Dantzler, Inc. et al v. Puerto Rico Ports Authority et al
Filing
102
OPINION AND ORDER re 55 Motion to Dismiss; re 85 Motion to Dismiss for Failure to State a Claim and Motion to Dismiss for Lack of Jurisdiction; and re 89 Motion to Stay. Defendants' motions to dismiss are GRANTED in part and DENIED in par t (Docket Nos. 55 and 85). Plaintiffs' takings, procedural due process, and substantive due process claims pursuant to section 1983 are DISMISSED WITH PREJUDICE. Defendants' motion to stay discovery pending the ruling on these motions (Docket No. 89) is MOOT. There being no just reason for delay, partial judgment shall be entered accordingly. Signed by Judge Francisco A. Besosa on 09/26/2018. (brc)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
DANTZLER, INC., et al.,
Plaintiffs,
Civil No. 17-1447 (FAB)
v.
PUERTO RICO PORTS AUTHORITY, et
al.,
Defendants.
OPINION AND ORDER 1
BESOSA, District Judge.
Defendants S2 Services Puerto Rico, LLC (“S2”) and Rapiscan
Systems, Inc. (“Rapiscan”) move to dismiss the plaintiffs’ amended
complaint pursuant to Federal Rule of Civil of Procedure 12(b)(1)
(“Rule 12(b)(1)”) and Federal Rule Civil Procedure 12(b)(6) (“Rule
12(b)(6)”).
(Docket
No.
55.)
Defendant
Puerto
Rico
Ports
Authority (“PRPA”) also moves to dismiss the plaintiffs’ amended
complaint pursuant to Rule 12(b)(1), Rule 12(b)(6), and Federal
Rule of Civil Procedure 12(b)(7) (“Rule 12(b)(7)”).
No. 85.)
(Docket
For the reasons set forth below, the Court GRANTS IN
PART and DENIES IN PART S2, Rapiscan, and PRPA (collectively,
“defendants”)’s motions to dismiss (Docket Nos. 55 and 85.)
1
The
Jeremy S. Rosner, a third-year student at Emory University School of Law,
assisted in the preparation of this Opinion and Order.
Civil No. 17-1447 (FAB)
2
defendants’ motion to stay discovery pending the ruling on these
motions is moot (Docket No. 89.)
I.
Factual Background
The Court construes the following facts from the amended
complaint “in the light most favorable to the plaintiffs” and
“resolve[s] any ambiguities” in the plaintiffs’ favor. See OcasioHernández
v.
Fortuño-Burset,
640
F.3d
1,
17
(1st
Cir.
2011)
(discussing the Rule 12(b)(6) standard of review); see Viqueira v.
First Bank, 140 F.3d 12, 15 (1st Cir. 1998) (discussing the
Rule 12(b)(1) standard of review).
On December 17, 2009, PRPA and Rapiscan signed an agreement
allowing
Rapiscan
“to
conduct
all
services
of
non-intrusive
scanning of shipping containers entering Puerto Rico through the
port of San Juan,” although PRPA “had not been expressly delegated
legal authority or police powers to inspect cargo.” (Docket No. 19
at pp. 9-10.)
About eight months later, Rapiscan “assigned all of
its purported rights and obligations under its agreement with PRPA
to [S2], its wholly owned subsidiary.”
Id. at p. 10.
In February 2011, PRPA conceded that “it is not the government
instrumentality with the proper legal jurisdiction and authority
to intervene as of right in [the inspection of cargo containers]”
in a “Memorandum of Understanding” executed by PRPA and the Puerto
Rico Department of Treasury.
See Docket No. 19 at pp. 10-11
Civil No. 17-1447 (FAB)
3
(alteration in original).
PRPA, nonetheless, approved Regulation
8067, which required “the ocean carriers or their agents” to “pay
PRPA the Enhanced Security Fee to recover the costs incurred by
PRPA in the scanning program.”
Id. at p. 11. 2
“Ocean carriers
and their agents, in turn, collected Enhanced Security Fees from
shippers like named Plaintiffs . . . who import cargo through the
maritime
ports
of
San
Juan.”
Id.
(internal
quotation
marks
omitted).
On October 16, 2013, the Court enjoined Puerto Rico “from
collecting enhanced security fees from shipping operators that are
not being scanned pursuant to Regulation [] 8067.”
Cámara de
Mercadeo, Industria y Distribución de Alimentos v. Vázquez, 2013
WL 5652076, at *15 (D.P.R. Oct. 16, 2013) (McGiverin, Mag. J.),
aff’d on other grounds, Industria y Distribución de Alimentos v.
Trailer Bridge, 797 F.3d 141 (1st Cir. 2015).
The Court found
that the “enhanced security fee is unconstitutional as applied to
shipping operators without scanning facilities because it (1) does
not
fairly
approximate
their
use
or
privilege
of
using
port
scanning facilities, and (2) is excessive relative to the benefits
conferred.”
Id. at *12.
2 Regulation 8067 is titled, “Regulation for Implementing the Necessary Means
to Guarantee an Efficient Flow of Commercial Traffic in the Scanning of Inbound
Cargo Containers, to Improve Security and Safety at the Port Facilities, and/or
to Otherwise Implement the Public Policy of the Commonwealth of Puerto Rico
Delegated upon the Ports Authority.” (Docket No. 19 at p. 11.)
Civil No. 17-1447 (FAB)
4
Regulation 8067 was set to expire in June 30, 2014, “unless
such
term
was
expiration.”
extended,
modified
or
amended
(Docket No. 19 at p. 12.)
prior
[to]
its
PRPA did not extend,
modify, or amend Regulation 8067, “but continued to implement the
cargo scanning program despite and beyond its expiration.”
Id.
In October 2016, the Puerto Rico Court of Appeals ordered
PRPA
“to
immediately
cease
and
desist
from
carrying
out
any
procedure under [Regulation 8067]” because Regulation 8067 “was
not in force.”
Cámara de Mercadeo, Industria y Distribución de
Alimentos v. Autoridad de los Puertos, 2016 WL 7046805, at *8 (P.R.
Ct. App. Oct. 28, 2016) (official translation at Docket No. 73 at
p. 9).
Regulation 8067 required “the extension of the established
term of validity” to “be done during its term,” and because
Regulation 8067 was not extended prior to its expiration, the
Puerto Rico Court of Appeals held that the “decree had no effect.”
Id. at *7 (official translation at Docket No. 73 at p. 8).
The defendants, nevertheless, have “acted and/or continued to
act in collecting [] Enhanced Security Fees in connection with the
cargo scanning program.”
(Docket No. 19 at p. 13.)
The defendants
have also continued to collect enhanced security fees from the
plaintiffs for “non-containerized cargo such as cars, ISO tanks,
cargo on platforms, and other types of cargo which are imported
without using shipping containers,” as well as “cargo entering the
Civil No. 17-1447 (FAB)
5
Port of San Juan, through some marine terminals which do not have
access to scanning stations,” and “cargo . . . that [is] not being
scanned at all,” Docket No. 19 at pp. 13-15, despite the Court’s
ruling that the defendants cannot collect such fees from “shipping
operators that are not being scanned pursuant to Regulation []
8067.”
Vázquez, 2013 WL 5652076, at *15.
The defendants have
“collected and derived economic benefit from the Enhanced Security
Fees,”
and
the
plaintiffs
have
sustained
“substantial
and
continuing economic losses” in amounts “believed to be in excess
of $150,000,000.00” because of the defendants’ actions.
(Docket
No. 19 at p. 15.)
II.
Procedural History
The plaintiffs commenced this action on April 5, 2017 “as
entities that paid fees for the scanning cargo imported into Puerto
Rico through the maritime port of San Juan that were illegally
collected by Defendants” in violation of federal and Puerto Rico
law.
an
(Docket No. 1 at p. 2; Docket No. 19 at pp. 2-3.)
amended
complaint
approximately
five
months
They filed
later
seeking
relief pursuant to 42 U.S.C. section 1983 (“section 1983”), based
on the Fifth Amendment, the Fourteenth Amendment, and the Commerce
Clause, and pursuant to Puerto Rico civil code, articles 7, 200,
and 1795.
Docket No. 19 at pp. 21-30; see 42 U.S.C. § 1983; P.R.
Laws Ann. tit. 3, §§ 7, 901, 5121.
Civil No. 17-1447 (FAB)
6
On December 19, 2017, S2 and Rapiscan moved to dismiss the
amended complaint. (Docket No. 55.) According to S2 and Rapiscan,
the plaintiffs “lack standing to challenge the Enhanced Security
Fees at issue because they did not pay them—the fees were imposed
on ocean freight carriers who independently decided whether, and
in what amount, to pass their own costs onto merchants such as
Plaintiffs.”
Id. at p. 1.
S2 and Rapiscan argue that the amended
complaint “fails to state cognizable claims against Rapiscan and
S2 under 42 U.S.C. § 1983 because it does not allege that Rapiscan
or S2 individually caused any violation of Plaintiffs’ alleged
constitutional rights.”
Id.
In the alternative, S2 and Rapiscan
contend that they are “entitled to qualified immunity from suit
under
§
1983
respectively,
services.”
as
a
sued
Id.
former
solely
and
on
current
the
government
basis
of
their
contractor,
contracted
S2 and Rapiscan also maintain that the amended
complaint “fails to state claims for unjust enrichment and undue
collection under Puerto Rico law because it does not allege that
Rapiscan or S2 received compensation for their services without
cause.”
