Atesom v. Guam Memorial Hospital Authority et al
Filing
17
Report And Recommendations re 5 Motion to Dismiss pursuant to FRCP 12(b)(1) filed by Guam Memorial Hospital Authority, Theodore Lewis, 7 Cross Motion for Summary Judgment filed by Tairin Atesom. The undersigned recommends the Chief Judge gran t the Defendants' Motion to Dismiss on the grounds that this court lacks subject matter jurisdiction over the action. The court lacks federal question jurisdiction because the Plaintiff has failed to meet her burden of showing that her claims &q uot;arise under" federal law. Second, the court lacks diversity jurisdiction because the parties are not citizens of different states and because the Plaintiff has failed to satisfy the jurisdictional amount requirement. Additionally, because t he court's finding that it lacks subject matter jurisdiction is dispositive, the court declines to address the arguments raised in the Defendants' motion and the Plaintiff's Cross Motion for Partial Summary Judgment. Without subject ma tter jurisdiction over the claims, the court has no authority to grant the relief sought by the Plaintiff. Thus, the undersigned recommends the Plaintiff's cross motion be dismissed as moot. Objections to R&R due by 3/16/2016. Signed by Magistrate Judge Joaquin V.E. Manibusan, Jr on 3/2/2016. (fad, ) **Modified on 3/3/2016 to edit docket text** (fad, ).
1
2
3
4
5
6
IN THE DISTRICT COURT
7
FOR THE TERRITORY OF GUAM
8
9
10
11
12
13
14
15
TAIRIN ATESOM, individually and on behalf of )
CIVIL CASE NO. 15-00038
all others similarly situated,
)
)
Plaintiff,
)
)
vs.
)
) REPORT AND RECOMMENDATION
GUAM MEMORIAL HOSPITAL AUTHORITY )
re Motion to Dismiss and
and THEODORE LEWIS, in his official
) Cross Motion for Partial Summary Judgment
capacity as the Chief Administrator of the
)
Guam Memorial Hospital,
)
)
Defendants.
)
)
16
17
This matter is before the court on two motions referred by the Chief Judge to the below-signed
18
Magistrate Judge: (1) the Defendants’ Motion to Dismiss, and (2) Plaintiff’s Cross Motion for
19
Summary Judgment. See ECF Nos. 5 and 7. On February 5, 2016, the court heard argument on the
20
motions. Having reviewed all pertinent pleadings filed herein and heard argument from counsel, the
21
court hereby issues this Report and Recommendation.
BACKGROUND
22
23
1.
Procedural History
24
This proposed class action was filed on October 9, 2015. See Compl., ECF No. 1. The Class
25
Action Complaint (the “Complaint”) asserted three grounds for the court’s exercise of subject matter
26
jurisdiction over this action: (1) pursuant to 28 U.S.C. §§ 1331 and 1343, the matters in controversy
27
arise under the Constitution and the laws of the United States, specifically 42 U.S.C. §§ 1983 and
28
1988; (2) pursuant to 28 U.S.C. § 1332, the court has diversity jurisdiction since the plaintiff and all
Tairin Atesom, etc. v. GMHA and Theodore Lewis, in his official capacity as the Chief Administrator of the GMHA, Civil Case No. 15-00038
Report and Recommendation re Motion to Dismiss and Cross Motion for Partial Summary Judgment
page 2 of 18
1
proposed class members are non-U.S. citizens; and (3) pursuant to 28 U.S.C. § 1421(d), this court
2
has exclusive jurisdiction with regard to the Guam Territorial Income Tax (“GTIT”).
3
4
5
6
7
8
The Defendants did not answer the Complaint. Instead, the Defendants filed the instant
Motion to Dismiss on November 30, 2015. See ECF No. 5.
On December 8, 2015, the Plaintiff filed an Opposition to the Motion to Dismiss, in
conjunction with a Cross Motion for Partial Summary Judgment. See ECF No. 7.
On December 22, 2015, the Defendants filed a Reply Brief and an Opposition to the Cross
Motion for Partial Summary Judgment. See ECF No. 9.
9
On December 23, 2015, the Chief Judge issued an Order which noted that the parties had
10
consented to have the Magistrate Judge conduct all proceedings herein, however, the Chief Judge
11
opted to reserve the right to conduct all proceedings in this matter. See ECF No. 11. The Order also
12
referred the Defendants’ Motion to Dismiss to the below-signed judge for issuance of a report and
13
recommendation. Id.
14
15
16
17
18
19
On December 28, 2015, the Chief Judge referred Plaintiff’s Cross Motion for Partial Summary
Judgment to the Magistrate Judge. See ECF No. 12.
On December 28, 2015, the Plaintiff filed a Reply Brief to the Defendants’ Opposition to her
Cross Motion for Partial Summary Judgment. See ECF No. 13.
On February 5, 2016, the court heard argument on the two pending motions, and thereafter
took the matters under advisement. See Minutes, ECF No. 16.
20
2.
21
According to the Complaint, the Plaintiff is a citizen of the Federated States of Micronesia
22
(“FSM”). Compl. at ¶6, ECF No. 1. She has three dependent children and resides and works on
23
Guam. Id. Plaintiff claims she earns only the minimum wage, or a little more than that, and has
24
never been offered medical insurance at her places of employment on Guam. Id. The Plaintiff states
25
in 2014 she earned $12,468 but, because of the Earned Income and Dependent Child tax credits, she
26
was entitled to a $7,036 refund. Id. The Plaintiff asserts the Guam Memorial Hospital Authority
27
(“GMHA”) garnished the entire refund for tax year 2014 and has garnished all of the Plaintiff’s
28
refunds for the past three years to pay for hospital bills allegedly owed for services rendered to the
Factual Background
Tairin Atesom, etc. v. GMHA and Theodore Lewis, in his official capacity as the Chief Administrator of the GMHA, Civil Case No. 15-00038
Report and Recommendation re Motion to Dismiss and Cross Motion for Partial Summary Judgment
page 3 of 18
1
Plaintiff or her children. Id.
