Rivera-Carrasquillo et al v. Bhatia-Gautier et al
Filing
463
ORDER: Oscar Serrano-Negron ("Serano")'s motion to unseal is GRANTED. See Docket No. 454. The Clerk of the Court shall remove the "case participants" restriction from all docket entries in this action. The record shall be made public. The Clerk will ensure that Serrano receives a copy of this Opinion and Order. Signed by Senior Judge Francisco A. Besosa on 3/9/2022. (AA)
Case 3:13-cv-01296-FAB Document 463 Filed 03/09/22 Page 1 of 11
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
ELIZAIDA RIVERA CARRASQUILLO,
et al.,
Plaintiffs,
v.
EDUARDO BHATIA-GAUTIER, et al.,
Civil Nos. 13-1296, 13-1384,
13-1812, 13-1860 & 13-1896
(FAB)
Defendants.
JANICE TORRES-TORRES, et al.,
Plaintiffs,
v.
JAIME PERELLÓ-BORRÁS, et al.,
Civil Nos. 13-1560, 13-1862,
13-1820, 13-1895, & 15-2738
(FAB)
Defendants.
OPINION AND ORDER
BESOSA, District Judge.
Before the Court is Oscar Serrano-Negrón (“Serrano”)’s motion
to unseal confidential settlement agreements and records regarding
indemnification costs associated with Act No. 9 of November 27,
1966 (“Law 9”).
(Docket No. 454.)
For the reasons set forth
below, Serrano’s motion to unseal is GRANTED.
I.
Background
Former employees of the Puerto Rico Senate (“Senate”), the
Puerto Rico House of Representatives (“House”), and the Office of
the Superintendent of the Capitol Building (“OSC”) (collectively,
Case 3:13-cv-01296-FAB Document 463 Filed 03/09/22 Page 2 of 11
Civil Nos. 13-1296 et al., (FAB)
“plaintiffs”)
officials
commenced
nine
(collectively,
2
civil
“defendants”)
actions
against
pursuant
to
public
the
First
Amendment of the United States Constitution, Article II of the
Puerto
Rico
Constitution,
the
Human
Resources
Administration
System Act, and Articles 1802 and 1803 of the Civil Code.
See
P.R. Laws Ann. tit. 3, § 1461; P.R. Laws Ann. tit. 31, §§ 5141 et
seq. 1
The
defendants
purportedly
purged
members
of
the
New
Progressive Party (“NPP”) from the Senate, House and OSC payrolls
for political gain.
Id.
The parties executed two confidential settlement agreements
(hereinafter, “settlement agreements”).
(Case No. 13-1296, Docket
No. 197; Case No. 13-1560, Docket No. 180.) 2
Essentially, the
Officials from the Puerto Rico Senate are named as defendants in Cases Nos.
13-1296, 13-1812, 13-1860, and 13-1384. Officials from the Puerto Rico House
of Representatives appear in Cases Nos. 13-1820 and 13-1895. Officials from
the Office of the Superintendent of the Capitol appear in Cases Nos. 13-1862,
13-1569, and 15-2738. The OSC is responsible for “keeping and maintaining the
buildings, offices and structures of the Puerto Rico Legislative Branch, as
well as peripheral areas, in optimal conditions.” (Case No. 13-1560, Docket No.
1.)
1
The former Senate employees and defendants Eduardo Bhatia-Gautier, Denise
Rivera-González, Tania Barbarrosa-Ortiz, Luis Ramos-Rivera, José HernándezArebelo, Juan Vázquez-López, and Maritza Alejandro-Cheves entered into a
confidential settlement agreement on May 25, 2016 for $6,267,000.00 (“Senate
agreement”), payable in one installment of $1,000,000.00, and two subsequent
installments of $2,633,750.00. (Case No. 13-1296, Docket No. 197.) The former
House and OSC employees entered into a confidential settlement agreement with
Jaime Perelló-Borrás, Javier Vázquez-Collazo, Rosendo Vela-Birrel, Álvaro
Vázquez-Ramos, Miguel Arana-Colón, Aileen Figueroa-Vázquez, Xavier GonzálezCalderón, José Fuentes-Serrano, René Valle-Umpierre, José Sapia, and Julio
Mojica on October 4, 2016 (“House/OSC agreement”) for $3,690,000.00, payable in
two successive installments of $2,460,000.00 and $1,230,000.00 (Case No. 131560, Docket No. 180.)
2
Case 3:13-cv-01296-FAB Document 463 Filed 03/09/22 Page 3 of 11
Civil Nos. 13-1296 et al., (FAB)
plaintiffs
moved
$9,957,500.00.
to
Id.
dismiss
Only
3
the
the
complaints
“case
in
exchange
participants”
personnel are permitted to access these documents.
and
for
Court
(Case No. 13-
1296, Docket No. 197; Case No. 13-1560, Docket No. 180.)
