Metcalf & Eddy, Inc. v. Puerto Rico Aqueduct and Sewer Authority

Citation945 F.2d 10
Decision Date05 September 1991
Docket NumberNo. 91-1602,91-1602
PartiesMETCALF & EDDY, INC., Plaintiff, Appellee, v. PUERTO RICO AQUEDUCT AND SEWER AUTHORITY, Defendant, Appellant. . Heard
CourtUnited States Courts of Appeals. United States Court of Appeals (1st Circuit)

Michael T. Brady with whom Paige E. Reffe, Perry M. Rosen, Cutler & Stanfield, Washington, D.C., Arturo Trias, Hector Melendez Cano, and Trias, Acevedo & Otero, Hato Rey, P.R., were on brief for defendant, appellant.

Peter W. Sipkins with whom Dorsey & Whitney, Minneapolis, Minn., Jay A. Garcia-Gregory, and Fiddler, Gonzalez & Rodriguez, San Juan, P.R., were on brief for plaintiff, appellee.

Before BREYER, Chief Judge, and ALDRICH and SELYA, Circuit Judges.

SELYA, Circuit Judge.

We recently acknowledged that "words can be 'chameleons, which reflect the color of their environment.' " Hanover Ins. Co. v. United States, 880 F.2d 1503, 1504 (1st Cir.1989) (quoting Commissioner v. National Carbide Co., 167 F.2d 304, 306 (2d Cir.1948) (L. Hand, J.)), cert. denied, 493 U.S. 1023, 110 S.Ct. 726, 107 L.Ed.2d 745 (1990). As the appeal before us illustrates, "immunity" is such a word.

I. BACKGROUND

The Puerto Rico Aqueduct and Sewer Authority (PRASA) was established by the Puerto Rico legislature as "a public corporation and an autonomous government instrumentality." 22 L.P.R.A. § 142 (1987). Its purpose was "to provide to the inhabitants of Puerto Rico ... adequate drinking water, sanitary sewage service and any other service or facility proper or incidental thereto." Id. § 144. In 1985, PRASA and the United States Environmental Protection Agency signed a consent decree which, as later supplemented, required PRASA to bring eighty-three of its facilities into compliance with federal "clean water" standards.

In March 1986, PRASA entered into a contract with Metcalf & Eddy, Inc. (Metcalf), an engineering firm, to provide extensive services anent the subject matter of the consent decree. By late 1990, the relationship had soured. Invoking diversity jurisdiction, 28 U.S.C. § 1332(a) (1988), Metcalf sued PRASA in Puerto Rico's federal district court. Metcalf's suit sought a declaration of rights with respect to the PRASA/Metcalf agreement along with $52,000,000 in damages for breach of contract.

PRASA mounted a furious campaign to avoid joining issue. Its initial motion to dismiss was denied. It then moved to dismiss on the basis of Eleventh Amendment immunity. 1 The district court denied the motion on May 17, 1991. PRASA appeals from the denial of this motion. 2

II. APPELLATE JURISDICTION

We begin and end our consideration of this appeal by addressing the threshold question of appellate jurisdiction.

A. Existence of Circuit Precedent

PRASA's appeal hinges, in the first instance, on whether it is properly before us at this early date. Ordinarily, apart from injunctions and other special circumstances, see, e.g., 28 U.S.C. § 1292(a)-(c) (1988), federal appellate courts lack jurisdiction, prior to the entry of final judgment in a given case, to hear appeals from interim trial-court orders. See 28 U.S.C. § 1291 (1988). There is, of course, an exception for interlocutory rulings which meet the rigorous collateral-order standards first enunciated by the Supreme Court in Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 545-47, 69 S.Ct. 1221, 1225-26, 93 L.Ed. 1528 (1949). PRASA contends that its appeal fits within Cohen's contours because the Eleventh Amendment renders PRASA "immune" from suit in a federal forum. Thus, PRASA says that the district court's refusal to credit its immunity defense should be reviewable forthwith. In support of its position, PRASA cites a line of cases capped by Mitchell v. Forsyth, 472 U.S. 511, 105 S.Ct. 2806, 86 L.Ed.2d 411 (1985). Mitchell holds that interlocutory orders denying state officials the benefit of colorable "qualified immunity" defenses are immediately appealable. See id. at 526-27, 105 S.Ct. at 2815-16. 3

The problem with PRASA's position is that the qualified immunity defense available to individual state actors is not, from either a conceptual or a practical standpoint, congruent with the Eleventh Amendment defense available to unconsenting states and state agencies. We said as much in Libby v. Marshall, 833 F.2d 402, 404-07 (1st Cir.1987). There, certain Massachusetts state employees, sued in their official capacities, moved to dismiss on the basis of an asserted Eleventh Amendment immunity. The district court denied their motion. The officials essayed an immediate appeal. After a carefully reasoned analysis of the question, fully considering the Mitchell line of qualified immunity cases, see Libby, 833 F.2d at 404-05, a panel of this court concluded that "because the interests underlying the immunity the Eleventh Amendment provides to the states can be adequately vindicated upon an appeal from a final judgment ... the district court's decision [denying the defendants' motion to dismiss was] not a collateral order." Id. at 407. Hence, there was no appellate jurisdiction. Id. Libby must shape our consideration of PRASA's appeal. 4