2
The garnishments by GMHA for the hospital bills allegedly owed by Plaintiff are done
3
through offsets it filed with the Guam Department of Revenue and Taxation (“DRT”) pursuant to
4
26 U.S.C. § 6402(e).1 Id. at ¶9. Based on the Offset of Overpayment Notices attached to the
5
Complaint, the following amounts were garnished from the Plaintiff’s tax refunds:
6
DATE OF NOTICE
TAX YEAR
7
8/20/13
2012
$
283.99
8
5/28/14
2013
$
7,182.00
9
5/4/15
2014
$
7,036.00
$
14,501.99
TOTAL OFFSET AMOUNT
10
OFFSET AMOUNT
11
The Plaintiff proposes to represent a class defined as
12
All FAS2 citizens residing and working on Guam pursuant to the Compact of Free
Association who have dependent children and who have had yearly earned income that
was so low that when they filed their income tax returns they were eligible for the
EITC and/or Dependent child Tax credits, but whose refunds, including refunds
attributable to those tax credits, have been garnished by GMHA, with or without due
process, for hospital bills allegedly owed.
13
14
15
16
Id. at ¶12.
17
The Complaint asserts five causes of action, summarized as follows:
18
First Claim: For Declaratory and Injunctive Relief Under 42 U.S.C. § 1983:
19
Plaintiff asserts GMHA’s garnishments violate the Supremacy Clause of the Constitution in
20
that said garnishments “interfere[] with the intent of the Federal Government in the Compact of Free
21
Association to promote the economic advancement and self-sufficiency of the working poor with
22
dependent children of the FAS whom it encourages to migrate to Guam and work to lift themselves
23
24
25
26
27
28
1
This is the statutory provision cited in the Complaint and in the Offset of Overpayment
Notices sent by DRT to the Plaintiff. See exhibits attached to Complaint. As will be discussed more
fully below, the court believes the correct statutory citation for these offsets is Section 6402(d), Title
26 United States Code.
2
The complaint does not define the term “FAS” but the court presumes it refers to the Freely
Associated States – consisting of the Federated States of Micronesia, the Republic of the Marshall
Islands and the Republic of Palau.
Tairin Atesom, etc. v. GMHA and Theodore Lewis, in his official capacity as the Chief Administrator of the GMHA, Civil Case No. 15-00038
Report and Recommendation re Motion to Dismiss and Cross Motion for Partial Summary Judgment
page 4 of 18
1
and their dependent children from degrading poverty.” Id. at ¶21. Plaintiff further alleges that the
2
garnishments violate the “more general intent of federal income tax policy embodied in the EITC
3
law” which seeks to “give a boost to working poor, particularly those with dependent children, who
4
are working to lift themselves from degrading poverty.” Id. at ¶¶2 and 21.
5
Second Claim: For Declaratory and Injunctive Relief Under 42 U.S.C. § 1983 and Under
6
Common Law Principles as Applicable
7
Plaintiff claims GMHA’s garnishment of Plaintiff’s tax refunds “is in violation of rights of
8
[the class members] . . . to the extent to which GMHA has already received reimbursement for those
9
bills, in whole or in part, and will receive more reimbursement in the future, by way of federal
10
Compact Impact funding. Under common law principles, GMHA has no right to collect twice for
11
having provided those services; a tacit novation having effectively been entered into between GMHA
12
and the Federal Government.” Id. at ¶25. Plaintiff requests the court enjoin the Defendants “from
13
so garnishing plaintiff’s and the proposed Class members’ refunds in the future for that fractional
14
amount of their bills that has already been paid for, or will be paid for by the Federal Government
15
in the future.” Id.
16
Third Claim: For Declaratory and Injunctive Relief Under 42 U.S.C. § 1983
17
Plaintiff asserts “GMHA did not provide Plaintiff, or any of the members of the proposed
18
Class, with a pre-attachment notice of and opportunity to be heard about the offsets/garnishments,
19
so as to enable any of them to present any defense they might have to GMHA’s so garnishing their
20
refunds.” Id. at ¶27. Plaintiff contends this violated the “Due Process Clauses of the Fifth and
21
Fourteenth Amendments to the U.S. Constitution,” in addition to violating the “expressly provided
22
due process right . . . provided for at 26 U.S.C. § 6402.” Id. at ¶28.
23
Fourth Claim: For Common Law Claim for Injunctive Relief and Damages
24
Plaintiff alleges the hospital bills she allegedly owed “were mostly from back in 2007, and
25
earlier.” Id. at ¶30. GMHA never filed a lawsuit against her and Plaintiff contends that the four year
26
statute of limitation set forth in 7 Guam Code Ann. § 11303 had or should have expired before
27
GMHA filed the offsets at issue here. Id. She further claims that any agreement she or other class
28
members may have made with GMHA after the statute of limitation had run on said debts that
Tairin Atesom, etc. v. GMHA and Theodore Lewis, in his official capacity as the Chief Administrator of the GMHA, Civil Case No. 15-00038
Report and Recommendation re Motion to Dismiss and Cross Motion for Partial Summary Judgment
page 5 of 18
1
rendered said debts “no longer time-barred, was made without sufficient consideration, under duress,
2
in extremis, and/or by way of GMHA’s taking unfair and unconscionable advantage of plaintiff’s and
3
each of the proposed Class members’ lack of legal sophistication about the matter.” Id. Plaintiff
4
asserts “[t]he aggregate amount of damages caused as alleged in this Claim is well in excess of the
5
diversity jurisdictional threshold of $75,000.”
