Asociacion de Detallistas de Gasolina de Puerto Rico Inc. et al v. Commonwealth of Puerto Rico et al
Filing
24
OPINION AND ORDER granting 14 Motion to Dismiss. For the reasons stated herein, the Court hereby DISMISSES WITHOUT PREJUDICE Plaintiffs' causes of action. Judgment shall be entered accordingly. IT IS SO ORDERED. Signed by Judge Daniel R. Dominguez on 05/07/2014. (MM)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
ASOCIACIÓN DE DETALLISTAS DE
GASOLINA DE PUERTO RICO, INC.,
et al.,
Plaintiffs,
v.
Civil No.: 14-1094 (DRD)
COMMONWEALTH OF PUERTO RICO, et
al.,
Defendants.
OPINION AND ORDER
On January 30, 2014, Plaintiffs Asociación de Detallistas
de
Gasolina
Station
de
Inc.,
“Plaintiffs”)
Puerto
and
filed
Rico,
Miguel
suit
Ricardo
A.
Román,
Fairview
Rivera-Robles
against
the
Service
(collectively,
Commonwealth
of
Puerto
Rico, Governor Alejandro Garcia Padilla, Margarita Mercado, and
Nery
E.
Adames
(collectively,
“Defendants”)
requesting
an
injunction enjoining Defendants from enforcing Puerto Rico Law
150-2008, as amended by Law 152-2013.
Puerto
Rico
Law
150-2008,
as
amended
Plaintiffs aver that
by
Law
152-2013,
is
unconstitutionally vague under the Due Process Clause of the
Fourteenth Amendment and preempted by federal law.
1
I.
On
August
ratified
Prohibits
Law
FACTUAL AND PROCEDURAL HISTORY
4,
2008,
150-2008
Additional
Puerto
Rico’s
(Docket
Charges
No.
for
Use
Legislative
10-1)
of
titled
Credit
Assembly
“Law
That
Card.”
The
Legislative Assembly’s purpose in enacting Law 150-2008 was “to
establish the prohibition to the surcharge that is imposed in
the sales or lease transactions on those consumers who elect to
use a credit card, instead of cash, check or any other method of
similar payment....”
Id. at 1.
However, Article 2 of Law 150-
2008 explicitly permitted merchants to offer discounts for the
purposes of promoting payment in cash or check, provided that
said discounts were offered equally to all potential consumers.
On December 13, 2013, the Puerto Rico legislature amended
Law 150-2008 by passing Law 152-2013.
See Docket No. 10-3.
In
so doing, the Legislative Assembly repealed Articles 1 and 2 of
Law 150-2008, effectively eliminating any language regarding the
offering
of
cash
discounts
to
consumers.
The
Statement
of
Purpose contained within the text of Law 152-2013 explains that
the Legislative Assembly was highly concerned as to the pricing
disparity created by Law 150-2008 for the same good or service.
The
Assembly
emphasized
that
it
had
a
duty
to
consumer and would do so through deregulation.
the
actual
language
of
the
statute
does
not
protect
the
Nevertheless,
specifically
eliminate the offering of cash discounts to consumers, as the
2
law
only
specifically
prohibits
merchants
from
imposing
“an
additional charge ... on that consumer who chooses to use a
valid payment method in the Commonwealth of Puerto Rico....”
Id. at 2.
Thus, the statute clearly prohibits the imposition of
surcharges on the use of debit or credit cards, but remains
silent as to whether merchants may offer, without imposing any
surcharges to other consumers, discounts for paying by cash or
check.
Following
Department
of
the
amendments
Consumers
Spanish acronym)
made
Affairs
to
Law
(hereinafter,
150-2008,
“DACO”
for
the
its
issued Administrative Order 2014-002 (Docket
No. 10-2) requiring gasoline retailers to refrain from offering
discounts to consumers paying in cash.
Merchants who violate
said order are subject to a potential fine of up to five hundred
($500) dollars or up to six (6) months in prison.
Accordingly, on January 30, 2014, Plaintiffs, a group of
gasoline retailers represented by the “Asociación de Detallistas
de
Puerto
Rico,”
filed
a
Verified
Complaint
(Docket
No.
1)
challenging the DACO order and the constitutionality of Law 1502008, as amended by Law 152-2013.
On February 27, 2014, Defendants filed a Motion to Dismiss
(Docket No. 14) contending that Law 152-2013 is not preempted by
federal law, as Congress’ intent in ratifying the Dodd Frank
Wall Street Reform and Consumer Protection Act of 2010 and its
3
“Durbin
Amendment”
retailers
and
Defendants
was
to
payment
aver
that
regulate
networks,
Law
the
not
152-2013
relationship
the
is
between
State.
not
Further,
unconstitutionally
vague, as DACO undeniably determined that said law eliminated
cash
discounts.
