Grajales v. Puerto Rico Ports Auth.

• Decision Date: 26 July 2016
• Docket Number: No. 15-1278,15-1278
• Citation: 831 F.3d 11
• Parties: Daniel Grajales, Wanda I. González, Conjugal Partnership Grajales-González, Plaintiffs, Appellants, v. Puerto Rico Ports Authority, Defendant, Appellee, Miguel Alcover; Elmer Emeric; Gonzalo González-Santini; Álvaro Pilar-Vilagrán; Carlos Travieso; and Manuel Villázan-Lig-Long, each in his personal and official capacities, Defendants.
• Court: U.S. Court of Appeals — First Circuit

831 F.3d 11

Daniel Grajales, Wanda I. González, Conjugal Partnership Grajales-González, Plaintiffs, Appellants,

v.Puerto Rico Ports Authority, Defendant, Appellee,Miguel Alcover; Elmer Emeric; Gonzalo González-Santini; Álvaro Pilar-Vilagrán; Carlos Travieso; and Manuel Villázan-Lig-Long, each in his personal and official capacities, Defendants.

No. 15-1278

United States Court of Appeals, First Circuit.

July 26, 2016

Eugenio W.A. Géigel-Simounet , with whom Géigel-Simounet Law Offices C.S.P. , San Juan, PR, was on brief, for appellants.

Jorge Martínez-Luciano , with whom Martínez-Luciano & Rodríguez-Escudero Law Office , San Juan, PR, was on brief, for appellee.

Before Thompson, Hawkins,^* and Barron, Circuit Judges.

BARRON

, Circuit Judge.

State-created public corporations serve a range of special purposes. Sometimes states structure these entities to be so closely tied to the state government—in terms, among other things, of how they are funded and how they are supervised—that they are properly understood to be “arms” of the state itself. As a result, such entities may claim the very same sovereign immunity from suit that the state enjoys under the Eleventh Amendment of the United States Constitution. Sometimes, however, states structure these entities to operate at such a remove from the state government that they are not properly understood to be arms of the state. When states set up such entities in that way, they are not entitled to share in the state's immunity.

What is true of states is also true of the Commonwealth of Puerto Rico. It, too, we have held, is entitled to assert the sovereign immunity that states enjoy. It, too, has created a number of special-purpose public corporations. And, it, too, has structured some of them to be very closely tied to the Commonwealth government and some to operate separate and apart from it.

Unfortunately, it is not always easy to tell whether a sovereign has structured one of its special-purpose public corporations to be an “arm.” Disputes over classification thus frequently arise, such as this one, in which we must decide whether one of the Commonwealth's special-purpose public corporations, the Puerto Rico Ports Authority (“PRPA”), is an arm of the Commonwealth.

We have twice before—albeit decades ago—addressed PRPA's status. In each case, we reached a different conclusion based on the distinct nature of the particular function that PRPA was performing that gave rise to the underlying suit. After we decided those cases, however, we refined our arm-of-the-state analysis in response to intervening Supreme Court precedent. In this case, based on that refined analysis and the arguments that PRPA makes to us, we conclude that PRPA is not entitled to assert the Commonwealth's immunity as an arm of the Commonwealth. Accordingly, we reverse the District Court's order of dismissal and remand for further proceedings.

I.

Puerto Rico law established the Puerto Rico Transportation Authority as a public corporation in 1942. P.R. Laws Ann. tit. 23 § 331

. In 1955, Puerto Rico renamed the entity the Puerto Rico Ports Authority. Id.§ 332(a). The special purposes that PRPA is charged with performing are “to develop and improve, own, operate, and manage any and all types of air and marine transportation facilities and services, as well as to establish and manage mass marine transportation systems in, to and from the Commonwealth of Puerto Rico on its own, or in coordination with other government, corporate or municipal entities.” Id.§ 336.

The plaintiffs are Daniel Grajales and his family. Their suit arises from events that allegedly occurred after PRPA transferred Grajales, who had served as PRPA's Interagency Coordinator for Emergency Management, to the position of Supervisor of Security at the Aguadilla Airport in Aguadilla, Puerto Rico.

The plaintiffs allege that from 2009 to 2011, the defendants—which include not only PRPA, but also various PRPA officials who are not parties to this appeal—subjected Grajales to “persecution, prosecution, harassment, unfair working conditions and a hostile working environment” due to his political affiliation.¹ The plaintiffs also allege that Grajales was unlawfully terminated from his employment with PRPA on May 20, 2011, for reasons related to political discrimination and retaliation. As to retaliation, the plaintiffs allege that Grajales was terminated on account of his perceived involvement in the filing of a complaint with the Occupational Safety and Health Administration about the procedures used by airport personnel to fix lights at the airport.