Id.
On May 23, 2018, PRPA moved to dismiss the amended complaint.
(Docket No. 85.)
Like S2 and Rapiscan, PRPA asserts that the
plaintiffs’ claims are “improperly anchored on their carriers’
independent decisions to charge operating fees” and thus do “not
Civil No. 17-1447 (FAB)
7
satisfy the constitutional standing requirements.”
Id. at p. 1.
In the alternative, PRPA argues that it “is an arm of the state
cloaked with sovereign immunity,” which “shields it from legal
actions that precisely target its governmental functions.”
p. 2.
Id. at
PRPA also contends that:
(1) Plaintiffs’ Section 1983 claims are mostly time
barred; (2) Plaintiffs have failed to include the Ocean
Freight
Carriers, who
are
indispensable
to
any
litigation challenging the collection of [enhanced
security fees]; (3) the [] amended complaint fails to
state a cause of action for unjust enrichment or undue
collection; (4) Plaintiff’s regulatory takings claim is
flawed, inasmuch as it is incorrectly based on PRPA’s
alleged ultra vires acts; and (5) Plaintiffs’ claim
regarding PRPA’s alleged ultra vires conduct are
inapposite.
Id.
While the Court disagrees with the defendants’ arguments
regarding
standing
and
immunity,
the
Court
agrees
that
the
plaintiffs fail to establish takings, procedural due process, and
substantive due process claims pursuant to section 1983.
The
Court, nevertheless, finds that the plaintiffs state a valid
Commerce Clause claim pursuant to section 1983, as well as Puerto
Rico law claims.
III. Standards of Review
Rule 12(b) permits a party to assert defenses against claims
for relief.
Fed. R. Civ. P. 12.
A court, nonetheless, “must
construe the complaint liberally,” Aversa v. United States, 99
F.3d 1200, 1210 (1st Cir. 1996), and a complaint that adequately
Civil No. 17-1447 (FAB)
8
states a claim may still proceed even if “recovery is very remote
and
unlikely.”
Ocasio-Hernández,
640
F.3d
at
13
(internal
quotation marks and citations omitted); see Katz v. Pershing, LLC,
672 F.3d 64, 70 (1st Cir. 2012) (“In considering the pre-discovery
grant of a motion to dismiss for lack of standing, [courts] accept
as true all well-pleaded factual averments in the plaintiff’s . .
. complaint and indulge all reasonable inferences therefrom in his
favor.”) (internal citation omitted).
Rule 12(b)(1) allows a court to dismiss a complaint when a
plaintiff fails to establish subject-matter jurisdiction.
Civ. P. 12(b)(1).
Fed. R.
The party asserting jurisdiction has the burden
of demonstrating the existence of federal jurisdiction.
See Droz-
Serrano v. Caribbean Records Inc., 270 F. Supp. 2d 217, 217 (D.P.R.
2003) (García-Gregory, J.) (citing Murphy v. United States, 45
F.3d
520,
522
(1st
Cir.
1995)).
“As
courts
of
limited
jurisdiction, federal courts have the duty to construe their
jurisdictional grants narrowly.”
Fina Air, Inc. v. United States,
555 F. Supp. 2d 321, 323 (D.P.R. 2008) (Besosa, J.) (citing AliceaRivera v. SIMED, 12 F. Supp. 2d 243, 245 (D.P.R. 1998) (Fusté,
J.)).
A defendant may move to dismiss an action for failure to state
a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6).
To survive a Rule 12(b)(6) motion to dismiss, a complaint must
Civil No. 17-1447 (FAB)
9
contain sufficient factual matter “to state a claim to relief that
is plausible on its face.”
Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007). A court must decide whether the complaint alleges
sufficient facts to “raise a right to relief above the speculative
level.”
Id. at 555.
A party may move for dismissal of an action for failure to
join
a
necessary
party
pursuant
to
Federal
Rule
of
Civil
Procedure 19 (“Rule 19”). Fed. R. Civ. P. 12(b)(7). Courts employ
a two-step approach to establish whether an action should be
dismissed pursuant to Rule 12(b)(7).
See United States v. San
Juan Bay Marina, 239 F.3d 400, 405 (1st Cir. 2009); Fed. R. Civ.
P. 19.
First, a court examines “whether the [party] fits the
definition of those who should ‘be joined if feasible’ under
[R]ule 19(a).”
Cruz-Gascot v. HIMA-San Pablo Hosp. Bayamón, 728
F. Supp. 2d. 14, 26 (D.P.R. 2010) (Besosa, J.).
ascertains whether joinder is feasible.
IV.
Second, a court
Id. at 27.
Standing
The defendants argue that the plaintiffs do not have standing
to raise their claims in federal court.
16;
Docket
No.
Rule 12(b)(1)
to
jurisdiction.
Id.
85
at
dismiss
pp.
the
16-22.)
amended
(Docket No. 55 at pp. 14The
defendants
complaint
for
invoke
lack
of
Civil No. 17-1447 (FAB)
A.
10
Legal Standard
“The
Constitution
limits
the
judicial
federal courts to actual cases and controversies.”
power
of
the
Katz, 672 F.3d
at 71 (citing U.S. Const. art. III, § 2, cl. 1).
“A case or
controversy exists only when the party soliciting federal court
jurisdiction . . . demonstrates ‘such a personal stake in the
outcome of the controversy as to assure that concrete adverseness
which sharpens the presentation of issues.’”
v. Carr, 369 U.S. 186, 204 (1962)).
outcome
of
“standing.”
the
case
See id.
or
Id. (quoting Baker
A “personal stake” in the
controversy
is
otherwise
known
as
“If a plaintiff lacks standing to bring a
matter before a court, the court lacks jurisdiction to decide the
merits of the underlying case.”
Libertad v. Welch, 53 F.3d 428,
436 (1st Cir. 1995) (citation omitted).
To
establish
three elements:
standing,
a
plaintiff
must
demonstrate
“[f]irst, the plaintiff must have suffered an
injury in fact,” “[s]econd, there must be a causal connection
between the injury and the conduct complained of,” and “[t]hird,
it must be likely, as opposed to merely speculative, that the
injury will be redressed by a favorable decision.”
Lujan v. Defs.
of Wildlife, 504 U.S. 555, 560-61 (1992) (citations omitted). “The
party
invoking
federal
jurisdiction
establishing these elements.”
bears
Id. at 561.
the
burden
of
“[E]ach element must
Civil No. 17-1447 (FAB)
11
be supported in the same way as any other matter on which the
plaintiff bears the burden of proof, i.e., with the manner and
degree
of
evidence
litigation.”
A
required
at
the
successive
stages
of
the
Id. 3
plaintiff
must
demonstrate
a
“sufficiently
direct
causal connection between the challenged action and the identified
harm.”
While
Katz, 672 F.3d at 71 (citing Lujan, 504 U.S. at 560).
“this
causal
connection
cannot
be
overly
attenuated,”
Donahue v. City of Boston, 304 F.3d 110, 115 (1st Cir. 2002)
(citation
omitted),
“a
plaintiff
need
not
allege
that
the
defendant’s conduct was the proximate cause of the plaintiff’s
injuries.”
Connor B. ex rel. Vigurs v. Patrick, 771 F. Supp. 2d
142, 152 (D. Mass. 2011) (citations omitted).
A plaintiff must
“merely [show] that the injury was ‘fairly traceable’ to the
3
“Injury in fact” is an injury that is “concrete and particularized” and “actual
or imminent, not conjectural or hypothetical.” Lujan, 504 U.S. at 560 (internal
quotation marks and citation omitted). “A particularized injury is one that
‘affect[s] the plaintiff in a personal and individual way.” Pagán v. Calderón,
448 F.3d 16, 27 (1st Cir. 2006) (alteration in original) (quoting Lujan, 504
U.S. at 560 n.1). The injury “may be shared by many others, but may not be
common to everyone.” Dubois v. United States Dep’t of Agric., 102 F.3d 1273,
1281 (1st Cir. 1996) (citing Warth v. Seldin, 422 U.S. 490, 499 (1975); see
United States v. Students Challenging Reg. Agency Procs., 412 U.S. 669, 687-88
(1973)). “[T]he redressability element of standing requires that the requested
relief directly redress the injury alleged.” Mass. Indep. Certification, Inc.
v. Johanns, 486 F. Supp. 2d 105, 116 (D. Mass. 2007) (citing Steel Co. v.
Citizens for a Better Env’t, 523 U.S. 83, 105-09 (1998)). A “[p]laintiff must
establish that it is ‘likely,’ as opposed to merely ‘speculative,’ that its
claimed injuries will be redressed by a favorable decision.”
Id. (quoting
Lujan, 504 U.S. at 560). A complaint that “prays for monetary damages as a
means of ameliorating the asserted wrong” is sufficient to establish
redressability. Culhane v. Aurora Loan Servs. of Neb., 708 F.3d 282, 290 (1st
Cir. 2013).
Civil No. 17-1447 (FAB)
12
challenged action of the defendant.”
Vigurs, 771 F. Supp. 2d at
152 (quoting Lujan, 504 U.S. at 590); see Focus on the Family v.
Pinellas Suncoast Transit Auth., 344 F.3d 1263, 1273 (11th Cir.
2003) (“[E]ven harms that flow indirectly from the action in
question can be said to be ‘fairly traceable’ to that action for
standing purposes.”).
