Rivera-Corraliza et al v. Puig et al

Filing 101

OPINION AND ORDER granting 59 motion for summary judgment. Plaintiffs' Commonwealth law claims are dismissed without prejudice. Signed by Judge Jose A Fuste on 07/15/2013. (dv)

UNITED STATES DISTRICT COURT
DISTRICT OF PUERTO RICO

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PABLO RIVERA-CORRALIZA, et. al.,
Plaintiff,

Civil No. 11-1219 (JAF)

v.
JUAN PUIG-MORALES, et. al.,
Defendants.
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OPINION AND ORDER

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We must decide whether the Puerto Rico Treasury Department’s seizure of

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Plaintiffs’ gaming machines violated the First, Fourth, Eighth and Fourteenth

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Amendments to the U.S. Constitution.
I.
Background

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Because we must view all facts in the light most favorable to the non-moving

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party when considering a summary judgment motion, to the extent that any facts are

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disputed, the facts set forth below represent Plaintiffs’ version of the events at issue.

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Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

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Five operators of adult entertainment machines bring suit against various

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employees of the Department of the Treasury of Puerto Rico, alleging various violations

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of Puerto Rican law as well as federal constitutional violations for which they seek relief

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under 42 U.S.C. §1983. (Docket No. 16.) The plaintiffs claim the Treasury Department

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is improperly regulating and interfering with their business of operating adult

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entertainment machines. (Id.) Plaintiffs seek several million dollars in damages and

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punitive damages, and request that we award attorneys’ fees and costs incurred in

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litigation. (Docket No. 16 at 37-38.) Defendants have filed a motion for summary

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judgment requesting that the complaint be dismissed with prejudice. (Docket No. 59.)

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Plaintiffs allege that Defendant Secretary Puig “went on a media tour to accuse the

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adult entertainment machine operators of the island of being ‘gangsters’ and

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‘criminals.’” (Docket No. 16 at 13.) Plaintiff Rivera-Corraliza responded by giving

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interviews and attending television and radio shows on behalf of Commercial

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Recreational Enterprises of Puerto Rico or “EMPRECOM,” an organization of adult

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entertainment machine owners. (Id.) Rivera-Corraliza “made it clear that Mr. Puig’s

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attacks” were based on EMPRECOM not supporting the installation of a “Video Lottery

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Terminal system” in Puerto Rico. (Id.) Plaintiffs allege that the Department then “denied

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their right to renew the licenses of their machines” and that Defendant Puig (again) went

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on “a media blitz against them.” (Docket No. 16 at 14.) Rivera-Corraliza went to the

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press a second time. (Id.) Although the complaint neglects to specify dates, it alleges

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that this sequence of events occurred from August of 2009 through October of

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2009. (Docket No. 16 at 13-14.)

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The plaintiffs allege that on February 26, 2010, the Department of Treasury

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illegally seized licensed adult entertainment machines that belonged to Rivera-Corraliza's

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business. (Docket No. 16 at 14-15.) On March 26, 2010, Puig sent a letter informing

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Rivera-Corraliza that all of his licenses would be temporarily suspended; ultimately this

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became permanent after an “informal administrative hearing” with the Department of

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Treasury. (Docket No. 16 at 16.) Rivera-Corraliza then filed an administrative complaint

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with the Department of Treasury in May of 2010. (Docket No. 16 at 17.)

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On February 25, 2011, Plaintiffs filed the initial complaint. (Docket No. 1.) On

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March 14, 2011, Plaintiffs filed an amended complaint that added Alfredo Pérez-Rivera,

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Héctor O. Gadea-Rivera, and Rafael Diez de Andino as defendants (Docket No. 4.) On

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June 1, 2011, Defendants answered the amended complaint. (Docket No. 14.) On June

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8, 2011, Plaintiffs filed a second amended complaint that added Marisol Flores and

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Milton Vescovacci-Nazario as defendants. (Docket No. 16.)

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answered the second amended complaint on June 27, 2011. (Docket No. 21.) Defendant

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Aileen De Leon answered the second amended complaint on July 18, 2011. (Docket No.

