Monjitas, et al v. Pedro-Gordian

Filing 920100311

Opinion

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var WPFootnote1 = 'The Fund was created to "promot[e] the production, sale,\
processing and consumption of fresh milk and its byproducts, and \
. . . any other activity necessary for the advancement of the milk\
industry." P.R. Laws Ann. tit. 5, § 1099. It is "supported by\
contributions from milk producers at the rate of one-half (1/2)\
cent for each quart of milk produced and accepted by the processors\
for pasteurizing." Id.\
'

var WPFootnote2 = 'The intricacies of the regulatory mechanism that Defendants\
adopted have not been challenged by the parties. Defendants have\
not argued on appeal or in their petition for rehearing en banc,\
that the regulatory mechanism forces the Commonwealth to expend\
public funds or resources in violation of the Eleventh Amendment. \
Therefore, any arguments raised by the dissent sua sponte regarding\
the details of the regulatory accrual are insufficient to justify\
rehearing in this case.\
'

var WPFootnote3 = 'In fact, the precise compensation that Plaintiffs will be\
entitled to receive has not been determined as of yet, nor can it\
be gleaned from the record that the Commonwealth will bear any type\
of subsidiary monetary liability in this case. Thus, any\
contention that such an impermissible outcome is within the realm\
of possibility on the present record, is beyond speculation.\
'

var WPFootnote4 = 'The Supreme Court\'s decision in Doe is distinguishable because\
it dealt with an indemnification agreement between the State and a\
third party. This contractual relationship had nothing to do with\
the relationship between the state and the plaintiff who sought\
relief against the state in federal court. That is, the presence\
of third-party indemnitor in Doe failed to alter the state\'s\
liability towards the plaintiff.\
'

var WPFootnote5 = '              Specifically, plaintiffs claimed that since 2003, ORIL had\
used outdated economic data and had unfairly favored dairy farmers\
and other entities at the expense of fresh milk processors when\
formulating the annual pricing schemes for the milk industry. \
Plaintiffs claimed they were therefore unable to obtain reasonable\
profits. They alleged violations of, inter alia, the Due Process\
Clause, the Equal Protection Clause, and the Takings Clause.\
'

var WPFootnote6 = '              The Milk Industry Development Fund (Spanish acronym "FFIL")\
was established to promote the fresh milk industry. It is\
administered by an Administrative Board chaired by the\
Administrator of ORIL, and by law, "[a]ll monies in the Fund . . . \
shall be acknowledged as depositories of funds of the Commonwealth\
of Puerto Rico, but they shall be kept in an account or accounts\
under the name of the Fund." P.R. Gen. Laws. Ann. tit. 5,\
§ 1099(e). Thus, Puerto Rican law characterizes the funds in the\
account as funds of the Commonwealth of Puerto Rico.\
'

var WPFootnote7 = '              Specifically, the new price structure set the consumer price\
of fresh milk in Puerto Rico ($1.32) and divided the revenues per\
quart among retailers ($0.09), distributors ($0.02), fresh milk\
processors ($0.39), dairy farmers ($0.805), the new cost to ORIL of\
"future audits and regulatory activities" ($0.0025), and the\
special account contribution for regulatory accrual ($0.0125).\
'

var WPFootnote8 = '              The district court clearly erred when it characterized the\
relief as "prospective injunctive relief against the Defendants to\
avoid insolvency" as opposed to retrospective compensatory relief. \
See Vaquería Tres Monjitas, No. 04-1840, slip op. at 13-14 (D.P.R.\
Oct. 2, 2006) (order denying motions to dismiss). Plaintiffs say\
the regulatory accrual is really prospective because its purpose is\
to rebuild plaintiffs\' capital base and no pricing structure, going\
forward, would be effective without this step. But that argument\
would open the floodgates to retrospective compensation in almost\
any situation. The panel opinion assumed this relief was\
retrospective and rested its holding on the theory that retroactive\
compensatory relief that does not come directly from the state\
treasury does not violate the Eleventh Amendment. Vaquería Tres\
Monjitas, 587 F.3d at 478.\
'