These
agreements contain the following confidentiality provision:
The Plaintiffs further agree to maintain confidential
the fact that they have entered into this Agreement, as
well as all of its details, terms, and conditions. Unless
disclosure is required by law and/or means of a Court
Order issued to such effect, the Plaintiffs shall not
disclose the contents of this Agreement to third
parties, except as it may be reasonably necessary to
reveal the terms hereof to their attorney(s), spouse,
accountant(s), or representatives, who shall be bound to
maintain the confidentiality of this Agreement in the
same terms as them. In the event that anyone approaches
the Plaintiffs and asks them about the status of their
claim, their answer shall be limited to discussing that
the matter has been resolved to the satisfaction of the
parties, but they shall refrain from further comment.
Under no circumstances shall this document or any copy
thereof be distributed to the Press or Media or any
person or entity without the Defendant’s written
authorization.
The signatories agree not to publish,
publicize, or disseminate in any way information
obtained by their attorneys through the discovery
process of this case.
(Case No. 13-1296, Docket No. 197 at p. 7.) 3
The defendants failed to remit timely payments, falling into
arrears for millions of dollars just as “the island effectively
ran out of cash and stopped paying its debt.”
Id.; Mary W. Walsh,
The Senate and House/OSC agreements contain identical confidentiality
provisions. (Case No. 13-1296, Docket No. 197; Case No. 13-1560, Docket No.
180.)
3
Case 3:13-cv-01296-FAB Document 463 Filed 03/09/22 Page 4 of 11
Civil Nos. 13-1296 et al., (FAB)
4
“How Puerto Rico is Grappling with a Debt Crisis,” New York Times
(May 16, 2017) (available at https://www.nytimes.com/interactive
/2017/business/dealbook/puerto-rico-debt-bankruptcy.html)
visited March 9, 2022).
(last
On May 3, 2017, the Oversight Board filed
a Title III petition on behalf of the Commonwealth pursuant to the
Puerto
Rico
Emergency
Moratorium
and
(“PROMESA”), 48 U.S.C. §§ 2010 et seq.
Rehabilitation
Act
In re Commonwealth of
Puerto Rico, No. 17-3283 (LTS) (D.P.R. May 3, 2017). This petition
triggered the automatic stay set forth in 11 U.S.C. section 362(a).
See 48 U.S.C. § 2194. 4
On May 11, 2018, the plaintiffs requested that this Court
compel the defendants, in their individual capacities, to satisfy
the outstanding settlement amount.
(Docket No. 398 in Case No.
13-1296; Docket No. 239 in Case No. 13-1560.)
agreements
stipulate,
however,
that
the
The settlement
defendants
are
the
Congress patterned the automatic stay contained in section 2194 of PROMESA on
the United States Bankruptcy Code. 48 U.S.C. §§ 2102-2241. Section 2194(b)(1)
of PROMESA stays actions or proceedings against the Government of Puerto Rico
that were or could have been commenced before the enactment of PROMESA. Id. at
§ 2194(b)(1). The statute also stays judicial actions “to recover a Liability
Claim against the Government of Puerto Rico that arose before the enactment of
[PROMESA].”
Id.
In the bankruptcy context, the automatic stay becomes
operative upon the filing of a bankruptcy petition, and “is extremely broad in
scope,” applying “to almost any type of formal or informal action taken against
the debtor.” Montalvo v. Autoridad de Acueductos y Alcantarillados, 537 B.R.
128, 140 (Bankr. D.P.R. 2015) (citing Alan N. Resnick & Henry J. Sommer, 3
Collier on Bankruptcy ¶ 362.03 (16th ed. 2015)).
4
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Civil Nos. 13-1296 et al., (FAB)
“beneficiaries” of Law 9.
5
(Case No. 13-1296, Docket No. 197 at p.
4; Case No. 13-1560, Docket No. 180 at p. 5.)
Law 9 provides that:
Every official, ex-official, employee, or ex-employee
of the Commonwealth of Puerto Rico who is sued for
damages in his personal capacity, when the cause of
action is based on alleged violations of the
plaintiff’s civil rights, due to acts or omissions
committed in good faith, in the course of his
employment and within the scope of his functions, may
request the Commonwealth of Puerto Rico to provide
him with legal representation, and to subsequently
assume the payment of any judgment that may be entered
against his person.
Laws P.R. Ann. tit 32, § 3085 (emphasis added).
In sum, the
individual defendants avoided trial by writing checks with public
funds – checks that could not be cashed because of the automatic
stay due to PROMESA.
According to the defendants, the “Commonwealth of Puerto Rico
ought to pay from monies drawn from the public fisc which, as we
all know, is a major component of the Debtor’s [Commonwealth’s]
Estate.”