6
Fifth Claim: For Fifth Amendment Takings Claim
7
Plaintiff claims that GMHA’s garnishing was an unconstitutional taking of her private
8
property for a public purpose for which she is entitled to just compensation pursuant to the Fifth
9
Amendment of the U.S. Constitution.
10
11
As noted above, the Defendants have not filed an answer to the Complaint, but instead filed
a Motion to Dismiss.
12
LEGAL STANDARD
13
Rule 12(b)(1) allows the court to dismiss a claim for lack of jurisdiction. “It is a fundamental
14
principle that federal courts are courts of limited jurisdiction.” Owen Equip. & Erection Co. v.
15
Kroger, 437 U.S. 365, 374 (1978). Thus, the plaintiff bears the burden of establishing subject matter
16
jurisdiction. Federal subject matter jurisdiction must exist at the time the action is commenced.
17
Morongo Band of Mission Indians v. Cal. State Bd. of Equalization, 858 F.2d 1376, 1380 (9th Cir.
18
1988). A court must presume lack of jurisdiction until the plaintiff establishes otherwise. Kokkonen
19
v. Guardian Life Ins. Co. of America, 511 U.S. 375 (1994); Scott v. Breeland, 792 F.2d 925, 927 (9th
20
Cir. 1986) (“The party seeking to invoke federal court jurisdiction has the burden of establishing that
21
jurisdiction exists.”).
22
A party bringing a Rule 12(b)(1) challenge to the court’s jurisdiction may do so either on the
23
face of the pleadings or by presenting extrinsic evidence for the Court's consideration. See White v.
24
Lee, 227 F.3d 1214, 1242 (9th Cir. 2000) (“Rule 12(b)(1) jurisdictional attacks can be either facial
25
or factual”). “In a facial attack, the challenger asserts that the allegations contained in a complaint
26
are insufficient on their face to invoke federal jurisdiction.” Safe Air for Everyone v. Meyer, 373
27
F.3d 1035, 1039 (9th Cir. 2004). In evaluating a facial attack to jurisdiction, the court must accept
28
the factual allegations of the complaint as true. See Lacano Invs., LLC v. Balash, 765 F.3d 1068,
Tairin Atesom, etc. v. GMHA and Theodore Lewis, in his official capacity as the Chief Administrator of the GMHA, Civil Case No. 15-00038
Report and Recommendation re Motion to Dismiss and Cross Motion for Partial Summary Judgment
page 6 of 18
1
1071 (9th Cir. 2014). However, legal conclusions in the complaint are not accepted as true, even if
2
they are cast as factual allegations. See id.
3
“By contrast, in a factual attack, the challenger disputes the truth of the allegations that, by
4
themselves, would otherwise invoke federal jurisdiction.” Safe Air, 373 F.3d at 1039. “With a
5
factual Rule 12(b)(1) attack . . . a court may look beyond the complaint to matters of public record
6
without having to convert the motion into one for summary judgment. It also need not presume the
7
truthfulness of the plaintiff[’s] allegations.” White, 227 F.3d at 1242 (internal citation omitted); see
8
also Thornhill Publishing v. General Tel. & Elec. Corp., 594 F.2d 730, 733 (9th Cir. 1979).
9
In this case, the Defendants appear to argue that the allegations in Plaintiff’s Complaint are
10
insufficient on their face to establish subject matter jurisdiction. Whether subject matter exists then
11
does not depend on resolution of a factual dispute, but rather on the allegations in the Complaint.
12
The court must only assume the Complaint’s factual allegations to be true and draw all reasonable
13
inferences in Plaintiff’s favor. Legal conclusions in the Complaint need not be accepted as true, even
14
if they are cast as factual allegations.
15
DISCUSSION
16
Defendants seek dismissal of the Complaint because the court lacks subject matter
17
jurisdiction. First, Defendants argue the court has no subject matter jurisdiction over this case
18
because the Plaintiff failed to comply with the requirements of the Government Claims Act in that
19
she failed to first file an administrative claim for her contractual dispute with GMHA before bringing
20
this suit. Second, the Defendants assert the Plaintiff has not presented a question arising under
21
federal law. Finally, Defendants contend the Plaintiff has not established diversity of citizenship or
22
the jurisdictional amount in controversy. These arguments are separately addressed below:
23
1.
24
The Defendants begin their argument by asserting that the “Government of Guam enjoys
25
broad sovereign immunity” and then note that the Guam Legislature, through the Government
26
Claims Act, provided a limited waiver of said sovereign immunity for suits involving contractual
27
issues or certain types of torts. See 5 Guam Code Ann. §§ 6101-6404. According to the Defendants,
28
the Government Claims Act requires a claim to be filed before the commencement of an action in
Whether Failure to Comply with Government Claims Act Bars Suit
Tairin Atesom, etc. v. GMHA and Theodore Lewis, in his official capacity as the Chief Administrator of the GMHA, Civil Case No. 15-00038
Report and Recommendation re Motion to Dismiss and Cross Motion for Partial Summary Judgment
page 7 of 18
1
the Superior Court of Guam. See 5 Guam Code Ann. § 6106. The Defendants assert that the
2
Plaintiff here did not file a claim for her contractual dispute with GMHA, and even if she had
3
properly filed a claim, any lawsuit authorized must be brought in the Superior Court of Guam, not
4
this court.
5
While the Government of Guam may enjoy broad sovereign immunity, the Plaintiff is not
6
suing the Government of Guam. The defendants here are GMHA and its Chief Administrator in his
7
official capacity. Although GMHA is a “public corporation and an autonomous instrumentality” of
8
the Government of Guam, see 10 Guam Code Ann. § 80102, the Guam Legislature has waived the
9
doctrine of sovereign immunity for GMHA by granting it the right to sue and be sued in its enabling
10
legislature. 10 Guam Code Ann. § 80109(e). See also GEDA v. Island Equip. Co., Inc., 1998 Guam
11
7, ¶9 and Perez v. GHURA, 2000 Guam 33, ¶10.