Court
should
(1941),
Nevertheless,
abstain,
from
under
entertaining
Defendants
Texas
v.
emphasize
Pullman,
Plaintiffs’
312
vagueness
that
the
U.S.
496
claims,
as
abstention is required when state law is uncertain and a state
court’s interpretation of said law would make a federal court’s
constitutional ruling gratuitous and/or unnecessary.
On March 14, 2014, Plaintiffs filed their Opposition to
Motion to Dismiss (Docket No. 16) arguing, inter alias, that
nowhere in Law 152-2013 does the statute prohibit the offering
of discounts to consumers who pay in cash.
Thus, its vagueness
claims must survive as the “very essence of any vagueness claim
is the fact that the statute in question is unclear as to what
it
permits
or
Additionally,
prohibits....”
Plaintiffs
object
Docket
to
the
No.
16,
applicability
Pullman abstention doctrine to the case at bar.
at
of
10.
the
Specifically,
Plaintiffs aver that DACO has already interpreted Law 152-2013
and that, as such, there is no need for further state court
interpretation.
abstention
is
Lastly,
inapplicable
Plaintiffs
as
there
contested statute.
4
is
assert
no
that
ambiguity
Pullman
in
the
On April 2, 2014, Defendants filed a Reply to Opposition to
Motion to Dismiss (Docket No. 20) urging the Court to abstain
under both Pullman and Burford.
Defendants argue that Pullman
abstention applies inasmuch as Plaintiffs are challenging the
constitutionality
of
a
Puerto
Rico
interpreted by the state tribunals.
that
Burford1
abstention,
which
law
that
has
yet
to
be
Lastly, Defendants claim
serves
as
a
“bar
to
federal
courts to enter into issues that involve a special aspect of
complicated regulatory systems of local law,” also applies, as
the
regulation
inherent
powers
in
dispute
of
DACO,
an
involves
nothing
administrative
more
agency
than
the
protecting
local consumers, to regulate unjustified pricing practices.
See
Docket No. 20, at 8.
On April 16, 2014, Plaintiffs filed their Sur-Reply (Docket
No. 23) stressing that Burford abstention is inapplicable, as
Law 152-2013 does not deal exclusively with a highly regulated
market, i.e., the gasoline industry.
According to Plaintiffs,
if Law 152-2013 only applies to the gasoline industry then a
myriad of other constitutional issues would arise.
II.
In
that
seeking
the
Court
dismissal
should
of
ANALYSIS
the
abstain
complaint,
from
entertaining
claims under both Pullman and Burford.
1
Burford v. Sun Oil Company, 319 U.S. 315 (1943).
5
Defendants
argue
Plaintiffs’
Thus, the Court will
analyze
each
of
Defendants’
abstention
arguments
in
turn,
withholding judgment on Defendants’ other arguments as to why
the instant matter should be dismissed.
A. Pullman Abstention
The primary purpose of the Pullman abstention doctrine is
to “avoid federal-court error in deciding state-law questions
antecedent
to
federal
constitutional
issues.”
Arizonans
Official English v. Arizona, 520 U.S. 43, 79 (1997).
federal
courts
should
avoid
constitutional
for
Thus,
determinations
of
state law by allowing a state to construe the constitutionality
of its own law.
such,
“the
Texas v. Pullman, 312 U.S. 496 (1941).
federal
courts,
‘exercising
a
wise
As
discretion,’
restrain their authority because of ‘scrupulous regard for the
rightful
independence
of
the
state
governments’
smooth working of the federal judiciary.”
Under
Pullman,
premised on an
“when
a
federal
and
for
the
Id. at 501.
constitutional
claim
is
unsettled question of state law, the federal
court should stay its hand in order to provide the state courts
an opportunity to settle the underlying state law question and
thus avoid the possibility of unnecessarily deciding a [federal]
constitutional question.”
Harris County Comm'rs Court v. Moore,
420 U.S. 77, 83 (1975)(emphasis ours).
“When a federal court is
asked to invalidate a State's law . . . the federal tribunal
risks friction generating error when it endeavors to construe a
6
novel state Act not yet reviewed by the State's highest court.”
Arizonans
for
Official
English ,
520
U.S.
at
79
(1997).
Additionally, “abstention also promotes the principles of comity
and federalism by avoiding needless federal intervention into
local affairs.”
Ford Motor Co. v. Meredith Motor Co., 257 F.3d
67, 71 (1st Cir. 2001)(citing Pustell v. Lynn Pub. Schs., 18
F.3d 50, 53 (1st Cir. 1994)).
