Corcino-Rodriguez et al v. State Insurance Fund Corporation et al
Filing
151
OPINION AND ORDER denying 46 Motion to Dismiss. Signed by US Magistrate Judge Marcos E. Lopez on 10/17/2012. (GDR)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
VIRGEN M. CORCINO-RODRÍGUEZ, et al.,
Plaintiffs,
v.
CIVIL NO.: 10-1405 (MEL)
STATE INSURANCE FUND CORPORATION,
et al.,
Defendants.
OPINION AND ORDER
Pending before the court is a motion to dismiss (D.E. 46), filed by defendant State
Insurance Fund Corporation (“SIFC”), along with defendants Saúl Rivera-Rivera and Zoimé
Álvarez-Rubio, the Director and Assistant Director of the SIFC, in their official capacity
(“defendants”).
Plaintiffs Virgen M. Corcino-Rodríguez and Myriam Burgos-Ocana
(“plaintiffs”) have filed a response to this motion (D.E. 47).
Defendants argue that, as an “arms or ‘alter egos’ of the state,” they are protected from
suit under the Eleventh Amendment of the U.S. Constitution. D.E. 46, at 4. The Eleventh
Amendment dictates that “[t]he Judicial power of the United States shall not be construed to
extend to any suit in law or equity, commenced or prosecuted against one of the United States by
Citizens of another State, or by Citizens or Subjects of any Foreign State.” U.S. CONST. amend.
XI. The protection of the Eleventh Amendment extends not only to the fifty states, but also to
the Commonwealth of Puerto Rico. See Jusino Mercado v. Commonwealth of Puerto Rico, 214
F.3d 34, 39 (1st Cir. 2000). “[I]n the absence of consent a suit in which the State or one of its
agencies or departments is named as the defendant is proscribed by the Eleventh Amendment.”
Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 100 (1984). In particular, the Eleventh
Amendment “bars federal court lawsuits [against States] by private parties insofar as they
attempt to impose liabilities necessarily payable from public coffers.” Iberia Líneas Aéreas de
España v. Vélez-Silva, 59 F. Supp. 2d 266, 269 (1st Cir. 1999). This immunity protects not only
states, but also “arm[s] of the state.” In re San Juan Dupont Plaza Hotel Fire Litig., 888 F.2d
940, 942 (1st Cir. 1989). The entity seeking the protection of the Eleventh Amendment “bears
the burden of showing that it is an arm of the state.” Wojcik v. Massachusetts State Lottery
Comm’n, 300 F.3d 92, 99 (1st Cir. 2002).
In order to determine whether the SIFC, a public corporation, is an arm of the state, one
must engage in a two-step inquiry. First, one must determine “whether the state had structured
[the entity] to be an arm of the state.” Fresenius Med. Care Cardiovascular Res., Inc. v. Puerto
Rico & Caribbean Cardiovascular Ctr. Corp., 322 F.3d 56, 65 (1st Cir. 2003). Within this
inquiry is a four-factor analysis:
1. extent of state control including through the appointment of board
members and the state’s power to veto board actions or enlarge the entity's
responsibilities;
2. how the enabling and implementing legislation characterized the entity
and how the state courts have viewed the entity;
3. whether the entity’s functions are readily classifiable as state functions
or local or non-governmental functions; and
4. whether the state bore legal liability for the entity’s debts.
Id. at 65 n.7. If this first step is inconclusive, “the dispositive question concerns the risk that the
damages will be paid from the public treasury.” Id. at 68.
Defendants cite Berríos-Trinidad v. Ruiz-Nazario, CIV. 08-1809 (JP), 2009 WL 866864
(D.P.R. Mar. 27, 2009) (Pieras, J.), which held that the SIFC was an arm of the state and immune
from suit under the Eleventh Amendment. Nevertheless, since Berríos-Trinidad, there have been
two district court decisions holding that SIFC is not an arm of the state. Aponte-Ramos v.
Álvarez-Rubio, CIV. 10-2191 (GAG), 2011 WL 5855313 (D.P.R. Oct. 28, 2011) (Gelpí, J.);
2
Joubert-Vázquez v. Álvarez-Rubio, 820 F. Supp. 2d 289, 299 (D.P.R. 2011) (Casellas, J.). As
plaintiffs point out, the court in Berríos-Trinidad relied on Morales–González v. J.R.T., 121
D.P.R. 249 (1988), a Puerto Rico Supreme Court case which analyzed the SIFC as it existed
before the 1992 amendments to its Organic Act. D.E. 47, at 2. The court in Joubert-Vázquez
noted that Berríos-Trinidad “fails to paint the whole picture as to the SIFC’s structure.”1 820 F.