12
But whether GMHA enjoys sovereign immunity is not dispositive of whether GMHA is
13
excluded from the operation of Guam’s Government Claims Act. The Government Claims Act
14
specifically states that it
15
16
17
applies, except as provided in Section 6104 of the Chapter, to the entire government
of Guam, as specifically stated herein. No government agency, whether denominated
as a line department, an agency or a public corporation, is excluded from the scope of
this Chapter. The fact that an agency or instrumentality has or has not the right to sue
or to be sued in its own name does not exclude such agency or instrumentality from the
scope of this Chapter.
18
19
5 Guam Code Ann. § 6102.
20
For example, in the Perez v. GHURA case, the Supreme Court of Guam recognized that
21
although GHURA did not enjoy sovereign immunity, the Government Claims Act was still
22
applicable to GHURA. 2000 Guam 33 at ¶11. The Supreme Court of Guam stated that “[i]n order
23
to sue the government or any agency thereof, autonomous or non-autonomous, the procedures of the
24
Claims Act must first be followed. . . . Failure to file a claim prior to filing a suit warrants dismissal
25
on a jurisdictional ground.” Id. at ¶14.
26
The Plaintiff asserts that the Government Claims Act does not apply here because the suit was
27
filed in federal court and not the Superior Court of Guam. Additionally, the Plaintiff argues
28
because she has not filed a breach of contract claim against GMHA, the Government Claims Act
Tairin Atesom, etc. v. GMHA and Theodore Lewis, in his official capacity as the Chief Administrator of the GMHA, Civil Case No. 15-00038
Report and Recommendation re Motion to Dismiss and Cross Motion for Partial Summary Judgment
page 8 of 18
1
does not bar the claims now before the court.
2
The court concurs with the Plaintiff’s position that the Government Claims Act is inapplicable
3
here, but for a different reason. The very language of the Government Claims Act states that it “shall
4
not apply to any claim pertaining to any tax refund[.]” 10 Guam Code Ann. § 6104. A review of
5
the Complaint reveals that the crux of the Plaintiff’s claims are that the Defendants violated her
6
federal constitutional and statutory rights by garnishing her tax refunds to satisfy debts allegedly
7
owed to GMHA. Because the Plaintiff’s claims pertain to a tax refund, the Government Claims Act
8
is inapplicable. Accordingly, the court recommends the Chief Judge deny the motion to dismiss with
9
regard to the argument that the Plaintiff’s failure to comply with the Government Claims Act bars
10
her suit.
11
2.
12
Defendants next argue that this court lacks federal subject matter jurisdiction over the
13
Plaintiff’s claims. As discussed earlier, because federal courts are courts of limited jurisdiction, the
14
Plaintiff has the burden of proving this court has subject matter jurisdiction over this action. The
15
only sources of federal subject matter jurisdiction available in this case are (1) federal question
16
jurisdiction, 28 U.S.C. § 1331, and (2) diversity jurisdiction, 28 U.S.C. § 1332.
Whether Federal Question Jurisdiction Exists
17
Section 1331 governs federal question jurisdiction and provides that “[t]he district courts shall
18
have original jurisdiction of all civil actions arising under the Constitution, laws or treaties of the
19
United States.” 28 U.S.C. § 1331. A case “arises under” federal law either where federal law creates
20
the cause of action or where plaintiff’s right to relief necessarily depends on resolution of a
21
substantial question of federal law. Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677,
22
689-90 (2006).
23
Based on the allegations in the Complaint, the Plaintiff asserts this court has federal question
24
jurisdiction because her claims arise under certain federal laws: 42 U.S.C. § 1983, 48 U.S.C. §
25
1421i(h)(1), and the Takings Clause of the Fifth Amendment of the Constitution. The court will
26
review whether these federal laws create the causes of action the Plaintiff asserts in the Complaint
27
or whether the Plaintiff’s right to relief necessarily depends on resolution of a substantial question
28
of these laws.
Tairin Atesom, etc. v. GMHA and Theodore Lewis, in his official capacity as the Chief Administrator of the GMHA, Civil Case No. 15-00038
Report and Recommendation re Motion to Dismiss and Cross Motion for Partial Summary Judgment
page 9 of 18
1
a.
Section 1983
2
Paragraph 5 of the Complaint asserts that this court “has jurisdiction over this matter pursuant
3
to 28 U.S.C. Sections 1331 and 1343.”3 The Complaint alleges the actual federal law that creates
4
the cause of action or provides the relief she seeks is Section 1983 of Title 42, United States Code.4
5
Section 1983 provides a federal remedy for “the deprivation of any rights, privileges, or immunities
6
secured by the Constitution and laws.” There are two essential elements to a section 1983 action:
7
first, that a right secured by the Constitution or laws of the Untied States was violated; and second,
8
that the alleged deprivation was committed by a person acting under the color of state law. See 42
9
U.S.C. § 1983; West v. Atkins, 487 U.S. 42, 48 (1988).
10
In this case, there is no dispute that the Defendants were acting under color of law, thus
11
satisfying the second element of Section 1983 actions. The inquiry then is what federally protected
12
right of the Plaintiff did the Defendants violate. The Supreme Court has stated that
13
14
15
16
Section 1983 speaks in terms of “rights, privileges, or immunities,” not violations of
federal law. In deciding whether a federal right has been violated, we have considered
whether the provision in question creates obligations binding on the governmental unit
or rather “does no more than express a congressional preference for certain kinds of
treatment.” . . . The interest the plaintiff asserts must not be “too vague and
amorphous” to be “beyond the competence of the judiciary to enforce.” . . . We have
also asked whether the provision in question was “intend[ed] to benefit” the putative
plaintiff.