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23.) On December 14, 2011, Defendants Marisol Flores and Milton Vescovacci-Nazario

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answered the second amended complaint. (Docket No. 34.) Plaintiffs filed a motion for

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partial voluntary dismissal on March 5, 2012. (Docket No. 35.) On March 9, 2012, we

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granted a partial judgment dismissing with prejudice. (Docket No. 37.) Defendants filed

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a motion for summary judgment on October 10, 2012. (Docket No. 59.) On October 31,

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2012, Plaintiffs filed a response in opposition to the motion for summary judgment.

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(Docket No. 68.) Defendants replied on November 26, 2012. (Docket No. 82.)

Various Defendants

II.
Legal Standard

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The defendants are entitled to summary judgment on a claim if they can show that

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there is no genuine dispute over the material facts underlying the claim. Celotex Corp. v.

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Catrett, 477 U.S. 317, 323 (1986). We must decide whether a reasonable juror could find

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for plaintiffs on each of their claims when all reasonable inferences from the evidence are

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drawn in their favor. See Scott v. Harris, 550 U.S. 372, 380 (2007).

Civil No. 11-1219 (JAF)

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Discussion

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Defendants move for summary judgment as to Plaintiffs’ entire complaint.

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Plaintiffs’ assert that there are triable claims, including violations of numerous provisions

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of the federal constitution (First, Fourth, Sixth, and Fourteenth Amendments) and Puerto

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Rico law. All of these claims lack merit.

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Claims Raised Under 42 U.S.C. § 1983

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Section 1983 creates a cause of action against those who, acting under color of

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state law, violate a plaintiff’s Constitutional or federal rights. See 42 U.S.C. § 1983;

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Maine v. Thiboutot, 448 U.S. 1, 4(1980).

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A.

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Amendment Violation

Defendants are Entitled to Summary Judgment on Plaintiffs’ Claim of a 4th

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Plaintiffs argue that the seizure of their machines is illegal because there was no

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valid search warrant, in violation of their Fourth Amendment rights. See U.S. Const.

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amend. IV.

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entertainment machine industry is a highly regulated industry; (2) the seized machines

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were illegal. (Docket No. 59 at 17-26.) Additionally, Defendants argue that they are

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entitled to qualified immunity. (Docket No. 59 at 40-45.)

Defendants argue that the seizures were legal because: (1) the adult

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Supreme Court precedent recognizes a limited exception to the Fourth

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Amendment’s warrant requirement for searches of businesses in “closely regulated

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industries.” See, e.g., New York v. Burger, 482 U. S. 691, 699–703 (1987); see also

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Giragosian v. Bettencourt, 614 F.3d 25, 29 (1st Cir. 2010). There are two interrelated

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requirements justifying the warrantless search of businesses operating within a closely

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regulated industry. First, a strong state interest must justify the regulatory regime and a

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warrantless search must further that interest. See United States v. Gonsalves, 435 F.3d

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64, 67 (1st Cir. 2006). Second, the pervasive regulation of the industry must have reduced

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the justifiable privacy expectation of the subject of the search. Burger, 482 U.S. at 701-

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702.

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Here, the search satisfies these requirements, so proceeding without a warrant is

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constitutionally permissible. In Puerto Rico, adult entertainment machines operate within

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a pervasive regulatory regime. See P.R. Laws Ann. Tit. 15 §§ 82-85. Puerto Rico has a

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substantial state interest in regulating games of chance.

Posadas de Puerto Rico

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Associates v. Tourism Co. of Puerto Rico, 478 U.S. 328, 341 (1986) (“We have no

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difficulty in concluding that the Puerto Rico Legislature’s interest in the health, safety,

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and welfare of its citizens constitutes a ‘substantial’ governmental interest.”).

