violator pay “the proper toll and a reasonable administrative fee established by the authority and based upon the actual cost of processing and collecting the violation.” This administrative fee was originally set at $25 but was later raised to $50.

In Long, petitioners were two “E-ZPass toll violators” who filed a petition with the New Jersey Turnpike Authority challenging the $50 administrative fee. Petitioners challenged both the constitutionality of the regulation establishing the administrative fee (arguing that the Authority violated its rule-making authority, violated due process, etc.), and the amount of the fee itself, arguing that $50 was excessive because it was “unrelated to the actual costs of enforcement.” The Authority denied their petition and petitioners appealed to the Appellate Division.

The Appellate Division first held that petitioners waited too long to attack the legality of the regulation itself. They filed their petition “approximately six years after [the Turnpike Authority] raised the fee from $25 to $50, and almost two years after petitioners had paid their respective fees.” In the interim, “a number of important rule making considerations had changed,” therefore petitioners’ challenge to the regulation itself were barred by laches. (The Appellate Division briefly acknowledged, however, that even if this were not the case, it would have denied petitioners challenge to the legality of the regulation on the merits.)

But the Appellate Division rejected the Turnpike Authority’s decision that the $50 administrative fee was reasonable. When it denied petitioners’ petition, the Turnpike Authority ruled that the $50 fee “continue[d] to be reasonably related to the actual cost of processing and collecting toll violations.” (In fact, the Turnpike Authority claimed that the actual cost per violation was $80, not $50.) The Appellate Division held that the record was “insufficient” to support this conclusion, and that more information was needed to determine whether the $50 administrative fee matched the “actual cost of processing collecting the violation” as required under New Jersey law. The Appellate Division further observed:

Just because the administrative fee significantly exceeds the toll, does not mean that it is automatically unreasonable. Presumably, the need for a sophisticated system to capture toll violators exceeds the comparatively modest cost of any given toll. Prudently, the Legislature decided taxpayers should not bear this burden and shifted the expense to those who commit toll violations and fail to address their lapse. If the cost of collection is $50, the sum does not shock the court’s sense of fairness. Nevertheless, although NJTA abided by the proper procedures necessary to increase the administrative fee, we conclude the record remains unclear as to the reasonableness of the fee itself

Therefore, the Appellate Division remanded the matter for a “full evidentiary hearing,” which it envisioned would include “expert testimony, cross-examination, and neutral judicial inquiry.”

The next question was where this hearing should take place. According to the Appellate Division, the Turnpike Authority was not “readily equipped to conduct such full-blown evidentiary hearings,” and the Office of Administrative Law was not an appropriate venue because its rules limited discovery and relaxed the rules of evidence. Therefore, the Appellate Division remanded the matter to a trial court. (The Appellate Division did not remand to a specific trial court, but you can bet, wherever it ends up, this hearing will be closely watched.)

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