This case has a lengthy and complicated procedural history, with many twists and turns. These include the plaintiffs' filing of four complaints, each of which raised a variety of federal and Puerto Rico law claims; the reversal by this Court of the District Court's grant of the defendants' motion for judgment on the pleadings, see Grajales v. P.R. Ports Auth., 682 F.3d 40, 50 (1st Cir.2012)

; the District Court's subsequent denial of the defendants' motion for summary judgment; a trial that resulted in jury deadlock as to the retaliation claim; the entry of default against PRPA; and the transfer of the case from one judge to another.

Notably, PRPA did not assert Eleventh Amendment immunity until March 27, 2014, after default was entered against PRPA but before the entry of default judgment. PRPA asserted its immunity in a motion to dismiss the plaintiffs' then remaining claims against PRPA. The District Court granted that motion on January 12, 2015. See Grajales v. P.R. Ports Auth.(“Grajales II”), 81 F.Supp.3d 158, 166 (D.P.R.2015)

.²

The District Court relied primarily on Puerto Rico Port Authoritys v. Federal Maritime Commission(“FMC”), 531 F.3d 868 (D.C.Cir.2008)

, cert. denied, 555 U.S. 1170, 129 S.Ct. 1312, 173 L.Ed.2d 584 (2009). Grajales II, 81 F.Supp.3d at 163–65. In FMC, the D.C. Circuit concluded that PRPA was an arm of the Commonwealth and was thus immune from suit under Eleventh Amendment immunity principles. FMC, 531 F.3d at 880. The District Court agreed,

Grajales II, 81 F.Supp.3d at 162–65

, and also concluded that PRPA did not, through its course of conduct in litigation, waive its right to claim immunity, id. at 165–66.

This appeal followed. The plaintiffs do not challenge the District Court's conclusion that PRPA did not waive its right to assert immunity. The plaintiffs do challenge the District Court's conclusion that PRPA is an arm of the Commonwealth entitled to assert the Commonwealth's immunity from suit.

II.

The Eleventh Amendment provides that “[t]he Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.” U.S. Const. amend. XI

. The Supreme Court has explained that “[a]lthough the text of the Amendment would appear to restrict only the Article III diversity jurisdiction of the federal courts, 'we have understood the Eleventh Amendment to stand not so much for what it says, but for the presupposition ... which it confirms.' ” Seminole Tribe of Fla. v. Florida, 517 U.S. 44, 54, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996) (omission in original) (quoting Blatchford v. Native Vill. of Noatak, 501 U.S. 775, 779, 111 S.Ct. 2578, 115 L.Ed.2d 686 (1991) ).

This “presupposition ... has two parts: first, that each State is a sovereign entity in our federal system; and second, that '[i]t is inherent in the nature of sovereignty not to be amenable to the suit of an individual without its consent.' ” Id.

(second alteration in original) (quoting Hans v. Louisiana, 134 U.S. 1, 13, 10 S.Ct. 504, 33 L.Ed. 842 (1890) ). As a result, states are shielded from suit in federal court even when sued by their own citizens. See Edelman v. Jordan, 415 U.S. 651, 662-63, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974).

The parties agree that, because the Commonwealth enjoys this immunity,³ the only question that we must decide is whether PRPA may claim it. The parties further agree that the answer turns on whether PRPA's relationship to the Commonwealth is such that PRPA is an “arm of the Commonwealth.” See Pastrana – Torres v. Corporación de P.R. para la Difusión PÚBLICA, 460 F.3d 124, 125 (1st Cir.2006)

. Our review is de novo. Id. PRPA bears the burden of proving that it is an “arm.” Wojcik v. Mass. State Lottery Comm'n, 300 F.3d 92, 99 (1st Cir.2002).

III.

Before turning to an examination of PRPA's status, we need to review the substantial precedent that potentially bears on how we should conduct our analysis. We thus start with our two prior decisions that directly addressed whether PRPA is an arm of the Commonwealth but that reached opposite, case-specific outcomes. We then describe how, in light of subsequent Supreme Court decisions, our arm-of-the-state precedent has developed in the years since we decided those cases. Finally, we describe both the D.C. Circuit case that the District Court relied on in concluding that PRPA is an arm of the Commonwealth and the District Court decision itself. Both the D.C. Circuit and the District Court concluded that our prior precedents examining PRPA's status deployed an analysis that no longer is applicable.

A.

We first addressed whether PRPA qualifies as an arm of the Commonwealth in Puerto Rico Ports Authority v. M/V Manhattan Prince(“Prince”), 897 F.2d 1 (1st Cir.1990)

. We did so in connection with a suit that sought to hold PRPA vicariously liable for the negligence of a certain type of ship pilot who had been involved in a ship's collision into a dock. Id. at 2–3.⁴

To determine PRPA's status, we relied on a multi-factor framework drawn from our decision in Ainsworth Aristocrat Int'l Party Ltd. v. Tourism Co. of P.R.(“Ainsworth”), 818 F.2d 1034, 1037 (1st Cir.1987)

. See Prince, 897 F.2d at 9. Accordingly, we described how Puerto Rico law characterized PRPA's status, listed the various powers and functions of...