Rivera-Corraliza v. Puig-Morales

• Decision Date: 22 July 2015
• Docket Number: No. 13–2138.,13–2138.
• Citation: 794 F.3d 208
• Parties: Pablo Javier RIVERA–CORRALIZA, on his own behalf and as President of PJ Entertainment, Inc.; Carlos Cruz–Alverio; Jaime Rodríguez–Vega; Ellis Linfernal–Cruz, on his own behalf and as President of the Asociación de Operadores de Máquinas de Entretenimiento de Adultos Del Oeste, Inc.; Ricardo Hernándezechevestre on his own behalf and as President of Ricardo'S Entertainment Corp., Plaintiffs, Appellants, v. Juan Carlos Puig–MORALES; Aileen De León–García; Víctor R. Pérez–Pillot; Zulma I. Rivera–Gómez; David Caraballo–Maldonado; María C. Medina–Ortiz; Abimael Rodríguez–López; Alfredo E. Pérez–Rivera; Héctor O. Gadea–Rivera; Rafael A. Diez De Andino; Milton Vescovacci–Nazario; Marisol Flores–Cortés; John Doe I–XX, all in their personal capacities, Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

794 F.3d 208

Pablo Javier RIVERA–CORRALIZA, on his own behalf and as President of PJ Entertainment, Inc.; Carlos Cruz–Alverio; Jaime Rodríguez–Vega; Ellis Linfernal–Cruz, on his own behalf and as President of the Asociación de Operadores de Máquinas de Entretenimiento de Adultos Del Oeste, Inc.; Ricardo Hernándezechevestre on his own behalf and as President of Ricardo'S Entertainment Corp., Plaintiffs, Appellants

v.Juan Carlos Puig–MORALES; Aileen De León–García; Víctor R. Pérez–Pillot; Zulma I. Rivera–Gómez; David Caraballo–Maldonado; María C. Medina–Ortiz; Abimael Rodríguez–López; Alfredo E. Pérez–Rivera; Héctor O. Gadea–Rivera; Rafael A. Diez De Andino; Milton Vescovacci–Nazario; Marisol Flores–Cortés; John Doe I–XX, all in their personal capacities, Defendants, Appellees.

No. 13–2138.

United States Court of Appeals, First Circuit.

July 22, 2015.

Christian J. Francis–Martinez, with whom José J. Gueits–Ortiz and Francis & Gueits Law Offices, PSC, were on brief, for appellants.

Susana I. Peñagarícano–Brown, Assistant Solicitor General, Department of Justice, with whom Margarita L. Mercado–Echegaray, Solicitor General, was on brief, for appellees.

Before HOWARD, Chief Judge, LYNCH and THOMPSON, Circuit Judges.

Overview

THOMPSON, Circuit Judge.

Ticked off that agents of the Puerto Rico Treasury Department had seized their “adult entertainment machines” (“AEMs,” to save keystrokes), today's plaintiffs sued the supposedly responsible parties for damages under 42 U.S.C. § 1983, alleging (as relevant here) violations of the First, Fourth, and Fourteenth Amendments as well as several commonwealth laws. The district court granted defendants summary judgment on the federal claims and dismissed the commonwealth claims without prejudice. And plaintiffs are now here asking us to undo the court's ruling. Agreeing with some of what they say, we vacate in part, affirm in part, and remand for further proceedings. We will explain our thinking shortly. First, the facts, which we present in the light most favorable to plaintiffs (the summary-judgment losers), drawing all supportable inferences in their favor. See, e.g., Soto–Padró v. Pub. Bldgs. Auth., 675 F.3d 1, 2, 5 (1st Cir.2012).

Background

Games People Play

Plaintiffs hold licenses from the Puerto Rico Treasury Department (“Treasury,” for short) authorizing them to own and operate AEMs. Plaintiffs are also members of “EMPRECOM,” a business association of AEM owners.¹ AEMs are nothing more than coin-operated arcade-game-like machines found in small businesses (liquor stores, gas stations, etc. ) that are not supposed to award cash prizes (winners get bonus games)—which makes AEM games different from gambling machine games (more on this later).² But unscrupulous owners (we are told) occasionally convert AEMs into illegal gambling machines (say, for instance, slot machines), which is a major worry for Treasury.

According to plaintiffs (whose account we accept for purposes of summary-judgment review), here is how the suit arose:

Sometime in early 2009—possibly in February or March (the record is not exactly clear)—plaintiff Pablo Javier Rivera–Corraliza (EMPRECOM's president) met with Treasury Secretary (and defendant) Juan Carlos Puig–Morales, a big backer of a movement to install video-lottery terminals islandwide; as we understand it, these terminals are non-casino gaming machines that would connect to a system designed to collect tax revenue. Anyway, the two had a friendly conversation about issues affecting AEMs. They, for example, touched on a bill pending in the Puerto Rico legislature that would require that all AEMs connect to a central system at Treasury for monitoring purposes. And they talked about Puig–Morales's desire to go after AEM operators holding forged licenses—something EMPRECOM applauded.

But Puig–Morales was anything but friendly at a follow-up meeting the next month, telling Rivera–Corraliza point blank that every AEM was “illegal” and had to be “confiscated.” Hold on, said Rivera–Corraliza, Treasury had issued “8,000” AEM permits yet there are roughly “14,000” AEMs “out on the streets”—just go after the fake-license holders, he implored Puig–Morales. “We'll see about that” was Puig–Morales's reply.