var WPFootnote9 = '              Plaintiffs suggest in the alternative that First English\
Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304\
(1987), held, and our caselaw supports, the proposition that\
retroactive compensation for a Takings Clause claim is an exception\
to the Eleventh Amendment\'s usual bar on retrospective relief. The\
panel opinion rests instead on the ground that the regulatory\
accrual was an equitable remedy because there was no formal award\
of damages. Vaquería Tres Monjitas, 587 F.3d at 479-80.  \
              Plaintiffs\' position misinterprets the holdings of Parella v.\
Retirement Board of Rhode Island Employees\' Retirement System, 173\
F.3d 46 (1st Cir. 1999), and Tenoco Oil Co., Inc. v. Department of\
Consumer Affairs, 876 F.2d 1013 (1st Cir. 1989). Parella did not\
hold that the Eleventh Amendment allows the recovery of just\
compensation for temporary takings despite its retrospective\
nature. It was instead concerned with the complications such a\
position could pose for courts if Steel Co. v. Citizens for a\
Better Environment, 523 U.S. 83 (1998), were interpreted to require\
courts to reach Eleventh Amendment questions before other\
dispositive issues. 173 F.3d at 56-57. Tenoco mentioned First\
English only in passing and disposed of the case on the ground that\
permanent injunctions should not be imposed prior to final\
administrative actions. 876 F.2d at 1028-29. \
              In any event, First English did not squarely present an\
Eleventh Amendment question, since it involved a suit against a\
county, which cannot invoke Eleventh Amendment immunity. 482 U.S.\
at 308. And in the analogous context of compensation for reverse\
condemnation claims, we have stated that the Eleventh Amendment\
bars federal courts from granting this relief. See Citadel Corp.\
v. P.R. Highway Auth., 695 F.2d 31, 33 n.4 (1st Cir. 1982); see\
also Seven Up Pete Venture v. Schweitzer, 523 F.3d 948, 954-56 (9th\
Cir. 2008) (holding that the Eleventh Amendment bars retroactive\
compensation both under the Takings Clause and for reverse\
condemnation claims under the Due Process Clause).              \
'

var WPFootnote10 = '              Another circuit, applying Doe, has rejected the claim that the\
Eleventh Amendment is not implicated so long as a judgment against\
a state does not require any new expenditures from the state\
treasury. "[T]he proper inquiry is not whether the state treasury\
would be liable in this case, but whether, hypothetically speaking,\
the state treasury would be subject to \'potential legal liability\'\
if the [source in question] did not have the money to cover the\
judgment." Ernst v. Rising, 427 F.3d 351, 362 (6th Cir. 2005) (en\
banc). The panel opinion puts our circuit in conflict with the\
Sixth Circuit.\
'

var WPFootnote11 = '              Indeed, the regulatory accrual mechanism here functions\
similarly to the pricing scheme Massachusetts imposed to charge\
milk dealers additional money for the benefit of in-state dairy\
farmers in West Lynn Creamery, Inc. v. Healy, 512 U.S. 186 (1994). \
Under that mechanism, Massachusetts, which at the time exercised\
considerable regulatory control over in-state milk prices, ordered\
every milk dealer operating in Massachusetts to make a monthly\
payment into the "Massachusetts Dairy Equalization Fund," a special\
account, which was then distributed to Massachusetts producers\
every month. Id. at 190-91. The Supreme Court described this\
pricing scheme as "effectively a tax." Id. at 194.\
'

var WPFootnote12 = '              Defendants\' Eleventh Amendment argument on appeal rested on\
the theory that the regulatory accrual effectively made ORIL, an\
arm of the state, liable for retroactive compensation. Under\
defendants\' theory, these funds were by definition state funds, and\
the issue of whether the regulatory accrual implicates the state\
treasury is therefore before us. In any event, questions of\
Eleventh Amendment immunity can be raised by this court sua sponte,\
see Parella, 173 F.3d at 55. \
'

var WPFootnote13 = '              This is not to say that our inquiry must swing to a single-minded focus only on whether a given suit offends a state\'s\
dignitary interests. As the Supreme Court clarified in Verizon\
Maryland, Inc. v. Public Service Commission of Maryland, 535 U.S.\
635 (2002), whether a suit can proceed under Ex Parte Young turns\
on "a straightforward inquiry into whether [the] complaint alleges\
an ongoing violation of federal law and seeks relief properly\
characterized as prospective." Id. at 645 (alteration in original)\
(internal quotation marks omitted). But as other circuits have\
concluded, the state\'s sovereign interests are still relevant to\
the analysis and should not be ignored. See, e.g., Virginia v.\
Reinhard, 568 F.3d 110, 119-21 (4th Cir. 2009) (considering whether\
the state\'s "special sovereign interests" would be implicated in an\
Ex Parte Young action by a state administrative agency against\
state officials); Union Elec. Co. v. Mo. Dep\'t of Conservation, 366\
F.3d 655, 658 (8th Cir. 2004).\
'

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