(Case No. 13-1296, Docket No. 434 at p. 8.)
To provide
context for this assertion, the Court ordered Puerto Rico Attorney
General Domingo Emanuelli-Hernández to disclose the annual amount
of payments made by the Commonwealth of Puerto Rico pursuant to
Law 9 for each of the past ten years.
No. 439 at p. 4.)
(Case No. 13-1296, Docket
The Department of Justice submitted a Law 9
expense report on February 3, 2022.
(Case No. 13-1296, Docket No.
Case 3:13-cv-01296-FAB Document 463 Filed 03/09/22 Page 6 of 11
Civil Nos. 13-1296 et al., (FAB)
452, Ex. 2.) 5
6
From 2013 to the present, the Commonwealth has paid
approximately $14,402,935.93 to defend and hold harmless, inter
alia, politicians accused of civil rights violations.
Id.
Year
Indemnification Costs
2013
$1,030,000.00
2014
$1,816,010.05
2015
$1,127,724.44
2016
$4,154,734.62
2017
$5,850,565.50
2018
$150,000.00
2019
$901.32
2020
0
2021
0
The Court denied the plaintiffs’ motion to compel, holding
that Law 9 “precludes the plaintiffs from seeking payment from the
defendants in their individual capacities.”
Docket No. 456 at p. 12.)
(Case No. 13-1296,
Subsequently, Serrano moved to unseal
the settlement agreement and the Law 9 expense report.
No. 454 at p. 1.) 6
(Docket
The defendants assert, however, that the
5 This report is currently available only to the parties and this Court.
No. 13-1295, Docket No. 452, Ex. 2.)
6
Serrano is a journalist and an attorney.
Case
(Case No. 13-1296, Docket No. 454.)
Case 3:13-cv-01296-FAB Document 463 Filed 03/09/22 Page 7 of 11
Civil Nos. 13-1296 et al., (FAB)
7
confidentiality provisions require that these documents remain
under seal.
II.
(Docket No. 458.)
Standard of Review
To determine whether an order to seal is appropriate, courts
balance public and private interests.
Nat’l Org. for Marriage v.
McKee, 649 F.3d 34, 70 (1st Cir. 2011) (citation and quotation
omitted).
The scales tip, however, “toward transparency.”
Id.
Indeed, federal courts have long “recognize[d] a general right to
inspect and copy .
.
. judicial records and documents.”
Nixon
v. Warner Commc’ns, 435 U.S. 589, 597 (1978); see also In re Gitto
Global Corp., 422 F.3d 1, 6 (1st Cir. 2005) (“Under the common
law, there is a long-standing presumption of public access to
judicial records.”); see In re Providence Journal Co., 293 F.3d 1,
9 (1st Cir. 2002) (recognizing “that the public has a common-law
right of access to judicial documents”). This transparency “allows
the citizenry to monitor the functioning of our courts, thereby
insuring [sic] quality, honesty and respect for our legal system.”
McKee, 649 F.3d at 49 (quoting FTC v. Standard Fin. Mgmt. Corp.,
830 F.2d 404, 410 (1st Cir. 1987)).
The presumption of public access is broad, extending to
“materials on which a court relies in determining the litigants’
substantive rights.”
See In re Providence Journal Co., 293 F.3d
at 9 (quoting Anderson v. Cryovac, Inc., 805 F.2d 1, 13 (1st Cir.
Case 3:13-cv-01296-FAB Document 463 Filed 03/09/22 Page 8 of 11
Civil Nos. 13-1296 et al., (FAB)
8
1986); United States v. Krayetz, 706 F.3d 47, 58 (1st Cir. 2013)
(“[R]elevant documents which are submitted to, and accepted by, a
court of competent jurisdiction in the course of adjudicatory
proceedings, become documents to which the presumption of access
applies.”).
Restricting access to the docket “is a serious step,
which should be undertaken only rarely and for good cause.”
R&G
Mortg. Corp. v. Fed. Home Loan Mortg. Corp., 584 F.3d 1, 12 (1st
Cir. 2009) (“Sealing orders are not like party favors, available
upon request or as a mere accommodation.”); In re Providence
Journal Co., 293 F.3d at 10 (“[O]nly the most compelling reasons
can justify non-disclosure of judicial records that come within
the scope of the common-law right of access.”).
The defendants
shoulder the burden of establishing that an order to seal is
warranted.
See Standard Fin. Mgmt. Corp., 830 F.2d at 410.
Orders
to unseal are subject to an “abuse of discretion” standard of
review.
McKee, 649 F.3d at 70
(citation and quotation omitted).
III. Discussion
The Commonwealth is a party to this litigation. Accordingly,
the presumption of public access is “accentuated.”