B. Effect of Circuit Precedent

Finding, as we do, that Libby v. Marshall applies to this appeal, the lens of our inquiry narrows considerably. We have held, with a regularity bordering on the monotonous, that in a multi-panel circuit, newly constituted panels are, by and large, bound by prior panel decisions closely in point. See, e.g., United States v. Wogan, 938 F.2d 1446, 1449 (1st Cir.1991); Kotler v. American Tobacco Co., 926 F.2d 1217, 1223 (1st Cir.1990), petition for cert. filed (U.S. March 19, 1991) (No. 90-1473); Jusino v. Zayas, 875 F.2d 986, 993 (1st Cir.1989); Lacy v. Gardino, 791 F.2d 980, 985 (1st Cir.), cert. denied, 479 U.S. 888, 107 S.Ct. 284, 93 L.Ed.2d 259 (1986). The orderly development of the law, the need for stability, the value of results being predictable over time, and the importance of evenhanded justice all counsel continued fidelity to this principle.

Of course, there is a two-tiered exception to the rule. The exception has been described in varying terms. We visualize the top tier as becoming operative when, after a panel decision issues, the decision is undercut by controlling authority, subsequently announced, such as an opinion of the Supreme Court, an en banc opinion of the circuit court, or a statutory overruling. See, e.g., United States v. Bucuvalas, 909 F.2d 593, 594 (1st Cir.1990) (overruling United States v. Bosch Morales, 677 F.2d 1 (1st Cir.1982), in light of United States v. Powell, 469 U.S. 57, 105 S.Ct. 471, 83 L.Ed.2d 461 (1984)); Unwin v. Campbell, 863 F.2d 124, 128 (1st Cir.1988) (overruling in part Bonitz v. Fair, 804 F.2d 164 (1st Cir.1986), in light of Anderson v. Creighton, 483 U.S. 635, 107 S.Ct. 3034, 97 L.Ed.2d 523 (1987)); cf. State of Cal., Dep't of Health Serv. v. United States Dep't of HHS, 853 F.2d 634, 638-39 (9th Cir.1988) (refusing to abandon previous decision because language of intervening statutory change, read in context, did not require different result). We foresee the exception's remaining tier as coming into play in those few instances in which newly emergent authority, although not directly controlling, nevertheless offers a convincing reason for believing that the earlier panel, in light of the neoteric developments, would change its course. See generally United States v. Connor, 926 F.2d 81, 83 (1st Cir.1991) (suggesting that stare decisis need not always be applied woodenly, especially where new matters are brought to the court's attention); Colby v. J.C. Penney Co., 811 F.2d 1119, 1123 (7th Cir.1987) (discussing "complex relationship ... between a court and its own previous decisions"); cf. Aldens, Inc. v. Miller, 610 F.2d 538, 541 (8th Cir.1979) ("Although we are not bound by another circuit's decision, we adhere to the policy that a sister circuit's reasoned decision deserves great weight and precedential value."), cert. denied, 446 U.S. 919, 100 S.Ct. 1853, 64 L.Ed.2d 273 (1980). In leaving the door to this second tier ajar, however, we emphasize that only the most persuasive showing of collateral authority is likely to possess the power to push the door fully open.

PRASA's argument for overruling Libby seeks to take advantage of both aspects of the stated exception. PRASA contends, first, that the Court's decision in Midland Asphalt Corp. v. United States, 489 U.S. 794, 109 S.Ct. 1494, 103 L.Ed.2d 879 (1989), demands that we abandon our earlier precedent. This contention rests on the appellant's Panglossian reading of Midland Asphalt--a reading fueled more by wishful thinking than by legal insights. In Midland Asphalt, the Court determined that the denial of a criminal defendant's pretrial motion to dismiss an indictment on account of an alleged violation of Fed.R.Crim.P. 6(e)(2) was not immediately appealable under the collateral-order exception to the final judgment rule. 5 Id. at 798-802, 109 S.Ct. at 1497-98. Fairly read, the reasoning of Midland Asphalt fails to undermine Libby in the slightest degree. Indeed, the Court's admonition that litigants seeking to justify interlocutory appeals "must be careful ... not to play word games with the concept of a 'right not to be tried,' " id. 489 U.S. at 801, 109 S.Ct. at 1499, is a warning which PRASA could well have heeded.

The appellant's second salvo is better aimed, but still wide of the mark. Cases from four of our sister circuits hold, contrary to Libby, that denials of Eleventh Amendment immunity claims are immediately appealable. See Kroll v. Board of Trustees of Univ. of Ill., 934 F.2d 904, 906 (7th Cir.1991); Loya v. Texas Dep't of Corrections, 878 F.2d 860, 861 (5th Cir.1989) (per curiam); Coakley v. Welch, 877 F.2d 304, 305 (4th Cir.), cert. denied, --- U.S. ----, 110 S.Ct. 501, 107 L.Ed.2d 503 (1989); Minotti v. Lensink, 798 F.2d 607, 608 (2d Cir.1986), cert. denied, 482 U.S. 906, 107 S.Ct. 2484, 96 L.Ed.2d 376 (1987). Citing some of these cases, PRASA contends...

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