Cruz-Arce v. Mgmt. Admin. Servs. Corp.

• Decision Date: 06 December 2021
• Docket Number: No. 20-1509,20-1509
• Citation: 19 F.4th 538
• Parties: Chiany CRUZ-ARCE, on her own behalf and as legal representative of minor child H.V.C., Plaintiff, Appellant, v. MANAGEMENT ADMINISTRATION SERVICES CORPORATION and Leanette Vélez, Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

19 F.4th 538

Chiany CRUZ-ARCE, on her own behalf and as legal representative of minor child H.V.C., Plaintiff, Appellant,

v.MANAGEMENT ADMINISTRATION SERVICES CORPORATION and Leanette Vélez, Defendants, Appellees.

No. 20-1509

United States Court of Appeals, First Circuit.

December 6, 2021

Javier A Rivera-Vaquer and Rivera Mercado & Rivera Cordero on brief for appellant.

Luis N. Blanco-Matos on brief for appellees.

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

SELYA, Circuit Judge.

Plaintiff-appellant Chiany Cruz-Arce, suing in her own right and on behalf of her minor child (H.V.C.), seeks to hold private parties liable as state actors under 42 U.S.C. § 1983. The plaintiff's federal claims hinge on her allegation that the defendants were performing a function traditionally and exclusively reserved to the state.¹ Because the amended complaint fails to allege sufficient facts to ground a plausible conclusion that the function performed by the defendants is, by tradition, an exclusive prerogative of the state, we affirm the district court's order of dismissal.

I. BACKGROUND

Because this appeal arises out of a dismissal for failure to state a claim upon which relief could be granted, see Fed. R. Civ. P. 12(b)(6), we accept as true all well-pleaded facts adumbrated in the plaintiff's amended complaint, see Haley v. City of Boston, 657 F.3d 39, 46 (1st Cir. 2011) ; SEC v. Tambone, 597 F.3d 436, 438 (1st Cir. 2010) (en banc). We rehearse the background of the case in that light and then trace its travel.

In 2015, the plaintiff was a tenant in the Manuel A. Pérez low-income housing project (the Project) in San Juan, Puerto Rico. The Project is owned by the Puerto Rico Department of Housing (the Housing Department) and is administered through the Puerto Rico Public Housing Administration (the PRPHA). The Housing Department or the PRPHA, in turn, contracted with a private party, defendant-appellee Management Administration Services Corporation (MAS), to manage the Project.²

The plaintiff alleges that, following a change in her employment situation, she contacted MAS and sought to modify her monthly rent (as permitted by pertinent regulations). These negotiations began in the spring of 2015. During the next two years, the plaintiff and MAS wrangled over rent adjustments, retroactivity issues, and ostensible rent arrearages. On July 19, 2017, MAS initiated eviction proceedings against the plaintiff in a local Puerto Rico court. The plaintiff contested MAS's claims.

The plaintiff further alleges that — while the contested eviction proceedings were pending — MAS gratuitously placed her apartment on a list of vacant units given to the Puerto Rico Police Department pursuant to a "policy and agreement." The purpose of such a list was to help the police in identifying possible illegal arms- and drug-trafficking activities conducted in vacant apartments. After receiving this listing, the police raided the plaintiff's apartment, forcing the locks and ransacking the interior. The plaintiff asserts that the officers' actions incident to the search caused her and her autistic child "severe emotional distress," requiring medical attention.

Based on the communication breakdowns and what she deemed to be an illegal search, the plaintiff invoked section 1983 and brought this suit against MAS and its then-administrator, Leanette Vélez, in the federal district court. The parties agreed to proceed before a magistrate judge. See 28 U.S.C. § 636(c) ; Fed. R. Civ. P. 73(b).³ In due course, the plaintiff served an amended complaint containing three counts: count 1 alleged violations of the Fourth and Fourteenth Amendments related to the search; count 2 alleged denials of due process related to the plaintiff's travails regarding the rent-adjustment negotiations and eviction proceedings; and count 3 alleged pendant claims for emotional distress under Article 1802 of the Puerto Rico Civil Code.

As pleaded, the two counts of the amended complaint that invoked section 1983 (counts 1 and 2) hinged on the question of whether the defendants were "acting under color of state law" and, thus, could be held liable as state actors. The operative allegations of the amended complaint that bore on this question were sparse. First, the plaintiff alleged that "[b]y law, the Government of Puerto Rico[,] through the Housing Department, is in charge of the operations and administration of the residential community of Manuel A Perez." Second, she alleged that the Housing Department, "instead of administrating the residential community, entered into a services contract with [MAS] to supply the same in [its] stead." The plaintiff made no other allegations concerning the relationship between MAS and the government of Puerto Rico, nor did her amended complaint contain any facts bearing on the issue of whether MAS was carrying out a traditional and exclusive state function.

