748 F.3d 21 (1st Cir. 2014), 13-2517, Vaqueria Tres Monjitas, Inc. v. Pagan

Docket Nº:13-2517
Citation:748 F.3d 21
Opinion Judge:LYNCH, Chief Judge.
Party Name:VAQUER
Attorney:Edward W. Hill for appellants. Rafael Escalera Rodr
Judge Panel:Before Lynch, Chief Judge, Selya and Howard, Circuit Judges.
Case Date:April 03, 2014
Court:United States Courts of Appeals, Court of Appeals for the First Circuit

Page 21

748 F.3d 21 (1st Cir. 2014)



MYRNA COMAS PAGAN, Secretary of the Department of Agriculture for the Commonwealth of Puerto Rico; EDMUNDO ROSALY, Administrator of the Office of the Milk Industry Regulatory Administration for the Commonwealth of Puerto Rico, Defendants, Appellants

No. 13-2517

United States Court of Appeals, First Circuit

April 3, 2014

Page 22


Edward W. Hill for appellants.

Rafael Escalera Rodríguez, with whom Amelia Caicedo Santiago, Carlos M. Hernández Burgos, and Reichard & Escalera were on brief, for appellees.

Before Lynch, Chief Judge, Selya and Howard, Circuit Judges.


Page 23

LYNCH, Chief Judge.

Understandably concerned by language in a district court order which opined that Puerto Rico had waived its Eleventh Amendment immunity by entering into a Settlement Agreement, the Commonwealth's milk regulatory agency (Spanish acronym " ORIL" ) appeals. The court's language on that immunity was in no sense necessary to the approval of the Settlement Agreement or to entry of the judgment. In the motion seeking approval, no party raised any Eleventh Amendment issue, nor was such an issue briefed or argued. The statement is contrary to the principle of constitutional avoidance. We conclude that the language at issue is merely a statement of dicta and not a judgment. The statement is wholly gratuitous, does not respond to any argument made in those proceedings, and has the obvious effect of causing confusion. We strongly suggest to the district court that it issue an amended order deleting the language. We otherwise dismiss the appeal for want of appellate jurisdiction.


The facts of this long running case are found in more detail in Puerto Rico Dairy Farmers Association v. Comas Pagan, 748 F.3d 13, (1st Cir. Apr. 3, 2014), and in our court's previous decision, Vaquería Tres Monjitas, Inc. v. Irizarry, 587 F.3d 464 (1st Cir. 2009), reh'g en banc denied, 600 F.3d 1 (1st Cir. 2010), cert. denied, 131 S.Ct. 2441, 179 L.Ed.2d 1235 (2011). We assume familiarity with those decisions.

On October 29, 2013, the plaintiffs Suiza Dairy, Inc. (" Suiza" ) and Vaquería Tres Monjitas, Inc. (" VTM" ), and the government defendants, Myrna Comas Pagan, the Secretary of the Department of Agriculture for the Commonwealth of Puerto Rico, and Edmundo Rosaly, the Interim Administrator of ORIL (the Office for the Milk Industry Regulatory Administration), filed with the district court for its approval the Final Settlement Agreement and Memorandum of Understanding Between the Parties (" Agreement" ), executed that day.

We briefly describe the substance of the settlement. The Agreement provided for the adoption and implementation of Regulation 12, which governs pricing mechanisms in Puerto Rico's milk industry. In effect, Regulation 12 establishes the price margins for all players in the industry. As part of the implementation of Regulation 12, ORIL pledged to conduct a comprehensive study of the milk industry within twelve months of the effective date of the Agreement.

Under the Agreement, the government of Puerto Rico is also obligated to create a " Special Fund to promote the efficiency of the Milk Market in Puerto Rico." In addition to the " Special Fund," the government agreed to contribute funds over four years to Suiza and VTM as part of a regulatory accrual mechanism designed to allow the processors to recoup a fair rate of return on their products.

We turn from this substantive summary to the Agreement's precise language. The

Page 24

Agreement first recited that there was no concession of the validity of the plaintiffs' claims or of any court order entered and that the effect of entry of the order would be dismissal of the case with prejudice. The substance of the Agreement was found in covenants, contained in subparagraphs 3 through 17 of the paragraph. The Agreement included a final paragraph stating the parties' rights moving forward:

The terms and conditions of this settlement will be incorporated into the firm, final and unappealable judgment to be issued by the District Court. That Judgment will be equally binding to and enforceable against all signatories of this Agreement and the Government of Puerto Rico. All such parties hereby waive any defense they may have to the enforcement of this Agreement.

(emphasis added).

At the hearing on whether to enter the Settlement Agreement as a judgment, counsel for Suiza added that although the Agreement did not contain an explicit clause regarding contempt, the plaintiffs waived all attempts to find the government defendants in contempt. Plaintiffs did not assert that the Commonwealth had waived its immunity either in the Agreement or specifically in the Agreement's " waive any defense" clause. At no time did any issue concerning the Commonwealth's Eleventh Amendment immunity come up at that hearing or in the settlement...

To continue reading