In Casiano-Montañez v. State Insurance Fund Corp., 707 F.3d
124, 128-29 (1st Cir. 2013), the First Circuit reiterated that,
“under
Pullman,
federal
courts
should
abstain
when
‘(1)
substantial uncertainty exists over the meaning of the state law
in question, and (2) settling question of state law will or may
well
obviate
the
need
constitutional question.’”
to
resolve
a
significant
federal
Id. (quoting Batterman v. Leahy, 544
F.3d 370, 373 (1st Cir. 2008); see Bellotti v. Baird, 428 U.S.
132, 146-47 (1976)(Abstention is the appropriate remedy if the
state statute “is susceptible of a construction by the state
judiciary ‘which might avoid in whole or in part the necessity
for federal constitutional adjudication, or at least materially
change the nature of the problem.’”)(quoting Harrison v. NAACP,
360 U.S. 167, 177 (1959)).
Thus, a federal district court is
required to abstain if the state’s law is “fairly subject to an
interpretation which will render unnecessary” the adjudication
of a federal constitutional issue.
7
Harman v. Forssenius, 380
U.S.
528,
534-35
(1965);
see
Erwin
Chemerinsky,
Federal
Jurisdiction § 12.2, at 819 (6th ed. 2012)(In order for Pullman
abstention to apply, “it must be shown that the state law is
fairly subject to an interpretation that could render a federal
constitutional decision unnecessary.”).
Applying
these
principles
to
Plaintiffs’
preemption
and
Fourteenth Amendment due process claims, the Court finds that
Pullman abstention is warranted.
Plaintiffs
are
We explain.
challenging
the
constitutionality
of
Law
152-2013 on the basis that it is both unconstitutionally vague
and preempted by federal law.
They argue that Law 150-2008, as
amended by Law 152-2013, does not provide guidance as to what
gasoline retailers are permitted to do with regards to cash
discounts,
discounts
as
Article
was
2
the
provision
eliminated
of
Law
specifically
the
when
150-2008
authorizing
amended
law
provided
was
that:
in
“Merchants
cash
2013.
may,
however, offer discounts for the purpose of promoting payment in
cash, check or any other similar method not involving the use of
a
credit
card,
provided
potential buyers.”
said
discount
is
offered
to
all
However, when Law 150-2008 was amended in
2013, the Puerto Rico legislature repealed both Articles 1 and
2, eliminating the provision regarding discounts for purchases
made in cash or check.
8
The ambiguity in the amendment stems from the fact that the
Puerto Rico legislature at first specifically allowed merchants
to offer cash discounts to its consumers but then repealed said
provision without elaborating whether cash discounts would now
be
prohibited.
However,
the
Legislative
Assembly
was
not
entirely clear as to its intent regarding the offering of cash
discounts in repealing Article 2, as it articulated in Law 1522013’s
Statement
of
Purpose
that
their
goal
was
to
correct
pricing disparity but also “to protect the weakest party in a
commercial transaction, the consumer.”
Docket No. 10-3, at 2.
In other words, the legislature wanted to protect the consumer
by
eliminating
pricing
disparities,
while
at
the
same
time
making goods and services more expensive for consumers who opt
to pay in cash.
While it seems to the Court, viewing the statute through
the
lens
of
a
local
trial
judge,
that
the
Puerto
Rico
legislature’s motive in amending Law 150-2008 was to prohibit
discounts to consumers paying in cash, said determination must
be
subject
to
the
interpretation
of
the
state
courts,
as
a
federal judge should be hard-pressed to trailblaze undetermined
state
law,
especially
declaring
the
same
unconstitutional.
Regardless of the fact that both Law 150-2008 and 152-2013 had
provisions
prohibiting
merchants
from
imposing
surcharges
on
consumers using credit cards, the legislature did not expressly
9
provide
in
its
amendment
that
cash
discounts
were
now
prohibited.
Although Plaintiffs now argue that there is no ambiguity in
the
statute
warranting
the
applicability
of
Pullman,
it
nevertheless argues that said law is void for vagueness “since a
mere
reading
of
the
law
reveals
that
nowhere
within
its
provisions does it impose [a cash discount] prohibition.”
Docket
No.
16,
20.2
at
Thus,
Plaintiffs
are
See
essentially
contending that the federal district court should invalidate Law
152-2013 for being vague, while at the same time averring that
there is no substantial uncertainty over the meaning of the
state
law
(requiring
at
a
issue.
See
showing
that
Ford
there
Motor
is
Co.,
257
“substantial
F.3d
at
71
uncertainty”
over the meaning of the state statute in dispute).
Here, the state statute is unclear as to whether gasoline
retailers may offer discounts to its consumers who pay in cash,
an
issue
gasoline
which
forms
retailers
the
and
crux
the
of
the
dispute
Commonwealth
of
between
Puerto
the
Rico.