The defendants moved to dismiss the amended complaint for failure to state a claim upon which relief could be granted. See Fed. R. Civ. P. 12(b)(6). The plaintiff opposed the motion. She contended, in conclusory fashion, that MAS was exercising an exclusive public function and could therefore be considered a state actor.

Surveying the plaintiff's allegations and contentions, the district court found her federal claims wanting and granted the defendants' motion to dismiss. The court determined that the amended complaint failed to state any actionable federal claims because it did not contain sufficient facts to ground a conclusion that MAS was performing an exclusive public function. See, e.g., Santiago v. Puerto Rico, 655 F.3d 61, 68-69 (1st Cir. 2011). It then dismissed the remaining state-law claims without prejudice. This timely appeal followed.

II. ANALYSIS

We review a dismissal for failure to state a claim de novo. See Haley, 657 F.3d at 46 ; Tambone, 597 F.3d at 441. In conducting this tamisage, we accept all well-pleaded, non-conclusory facts set forth in the complaint as true and draw all reasonable inferences therefrom to the pleader's behoof. See Ashcroft v. Iqbal, 556 U.S. 662, 681, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ; Haley, 657 F.3d at 46. As relevant here, we may augment those facts and inferences with facts that are matters of public record or otherwise susceptible to judicial notice. See Haley, 657 F.3d at 46.

It is by now common ground that a complaint must contain only a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Although this is a low bar, it still requires more than a cascade of conclusory allegations: at a minimum, the complaint must "contain sufficient factual matter ... to ‘state a claim to relief that is plausible on its face.’ " Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). As we have explained, "[i]f the factual allegations in the complaint are too meager, vague, or conclusory to remove the possibility of relief from the realm of mere conjecture, the complaint is open to dismissal." Tambone, 597 F.3d at 442 (citing Twombly, 550 U.S. at 555, 127 S.Ct. 1955 ). It is against this backdrop that we scrutinize the plaintiff's amended complaint.

We begin with bedrock. Section 1983 furnishes a private right of action against any person who, while acting under color of state law, deprives another (or causes another to be deprived) of rights secured either by the Constitution or by federal law. See 42 U.S.C. § 1983 ; see also Santiago, 655 F.3d at 68. To make out a section 1983 claim, a plaintiff must allege facts sufficient to show that the defendants acted under color of state law and caused the deprivation of federal rights. See Santiago, 655 F.3d at 68. This "under color of state law" requirement lies at the epicenter of the appeal that is before us.

Section 1983's "under color of state law" requirement has long been regarded as functionally equivalent to the "state action" requirement of the Fourteenth Amendment. See United States v. Price, 383 U.S. 787, 794 n.7, 86 S.Ct. 1152, 16 L.Ed.2d 267 (1966) ; Perkins v. Londonderry Basketball Club, 196 F.3d 13, 17 n.1 (1st Cir. 1999). If the challenged conduct cannot be classified as state action, a section 1983 claim necessarily fails. See Santiago, 655 F.3d at 68.

In the mine-run of cases, state action will derive from the conduct of government actors, that is, government officials or employees. See, e.g., Lugar v. Edmondson Oil Co., 457 U.S. 922, 936-39, 102 S.Ct. 2744, 73 L.Ed.2d 482 (1982). Even so, when the conduct of a private party can be "fairly attributable to the State," that conduct may constitute state action and, as such, engage the gears of section 1983. Id. at 937, 102 S.Ct. 2744.

Determining whether a private party's conduct amounts to state action demands a fact-intensive and context-specific inquiry. See Burton v. Wilmington Parking Auth., 365 U.S. 715, 722, 81 S.Ct. 856, 6 L.Ed.2d 45 (1961) (observing that "[o]nly by sifting facts and weighing circumstances can the nonobvious involvement of the State in private conduct be attributed its true significance").

Because some constitutionally assured rights (such as the right to due process) may be manifested in a nearly infinite variety of applications, courts have resisted attempts to define with granular precision the universe of circumstances in which a private party may be considered to be acting under color of state law. See id. Notwithstanding this need for individualized consideration, we have noted three general ways in which a private party may become a state actor within the purview of section 1983. See Santiago, 655 F.3d at 68. First, a private party may be considered a state actor if it assumes a public function which, by tradition, is exclusively reserved to the state (the public function test). See id. Second, a private party may be considered a state actor if its conduct is coerced or...