When “a plaintiff’s asserted injury arises
from the government’s allegedly unlawful regulation (or lack of
regulation) of someone else . . . . causation and redressability
ordinarily hinge on the response of the regulated (or regulable)
third party to the government action or inaction—and perhaps on
the
response
of
others
as
(alterations in original).
well.”
Lujan,
504
U.S.
at
562
A sufficient causal connection may
thus be established even if a plaintiff is not “the object of the
government action or inaction.”
B.
Id. (citations omitted).
Discussion
The plaintiffs establish an adequate “casual connection
between the challenged action and the identified harm” because the
enhanced
security
fees
paid
traceable” to the defendants.
by
the
plaintiffs
are
“fairly
See Katz, 672 F.3d at 71 (citing
Lujan, 504 U.S. at 560); Vigurs, 771 F. Supp. 2d at 152.
The
defendants argue that the plaintiffs have not demonstrated the
causal connection required to establish the plaintiffs’ standing
because the plaintiffs’ alleged injuries are “not fairly traceable
Civil No. 17-1447 (FAB)
to Defendants.”
pp. 17-22. 4
13
Docket No. 55 at p. 15; see Docket No. 85 at
The defendants, however, imposed enhanced security
fees on ocean freight carriers, and the ocean freight carriers
collected those fees from the plaintiffs.
p. 11.)
(Docket No. 19 at
Causality may be established when a plaintiff is not the
direct “object of the government action,” Lujan, 504 U.S. at 562
(citations omitted), because “even harms that flow indirectly from
the action in question can be said to be ‘fairly traceable’ to
that action for standing purposes.”
at
1273.
At
minimum,
the
Focus on the Family, 344 F.3d
plaintiffs
indirectly by the government regulation.
were
allegedly
The plaintiffs’ alleged
injuries are “fairly traceable” to the defendants.
v.
Seldin,
422
U.S.
490,
510
(1975)
injured
See id.; Warth
(“[E]nforcement
of
the
challenged [governmental] restriction against the [vendor] would
result indirectly in the violation of third parties’ rights.”); In
re Pharm. Indus. Average Wholesale Price Litig. v. Abbott Labs.,
339 F. Supp. 2d 165, 172 (D. Mass. 2004) (finding that plaintiffs
had
4
standing
because
they
were
“indirectly
harmed”
by
the
While PRPA also argues that the plaintiffs’ “conclusory allegations do not
show a particularized grievance,” PRPA fails to support this contention.
(Docket No. 85 at p. 20.) The plaintiffs allege past and continuing illicit
charges of enhanced security fees through the scanning program. (Docket No. 1
at p. 13.) The estimated charges amount to more than $150,000,000.00. Id.
The alleged injury is concrete, particularized, and actual.
See Lujan, 504
U.S. at 560. The alleged injury is also “likely” to be redressed by the Court
through a monetary award. See Johanns, 486 F. Supp. 2d at 116. S2 and Rapiscan
do not dispute the plaintiffs’ injury in fact or the redressability of the
plaintiffs’ claims. (Docket No. 55 at p. 15.)
Civil No. 17-1447 (FAB)
14
government regulations); see also Sprint Commc’n Co. v. APCC
Servs., Inc., 554 U.S. 269, 290 (2008) (“[T]he payphone operators
assigned to the aggregators all rights, title and interest in
claims based on those injuries. . . .
The aggregators, in other
words,
not
are
asserting
first-party,
third-party,
legal
rights.”).
Because the plaintiffs’ alleged injuries are concrete,
particularized, and actual, see Lujan, 504 U.S. at 560, “fairly
traceable” to the defendants, see Vigurs, 771 F. Supp. 2d at 152,
and “likely” to be redressed by the Court through monetary award,
see Johanns, 486 F. Supp. 2d at 116, the plaintiffs have standing
to bring this action.
V.
Absolute Sovereign Immunity
PRPA contends that it is entitled to absolute sovereign
immunity from this action pursuant to the Eleventh Amendment of
the United States Constitution.
A.
(Docket No. 85 at pp. 6-16.)
Legal Standard
Sovereign
immunity
“bars”
private
parties
from
“adjudicating claims . . . against a nonconsenting State.”
Fed.
Mar. Comm’n v. S.C. Ports Auth., 535 U.S. 743, 760 (2002).
The
Eleventh Amendment provides sovereign immunity for “the states
themselves and entities that are determined to be arms of a state.”
Pastrana-Torres v. Corporación de P.R. para la Difusión Pública,
Civil No. 17-1447 (FAB)
15
460 F.3d 124, 126 (1st Cir. 2006) (citation omitted). 5
An entity
that invokes sovereign immunity “bears the burden of showing that
it is an arm of the state.”
Wojcik v. Mass. St. Lottery Comm’n,
300 F.3d 92, 99 (1st Cir. 2002) (citation omitted).
The First Circuit Court of Appeals applies a two-step
inquiry to determine whether an entity is an arm of the state.
Grajales v. P.R. Ports Auth., 831 F.3d 11, 17 (1st Cir. 2016)
(citing Fresenius Med. Care Cardiovascular Res., Inc. v. P.R. &
Caribbean Cardiovascular Ctr. Corp., 322 F.3d 56, 65 (1st Cir.
2003)).
The first step “‘pays deference to the state’s dignitary
interest in extending or withholding Eleventh Amendment immunity
from an entity’ by examining ‘how the state has structured the
entity.’”
Id. (quoting Fresenius, 322 F.3d at 65).
A court
considers a “broad range of structural indicators,” such as “how
state law characterizes the entity, the nature of the functions
performed by the entity, the entity’s overall fiscal relationship
5
Sovereign immunity has applied to the Commonwealth of Puerto Rico for over a
century. See Porto Rico v. Rosaly, 227 U.S. 270, 273 (1913); see also JusinoMercado v. Puerto Rico, 214 F.3d 34, 38-39 (1st Cir. 2000) ([W]e consistently
have held that Puerto Rico’s sovereign immunity in federal courts parallels the
states’ Eleventh Amendment immunity.”) (citing cases). The plaintiffs, however,
argue that, “in light of recent Supreme Court and First Circuit case law, Puerto
Rico is not a State-like sovereign entitled to such immunity.” See Docket No.
90 at pp. 2-4 (citing Puerto Rico v. Sánchez-Valle, 136 S. Ct. 1863 (2016);
Franklin Cal. Tax-Free Tr. V. Puerto Rico, 805 F.3d 322 (1st Cir. 2015), aff’d,
136 S. Ct. 1938 (2016)). Because PRPA fails to establish that it is an arm of
the state, this Court declines to address whether sovereign immunity continues
to apply to Puerto Rico in light of Sánchez-Valle, 136 S. Ct. 1863, and Franklin
Cal. Tax-Free Tr., 805 F.3d 322.
Civil No. 17-1447 (FAB)
16
to the [state],” and “how much control the state exercises over
the operations of the entity.”
omitted).
Id. at 17-18 (internal citations
“[I]f the analysis of these structural indicators
reveals that ‘the state clearly structured the entity to share its
sovereignty,’ then the entity is an arm of the state and the
analysis is at an end.”
Id. at 18 (quoting Fresenius, 322 F.3d
at 68).
“[I]f
the
structural
indicators
‘point
in
different
directions,’” however, a court proceeds to the second step of the
analysis concerning “the risk that the damages will be paid from
the public treasury.” Grajales, 831 F.3d at 18 (quoting Fresenius,
322 F.3d at 68).
“At the second step . . . ‘[the] analysis focuses
on whether the state has legally or practically obligated itself
to pay the entity’s indebtedness’ in the pending action.”
(quoting
Fresenius,
322
F.3d
at
68).
“If
the
state
is
obligated, then the entity may claim the state’s immunity.”
Id.
so
Id.
(citing Fresenius, 322 F.3d at 65, 68).
B.
Discussion
PRPA fails to demonstrate that it is an arm of the state,
and is not entitled to immunity from this action.
i.
Puerto Rico’s Intent in Structuring PRPA
The
structural
indicators
“point
in
different
directions” and do not indicate whether Puerto Rico “clearly
Civil No. 17-1447 (FAB)
17
structured” PRPA to be its arm.
See Grajales, 831 F.3d at 18
(quoting Fresenius, 322 F.3d at 68).
PRPA’s enabling act “does
not by its terms structure [PRPA] to be an arm of the state.”
See
Fresenius, 322 F.3d at 68; see also Grajales, 831 F.3d at 21-22.
According to PRPA’s enabling act, PRPA is a “public corporation”
with a “legal existence and personality separate and apart from
those of the Government and any officials thereof.”
Ann.
tit.
23,
§
333(a)-(b)
(emphasis
added).
P.R. Laws
This
language
strongly suggests that PRPA is not an arm of the state.
Grajales, 831 F.3d at 21-22.
See
“[W]hen Puerto Rico has chosen to
make an entity an arm of the state, it has used other language.”
Fresenius, 322 F.3d at 68.
For example, the Medical Services
Administration, a “health care entity created by the Commonwealth,
was
‘created
Commonwealth
as
an
instrumentality
of
Puerto
Rico,
of
attached
the
to
Government
the
of
the
Commonwealth
Department of Health . . . under the direction and supervision of
the Secretary of Health.’”
Id. at 69-70 (quoting P.R. Laws Ann.
tit 24, § 342(b)); see Rodríguez-Díaz v. Sierra-Martínez, 717 F.