Treasury started seizing AEMs around this time. But none belonged to plaintiffs—Treasury did not start seizing theirs until February 2010, as we will soon see.

Around the spring of 2009 (the record does not reveal when) Puig–Morales told plaintiff Jaime Rodríguez–Vega (EMPRECOM's treasurer) that AEM owners should exchange their machines for the video-lottery machines of Caribbean Cage, Inc., a company that specializes in gaming systems. Puig–Morales promised to stop the seizures if they made the switch to Caribbean Cage's machines. And Puig–Morales said essentially the same thing to Rivera–Corraliza, telling him that AEM owners would not have to worry about seizures if they “signed up” with Caribbean Cage.

So Rivera–Corraliza inked a deal with Caribbean Cage on behalf of EMPRECOM (when, we do not know). Under the agreement, EMPRECOM members were to provide the venues for the video-lottery terminals. And Caribbean Cage promised to pay any fees EMPRECOM members might owe Treasury.

In August 2009 Puig–Morales issued a letter of intent to negotiate with Caribbean Cage about installing video-lottery terminals islandwide. For this to work, though, EMPRECOM and its members had to be on board, as Puig–Morales well knew. But EMPRECOM members became distinctly unhappy when Puig–Morales told EMPRECOM representatives during that same month that they had to pay a $2,250 license fee for each video-lottery machine. And when EMPRECOM members balked, Puig–Morales slammed his hand on a desk and screamed that they had until the end of the day to resolve the problem—and if they did not, then all their AEMs would “disappear.” Ultimately (for reasons this record does not illuminate) the deal between EMPRECOM and Caribbean Cage fell through and Treasury installed no video-lottery terminals anywhere.

Shortly after the table-slamming meeting, Puig–Morales went on a media campaign to trash AEM owners (the record does not indicate precisely when the offensive started, though). He told one interviewer, for example, that he “hated” AEMs and favored installing video-lottery terminals throughout Puerto Rico (plaintiffs have not told us when he said this). He told another interviewer that all AEMs were “illegal” (plaintiffs have not told us when he said that). And he told a third interviewer in February 2010 (finally, a date!) that he was going to “eliminate” the AEM industry because neither the governor nor the public supported AEMs. Not willing to take Puig–Morales's attacks lying down, Rivera–Corraliza also gave interviews to the media in which he defended AEM owners—though the record evidence plaintiffs point us to does not say how many interviews he gave and when.

In late 2009 or early 2010 Puig–Morales appointed defendant Abimael Rodríguez–López head of a special Treasury task force charged with dealing with AEMs. When Rodríguez–López was absent, then defendant Alfredo Pérez–Rivera was in charge. Agents on the task force—like defendant Victor Pérez–Pillot, for example—took an eight-hour course in how to inspect AEMs for illegalities. And they went about inspecting AEMs this way (Treasury had no manuals or guidelines covering how to inspect AEMs):

Task-force agents identified businesses with AEMs. And once they got the go-ahead from Rodríguez–López, they would inspect the AEMs, examining the licenses and then the machines themselves—even if the licenses checked out. In fact, even if the AEMs' exterior looked okay, agents would ask the businesses' owners to unlock the machines, and if the owners refused, agents would break the locks open—simply on Rodríguez–López's say-so, even without probable cause or a search warrant.

Defendants Milton Vescovacci–Nazario and Marisol Flores–Cortés—two outside lawyers Puig–Morales had hired to remind agents about the dos and don'ts of AEM inspections—signed off on the lock-breaking protocol around February 2010. And Puig–Morales signed off on the entire seek-and-find procedure. Another high-ranking Treasury official—defendant Héctor O. Gadea–Rivera—let task-force agents conduct inspections as they had been doing before he came on board on July 1, 2010. And still another—defendant Rafael Diez de Andino—also signed off on the inspection procedure when he became a deputy director at Treasury on September 15, 2010, or so plaintiffs claim.³ But before that, Diez de Andino (who was at Treasury, though we're not sure what his title was) had a hand (at least as early as February 2010) in telling agents which businesses to inspect.

Rivera–Corraliza is not only EMPRECOM's president; he is also president of PJ Entertainment, Inc., a corporation that owned AEMs. Early in the morning of February 26, 2010, he got a call from the owner of a liquor store—which was then closed—saying that task-force agents were seizing some of PJ Entertainment's AEMs without a warrant. The store was not on the list of businesses to be inspected that day. But Diez de Andino had ordered Pérez–Pillot to go there.

Rivera–Corraliza got to the scene lickety-split. Just then, Puig–Morales reached him on his cell phone. “How are the guys behaving?” Puig–Morales asked. Pérez–Pillot “wants to take the machines” Rivera–Corraliza explained, to which Puig–Morales replied, “Good fellow, good fellow” (referring to Pérez–Pillot). Agents claimed the seized AEMs had “knock-off switches”—i.e., devices that make it possible for players to redeem winnings and for the operators to reset the machines. See 15 L.P.R.A. § 82(3) (part of the “Games of Chance Act”). A knock-off switch is a telltale sign of illegal gambling machines. See id. But Rivera–Corraliza insists that none of his company's AEMs had a device like that. And when he got to inspect the AEMs months later he allegedly saw that the games had been changed and that...