See Standard
Fin. Mgmt. Corp., 830 F.2d at 410 (“It cannot be ignored that this
litigation involves a government agency and an alleged series of
deceptive trade practices culminating (it is said) in widespread
consumer losses.
These are patently matters of significant public
Case 3:13-cv-01296-FAB Document 463 Filed 03/09/22 Page 9 of 11
Civil Nos. 13-1296 et al., (FAB)
9
concern.”); United States v. Isaacson, Case No. 09-332, 2010 U.S.
Dist. LEXIS 111348, at *6-7 (D.N.H. Sept. 28, 2010) (“Because this
case involves a suit by a government agency, this court is even
more reluctant to find that the public’s interest is outweighed by
the parties’ private interests.”).
The Law 9 expenditures are
exorbitant, drawn from the public fisc.
has
a
significant
interest
in
Consequently, the public
knowing
how
its
government
is
spending its money.
The defendants set forth two arguments in support of the order
to seal.
(Case No. 13-1296, Docket No. 458.)
First, they contend
that restricted access to the settlement agreements and the Law 9
expense
report
Commonwealth’s
“is
necessary
position
considerably undermined.”
the other’s weakness.
at
.
the
.
.
because
negotiating
Id. at p. 3.
otherwise,
table
will
the
be
One party’s strength is
The defendants’ perceived advantage at the
“negotiating table” is immaterial to the Court’s analysis, and is
insufficient to rebut the presumption of public access to judicial
records.
Second, the defendants cite the confidentiality provisions in
the settlement agreements.
Id. at p. 7.
They assert that “the
signatory parties are bound by the confidentiality clause in the
settlement covenant into which they entered voluntarily.”
Id.
These provisions do not, however, overcome the presumption of
Case 3:13-cv-01296-FAB Document 463 Filed 03/09/22 Page 10 of 11
Civil Nos. 13-1296 et al., (FAB)
public access.
10
See Gosel v. Boley Int’l Ltd., 738 F.3d 831, 835
(7th Cir. 2013) (“In neither case have [the parties] offered any
reason
for
secrecy
except
that
they
have
a
confidentiality
agreement. Obviously, that’s insufficient, and I could stop there;
because
there
is
potential
public
value
to
disclosing
the
settlement terms, including amount, parties have to give the judge
a reason for not disclosing them – and the fact that they don’t
want to disclose is not a reason.”);
Brown v. Advantage Eng’g,
Inc., 960 F.2d 1013, 1015-16 (11th Cir. 1992) (“It is immaterial
whether the sealing of the record is an integral part of a
negotiated settlement between the parties, even if the settlement
comes with the court’s active encouragement.
Once a matter is
brought before a court for resolution, it is no longer solely the
parties’ case, but also the public’s case.”); McKenzie v. Brannan,
Case No. 20-262, 2020 U.S. Dist. LEXIS 211557, at *14 (D. Me. Nov.
12, 2020) (“[T]he Estate seems to maintain that because the parties
entered into the mediation with assurances of confidentiality, the
Court
is
agreement.
bound
to
enforce
the
secrecy
provisions
of
their
This is not correct.”) (citing P.R. Land & Fruit, S.E.
v. Municipio de Culebra, Case No. 09-2280, 2019 U.S. Dist. LEXIS
143915, at *8 (D.P.R. July 23, 2019) (McGiverin, Mag. J.) (“An
agreement by the existing parties is not itself a sufficient basis
to
violate
the
public’s
right
to
public
access.”)
(citation
Case 3:13-cv-01296-FAB Document 463 Filed 03/09/22 Page 11 of 11
Civil Nos. 13-1296 et al., (FAB)
11
omitted)); Lohman v. Rite Aid Corp., Case No. 11-250, 2011 U.S.
Dist. LEXIS 128394, at *3 (D.N.H. Nov. 2, 2011) (“Under the
circumstances of this case, defendants’ interest in preserving the
confidentiality of their agreement with [the plaintiff] does not
outweigh the strong presumption in favor of public access.”
Because the defendants have failed to set forth a compelling
reason for denying the public access to the settlement agreements
and the Law 9 expense report, Serrano’s motion to unseal is
GRANTED.
IV.
Conclusion
For the reasons set forth above, Serrano’s motion to unseal
is GRANTED. (Case No. 13-1296, Docket No. 454.)
The Clerk of the
Court shall remove the “case participants” restriction from all
docket entries in this action.
The record shall be made public.
The Clerk will ensure that Oscar Serrano receives a copy of this
Opinion and Order.
IT IS SO ORDERED.
San Juan, Puerto Rico, March 9, 2022.
s/ Francisco A. Besosa
FRANCISCO A. BESOSA
UNITED STATES DISTRICT JUDGE
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