Supp. 27, 29-31 (D.P.R. 1989) (Pieras, J.). 6
6
The Court does not address the second structural indicator involving PRPA’s
functions because the “nature of the functions” performed by PRPA “does not
advance the inquiry into PRPA’s status” due to PRPA’s “mix of functions of which
some are characteristic of arms and others are not.” Grajales, 831 F.3d at 24
(citing Hess v. Port Auth. Trans-Hudson Corp., 513 U.S. 30, 45 and n.17 (1994).
Civil No. 17-1447 (FAB)
18
PRPA’s overall fiscal relationship with Puerto Rico
displays a high degree of separation between the entity and the
state, suggesting that PRPA is not an arm of the state.
Grajales, 831 F.3d at 25.
See
Pursuant to PRPA’s enabling act, PRPA’s
debts and obligations are “deemed to be those of [PRPA], and not
those of the Commonwealth of Puerto Rico.” P.R. Laws Ann. tit. 23,
§ 333(b) (emphasis added).
Puerto Rico law requires PRPA to
“develop strategies and take steps for financing and/or defraying
any costs related to [port security],” and “the credit or power to
levy taxes of the Commonwealth of Puerto Rico or of any of its
political subdivisions shall not be pledged nor made liable for
the payment of the principal of any loans, guarantees or bonds
issued by any entity.”
P.R. Laws Ann. tit. 23, § 3223(a)-(b).
PRPA thus “has the funding power to enable it to satisfy judgments
without direct state participation or guarantees.”
See Grajales,
831 F.3d at 24 (internal quotation marks and citation omitted).
Puerto Rico “generally has immunized itself from responsibility
for [PRPA]’s acts or omissions, and the Commonwealth generally
bears no legal liability for [PRPA]’s debts.”
Grajales, 831 F.3d
at 25 (internal citations omitted).
“[T]he extent to which [Puerto Rico] exerts control
over PRPA”, however, weighs “rather strongly in favor of concluding
that PRPA is an arm of the [state].”
Grajales, 831 F.3d at 28.
Civil No. 17-1447 (FAB)
Puerto
Rico
19
“exercises
supervision over PRPA.”
a
meaningful
degree
of
control
and
Id. (citing Royal Caribbean Corp. v. P.R.
Ports Auth., 973 F.2d 8, 11-12 (1st Cir. 1992)).
“The governor
retains formal control over PRPA through his power to appoint and
remove a majority of PRPA’s board members,” and the state “appears
to exert a great deal of control over PRPA in practice.”
Id.
(citing Fed. Mar. Comm’n, 531 F.3d at 877-78).
Because
the
structural
indicators
“point
in
different directions,” the Court proceeds to the second step of
the analysis.
See Grajales, 831 F.3d at 18 (quoting Fresenius,
322 F.3d at 68).
ii.
Puerto Rico’s Financial Obligation to PRPA
PRPA fails to demonstrate that this action poses
any financial risk to the Commonwealth.
PRPA does not contend
that the Commonwealth would be liable for a judgment against PRPA
in this case, 7 nor is there any basis for the Court to conclude
that the Puerto Rico Department of Treasury would pay for the
damages in this action.
Grajales, 831 F.3d at 29.
See P.R. Laws Ann. tit. 23, § 333(b);
“PRPA [was designed] to raise enough
revenue to shoulder its own costs, including its litigation costs,
and to bear its own debts, including (generally) any judgments
7
Indeed, PRPA fails to address this step of the analysis in its briefing.
Docket No. 85 at pp. 6-16.
See
Civil No. 17-1447 (FAB)
against it.”
20
Grajales, 831 F.3d at 29 (alteration in original).
Pursuant to the “Memorandum of Understanding” between PRPA and the
Puerto Rico Department of Treasury:
Each of the parties waives its right to recover from the
other, fully and irrevocably releasing the other . . .
from any and all claims, causes of action, loss,
liability, of any nature whatsoever . . . in connection
with the either party alleged negligent performance of
its obligations under this Memorandum of Understanding
and Agreement.
(Docket No. 19 at pp. 95-96.)
Because the Commonwealth would not be liable for a
judgment against PRPA in this action, PRPA is not entitled to
immunity from this case.
Consequently, the Court DENIES PRPA’s
absolute immunity defense (Docket No. 85).
VI.
Section 1983 Claims
The plaintiffs assert four claims pursuant to section 1983.
(Docket No. 19 at pp. 21-22.)
Clause,
takings,
procedural
process violations.
Id.
due
The plaintiffs allege Commerce
process,
and
substantive
due
The defendants move to dismiss the
plaintiffs’ section 1983 claims pursuant to Rule 12(b)(6). (Docket
No. 55 at pp. 16-17, 21; Docket No. 85 at pp. 22-26.)
A.
Legal Standard
Section 1983 is not itself a source of substantive
rights, but rather it “renders persons acting under color of state
law
liable
for
constitutional
and
federal-law
violations.”
Civil No. 17-1447 (FAB)
21
Costas-Elena v. Municipality of San Juan, 677 F.3d 1, 6 (1st Cir.
2012); see Graham v. Connor, 490 U.S. 386, 393 (1989). 8
In order
to establish a section 1983 claim, a plaintiff must adequately
allege that he or she was deprived of a federally secured right
and that the challenged conduct transpired “under color of state
law.”
See Santiago v. Puerto Rico, 655 F.3d 61, 68 (1st Cir.
2011).
“In distinguishing private action from state action, the
general inquiry is whether ‘a state actor’s conduct occurs in the
course of performing an actual or apparent duty of his office, or
. . . is such that the actor could not have behaved in that way
but for the authority of his office.’” Zambrana-Marrero v. SuárezCruz, 172 F.3d 122, 125 (1st Cir. 1999) (citation omitted).
A
private entity may be deemed a state actor for the purpose of
section 1983 if it:
assumes a traditional public function when performing
the challenged conduct; or if the challenged conduct is
coerced or significantly encouraged by the state; or if
the state has “so far insinuated itself into a position
of interdependence with the [private party] that it was
a joint participant in [the challenged activity].”
8 “For purposes of § 1983, Puerto Rico ‘is deemed equivalent to a state.’”
Costas-Elena, 677 F.3d at 6 n.5 (quoting Déniz v. Municipality of Guaynabo 285
F.3d 142, 146 (1st Cir. 2002)).
Civil No. 17-1447 (FAB)
Santiago
v.
Puerto
22
Rico,
655
F.3d
61,
68
(1st
Cir.
2011)
(alterations in original) (quoting Estades-Negroni v. CPC Hosp.
San Juan Capestrano, 412 F.3d 1, 5 (1st Cir. 2005)).
A
plaintiff
must
“plausibly
plead
.
.
connection between the actor and the deprivation.”
.
a
causal
Torres-López
v. García-Padilla, 209 F. Supp. 3d 448, 455 (D.P.R. 2016) (PérezGiménez, J.) (citing Sánchez v. Pereira-Castillo, 590 F.3d 31 (1st
Cir. 2009); 42 U.S.C. § 1983).
A plaintiff must “establish the
link between each particular defendant and the alleged violation
of federal rights.”
Id. (citing González-Piña v. Rodríguez, 407
F.3d 425, 432 (1st Cir. 2005)).
“A plaintiff may do so by
indicating any ‘personal action or inaction [by the defendants]
within the scope of [their] responsibilities that would make [them]
personally
answerable
in
damages
under
Section
1983.”
Id.
(alterations in original) (citing Pinto v. Nettleship, 737 F.2d
130, 133 (1st Cir. 1984)).
B.
Fifth Amendment Takings Claim
i.
Applicable Law
The
“expressly
requires
Takings
Clause
compensation
of
where
the
[the]
Fifth
Amendment
government
takes
private property ‘for public use.’” Lingle v. Chevron U.S.A. Inc.,
544 U.S. 528, 543 (2005) (quoting U.S. Const. amend. V).
A
plaintiff must demonstrate a “protected property interest” to
Civil No. 17-1447 (FAB)
23
establish a takings claim.
See Santiago-Ramos v. Autoridad de
Energía Eléctrica de P.R., 834 F.3d 103, 106 (1st Cir. 2016).
“The Supreme Court has recognized two types of
takings: physical takings and regulatory takings.”
Asociación de
Subscripción Conjunta del Seguro Responabilidad Obligatorio v.
Flores-Galarza, 484 F.3d 1, 28-29 (1st Cir. 2007) (citing Brown v.
Legal Found. of Wash., 538 U.S. 216, 233 (2003)).
“A physical
taking occurs either when there is a condemnation or a physical
appropriation of property.”
Philip Morris, Inc. v. Reilly, 312
F.3d 24, 33 (1st Cir. 2002).
“A regulatory taking transpires when
some significant restriction is placed upon an owner’s use of his
property
for
which
‘justice
compensation be given.”
and
fairness’
require
that
Id. (quoting Goldblatt v. Hempstead, 369
U.S. 590, 594 (1962)).
“[T]he Supreme Court has identified ‘two categories
of
regulatory
takings.’”
action
that
generally
will
be
deemed
per
se
Franklin Mem. Hosp. v. Harvey, 575 F.3d 121, 125 (1st
Cir. 2009) (quoting Lingle, 544 U.S. at 538).
“First, where [the]
government
permanent
invasion
requires
of
her
compensation.”
‘regulations
an
owner
to
suffer
property—however
minor—it
Lingle, 544 U.S. at 538.
completely
deprive
an
a
owner
must
physical
provide
just
Second, “where the
of
all
economically
Civil No. 17-1447 (FAB)
24
beneficial us[e] of her property.’”