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Unannounced searches help the commonwealth ensure compliance with the pervasive

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regulatory regime. Similar to the trucks in Maldonado, adult entertainment machines can

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be quickly altered at any time and can potentially be restored to legal operation after

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tampering. United States v. Maldonado 356 F.3d 130, 135-6 (1st Cir. 2004) (holding

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that warrantless inspections of commercial trucks are necessary to further the regulatory

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scheme because the industry is mobile and surprise is an important component of an

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efficacious inspection regime). Surprise inspections ensure compliance by preventing

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owners from using their machines illegally during non-inspection times and correcting

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the problem before an announced inspection. See United States v. Biswell, 406 U.S. 311,

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316 (1972) (stating that “if inspection is to be effective and serve as a credible deterrent,

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unannounced, even frequent, inspections are essential”). Announcing searches ahead of

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time would thwart the Commonwealth’s enforcement of its laws, because machines can

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be altered or removed before an announced inspection, thus concealing illegal

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actions. Unannounced inspections avoid this problem. Additionally, the defendants have

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a reduced expectation of privacy in their gambling machines because of the pervasive

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regulation of gambling. The defendants have chosen to run a business that the

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Commonwealth monitors closely. Their machines are public commodities—requiring

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licensure to operate—and are placed and located in an open place of business, not private

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homes. Defendants cannot expect privacy in their public accommodations, which they

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openly offer to the public and agree to maintain according to stringent Commonwealth

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guidelines. The search here did not violate the Fourth Amendment.

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Even if these searches violated the constitution, which we hold they did not, the

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defendants are entitled to qualified immunity because the Defendants' conduct did "not

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violate clearly established statutory or constitutional rights of which a reasonable person

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would have known.”

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omitted). Given that the government here searched and seized illegal gambling machines

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used in a pervasively regulated industry where the machines were publicly accessible, no

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clearly established Fourth Amendment privacy protection prohibited the Defendants'

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actions. Id. at 232. In Replay, Inc. v. Secretary of the Treasury of Puerto Rico, 778

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F.Supp.2d 207 (D.P.R. 2011), the machines at issue were allegedly legal. Here, the

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plaintiffs have provided no evidence of the seized machines’ legality. They have

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ventured only two arguments and both fall short.

Pearson v. Callahan, 555 U.S. 223, 231 (2009) (citation

First, Plaintiffs’ allege that the

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government tampered with the machines, which is an unsupported and specious

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accusation we will not credit, see National Archives and Records Admin. V. Favish, 541

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U.S. 157, 174 (2004) (“‘[I]n the absence of clear evidence to the contrary, courts presume

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that [Government agents] have properly discharged their official duties’”) (citation

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omitted). Second, Plaintiffs’ claim about the seizing officers’ inadequate training, which

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is irrelevant because it does not tend to show the machines’ legality in this case, only the

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general possibility that an official could make a mistake. In any event, the plaintiffs

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received post-deprivation process in which they failed to prove the machine's legality.

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Given that no case clearly establishes a Fourth Amendment violation based on

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Defendants’ actions, Defendants are entitled to qualified immunity.

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B.

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Corraliza’s Claim of First Amendment Retaliation

Defendants are Entitled to Summary Judgment on Plaintiff Rivera-

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Plaintiffs allege that the seizure of their adult entertainment machines was in

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retaliation for the interviews Rivera-Corraliza gave with local press, critizing Secretary of

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Treasury Puig. (Docket No. 68 at 7-9.) Defendants argue that Plaintiffs have failed to

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state a First Amendment claim and ask that we dismiss the claim with prejudice. (Docket

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No. 59 at 12-15.)

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Government actors violate the First Amendment if they retaliate against an

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individual for constitutionally protected speech. González-Droz v. González-Colón, 660

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F.3d 1, 16 (1st Cir. 2011). Such action “offends the Constitution [because] it threatens to

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inhibit exercise of the protected right,” Crawford–El v. Britton, 523 U.S. 574, 588, n. 10

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(1998), and punishes an individual for speaking out.

Id., at 592; see also Perry v.

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Sindermann, 408 U.S. 593, 597 (1972) (noting that the government may not punish a

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person or deprive him of a benefit on the basis of his “constitutionally protected speech”).

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To make out a First Amendment retaliation claim, a plaintiff mush show that his

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conduct was constitutionally protected, Goldstein v. Galvin, 2013 WL2466861(1st Cir.

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2013), and establish “a causal connection between the allegedly protected speech and the

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allegedly retaliatory response.”