17
18
19
20
21
22
23
24
25
26
27
28
3
It is unclear which of the four subsections of Section 1343 Plaintiff relies upon. It would
appear that Plaintiff is proceeding under subsection 1343(a)(3), which is the jurisdictional grant for
Section 1983 causes of action. See Golden State Transit Corp. v. City of Los Angeles, 493 U.S. 107
n.4 (1999). Subsection 1343(a)(3) provides district court with jurisdiction over civil actions “[t]o
redress the deprivation, under color of any State law, statute, ordinance, regulation, custom or usage,
of any right, privilege or immunity secured by the Constitution of the United States or by any Act
of Congress providing for equal rights of citizens or of all persons within the jurisdiction of the
United States.”
4
Section 1983 provides
Every person who, under color of any statute, ordinance, regulation, custom, or
usage, of any State or Territory or the District of Columbia, subjects, or causes to be
subjected, any citizen of the United States or other person within the jurisdiction
thereof to the deprivation of any rights, privileges, or immunities secured by the
Constitution and laws, shall be liable to the party injured in an action at law, suit in
equity, or other proper proceeding for redress.
Tairin Atesom, etc. v. GMHA and Theodore Lewis, in his official capacity as the Chief Administrator of the GMHA, Civil Case No. 15-00038
Report and Recommendation re Motion to Dismiss and Cross Motion for Partial Summary Judgment
page 10 of 18
1
Golden State Transit Corp., 493 U.S. at 106.
2
Turning to the allegations of the Complaint then, the Plaintiff asserts a “violation of the rights
3
of [the Class] derivative of the Supremacy Clause of the United States Constitution.” See Compl.
4
at ¶21, ECF No. 1. But the Supreme Court has stated that the Supremacy Clause “is not a source of
5
any federal right” since it simply “secure[s] federal rights by according them priority whenever they
6
come in conflict with state law.” Chapman v. Houston Welfare Rights Organization, 441 U.S. 600,
7
613 (1965). Therefore, the Supremacy Clause in and of itself does not create rights enforceable
8
under Section 1983.
9
The Plaintiff’s Opposition appears to argue that she and the class have rights that accrue to
10
them under the Compact of Free Association (the “Compact”).
11
12
13
14
15
16
In January 1986, Congress adopted the Compact of Free Association Act of 1985,
Pub. L. No. 99-239, 99 Stat. 1770 (1986), approving a Compact of Free Association
between the United States and the Governments of the Federated States of Micronesia
and the Republic of the Marshall Islands. 48 U.S.C. § 1901. Among other provisions,
the Compact authorized citizens of Micronesia and the Marshall Islands freely to “enter
into, lawfully engage in occupations, and establish residence as a non-immigrant in the
United States and its territories and possessions.” See 99 Stat. at 1804. However,
Congress declared its intent that the Compact not “cause any adverse consequences for
the United States territories and commonwealths or the State of Hawaii.” 48 U.S.C.
§ 1904(e)(1).
17
Leon Guerrero v. Clinton, 157 F.3d 1190, 1191 (9th Cir. 1998)
18
Under the Compact, Congress also declared “that, if any adverse consequences to United
19
States territories and commonwealths or the State of Hawaii result from implementation of the
20
Compact of Free Association, the Congress will act sympathetically and expeditiously to redress
21
those adverse consequences.” 48 U.S.C. § 1904(e)(4).
22
The Compact was later amended by agreement on June 30, 2004. In the amended version,
23
Congress authorized certain reimbursement to the governments of the affected jurisdictions for the
24
“adverse consequences” caused by the Compact. Congress “authorized to be appropriated to the
25
Secretary of the Interior such sums as may be necessary to reimburse health care institutions in the
26
affected jurisdictions for costs resulting from the migration of citizens of the Republic of the
27
Marshall Islands, the Federated States of Micronesia and the Republic of Palau to the affected
28
Tairin Atesom, etc. v. GMHA and Theodore Lewis, in his official capacity as the Chief Administrator of the GMHA, Civil Case No. 15-00038
Report and Recommendation re Motion to Dismiss and Cross Motion for Partial Summary Judgment
page 11 of 18
1
jurisdictions as a result of the implementation of the Compact of Free Association[.]” 48 U.S.C. §
2
1921c(e)(6).
3
The Plaintiff argues that she and the proposed class have rights that are “derivative” of this
4
treaty because they are “third party beneficiaries” of the Compact. See Opp’n at 5-6, ECF No. 7.
5
Plaintiff asserts that because the federal government reimburses GMHA under the Compact, GMHA
6
has already been compensated for the medical bills allegedly owed by the Plaintiff. She argues,
7
therefore, that Defendants should not have garnished her tax refunds.
8
Defendants disagree with Plaintiff’s assertion and argue that the “federal government has not
9
obligated itself to pay for expenses incurred by individual FSM citizens residing in Guam.” Reply
10
at 3, ECF No. 9. Instead of providing FSM citizens with individual assistance, the Defendants claim
11
the reimbursements authorized by the Compact are meant to assist Guam and other affected areas.
12
At the hearing, counsel for the Defendants stated that the monies received by GMHA under the
13
Compact are used to improve the facility and equipment at the hospital. Counsel stated GMHA does
14
not use said funds toward individual patients’ bills.
15
The court agrees with the Defendants. Congress expressed an intent to redress adverse
16
consequences of the Compact by reimbursing the governments of the affected jurisdictions. If
17
anyone is a “third party beneficiary” of the Compact’s reimbursement authorizations, it would be the
18
affected jurisdictions, such as Guam, and not any individual FSM citizen who resides here. There
19
is nothing in the treaty’s express language that would indicate it was meant to inure to the benefit
20
of any specific individual. Even the Ninth Circuit has recognized that “Congress did not explicitly
21
or implicitly provide for a private right of action or a private remedy pursuant to the Compact.”