Franklin Mem. Hosp., 575 F.3d
at 125 (quoting Lingle, 544 U.S. at 538) (alterations in original).
ii.
Discussion
The plaintiffs fail to establish a Fifth Amendment
takings claim.
The plaintiffs contend that the defendants, “under
color of law and authority, . . . depriv[ed] Plaintiffs . . . of
their
property
in
violation
of
(Docket No. 19 at pp. 15 and 23.)
their
rights.”
The plaintiffs, however, do not
assert a “protected property interest.”
F.3d at 106.
constitutional
See Santiago-Ramos, 834
The plaintiffs forfeited their interest in the funds
by voluntarily paying the enhanced security fees to the defendants.
See id. at 107; see also Manistee Apartments, LLC v. City of
Chicago, 844 F.3d 630, 633 (7th Cir. 2016) (“It is, of course,
indisputable that the plaintiff had a cognizable property in the
entirety of the amount it paid to the City of Chicago . . . . But,
. . . Manistee voluntarily paid this amount to the City, and
voluntary payment is not a property deprivation.”).
“It is beyond
dispute that . . . user fees . . . are not ‘takings.’”
Koontz v.
St. Johns River Water Mgmt. Dist., 570 U.S. 595, 615 (2013)
(internal quotation marks) (citing cases). 9
9
A user fee is a “charge assessed for the use of a governmental facility or
service,” like the enhanced security fee charged by the defendants in this case.
See Trailer Bridge, 797 F.3d at 145.
Civil No. 17-1447 (FAB)
The
25
plaintiffs
support their takings claim.
also
provide
no
information
to
They do not allege “a condemnation
or a physical appropriation of property,” see Philip Morris, 312
F.3d
at
33,
nor
do
they
claim
that
a
government
regulation
“require[d] [them] to suffer a permanent physical invasion of
[their]
property,”
government
see
regulation
Lingle,
544
“completely
U.S.
at
deprive[d]
538,
[them]
economically beneficial us[e] of [their] property.’”
Mem. Hosp., 575 F.3d at 125.
or
that
of
a
all
See Franklin
Indeed, there is no mention of
“takings” in the amended complaint.
See Docket No. 19.
Because the plaintiffs fail to plead sufficient
factual matter to state a section 1983 Fifth Amendment takings
claim, the Court GRANTS the defendants’ motions to dismiss (Docket
Nos. 55 and 85) with respect to the plaintiffs’ takings claim.
See Santiago, 655 F.3d at 68; Twombly, 550 U.S. at 570.
C.
Fourteenth Amendment Due Process Claim
i.
Applicable Law
Pursuant to the Fourteenth Amendment, a “[s]tate
[shall not] deprive any person of life, liberty, or property,
without due process of law.”
Fournier v. Reardon, 160 F.3d 754,
757 (1st Cir. 1998) (internal quotation marks omitted) (citing
U.S. Const. amend. XIV).
“Due process claims may take either of
Civil No. 17-1447 (FAB)
26
two forms: procedural due process or substantive due process.”
Id. (internal quotation marks and citation omitted).
Procedural due process requires “fair procedure.”
Zinermon v. Burch, 494 U.S. 113, 125 (1990).
individuals
who
are
threatened
with
the
“This right assures
deprivation
of
a
significant liberty or property interest by the state notice and
an
opportunity
to
meaningful manner.’”
be
heard
‘at
a
meaningful
time
and
in
a
Ford v. Bender, 768 F.3d 15, 24 (1st Cir.
2014) (quoting Armstrong v. Manzo, 380 U.S. 545, 552 (1965)).
To
establish a procedural due process claim pursuant to section 1983,
a plaintiff must “(1) allege facts that show that the plaintiff
has a property interest, as defined by state law, and (2) that the
conduct complained of, committed under color of state law, has
deprived
the
plaintiff
of
that
property
constitutionally adequate procedures.”
interest
without
Vélez-Herrero v. Guzman,
330 F. Supp. 2d 62, 71 (D.P.R. 2004) (Fusté, J.) (citing PFZ
Props., Inc. v. Rodríguez, 928 F.2d 28, 30 (1st Cir. 1991)).
“[T]he adequacy of the due process provided by the state is
assessed by means of a balancing test that weighs the government’s
interest against the private interest affected, the risk of an
erroneous deprivation, and the value of additional safeguards.”
Morales-Torres v. Santiago-Díaz, 338 F. Supp. 2d 283, 292 (D.P.R.
Civil No. 17-1447 (FAB)
27
2004) (Fusté, J.) (citing Mathews v. Eldridge, 424 U.S. 319, 335
(1976)).
“Substantive due process . . . imposes limits on
what a state may do regardless of what procedural protection is
provided.”
Fournier,
160
F.3d
at
757
(citations
omitted).
Substantive due process “affords only those protections ‘so rooted
in the traditions and conscience of our people as to be ranked as
fundamental.’”
Michael H. v. Gerald D., 491 U.S. 110, 109 (1989)
(quoting Snyder v. Massachusetts, 291 U.S. 97, 105 (1934)).
every
property
interest
substantive due process.”
is
entitled
to
the
protection
“Not
of
Coyne v. City of Somerville, 770 F.
Supp. 740, 747 (D. Mass. 1991); see Bd. of Regents v. Roth, 408
U.S. 564, 577 (1972).
A successful substantive due process claim
must have “significant resemblance to those interests previously
viewed as fundamental by the Constitution,” and not be “a right
weaved from the cloth of state law.”
Id.
“While a property interest created under state law
will receive the protections of procedural due process, only those
property
rights
derived
under
the
Constitution
protections of substantive due process.”
receive
the
Coyne, 770 F. Supp. at
747 (citing Regents of Univ. of Mich. v. Ewing, 474 U.S. 214, 229
(1985) (Powell, J., concurring)).
Substantive due process does
not protect “indirect state action having only an incidental
Civil No. 17-1447 (FAB)
28
effect” on one’s protected liberty or property interest.
Pittsley
v. Warish, 927 F.2d 3, 8 (1st Cir. 1991), abrogated on other
grounds, Martínez v. Cui, 608 F.3d 54 (1st Cir. 2010).
Nor does
substantive due process protect “the failure of the government and
its officials to abide by their contract[s].”
Charles v. Baesler,
910 F.2d 1349, 1353 (6th Cir. 1990).
ii.
Discussion
The plaintiffs fail to assert sufficient factual
allegations to state procedural or substantive due process claims
pursuant to section 1983.
See Santiago-Ramos, 834 F.3d at 107;
Vélez-Herrero, 330 F. Supp. 2d at 71 (citing PFZ Props., Inc., 928
F.2d at 30); Twombly, 550 U.S. at 570; Ocasio-Hernández, 640 F.3d
at 13.
The demonstration of a protected property interest is
fundamental to procedural and substantive due process claims.
Ford, 768 F.3d at 24; Coyne, 770 F. Supp. at 747.
do not establish a valid property interest. 10
See
The plaintiffs
Accordingly, the
Court GRANTS the defendants’ motions to dismiss (Docket Nos. 55
and 85) with respect to the plaintiffs’ procedural and substantive
due process claims.
10
For a discussion regarding the plaintiffs’ failure to establish a valid
property interest, see supra Section VII(B)(ii).
Civil No. 17-1447 (FAB)
D.
29
Commerce Clause Claim
i.
Applicable Law
The
discriminat[ing]
interstate
Commerce
between
element
[]
between the states.”
Clause
“precludes
transactions
and
on
inhibits
the
States
basis
‘economic
‘from
of
some
protectionism’
Trailer Bridge, 797 F.3d at 144 (citing
Comptroller of Treasury of Md. V. Wynne, 135 S. Ct. 1787, 1794
(2015); New Energy Co. of Ind. v. Limbach, 486 U.S. 269, 273-74
(1988)).
some
fair
User fees are constitutional if they are:
approximation
of
use
of
the
(1) “based on
facilities,”
(2)
“not
excessive in relation to the benefits conferred,” and (3) “do[]
not
discriminate
against
interstate
commerce.”
Northwest
Airlines, Inc. v. County of Kent, 510 U.S. 355, 369 (1994) (citing
Evansville-Vanderburgh
Inc.,
405
U.S.
707,
Airport
716-17
Auth.
(1972)).
Dist.
v.
“Those
Delta
Airlines,
challenging
the
government action carry the burden of persuasion.” Trailer Bridge,
797 F.3d at 145 (citation omitted).
First, to determine whether a user fee “is based on
some fair approximation of use of the facilities,” a court asks
“whether the government is charging each individual entity a fee
that is reasonably proportional to the entity’s use, and whether
the government has reasonably drawn a line between those it is
charging and those it is not.”
Trailer Bridge, 797 F.3d at 145
Civil No. 17-1447 (FAB)
30
(citing Northwest Airlines, 510 U.S. at 368-69).
Second, a court
compares the fee with the “costs incurred in connection with . .
. [the] facilities” to determine whether the fee is “excessive in
relation to the benefits conferred.”
Id. at 146 (citing Northwest
Airlines, 510 U.S. at 369); Am. Airlines, Inc. v. Mass. Port Auth.,
560 F.2d 1036, 1038 (1st Cir. 1977).
“A fee is unconstitutional
only insofar as it is ‘excessive in relation to the costs incurred
by the taxing authorities.’”