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plaintiff’s conduct was a “substantial” or “motivating” factor in bringing about the

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allegedly retaliatory action. Some adverse official actions are acceptable if premised on

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nonretaliatory grounds. But where nonretaliatory grounds are insufficient to provoke the

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official adverse consequences, we can infer that the plaintiff's protected speech was the

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but-for cause of adverse official action, which offends the Constitution. See Crawford–

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El, supra, at 593; Mt. Healthy City Bd. of Ed. v. Doyle, 429 U.S. 274, 283–284 (1977)

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(adverse action against government employee cannot be taken if it is in response to the

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employee's “exercise of constitutionally protected First Amendment freedoms”).

Id.

Causation is established by showing that the

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Here, plaintiffs fail to present sufficient evidence to demonstrate that the stated

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reason for the seizure of the machines—namely, their illegality—was an insufficient

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cause for the adverse action or thus merely a pretext for retaliation.

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Rivera-Corraliza complained of Secretary Puig’s policy decisions somewhere

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during the months of August to October 2009. The Department of Treasury first seized a

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machine almost a full four months later, in February of 2010. This is a relatively long

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duration, during which there were no complaints of interference by Treasury Department

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officials. As the First Circuit frequently has observed in antidiscrimination cases, “the

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inference of a causal connection becomes tenuous with the passage of time.” Calero–

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Cerezo v. U.S. Dept. of Justice, 355 F.3d 6, 25–26 (1st Cir.2004) (holding that a three-

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month period between the protected conduct and alleged retaliation undermined the

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inference of causation); see also Richmond v. ONEOK, Inc., 120 F.3d 205, 209 (10th

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Cir.1997); Hughes v. Derwinski, 967 F.2d 1168, 1174-75 (7th Cir.1992) (three and four

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month periods have been held insufficient to establish a causal connection based on

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temporal proximity). Here, the sequence of events is too tenuous to support a causal

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connection between the statutorily protected conduct and the adverse action, not the

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converse.

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Plaintiffs have not provided any additional evidence that would support their claim

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that the Defendants' undertook adverse actions based to retaliate for the Plaintiffs'

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protected speech. They have produced no other theory by which we could conclude that

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the Defendant's proffered reasons - the illegality of the machines - were false or

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pretextual. As a result, they cannot create a genuine issue of material fact on this claim,

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and we conclude that summary judgment in favor of the Defendants on Rivera-

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Corraliza’s First Amendment claim is appropriate.

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C.

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Excessive Fines in Violation of the Eighth Amendment

Defendants are Entitled to Summary Judgment on Plaintiffs’ Claim of

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Plaintiffs state that in addition to their machines being “illegally seized,” they

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were “issued fines that crippled their businesses.” (Docket No. 68 at 18.) Plaintiffs then

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allege that by not “selling” licenses, the Department of Treasury has imposed an

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excessive fine under the Eighth Amendment. (Docket No. 68 at 19.) Defendants argue

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that Plaintiffs have failed to state an Eighth Amendment claim and ask that we dismiss

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the claim with prejudice. (Docket No. 59 at 26-28.)

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Forfeitures are “fines” within the meaning of the Eighth Amendment if they

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“constitute punishment for an offense.” United States v. Bajakajian, 524 U.S. 321, 328

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(1998); see also Browning-Ferris Indus. of Vermont, Inc. v. Kelco Disposal, Inc.,492

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U.S. 257, 265 (1989) (“[W]e think it significant that at the time of the drafting and

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ratification of the Amendment, the word ‘fine’ was understood to mean a payment to a

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sovereign as punishment for some offense.”).

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characterized as remedial because it removes dangerous or illegal items from society.

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Austin v. United States, 509 U.S. 602, 621 (1993) (citing United States v. One

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Assortment of 89 Firearms, 465 U.S. 354, 364 (1984)).

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The forfeiture of contraband may be

The Plaintiffs’ best argument is that the purported punishment in this case—the

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seizure of illegal gambling machines—constitutes forfeiture of contraband.