22
AHPW, Inc. v. Pohnpei, 437 Fed. Appx. 565, 567 (9th Cir. 2011). The Plaintiff has no right –
23
derivative or otherwise – to appropriations Congress provides to the affected jurisdictions. Thus,
24
the Compact does not create rights enforceable by the Plaintiff under Section 1983.
25
The only other federal right allegedly violated then is the Plaintiff’s Due Process rights under
26
the Fifth and Fourteenth Amendments. See Compl. at ¶28, ECF No. 1. Specifically, she argues that
27
when Defendants garnished her tax returns, they violated her “expressly provided due process right
28
to a sixty day notice of, and opportunity to contest, any such garnishment . . . as provided for at 26
Tairin Atesom, etc. v. GMHA and Theodore Lewis, in his official capacity as the Chief Administrator of the GMHA, Civil Case No. 15-00038
Report and Recommendation re Motion to Dismiss and Cross Motion for Partial Summary Judgment
page 12 of 18
1
U.S.C. § 6402.” Id.
2
The Plaintiff does not specify which subsection of Section 6402 she relies upon for the
3
assertion that she is entitled to a 60-day notice period. The court presumes she is referring to
4
subsection 6402(e)(4),5 however, this subsection is inapplicable.
5
Section 6402 generally permits certain offsets to be taken against federal tax refunds.
6
Subsection (c) permits offsets for past due child support. Subsection (d) permits offsets for debts
7
owed to federal agencies, and subsection (e) allows federal tax refunds to be offset to collect
8
delinquent state income tax obligations. In this case, the notices issued by GMHA to the Plaintiff
9
state that the garnishments were being made pursuant to Section 6402(e). This is incorrect, however,
10
because the garnishments by GMHA were not collected to satisfy a delinquent state income tax
11
obligation. Instead, said garnishments were actually offsets made pursuant to Section 6402(d). The
12
statute defines a “Federal agency” as a “department, agency, or instrumentality of the United
13
States[.]” 26 U.S.C. § 6402(h). Under the mirror tax code system, the word “Guam” is replaced for
14
the word “United States,” see 48 U.S.C. § 1421i(e), and thus GMHA becomes a “Federal agency”
15
for purposes of obtaining an offset under Section 6402(d). The offsets of Plaintiff’s tax returns were
16
not authorized under Section 6402(e) because said offsets were not collections of “past-due, legally
17
18
5
Subsection (e)(4) provides that
19
[n]o State may take action under this subsection until such State –
20
(A) notifies by certified mail with return receipt the person owing the past-due State
income tax liability that the State proposes to take action pursuant to this section;
21
22
23
24
(B) gives such person at least 60 days to present evidence that all or part of such
liability is not past-due or not legally enforceable;
(C) considers any evidence presented by such person and determines that an amount
of such debt is past-due and legally enforceable; and
25
26
27
28
(D) satisfies such other conditions as the Secretary may prescribe to ensure that the
determination made under subparagraph (C) is valid and that the State has made
reasonable efforts to obtain payment of such State income tax obligation.
26 U.S.C. § 6402(e)(4).
Tairin Atesom, etc. v. GMHA and Theodore Lewis, in his official capacity as the Chief Administrator of the GMHA, Civil Case No. 15-00038
Report and Recommendation re Motion to Dismiss and Cross Motion for Partial Summary Judgment
page 13 of 18
1
enforceable State income tax obligations” as permitted under that subsection. Instead, the offsets
2
were taken to satisfy hospital debts allegedly owed by the Plaintiff.
3
Furthermore, under Section 6402(d), the Defendants were not required to give Plaintiff 60
4
days notice of their intent to garnish her tax returns. The only notice required for offsets made under
5
subsection (d) is notice that the return “has been reduced by an amount necessary to satisfy such
6
debt.” 26 U.S.C. § 6402(d)(1)(C). The appropriate notices were sent to Plaintiff (see Notices
7
appended to her Complaint), and thus she can not assert any violation of her due process rights.
8
The Plaintiff has failed to satisfy the first element of a Section 1983 action. She has not
9
established that the Defendants’ conduct deprived her of a federally protected right under either the
10
Supremacy Clause, the Compact, or the Due Process Clauses of the Fifth and Fourteen Amendment.
11
Thus, this court has no subject matter jurisdiction based on the Section 1983 claims.
12
b.
GTIT Jurisdiction
13
Another possible ground for federal question jurisdiction asserted in paragraph 5 of the
14
Complaint is this court’s “jurisdiction over all judicial proceedings in Guam, both criminal and civil,
15
regardless of the degree of the offense or of the amount involved, with respect to the Guam
16
Territorial income tax.” 48 U.S.C. § 1421i(h)(1). While Section 1421i(h)(1) appears to provide this
17
court with jurisdiction over the claims asserted in the Complaint because said claims involve the
18
GTIT, this grant of jurisdiction is overcome by a more specific provision in the tax code.
19
Specifically, Section 6402(g) provides:
20
21
No court of the United States shall have jurisdiction to hear any action, whether legal
or equitable, brought to restrain or review a reduction authorized by subsection (c), (d),
(e), or (f). . . . No action brought against the United States to recover the amount of
any such reduction shall be considered to be a suit for refund of tax.
22
23
26 U.S.C. §6402(g). The statute is clear. Although this court generally has jurisdiction over civil
24
actions involving the GTIT, the court has no jurisdiction to review the tax offsets that form the basis
25
for the Plaintiff’s Complaint. Accordingly, the court finds that Section 1421i(h)(1) cannot form the
26
basis for this court’s federal question jurisdiction over the action.
27
28
c.