Trailer Bridge, 797 F.3d at 146
(quoting Evansville, 405 U.S. at 719).
Finally, a court considers “whether the regulation
discriminates against interstate commerce.”
Trailer Bridge, 797
F.3d at 145 (citing Evansville, 405 U.S. at 719).
“Where we have
a facially neutral regulation, . . . the law ‘will be upheld unless
the
burden
imposed
on
such
commerce
is
clearly
relation to the putative local benefits.’”
excessive
in
Id. (quoting Pike v.
Bruce Church, Inc., 397 U.S. 137, 142 (1970)).
“[A] party cannot
satisfy its burden simply by showing that a government action
affects an out-of-state company or manufacturer.”
Exxon
Corp.
v.
Governor
of
Md.,
437
U.S.
117,
Id. (citing
126
(1978)).
“Instead, the evidence must illustrate that the government action
interferes with interstate commerce by, for example, dissuading
competition from out-of-state corporations.”
Id. (citing Family
Winemakers of Cal. v. Jenkins, 592 F.3d 1, 10-11 (1st Cir. 2010)).
Civil No. 17-1447 (FAB)
ii.
31
Discussion
The plaintiffs assert sufficient factual matter to
state a Commerce Clause claim that is plausible on its face.
See
Northwest Airlines, 510 U.S. at 369 (citing Evansville, 405 U.S.
at 716-17); Twombly, 550 U.S. at 570.
The plaintiffs contend that
the enhanced security fees are unconstitutional user fees. (Docket
No. 19 at p. 22.)
According to the plaintiffs, the defendants
collect enhanced security fees for “non-containerized cargo such
as cars, ISO tanks, cargo on platforms, and other types of cargo
which are imported without using shipping containers,” as well as
“cargo entering the Port of San Juan, through some marine terminals
which do not have access to scanning stations,” and “cargo . . .
that [is] not being scanned at all.”
Id. at pp. 13-15.
Construing
these allegations
“indulg[ing]
reasonable
“liberally”
and
all
inferences” in the plaintiffs’ favor, see Katz, 672 F.3d at 70, it
is plausible that the fees are “excessive in relation to the
benefits
conferred,”
“discriminat[ory]
against
interstate
commerce,” and not “based on some fair approximation of use of the
facilities.”
See Northwest Airlines, 510 U.S. at 369 (citing
Evansville, 405 U.S. at 716-17).
The
plaintiffs
also
allege
that
the
defendants
violate the Commerce Clause “under color of state law.”
No. 19 at p. 21-22; see Santiago, 655 F.3d at 68.
Docket
According to
Civil No. 17-1447 (FAB)
32
the plaintiffs, “PRPA . . . purported to act under color of state
law,”
and
S2
and
Rapiscan
“were
agents
of
PRPA
and
willful
participants in a joint activity with PRPA and acted in concert
pursuant to a custom or usage that had the appearance of the force
of law.”
(Docket No. 19 at pp. 21-22.)
No party disputes that
the defendants are state actors for the purpose of section 1983.
S2 and Rapiscan’s argument that the plaintiffs fail
to
allege
a
causal
connection
between
S2,
Commerce Clause violation is unpersuasive.
pp. 16-18.
Rapiscan,
and
the
See Docket No. 55 at
S2 and Rapiscan contend that the amended complaint
“fails to allege that Rapiscan or S2 individually caused the ocean
carriers to pass on their own [enhanced security fee] costs to
shippers like Plaintiffs.”
Id. at p. 17.
They argue that the
amended complaint is “devoid of any factual allegations that
Rapiscan or S2 individually imposed on or even collected any
[enhanced security fees] from ocean carriers, let alone for cargo
not scanned by them.”
The
Id.
plaintiffs’
allegations,
however,
are
sufficient to “establish the link” between S2, Rapiscan, “and the
alleged violation of federal rights.”
See Torres-López, 209 F.
Supp. 3d at 455 (citing González-Piña, 407 F.3d at 432).
The
plaintiffs assert that Rapiscan agreed to “conduct all services of
non-intrusive scanning of shipping containers entering Puerto Rico
Civil No. 17-1447 (FAB)
33
through the port of San Juan” and that “Rapiscan assigned all of
its purported rights” pursuant to the agreement “to its wholly
owned subsidiary and alter ego, S2.”
(Docket No. 19 at pp. 9-10.)
According to the plaintiffs, S2 and Rapiscan “purposely forced
ocean carriers and their agents into becoming the Defendants’
Enhanced Security Fee [] collection agents” and “acted and/or
continue to act ultra vires in collecting [] Enhanced Security
Fees in connection with the cargo scanning program.”
pp. 11-13.
Id. at
The plaintiffs allege that S2 and Rapiscan “collected
and derived economic benefit from the Enhanced Security Fees under
color of law and authority, there by [sic] depriving Plaintiffs
. . . of their property in violation of their constitutional
rights.”
Id. at p. 15.
inaction”
by
S2
and
The plaintiffs thus indicate “action or
Rapiscan
“within
the
scope
of
[their]
responsibilities that would make [them] personally answerable in
damages under Section 1983.”
Torres-López, 209 F. Supp. 3d at 455
(alterations in original) (citing Pinto, 737 F.2d at 133).
Because the plaintiffs adequately allege that the
defendants
violated
the
Commerce
Clause,
a
federally
secured
right, and that the challenged conduct transpired “under color of
state law,” the plaintiffs assert a plausible claim pursuant to
section 1983.
at 68.
See Docket No. 19 at pp. 21-23; Santiago, 655 F.3d
Accordingly, the Court DENIES the defendants’ motions to
Civil No. 17-1447 (FAB)
34
dismiss (Docket Nos. 55 and 85) with respect to the plaintiffs’
section 1983 Commerce Clause claim.
VII. Statute of Limitations
PRPA raises an affirmative defense that the plaintiffs are
time-barred from their section 1983 claims.
(Docket No. 85 at
pp. 22-23.)
A.
Applicable Law
“Affirmative
defenses,
such
as
the
statute
of
limitations, may be raised in a motion to dismiss under Federal
Rule
of
Civil
establishing
Procedure
the
plaintiff’s
defense
12(b)(6),
[are]
pleadings.’”
provided
clear
Trans-Spec
‘on
that
the
Truck
‘the
face
Serv.,
facts
of
the
Inc.
v.
Caterpillar, Inc., 524 F.3d 315, 320 (1st Cir. 2008) (alteration
in
original)
“[w]here
the
(citation
dates
omitted).
included
in
Dismissal
the
complaint
is
appropriate
show
that
the
limitations period has been exceeded and the complaint fails to
‘sketch a factual predicate’ that would warrant the application of
either a different statute of limitations period or equitable
estoppel.”
Id. (citation omitted).
Courts
apply
section 1983 claims.
a
one-year
statute
of
limitations
for
González-García v. P.R. Elec. Power Auth.,
214 F. Supp. 2d 194, 200 (D.P.R. 2002) (Fusté, J.) (citing Rivera-
Civil No. 17-1447 (FAB)
Ramos v. Román, 156 F.3d 276, 282 (1st Cir. 1998)). 11
35
The one-
year statute of limitations “begins running one day after the date
of accrual, which is the date plaintiff knew or had reason to know
of the injury.”
Benítez-Pons v. Puerto Rico, 136 F.3d 54, 59 (1st
Cir. 1998); see Serrano-Nova v. Banco Popular de P.R., Inc., 254
F. Supp. 2d 251, 260 (D.P.R. 2003) (Domínguez, J.) (“A knowing
plaintiff has an obligation to file promptly or lose his claim.”). 12
The date of accrual is determined by “identify[ing] the actual
injury of which the plaintiff complains.” Guzmán-Rivera v. RiveraCruz, 29 F.3d 3, 5 (1st Cir. 1994).
An exception to the one-year statute of limitations for
section 1983 claims is the continuing violation doctrine.
See
González-García, 214 F. Supp. 2d at 201-02 (citing Provencher v.
11
Because section 1983 “lacks an accompanying federal statute of limitations,”
courts “adopt relevant provisions from the analogous statute of limitations of
the forum state.” González-García, 214 F. Supp. 2d at 199-200 (citing 42 U.S.C.
§ 1983; Wilson v. García, 471 U.S. 261, 266-80 (1985)). “For section 1983, the
most appropriate provision is the statute of limitations for personal injury
cases.” Id. at 200 (citing Owens v. Okure, 488 U.S. 235, 236 (1989)). “In
Puerto Rico, a one-year statute of limitations governs personal injury actions.”
Id. (citing P.R. Laws tit. 31, § 5298(2)). Accordingly, the Court applies a
one-year statute of limitations to the plaintiffs’ section 1983 claims.
12
“For section 1983 actions, federal law governs the date on which a cause of
action accrues (i.e., when the statute begins to run) while the length of the
period and tolling doctrine are taken from local law.” Rivera-Ramos, 156 F.3d
at 282.
Civil No. 17-1447 (FAB)
CVS Pharmacy, 145 F.3d 5, 13 (1st Cir. 1998)). 13
36
To establish that
a continuing violation occurred, a plaintiff must first show that
the “conduct [] [took] place ‘over a series of days or perhaps
years.’”
Tobin v. Liberty Mut. Ins. Co., 553 F.3d 121, 130 (1st
Cir. 2009) (quoting Nat’l R.R. Passenger Corp. v. Morgan,536 U.S.
101, 117 (2002)).