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LPRA § 1723, et seq.5. Even granting that point for argument's sake, the salient question

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becomes whether this punishment is proportionate. “[A] punitive forfeiture violates the

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Excessive Fines Clause if it is grossly disproportional to the gravity of a defendant’s

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offense. Bajakajian, 524 U.S. at 334 (1998). Here, forfeiture was limited to the seizure

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of the machines that were themselves illegal. That is the very definition of proportional:

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the forfeiture touched only those things that were violating the law and extended no

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further.

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remaining arguments are unsupported and nonsensical because declining to grant a

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license is in no way the equivalent of imposing a fine. We find no support for this

Thus, this forfeiture cannot a constitutionally excessive fine.

See 34

Plaintiffs’

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argument, legally or factually. And Plaintiffs’ mention of allegedly crippling fines are

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merely a phantom of the Plaintiff's complaint—they have provided no substantive

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information about the alleged fines.

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proportionality.

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D.

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Violations Under the 14th Amendment

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Without more, we cannot determine their

Defendants are Entitled to Summary Judgment on Plaintiffs’ Claim of

Due Process

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Plaintiffs argue that Defendants deprived them of their property interests without

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due process of law because they did not provide adequate pre-deprivation remedies, such

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as notification and an opportunity to be heard. (Docket No. 68 at 20.) Defendants argue

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that Plaintiffs have failed to state a Fourteenth Amendment claim and ask that we dismiss

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the claim with prejudice. (Docket No. 59 at 29-37.)

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The Fourteenth Amendment protects individuals against the deprivation of liberty

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or property by the government without due process. U.S. Const. amend XIV. A section

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1983 claim based upon procedural due process has three elements: (1) a liberty or

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property interest protected by the Constitution; (2) a deprivation of the interest by the

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government; (3) lack of process. Rocket Learning, Inc. v. Rivera-Sanchez, 715 F.3d 1,

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11 (1st Cir. 2013).

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Ordinarily, the Due Process Clause requires notice and an opportunity for a

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hearing prior to a final deprivation of liberty or property. Parratt v. Taylor, 451 U.S. 527,

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540 (1981). The Supreme Court, however, “has recognized, on many occasions, that

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where a State must act quickly, or where it would be impractical to provide

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predeprivation process, postdeprivation process satisfies the requirements of the Due

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Process Clause.” Gilbert v. Homar, 520 U.S. 924, 930 (1997). The First Circuit has

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stated that “[t]he variety of ... circumstances within which the exception [to the general

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requirement of predeprivation process] has been recognized demonstrates that the

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exception is a flexible one.” Hightower v. City of Boston, 693 F.3d 61, 85 (1st Cir.

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2012) (quoting San Gerónimo Caribe Project, Inc. v. Acevedo–Vilá, 687 F.3d 465, 488

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(1st Cir.2012) (internal quotation marks omitted.)

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Here, Plaintiffs’ machines appeared to be operating illegally. Puerto Rican law

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authorizes seizure under such circumstances and provides a post-deprivation process,

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which several defendants exercised. Article 9 of Act No. 119-2011. This is an adequate

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constitutional protection because here, providing a predeprivation notice and hearing

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would be inconsistent with the state's need to protect citizens from the illegal machines.

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Allowing the machines to remain in service would expose citizens to the risk of unfair

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operation, which the law seeks to avoid. Protecting against this immediate harm justifies

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seizing the machines immediately, while allowing the owner of the machines to appeal

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the seizure and prove the machines’ legality, if possible. Calero-Toledo v. Pearson Yacht

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Leasing Co., 416 U.S. 663, 678-9 (1974).

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2.

Equal Protection

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Plaintiffs complain, in vague fashion, that the defendants deprived them of their

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right to equal protection under the law. (Docket No. 16 at 34-35.) Defendants argue that

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Plaintiffs have failed to state an Equal Protection claim. We agree. (Docket No. 59 at

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37-39.)

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The Equal Protection Clause of the Fourteenth Amendment prohibits the States

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from making distinctions that burden a fundamental right, target a suspect class, or

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intentionally treat an individual differently from others similarly situated without any

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justification for the difference. Vacco v. Quill, 521 U.S. 793, 799 (1997). To prove a

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violation of the Equal Protection Clause, Plaintiffs’ must show that (1) compared with

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others similarly situated, they were selectively treated; and (2) that such selective

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treatment was based on impermissible considerations such as race, sex, or religion.