Supp. 2d at 299. For example, after the 1992 amendments, the SIFC can “[s]ue and be sued in
its name.”2 11 L.P.R.A. § 1b-1; cf. Berríos-Trinidad, 2009 WL 866864, at *1 (characterizing
SIFC as “a government agency not subject to sue and be sued”).
The dispositive inquiry, as the court in Joubert-Vázquez states, is “whether the
Commonwealth would end up holding the bag if Plaintiffs prevail in this suit.” Id. Like the
defendants in Joubert-Vázquez, defendants in this case argue that “the state treasury would be
placed in peril by any monetary judgment in this case,” pointing to “substantial fund transfers
from the [SIFC] to the central government.” D.E. 46, at 9-10. Indeed, a ruling that the SIFC is
not protected by the Eleventh Amendment “indirectly may impact the Commonwealth treasury.”
1
For the first step of the arm-of-the-state analysis, the Berríos-Trinidad court noted several factors favoring
protection under the Eleventh Amendment:
[T]he SIF[C] undoubtedly exercises a significant government function. Specifically, the Executive
Branch of the government controls the SIF[C] and appoints its manager, the SIF[C]’s budget must
be submitted for the approval of the Governor, and the SIF[C] must present an annual report to the
Legislature of Puerto Rico. The SIF[C] may not acquire property, except under certain limitations
imposed by statute. Although the SIF[C]’s employees were granted the right to collective
bargaining, they are not empowered to strike. Finally, the merit principle of the Personnel Act for
the Commonwealth of Puerto Rico permeates the recruitment and permanency of the SIF[C]’s
workforce.
2009 WL 866864, at *1 (internal citations omitted). But the Joubert-Vázquez court also noted that the SIFC could
“prepare, formalize, and award agreements, leases, contracts and other instruments with the Commonwealth of
Puerto Rico and any of its political subdivisions, agencies or political instrumentalities”; it may “sue and be sued in
its name”; its “Board of Directors has complete authority to run the corporation’s affairs, with the Commonwealth
enjoying no veto power over its decisions”; and “the Commonwealth may remove Board members … only … for
just cause, upon the filing of charges and the opportunity to be heard.” 820 F. Supp. 2d at 299 (internal quotations
and citations omitted). Thus, the first step of the arm-of-the-state analysis is inconclusive.
2
A sue-and-be-sued provision “typically is used to signify a waiver of immunity from suit.” Aroostook Band of
Micmacs v. Ryan, 484 F.3d 41, 68 (1st Cir. 2007); see also U.S. Postal Serv. v. Flamingo Indus. (USA) Ltd., 540
U.S. 736, 741 (2004) (“The [Postal Reorganization Act] waives the immunity of the Postal Service from suit by
giving it the power ‘to sue and be sued in its official name.’”).
3
Aponte-Ramos, 2011 WL 5855313 at *1. Nevertheless, “well settled law establishes that an
indirect or ancillary impact on a state’s treasury is insufficient to activate the Eleventh
Amendment.” 820 F. Supp. 2d at 300 (citing Cash v. Granville County Bd. of Educ., 242 F.3d
219, 224-25 (4th Cir. 2001)). “[I]t is an undisputed fact that the [SIFC] generates its own funds,
and any judgment rendered against it will be satisfied from its own funds, and not by the
Commonwealth Fisc.” Aponte-Ramos, 2011 WL 5855313, at *1.3
Because the SIFC is not an arm of the state, it is not protected by the Eleventh
Amendment. Thus, the Court hereby DENIES defendant’s motion to dismiss (D.E. 46).
IT IS SO ORDERED.
In San Juan, Puerto Rico, this 17th day of October, 2012.
s/Marcos E. López
U.S. Magistrate Judge
3
The Aponte-Ramos court points to other public corporations which were found not to be arms of the state and thus
do not receive Eleventh Amendment protection. 2011 WL 5855313, at *1 (citing Orria–Medina v. Metro. Bus
Auth., 565 F. Supp. 2d 285, 301-02 (D.P.R. 2007) (bus authority); Fresenius Med. Care Cardiovascular Res., Inc. v.
P.R. and the Caribbean Cardiovascular Ctr. Corp., 322 F.3d 56 (1st Cir. 2003) (Cardiovascular Center); Metcalf &
Eddy, Inc. v. P.R. Aqueduct and Sewer Auth., 991 F.2d 935 (1st Cir. 1993) (Aqueduct and Sewer Authority);
Riefkohl v. Alvarado, 749 F. Supp. 374, 375 (D.P.R. 1990) (Electric Energy Authority)).
4
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