Takings Clause of the Fifth Amendment
The fifth claim of the Complaint asserts a claim for deprivation of the Plaintiff’s Fifth
Tairin Atesom, etc. v. GMHA and Theodore Lewis, in his official capacity as the Chief Administrator of the GMHA, Civil Case No. 15-00038
Report and Recommendation re Motion to Dismiss and Cross Motion for Partial Summary Judgment
page 14 of 18
1
Amendment rights which, if true, would provide the court with federal question jurisdiction.
2
Specifically, the Plaintiff contends that GMHA’s garnishment of her tax refunds was “an
3
unconstitutional taking of her . . . private property for a public purpose; for which [she is] entitled
4
to just compensation.” Compl. at ¶32, ECF No. 1.
5
The Fifth Amendment provides, among other things, that: “No person shall ... be deprived of
6
life, liberty, or property, without due process of law; nor shall private property be taken for public
7
use, without just compensation.” U.S. Const. amend V.
8
In this case, the Complaint is internally inconsistent. Although paragraph 32 states that her
9
tax refund was taken for a public purpose, paragraph 6 of the Complaint asserts that GMHA
10
garnished her tax refunds “to pay for hospital bills allegedly owed for services rendered to her or her
11
children.” This is consistent with the Offset of Payment Notices appended to the Complaint. If the
12
tax refunds were taken to satisfy the Plaintiff’s personal debt to the hospital, then this does not
13
constitute a taking of private property for a public purpose without just compensation. The
14
Plaintiff’s Takings Clause claim is merely an attempt to attack the means by which the Defendants
15
utilized the tax offset scheme to satisfy a debt the Plaintiff alleged owed to GMHA. The court
16
simply cannot accept the Plaintiff’s legal conclusion – that the Defendants violated the Takings
17
Clause of the Fifth Amendment – as true.
18
The Plaintiff has failed to meet her burden of showing that her claims “arise under” federal
19
law. This court lacks federal question jurisdiction over the claims, but the court must still analyze
20
whether it has diversity jurisdiction over the action.
21
3.
22
Section 1332 grants district courts with “jurisdiction of all civil actions where the matter in
23
controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between .
24
. . citizens of a State and citizens or subjects of a foreign state.” 28 U.S.C. § 1332(a)(2). For
25
purposes of Section 1332, the word “State” includes Guam. 28 U.S.C. § 1332(e). Here, the
26
Defendants argue that the Plaintiff has not satisfied her burden of establishing diversity of citizenship
27
between the parties and the minimum required amount in controversy.
28
Whether Diversity Jurisdiction Exists
a.
Diversity of Citizenship
Tairin Atesom, etc. v. GMHA and Theodore Lewis, in his official capacity as the Chief Administrator of the GMHA, Civil Case No. 15-00038
Report and Recommendation re Motion to Dismiss and Cross Motion for Partial Summary Judgment
page 15 of 18
1
The Complaint alleges this court has diversity jurisdiction over this matter because Plaintiff
2
and all proposed class members are non-U.S. citizens. Compl. at ¶5, ECF No. 1. The Plaintiff also
3
confirms this in paragraph 6 of the Complaint when she states that she is a citizen of the FSM. The
4
Defendants argue that for purposes of diversity jurisdiction the Plaintiff is actually a citizen of Guam
5
because she has been domiciled on Guam since 2000, is employed on Guam and pays taxes on
6
Guam. See Mot. to Dismiss at 8, ECF No. 5.
7
8
9
10
11
12
The Ninth’s Circuit case of Kanter v. Warner-Lambert Co., 265 F.3d 853 (9th Cir. 2001) is
instructive. There, the Ninth Circuit stated that
the diversity jurisdiction statute, 28 U.S.C. § 1332, speaks of citizenship, not of
residency. To be a citizen of a state, a natural person must first be a citizen of the
United States. Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 828 . . . (1989).
The natural person’s state citizenship is then determined by her state of domicile, not
her state of residence.
Kanter, 265 F.3d at 857.
13
Here, the Plaintiff’s state of citizenship is not Guam because she is an FSM citizen, not a U.S.
14
citizen. Thus, she qualifies as a “citizen of a foreign state” under Section 1332(a)(2). Defendants
15
nevertheless argue that there is no diversity jurisdiction because Section 1332(a)(2) has a caveat
16
which provides that “district courts shall not have original jurisdiction under this subsection of an
17
action between citizens of a State and citizens or subjects of a foreign state who are lawfully admitted
18
for permanent residence in the United States and are domiciled in the same State.” 28 U.S.C.
19
§ 1332(a)(2) (emphasis added). The Defendants argue that under the Compact, the Plaintiff has been
20
admitted to Guam for permanent residence and is domiciled here.
21
The court disagrees. Under Section 141 of the Compact, a citizen of the FSM is permitted to
22
“enter into, lawfully engage in occupations, and establish residence as a non-immigrant in the United
23
States and its territories and possessions” for an unlimited length of time. 99 Stat. at 1804 (emphasis
24
added). However, this does not mean that such individuals are “lawfully admitted for permanent
25
residence” in the United States. This is a term of art defined under federal immigration laws as
26
meaning “the status of having been lawfully accorded the privilege of residing permanently in the
27
United States as an immigrant in accordance with the immigration laws, such status not having
28
changed.” 8 U.S.C. § 1101(a)(20) (emphasis added). Thus, the court concludes that the exception
Tairin Atesom, etc. v. GMHA and Theodore Lewis, in his official capacity as the Chief Administrator of the GMHA, Civil Case No. 15-00038
Report and Recommendation re Motion to Dismiss and Cross Motion for Partial Summary Judgment
page 16 of 18
1
noted in Section 1332(a)(2) is inapplicable to FSM citizens who are not lawfully admitted for
2
permanent residence in the United States.