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Freeman v. Town of Hudson, 714 F.3d 29, 38 (1st Cir. 2013). The plaintiff must show

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that Defendants acted with a discriminatory purpose, which means proving that

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Defendants undertook a course of action “because of, not merely in spite of, the action's

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adverse effects upon an identifiable group.” Ashcroft v. Iqbal, 556 U.S. 662, 677 (2009)

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(internal quotation marks and alterations omitted).

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It is true that ‘the Constitution prohibits selective enforcement of the law based on

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considerations such as race” and that the proper basis for objecting to “intentionally

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discriminatory application of laws is the Equal Protection Clause.” Whren v. United

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States, 517 U.S. 806, 813 (1996).

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selectively treated since they were punished for operating illegal gaming machines but

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the individuals who owned the establishments where those machines were located were

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not. But Plaintiffs and the establishments owners are not similarly situated: one party

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owned the illegal machines, the other did not. Just because the establishment owner

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profited from having a gaming machine on the premises does not mean he had reason to

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know of the machine’s illegality: an establishment owner is in, for example, the

Here, however, Plaintiffs allege that they were

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convenience store business, not the gaming business. no allegations that they were

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selectively treated, nor that Commonwealth officials acted, because of racial or a class-

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based animus. As a result, Plaintiffs cannot prove an equal protection violation since

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they have not alleged that the defendants treated them differently than others similarly

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situated.

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E.

Plaintiffs’ Commonwealth Tort Claims

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Plaintiffs allege violations of rights afforded by the Puerto Rico Civil Code.

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(Docket No. 16 at 35.) Specifically, Plaintiffs allege violations of Article 1802 of the

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Puerto Rico Civil Code and violations of Article II, Sections Four, Seven, and Ten of the

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Constitution of Puerto Rico. (Docket No. 16 at 36.) The complaint does not make clear

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what action constitutes the basis for these violations. In the response in opposition to the

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motion for summary judgment, it seems that Plaintiffs are alleging tort violations under

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Article 1802 of the Puerto Rico Civil Code. (Docket No. 68 at 26-27.) However it is not

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entirely clear what is being alleged insofar as violations of Puerto Rican laws are

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concerned. Plaintiffs state that “[b]ased on the previous discussion” of their claims under

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the United States Constitution, “it is clear that they have a valid claim under Article 1802

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of the Puerto Rico Civil Code.” (Docket No. 68 at 27.) There is no further mention of

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violations of the Constitution of Puerto Rico. Defendants argue that Plaintiffs have failed

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to state a claim under Article 1802 and ask that we dismiss the claim with prejudice.

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(Docket No. 59 at 45-46.)

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We have discretion to decline supplemental jurisdiction over the remaining

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Commonwealth law claims since we have dismissed all of the claims over which we have

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original jurisdiction. See 28 U.S.C. § 1367(c)(3); see also United Mine Workers v.

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Gibbs, 383 U.S. 715, 726 (1966) (“if the federal law claims are dismissed before

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trial…the state claims should be dismissed as well). In exercising our discretion under §

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1367(c), we must consider the issues of “judicial economy, convenience, fairness, and

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comity.” Che v. Massachusetts Bay Transp. Authority, 342 F.3d 31, 37 (1st Cir. 2003).

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Having considered these factors, we decline to exercise supplemental jurisdiction over

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Plaintiffs’ Commonwealth law claims.

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PREJUDICE Plaintiffs’ remaining Commonwealth law claims.

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Therefore, we DISMISS WITHOUT

IV.
Conclusion
For the foregoing reasons, Defendants’ summary judgment motion is GRANTED.
Plaintiffs’ Commonwealth law claims are DISMISSED WITHOUT PREJUDICE.

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IT IS SO ORDERED.

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San Juan, Puerto Rico, this 15th day of July, 2013.

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S/José Antonio Fusté
JOSE ANTONIO FUSTE
U. S. DISTRICT JUDGE