Billions of dollars at stake in toll road suits

Skipping out on paying a highway or bridge toll has long been a surefire way to get hit with a big fine. But if a raft of pending lawsuits seeking to overturn how toll operators share information about scofflaws is successful, California toll operators say taxpayers may end up taking the biggest hit.

Consumer groups contend that a legislative attempt to thwart the litigation constitutes one of the most important measures of the year – and one that has flown almost entirely under the public’s radar.

California has 200 miles of toll roads and bridges that handle 1.4 million mostly-routine transactions a day: a driver goes through a toll station and either pays cash to an attendant or has the toll automatically debited from a personal account, such as FasTrak.

Dozens of others claim they also received no notice of violations, but agencies nonetheless blocked their state income tax returns, placed DMV holds on their vehicle registration or even had their vehicles impounded

But when someone goes through without paying – for whatever reason – state law  allows toll operators to share consumers’ personally identifying information (PII) with each other and with agencies like the Department of Motor Vehicles in efforts to collect the unpaid tolls.

This is where things get dicey.

Several pending lawsuits claim toll operators like the Orange County Transportation Authority and the Transportation Corridor Agencies (comprised of the Foothill/Eastern Transportation Corridor Agency and the San Joaquin Hills Corridor Agency) have illegally used that information to not only track down scofflaws when they’ve missed paying a toll, but to also send them unsolicited marketing come-ons.

Litigants also claim the agencies have levied unconstitutionally excessive fines for toll violations, and then deprived alleged violators the opportunity to challenge those fines. In one case, a driver accused of evading tolls on the Golden Gate Bridge faced $11,000 in fines, even though mailed notices of the violations were sent to an incorrect street address.

“I can’t speak for what every toll agency does, but that is not something we would ever do.” — Randy Rentschler

Dozens of other litigants claim they also received no notice of violations, but agencies nonetheless blocked their state income tax returns, placed DMV holds on their vehicle registration or even had their vehicles impounded. And in some cases, they say that information was handed over to car rental companies or collection or credit agencies.

Toll agencies argue that none of this is illegal, and that their use of consumer data is all above board and in line with both the letter and the spirit of SB 1298, legislation authored by former Sen. Joe Simitian in 2010 to specifically allow them to share the information in the pursuit of “interoperability” and “toll enforcement and collection.” They vigorously deny sharing that info with marketers or anyone else.

“I can’t speak for what every toll agency does, but that is not something we would ever do,” says Randy Rentschler, the government affairs director for the Bay Area Toll Authority. “We need a court order to release any kind of personal information.”

If the courts decide with the plaintiffs, agencies say the damages could run into the tens of billions of dollars, which would do more than just obliterate their financial coffers. According to filings in one of the court cases, siding with the plaintiffs would mean that “California’s toll roads cannot function, the toll agencies will likely go bankrupt…”

Enter SB 664, a gut-and-amend bill from state Sen. Ben Allen, a Santa Monica Democrat, that would make significant changes to the law regulating toll agencies and their use of consumer PII.

The biggest issue for opponents, however, is that SB 664 would make all these changes retroactive back to 2011.

The bill cleared the Senate in April, but that was when it was an obscure measure dealing with the state’s official voter guide, not toll operations.

Allen’s bill now addresses several aspects of current law regarding interoperability.

First, it would clarify that toll agencies are allowed to share specific consumer data with each other and with certain third parties, such as contractors who handle billing processes. It also would extend the scope of who agencies can keep information on, from just those with accounts to anyone it deems subject to enforcement of a toll violation. Moreover, it would severely limit exposure to legal damages for agencies that do violate the law’s privacy restrictions, limiting it to not more than $2,500 per violation for the first three violations, and not more than $4,000 in total if the driver in question is a repeat violator.

“As a lawyer, when I see something like this my first thought is somebody has done something wrong that they are retroactively trying to say is okay.” — Lee Tien

In written testimony to the Assembly Transportation Committee, the Consumer Federation of California decried the damage caps, saying they would “make it more profitable for an agency to sell PII to third parties than face the consequences of consumer privacy invasion.”

Agencies would also not be held responsible for violations committed by third parties like billing vendors or credit agencies, something the bill’s opponents claim would lessen the agencies’ commitment to vetting those parties beforehand. As written, the bill would also make it easier for toll agencies to declare someone guilty of toll evasions, and for agencies to claim they gave their legal “best effort” to contact the violator before pursuing action against them.

The biggest issue for opponents, however, is that SB 664 would make all these changes retroactive back to 2011. If that sounds like it would slam the brakes on litigation against toll agencies, it would. And that has sparked furious opposition from consumer groups, who say it is a blatant attempt to short circuit pending litigation.

“That is one of the sketchiest things I’ve ever seen,” says Lee Tien of the Electronic Frontier Foundation, which opposes the bill. “As a lawyer, when I see something like this my first thought is somebody has done something wrong that they are retroactively trying to say is okay.”

Toll agencies “are sitting on hundreds of millions (if not billions) of unrestricted cash, garnered in large part from the toll and penalty revenues paid by class members.” — Coast Law Group

Toll agencies counter that the current statute doesn’t reflect new technologies like “expanded cashless toll collection systems, toll subscriptions completed online and subsequent use of emails or apps to communicate toll facility usage.” They further argue that without SB 664, agencies will continue to be subject to what they claim are the kind of “frivolous lawsuits” that have already cost the state more than $5 million to defend.

Whether any fiscal damages would ultimately come out of taxpayer pockets isn’t clear. Lawyers for the plaintiffs say state law bars a state agency like Caltrans from being held financially liable for such penalties, and that no current litigation names the agency as a defendant. Even so, toll agencies say that massive judgements would destroy their operating capital, preclude any further investment in system maintenance or upgrades and threaten their ability to meet current debt repayment obligations.

Coast Law Group, which represents the plaintiffs in one of the many pending court cases, disputes the claim. In Assembly hearings, they contended that toll agencies “are sitting on hundreds of millions (if not billions) of unrestricted cash, garnered in large part from the toll and penalty revenues paid by class members.” And if that money runs out, they say, the toll agencies have insurance that will cover the rest.

In any case, they argue, multiple state statutes bar Caltrans or any other state agency from being on the hook for damage claims. The firm has offered an amendment to SB 664 that would specifically spell that out. Allen has indicated a strong willingness to amend the measure to address many of the concerns voiced by consumer groups, but to date has not indicated that would be one of them.

In a year dominated by data privacy bills, SB 664 has remarkably stayed mostly under the radar. That will undoubtedly change when lawmakers return on August 12^th, though the measure is still well off from a final resolution. Although it has been endorsed in its current form unanimously in both the Assembly Transportation and the Assembly Privacy and Consumer Protection Committees, it is now in the Assembly Appropriations Committee and still needs to clear the full Assembly before it can return to the Senate for concurrence.