A plaintiff must then demonstrate “that an
unlawful act occurred or that an illegal policy existed within the
period prescribed by the statute [of limitations].”
Ruiz-Casillas
v. Camacho-Morales, No. 02-2640, 2004 WL 3622480, at *5 (D.P.R.
Apr. 27, 2004) (Fusté, J.) (citing Johnson, 840 F.2d at 137),
aff’d, 415 F.3d 127 (1st Cir. 2005). 14
13
“The continuing violation doctrine creates an equitable exception to the
statute of limitations when unlawful behavior is alleged to be ongoing.”
González-García, 214 F. Supp. 2d at 201-02 (citing Provencher, 145 F.3d at 13).
“Continuing violations are of two types: serial or systemic.”
Id. at 202
(citing Kassaye v. Bryant Coll., 999 F.2d 603, 606 (1st Cir. 1993)). “Systemic
violations refer to the general practices and policies of an employer, such as
systems of hiring, training, and promotion.” Id. (citing Provencher, 145 F.3d
at 14). Systemic violations “need not involve an identifiable, discrete act of
discrimination transpiring within the limitation[s] period.” Jensen v. Frank,
912 F.2d 517, 523 (1st Cir. 1990).
“To establish a [systematic] continuing
violation, the plaintiff ‘must allege that a discriminatory act occurred or
that a discriminatory policy or practice existed’ within the statutory period.”
Centro Médico del Turabo, Inc. v. Feliciano de Melecio, 321 F. Supp. 2d 285,
291 (D.P.R. 2004) (Casellas, J.) (quoting Johnson v. Gen. Elec., 840 F.2d 132,
137 (1st Cir. 1988)). In contrast, a serial violation “refers to a number of
discriminatory acts emanating from the same discriminatory animus, where each
act constitutes a separate actionable wrong.” Id. (quoting Jensen, 912 F.2d at
522).
14
“[I]f one of the discriminatory acts standing alone is of ‘sufficient
permanence’ that it should trigger an ‘awareness of the need to assert one’s
rights,’ then the [continuing] violation exception does not apply.” Phillips
v. City of Methuen, 818 F. Supp. 2d 325, 330 (D. Mass. 2011) (citing O’Rourke
v. City of Providence, 235 F.3d 713, 731 (1st Cir. 2001)).
Civil No. 17-1447 (FAB)
B.
37
Discussion
The plaintiffs’ remaining section 1983 claim survives
the
defendants’
statute
of
limitations
defense
because
the
continuing violation doctrine applies to the plaintiffs’ action.
See González-García, 214 F. Supp. 2d at 201-02.
The plaintiffs
allege that the defendants’ unlawful conduct has “take[n] place
‘over a series of . . . years.’”
See Tobin, 553 F.3d at 130
(quoting Morgan, 536 U.S. at 117); Docket No. 19 at pp. 13-14
(“Defendants
acted
and/or
continued
to
act
ultra
vires
in
collecting [] []Enhanced Security Fees[] in connection with the
cargo scanning program:
[s]ince at least 2009.”).
The plaintiffs
also allege that the “unlawful act occurred or that an illegal
policy existed within the period prescribed by the statute [of
limitations].”
See Ruiz-Casillas, 2004 WL 3622480, at *5 (citing
Johnson, 840 F.2d at 137); Docket No. 19 at pp. 13-14.
According
to the plaintiffs, they “have sustained substantial and continuing
economic losses” due to the defendants’ conduct beginning from the
scanning program’s inception because the defendants have continued
to collect enhanced security fees from the plaintiffs.
No. 19 at pp. 14-15.)
(Docket
Because the plaintiffs’ section 1983 claims
involve a continuing violation and the unlawful conduct occurred
within
the
period
prescribed
by
the
section
1983
statute
of
limitations, the plaintiffs’ section 1983 claims are not time-
Civil No. 17-1447 (FAB)
barred.
38
The Court DENIES PRPA’s defense that this action is time-
barred.
VIII. Qualified Sovereign Immunity
S2 and Rapiscan argue that they are entitled to qualified
sovereign immunity from the plaintiffs’ action.
(Docket No. 55 at
pp. 18-20.)
A.
Legal Standard
“Qualified
immunity
shields
government
officials
performing discretionary functions from civil liability for money
damages when their conduct does not violate ‘clearly established’
statutory or constitutional rights of which a reasonable person
would have known.”
Nereida-González v. Tirado-Delgado, 990 F.2d
701, 704 (1st Cir. 1993) (citing Harlow v. Fitzgerald, 457 U.S.
800, 818 (1982)).
with
qualified
“The primary purpose of providing officials
immunity
is
to
ensure
that
fear
of
personal
liability will not unduly influence or inhibit their performance
of public duties.”
Id. at 704-05 (citing Anderson v. Creighton,
483 U.S. 635, 638 (1987); Harlow, 457 U.S. at 814; Carlson v.
Green, 446 U.S. 14, 21 n.7 (1980)).
Qualified immunity thus
“confers immunity only from individual-capacity suits . . . against
government actors.”
Id. at 705.
Civil No. 17-1447 (FAB)
B.
39
Discussion
S2 and Rapiscan’s argument that they are entitled to
qualified immunity is unavailing because they are not “government
officials.”
See Nereida-González, 990 F.2d at 704.
S2 is a
“limited liability company created and organized under the laws of
the Commonwealth of Puerto Rico.”
(Docket No. 19 at pp. 8-9.)
Rapiscan is a “corporation created and organized under the laws of
the State of California.”
Court
of
Appeals
has
Id. at p. 9.
not
Although the First Circuit
determined
whether
private
limited
liability companies and corporations are “government officials”
for the purpose of qualified immunity, this Court adopts the Sixth
Circuit Court of Appeals’ position that “private corporations are
not
public
immunity.”
officials;
and
thus,
not
entitled
to
qualified
See Hammons v. Norfolk S. Corp., 156 F.3d 701, 706 n.9
(6th Cir. 1998) (citation omitted), abrogated on other grounds,
Corr. Servs. Corp. v. Malesko, 534 U.S. 61 (2001). 15
Qualified immunity is available to government agents and
officers in their individual capacities to provide assurance that
15
Although the Tenth Circuit Court of Appeals has held that “there is no bar
against a private corporation claiming qualified immunity,” the Sixth Circuit
Court of Appeals’ approach more accurately reflects this Court’s understanding
of qualified immunity.
See Rosewood Servs., Inc. v. Sunflower Diversified
Servs., Inc., 413 F.3d 1163 (10th Cir. 2005); but see Manis v. Corr. Corp. of
Am., 859 F. Supp. 302, 305-06 (M.D. Tenn. 1994) (“Affording the shield of
qualified immunity to a private corporation and its employees . . . would
directly contradict the policy behind qualified immunity.”).
Civil No. 17-1447 (FAB)
40
“they will not be held personally liable as long as their actions
are reasonable in light of current American law.”
483 U.S. at 646 (emphasis added).
See Anderson,
The law affords this protection
to individual people, inquiring what a “reasonable person” in the
defendant’s
position
constitutional
“would
rights.
have
known”
about
Nereida-González,
990
statutory
F.2d
at
and
704
(emphasis added) (citing Harlow, 457 U.S. at 818); see Anderson,
483 U.S. at 638-39.
S2 and Rapiscan are not individual people,
and therefore not government “officials,” for the purpose of this
analysis.
Cf. Nereida-González, 990 F.2d at 704.
Because S2 and
Rapiscan are not “government officials,” they are not entitled to
qualified
immunity.
Consequently,
the
Court
DENIES
S2
and
Rapiscan’s qualified immunity defense (Docket No. 55).
IX.
Necessary Joinder
PRPA moves to dismiss the plaintiffs’ claims pursuant to
Rule 12(b)(7) for failure to join a necessary party pursuant
Rule 19.
A.
(Docket No. 85 at pp. 29-32.)
Legal Standard
“Rule
19
addresses
situations
where
a
lawsuit
is
proceeding without a party whose interests are central to the
suit.”
Bacardí Int’l Ltd. v. V. Suárez & Co., 719 F.3d 1, 9 (1st
Cir. 2013) (citing Picciotto v. Continental Cas. Co., 512 F.3d 9,
15 (1st Cir. 2008)).
“The Rule provides joinder of required
Civil No. 17-1447 (FAB)
41
parties when feasible, and for dismissal of suits when joinder of
a required party is not feasible and that party is indispensable.”
Id. (citing Fed. R. Civ. P. 19(a)-(b)).
“The Rule calls for courts
to make pragmatic, practical judgments that are heavily influenced
by the facts of each case.”
14-15).
Id. (citing Picciotto, 512 F.3d at
“In a Rule 19 analysis, a court must first determine if
an absent party is a ‘required party’ under Rule 19(a).”
(citing Picciotto, 512 F.3d at 16).
Id. at 10
A party is “required” if:
in that person’s absence, the court cannot accord
complete relief among existing parties; or [] that
person claims an interest relating to the subject of the
action and is so situated that disposing of the action
in the person’s absence may: (i) as a practical matter
impair or impede the person’s ability to protect the
interest; or (ii) leave an existing party subject to a
substantial risk of incurring double, multiple, or
otherwise inconsistent obligations because of the
interest.
Fed. R. Civ. P. 19(a).
If joinder of a required party “is not feasible,” but
the party is “so indispensable that the suit must not be litigated
without them,” the case should be dismissed pursuant to Rule 19(b).