Moreover, and of critical importance, is the fact that neither
party
has
pointed
to
an
authoritative
2
decision
Puerto
Rico
The Court emphasizes that Plaintiffs, by arguing that Law 152-2013 is vague
but not ambiguous, “can’t have their cake and eat it too.”
10
resolving this ambiguity.3
Thus, Plaintiffs’ federal claims
hinge entirely on whether Law 150-2008, as amended in Law 1522013, is unconstitutionally vague, as there would be no need for
this Court to analyze Plaintiffs’ preemption claim should the
state courts determine that Law 152-2013 is unconstitutional.
In other words, the outcome of the state proceeding could moot
the federal issue if the Court either finds that cash discounts
are
not
prohibited
or
that
unconstitutionally vague.
the
statute,
as
amended,
is
Additionally, the Court refuses to
trailblaze Puerto Rican law without first according the state
forum
an
opportunity
constitutionality.
to
rule
on
its
applicability
and
As the constitutionality of Law 152-2013 is
a matter of first impression, the Court finds that “abstention
also
promotes
avoiding
the
needless
principles
federal
of
comity
intervention
and
into
federalism
local
by
affairs.”
Ford Motor Co., 257 F.3d at 71.
Accordingly,
the
Court
finds
that
Pullman
abstention
is
warranted, as substantial uncertainty exists over the meaning of
Law 152-2013 and a state court’s interpretation of said law may
well
obviate
the
need
to
resolve
a
significant
federal
constitutional question.
3
Plaintiffs’ averment that DACO’s interpretation of Law 152-2013 qualifies
as authoritative is wholly misguided, as DACO is an administrative agency
whose decisions are subject to appeal to Puerto Rico state courts.
11
B. Burford Abstention
Defendants further aver that abstention under Burford is
also warranted.
In Burford, the Court held that “questions of
regulation of the industry by the State administrative agency,
whether
involving
involves
basic
gas
or
problems
oil
...
of
programs
Texas
...
policy
so
that
clearly
equitable
discretion should be exercised to give the Texas courts the
first opportunity to consider them.”
Although
the
complex
state
interference,
Burford
Court
was
administrative
it
does
not
Burford , 319 U.S. at 332.
“concerned
processes
require
with
from
abstention
protecting
undue
federal
whenever
there
exists such a process, or even in all cases where there is a
‘potential for conflict’ with state regulatory law....”
New
Orleans Public Svc., Inc. v. Council of City of New Orleans, 491
U.S. 350, 362 (1989)(citing Colorado River Water Conservation
Dist.
v.
United
Additionally,
States,
Burford
424
U.S.
abstention
is
800,
815-16
inapplicable
(1976)).
“when
the
effect of an entire state regulatory scheme is challenged as
unconstitutional.”
Tenoco Oil Co. v. Dept. of Consumer Affairs,
876 F.2d 1013, 1029 n. 23 (1st Cir. 1989).
The Court agrees with Plaintiffs’ contentions that Burford
abstention
does
not
apply,
as
Law
152-2013
“is
not
a
state
regulation that deals exclusively with the gasoline industry and
as
such
does
not
deal
with
a
12
highly
regulated
market
which
defendants rely upon to argue abstention under Burford.”
No. 23, at 7.
Docket
Although Plaintiffs appropriately aver that the
Commonwealth of Puerto Rico, through DACO, has the police power
to regulate the gasoline industry,4 the truth is that the statute
in question does not apply exclusively to gasoline retailers,
but to all merchants in Puerto Rico.
Accordingly, the Court cannot abstain under Burford, as Law
152-2013
does
not
seek
to
regulate
a
specific
and
complex
industry, but rather applies, in equal force, to all commercial
establishments in the Commonwealth of Puerto Rico.
Court
accentuates
that
Burford
abstention
does
Lastly, the
not
apply
in
cases such as the case at bar, where the effects of an entire
state’s
regulatory
unconstitutional.
scheme
are
being
challenged
as
Regardless, the Court need not go further.
III. CONCLUSION
For
the
aforementioned
reasons,
the
Court
hereby
GRANTS
Defendants’ Motion to Dismiss (Docket No. 14). Thus, Plaintiffs’
causes of action are hereby DISMISSED WITHOUT PREJUDICE.
IT IS SO ORDERED.
In San Juan, Puerto Rico, this 7th day of May, 2014.
s/ Daniel R. Dominguez
DANIEL R. DOMINGUEZ
U.S. DISTRICT JUDGE
4
See Puerto Rico Dept. of Consumer Affairs v. Isla Petroleum Corp., 485 U.S.
495 (1988).
13
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