3
The parties in their briefs and at the hearing failed to discuss the state of citizenship for either
4
of the Defendants. The Complaint simply notes that GMHA is “an autonomous agency of the
5
Government of Guam,” and that Mr. Lewis is being sued only in his “official capacity” as the “Chief
6
Administrator” of GMHA. Compl. at ¶¶7-8, ECF No. 1. Suits against state agencies and state
7
officials in their official capacities, however, are treated as suits against the state itself. See Morongo
8
Band of Mission Indians v. California State Bd. of Equalization, 858 F.2d 1376 (9th Cir. 1988).6
9
Additionally, the Supreme Court has held that because ““[t]here is no question that a State is not a
10
‘citizen’ for purposes of the diversity jurisdiction, a suit between a state and a citizen or a corporation
11
of another state is not between citizens of different states.” Moor v. County of Alameda, 411 U.S.
12
693, 717 (1973); see also California v. Steelcase Inc., 792 F. Supp. 84, 86 (C.D. Cal. 1992) (“[F]or
13
diversity purposes, a state is not a citizen of itself. Therefore, it cannot sue or be sued in a diversity
14
action.”). Applying this to the facts of this case, the Plaintiff’s claims against GMHA and its Chief
15
Administrator in his official capacity – an agency and official of the Government of Guam – is
16
essentially a suit against Guam itself, and such suit cannot be based on diversity since Guam is not
17
18
19
20
21
22
23
24
25
26
27
28
6
The question presented in Morongo was whether the district court properly exercised
subject matter jurisdiction over an Indian tribe’s action in the nature of interpleader against a
member of the tribe and a state tax authority. The Ninth Circuit eventually reversed the district court
and stated the following with regard to its analysis of diversity jurisdiction:
As an agency of the State of California, the Board [of Equalization] has no
“citizenship” for the purposes of section 1332. See Moor v. County of Alameda, 411
U.S. 693, 717 . . . (1973) (“There is no question that a State is not a ‘citizen’ for
purposes of the diversity jurisdiction.”); Postal Tel Cable Co. v. Alabama, 155 U.S.
482, 487 . . . (1894) (“A State is not a citizen. And, under the Judiciary Acts of the
United States, it is well settled that a suit between a State and a citizen or a
corporation of another State is not between citizens of different States . . . .”).
858 F.2d 1381.
The Indian tribe also named as defendants certain members of the Board of Equalization in
their official capacities. The Ninth Circuit stated that “[a] claim alleged against a state officer acting
in his official capacity is treated as a claim against the state itself.” Id. at n.5.
Tairin Atesom, etc. v. GMHA and Theodore Lewis, in his official capacity as the Chief Administrator of the GMHA, Civil Case No. 15-00038
Report and Recommendation re Motion to Dismiss and Cross Motion for Partial Summary Judgment
page 17 of 18
1
a “citizen” of itself. Accordingly, the court finds that the Plaintiff has failed to establish diversity
2
of citizenship under Section 1332.
3
b.
Amount in Controversy
4
The second element of diversity jurisdiction under Section 1332 requires that “the matter in
5
controversy exceeds the sum or value of $75,000, exclusive of interest and costs.” 28 U.S.C.
6
§ 1332(a). The Complaint, however, only challenges the offsets made by Defendants which total
7
$14,501.99. This does not meet the threshold amount required by Section 1332. Even if the Plaintiff
8
attempted to lump her offsets with those asserted by potential class members, she would have to
9
meet an even higher threshold amount for class actions. Pursuant to Section 1332(d)(6),7 the amount
10
in controversy in class actions based on diversity jurisdiction has to exceed the sum of $5 million.
11
The Plaintiff’s Complaint fails to allege this higher jurisdictional amount.
12
Because the Plaintiff has failed to establish that (1) diversity between the parties exists and
13
(2) the threshold amount in controversy has been met, this court can not exercise diversity
14
jurisdiction over this matter. And, having failed to establish either federal question or diversity
15
jurisdiction, this court must grant the Motion to Dismiss for lack of subject matter jurisdiction.
16
RECOMMENDATION
17
Based on the above analysis, the undersigned recommends the Chief Judge grant the
18
Defendants’ Motion to Dismiss on the grounds that this court lacks subject matter jurisdiction over
19
the action. The court lacks federal question jurisdiction because the Plaintiff has failed to meet her
20
burden of showing that her claims “arise under” federal law. Second, the court lacks diversity
21
jurisdiction because the parties are not citizens of different states and because the Plaintiff has failed
22
to satisfy the jurisdictional amount requirement.
23
Additionally, because the court’s finding that it lacks subject matter jurisdiction is dispositive,
24
the court declines to address the arguments raised in the Rule 12(b)(6) issues raised in the
25
Defendants’ motion and the Plaintiff’s Cross Motion for Partial Summary Judgment. Without
26
27
28
7
This subsection provides: “In any class action, the claims of the individual class members
shall be aggregated to determine whether the matter in controversy exceeds the sum or value of
$5,000,000, exclusive of interest and costs.” 28 U.S.C. § 1332(d)(6).
Tairin Atesom, etc. v. GMHA and Theodore Lewis, in his official capacity as the Chief Administrator of the GMHA, Civil Case No. 15-00038
Report and Recommendation re Motion to Dismiss and Cross Motion for Partial Summary Judgment
page 18 of 18
1
subject matter jurisdiction over the claims, the court has no authority to grant the relief sought by the
2
Plaintiff. Thus, the undersigned recommends the Plaintiff’s cross motion be dismissed as moot.
3
IT IS SO RECOMMENDED.
4
/s/ Joaquin V.E. Manibusan, Jr.
U.S. Magistrate Judge
Dated: Mar 02, 2016
5
6
7
8
9
10
NOTICE
11
Failure to file written objections to this Report and Recommendation within
fourteen (14) days from the date of its service shall bar an aggrieved party from
attacking such Report and Recommendation before the assigned United States
District Judge. 28 U.S.C. § 636(b)(1)(B).
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?