Picciotto, 512 F.3d at 15 (internal quotation marks omitted)
(citing Fed. R. Civ. P. 19(b)).
To determine whether a case should
be dismissed for the failure to join an indispensable party, a
court evaluates:
Civil No. 17-1447 (FAB)
42
the extent to which a judgment rendered in the person’s
absence might prejudice that person or the existing
parties; [] the extent to which any prejudice could be
lessened or avoided by: (A) protective provisions in the
judgment; (B) shaping the relief; or (C) other measures;
[] whether a judgment rendered in the person’s absence
would be adequate; and [] whether the plaintiff would
have an adequate remedy if the action were dismissed for
nonjoinder.
Fed. R. Civ. P. 19(b).
A court also considers the policies
underlying Rule 19, “including the public interest in preventing
multiple and repetitive litigation, the interest of the present
parties in obtaining complete and effective relief in a single
action, and the interest of absentees in avoiding the possible
prejudicial effect of deciding the case without them.”
Picciotto,
512 F.3d at 15-16 (internal quotation marks and citations omitted).
B.
Discussion
PRPA’s
argument
that
indispensable parties is unavailing.
the
ocean
carriers
are
See Docket No. 85 at 29-32.
PRPA contends that “the essence of Plaintiffs’ complaint is to
recover the amounts of [enhanced security fees] allegedly paid by
them.”
Id. at p. 30.
PRPA argues that the plaintiffs paid the
ocean carriers, who “[u]nder Plaintiffs’ theory . . . presumably[]
pass[ed] on an operating/administrative charge . . . to PRPA.”
Id.
“Yet, any amounts paid by Plaintiffs to the Ocean Carriers
are exclusively part of contractual negotiations between them.”
Civil No. 17-1447 (FAB)
Id.
43
PRPA claims that “PRPA cannot return Plaintiffs any money it
did not collect from them in the first place.”
The
sustained
plaintiffs,
substantial
and
however,
allege
continuing
Id.
that
economic
they
losses
“have
.
.
.
reasonably believed to be in excess of $150,000,000.00” in enhanced
security fees and that the defendants “collected and derived
economic benefit from the Enhanced Security Fees.”
(Docket No. 19
at p. 15.) There is no reason why the Court cannot “accord complete
relief” among the existing parties in the absence of the ocean
carriers.
See Bacardí, 719 F.3d at 10 (quoting Fed. R. Civ.
P. 19(a)). Nor do the ocean carriers “claim[] an interest relating
to the subject of the action.”
See id.
Because complete relief
can be afforded between the existing parties and the ocean carriers
do not claim an interest in the case, the Court rejects PRPA’s
contentions regarding necessary joinder.
X.
Puerto Rico Law Claims
The defendants contest the plaintiffs’ Puerto Rico law claims
for unjust enrichment and undue collection.
(Docket No. 55 at
pp. 25-26; Docket No. 85 at pp. 26-29.)
A.
Unjust Enrichment
The plaintiffs assert an unjust enrichment claim against
the defendants.
Rico law:
(Docket No. 19 at pp. 23-25.)
Pursuant to Puerto
Civil No. 17-1447 (FAB)
44
When there is no statute applicable to the case at issue,
the court shall decide in accordance with equity, which
means that natural justice, as embodied in the general
principles of jurisprudence and in accepted and
established usages and customs, shall be taken into
consideration.
P.R. Laws Ann. tit. 31, § 7; see also P.R. Laws Ann. tit. 31,
§ 2992 (“Obligations are created by law, by contracts, by quasi
contracts, and by illicit acts and omissions or by those in which
any kind of fault or negligence occurs.”).
A Puerto Rico claim
for unjust enrichment consists of five elements:
“(1) existence
of enrichment; (2) a correlative loss; (3) nexus between loss and
enrichment; (4) lack of cause for enrichment; and (5) absence of
a
legal
cause.”
precept
excluding
application
of
enrichment
without
Montalvo v. LT’s Benjamin Records, Inc., 56 F. Supp. 3d
121, 136 (D.P.R. 2014) (Gelpí, J.) (quoting Hatton v. Municipality
of Ponce, 134 D.P.R. 1001 (P.R. 1994)).
“[I]t is well-settled
under Puerto Rico law that the undue enrichment doctrine is not
applicable where . . . there is a legal precept (e.g., a binding
agreement) that excludes the application of such doctrine.”
P.R.
Tel. Co. v. Sprintcom, Inc., 662 F.3d 74, 97 (1st Cir. 2011)
(alteration in original).
The
plaintiffs
allege
sufficient
factual
matter
to
establish an unjust enrichment claim pursuant to Puerto Rico law.
See Montalvo, 56 F. Supp. 3d at 136-37.
The plaintiffs claim:
Civil No. 17-1447 (FAB)
45
(1) Defendants have enriched themselves by collecting
Enhanced Security Fees from Plaintiffs, (2) Plaintiffs
. . . have lost money by paying the fees collected by
Defendants, (3) there is a direct relation between
Plaintiffs’ economic losses and Defendants’ enrichment,
(4) there is no valid cause for the enrichment due to
the illegality of the Enhanced Security Fee since it
first started, or in the alternative, since July 1, 2014,
when regulation 8067 expired; or in the alternative for
cargo that was not scanned or in the further alternative
for cargo that was imported through a terminal that did
not have scanning facilities[,] and (5) there is no legal
precept that would exclude the application of enrichment
without cause.
(Docket No. 19 at pp. 24-25.)
Construed liberally, the amended
complaint alleges adequate facts to “raise a right to relief above
the speculative level” against the defendants.
See Twombly, 550
U.S. at 555; Aversa, 99 F.3d at 1210; see also Ocasio-Hernández,
640 F.3d at 13 (holding that a claim may still proceed even if
“recovery is very remote and unlikely”).
Accordingly, the Court
DENIES the defendants’ motions to dismiss (Docket Nos. 55 and 85)
with respect to the plaintiffs’ unjust enrichment claim.
B.
Undue Collection
The plaintiffs assert an undue collection claim against
the defendants.
(Docket No. 19 at pp. 25-27.)
Pursuant to
Article 1795, “[i]f a thing is received when there was no right to
claim it and which, through an error, has been unduly delivered,
there arises an obligation to restore the same.”
P.R. Laws Ann.
Civil No. 17-1447 (FAB)
tit. 31, § 5121. 16
Enhanced
Security
46
The plaintiffs allege that they “paid the
Fees
with
the
obligation imposed by Defendants.”
intent
of
extinguishing
the
(Docket No. 19 at p. 26.)
According to the plaintiffs,
Because PRPA had no delegated legal authority to inspect
cargo and enter the PRPA/Rapiscan Agreement, and/or
because the PRPA/Rapiscan Agreement was annulled when
assigned to S2 [], and/or because Regulation 8067
expired on June 30, 2014, and/or because fees were
charged for cargo that was not scanned and/or for cargo
imported through terminals that had no scanning
facility; Plaintiffs aver that they made those payments
by error because they [were] wrongfully induced to
believe that these Defendants were lawfully collecting
the challenged fees.
Id. at p. 26.
The plaintiffs allege sufficient facts to “raise a
right to relief above the speculative level” against the defendants
for undue collection.
See Twombly, 550 U.S. at 555; Aversa, 99
F.3d at 1210; see also Ocasio-Hernández, 640 F.3d at 13 (holding
that a claim may still proceed even if “recovery is very remote
16
The parties agree that “[f]or a claim of undue collection to proceed, three
elements must be present” pursuant to Puerto Rico law:
(1) a payment was made with the intention of extinguishing an
obligation, (2) the payment made does not have just consideration
or cause, in other words, that there is no legal obligation between
the one who makes the payment and the one who collects it, and
(3) the payment was made by error and not by mere liberality or any
other concept.
Docket No. 85 at p. 28 (citing Estado Libre Asociado de P.R. v. Crespo-Torres,
180 D.P.R. 776, 794-95 (P.R. 2011)); see Docket No. 19 at p. 26 (citing same).
All parties, however, fail to submit a certified translation of Crespo-Torres,
180 D.P.R. 776, or any translated case law supporting this assertion.
Accordingly, the Court relies exclusively on the official translation of Article
1795 for the purpose of this Opinion and Order.
Civil No. 17-1447 (FAB)
and unlikely”).
47
Accordingly, the Court DENIES the defendants’
motions to dismiss (Docket Nos. 55 and 85) with respect to the
plaintiffs’ undue collection claim.
XI.
Conclusion
For the reasons set forth above, the defendants’ motions to
dismiss are GRANTED in part and DENIED in part.
They are GRANTED
with respect to the plaintiffs’ Fifth Amendment and Fourteenth
Amendment
section
1983
claims,
and
DENIED
regarding
the
plaintiffs’ Commerce Clause section 1983 claim and Puerto Rico law
claims (Docket Nos. 55 and 85).
takings,
procedural
due
process,
Consequently, the plaintiffs’
and
substantive
due
process
claims pursuant to section 1983 are DISMISSED WITH PREJUDICE
(Docket No. 19).
There being no just reason for delay, partial
judgment shall be entered accordingly.
The defendants’ motion to
stay discovery pending the ruling on these motions is MOOT (Docket
No. 89).
IT IS SO ORDERED.
San Juan, Puerto Rico, September 26, 2018.
s/ Francisco A. Besosa
FRANCISCO A. BESOSA
UNITED STATES DISTRICT JUDGE
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?