Dantzler, Inc. v. Empresas Berríos Inventory & Operations, Inc.
| Decision Date | 01 May 2020 |
| Docket Number | No. 18-2087, No. 18-2089,18-2087 |
| Citation | 958 F.3d 38 |
| Parties | DANTZLER, INC.; Northwestern Selecta, Inc.; Alberic Colón Auto Sales, Inc.; Alberic Colón Dodge Chrysler Jeep, Inc.; Alberic Colón Ford, Inc.; Alberic Colón Mitsubishi, Inc.; Sachs Chemical, Inc.; Mays Chemical Company of Puerto Rico, Inc.; Maderas Alpha, Inc.; Celta Export Corporation; Cougar Plastics Corporation; Caribbean Produce Exchange, LLC ; Madearte Furniture Imports & Distributors, Inc.; Maderas 3C, Inc. ; Marjor & Sons, Inc.; M.M. Fashion & Design, Inc.; Papelera Del Plata, Inc. ; the Paperhouse Corp.; Plavica, Inc. ; Empresas Berríos, Inc.; José Santiago, Inc.; Correa Tire Distributor, Inc.; Eugenio Serafin, Inc., d/b/a Est Hardware, Plaintiffs, Appellees, v. EMPRESAS BERRÍOS INVENTORY AND OPERATIONS, INC.; Correa Tire, Plaintiffs, v. S2 Services Puerto Rico, LLC ; Rapiscan Systems, Inc., Defendants, Appellants, Puerto Rico Ports Authority, John Doe; Jane Doe; ABC Corp., XYZ Corp.; Unknown Insurance Companies, Defendants. Dantzler, Inc.; Northwestern Selecta, Inc.; Alberic Colón Auto Sales, Inc.; Alberic Colón Dodge Chrysler Jeep, Inc.; Alberic Colón Ford, Inc.; Alberic Colón Mitsubishi, Inc.; Sachs Chemical, Inc.; Mays Chemical Company of Puerto Rico, Inc.; Maderas Alpha, Inc.; Celta Export Corporation; Cougar Plastics Corporation; Caribbean Produce Exchange, LLC ; Madearte Furniture Imports & Distributors, Inc.; Maderas 3C, Inc. ; Marjor & Sons, Inc.; M.M. Fashion & Design, Inc.; Papelera Del Plata, Inc. ; the Paperhouse Corp.; Plavica, Inc. ; Empresas Berríos, Inc.; José Santiago, Inc.; Correa Tire Distributor, Inc.; Eugenio Serafin, Inc., d/b/a Est Hardware, Plaintiffs, Appellees, v. Empresas Berríos Inventory and Operations, Inc.; Correa Tire, Plaintiffs, v. Puerto Rico Ports Authority, Defendant, Appellant, S2 Services Puerto Rico, LLC ; Rapiscan Systems, Inc., Jane Doe; ABC Corp., XYZ Corp.; and Unknown Insurance Companies, Defendants. |
| Court | U.S. Court of Appeals — First Circuit |
Eyck O. Lugo-Rivera, San Juan, PR, with whom María Teresa Figueroa-Colón, Edge Legal Strategies, PSC, Mark C. Campbell, Matt Light, and Shook, Hardy & Bacon L.L.P., Los Angeles, CA, were on brief, for appellants S2 Services Puerto Rico, LLC and Rapiscan Systems, Inc.
Heriberto López-Guzmán, San Juan, PR, with whom H. López Law, LLC, Thomas Trebilcock-Horan, and Trebilcock & Rovira, LLC were on brief, for appellant Puerto Rico Ports Authority.
Elwood C. Stevens, Jr., with whom James P. Roy, Domengeaux Wright Roy & Edwards LLC, Lafayette, LA, Manuel Sosa-Báez, Luis N. Saldaña, Ian P. Carvajal, Saldaña, Carvajal & Vélez-Rivé, PSC, San Juan, PR, Alberto J. Castañer, Castañer & Cía P.S.C., San Juan, PR, Deborah C. Waters, and Walters Law Firm, PC were on brief, for appellees.
Before Torruella, Dyk,* and Thompson, Circuit Judges.
These appeals concern a suit brought by a putative class of shippers (collectively, "Dantzler") who use the services of ocean freight carriers to import goods into Puerto Rico through the maritime port of San Juan. Their claims stem from a cargo scanning program implemented by the Puerto Rico Ports Authority ("PRPA") in an effort to improve the safety of the port. Pursuant to that program, PRPA contracted with Rapiscan Systems, Inc. ("Rapiscan") -- which later assigned its rights and obligations to its wholly-owned subsidiary S2 Services Puerto Rico LLC ("S2") -- to provide the technology and services needed to scan all containerized inbound cargo. To offset the costs of the program, PRPA charged the ocean freight carriers a fee for their use of the scanning facilities in the Port of San Juan. Dantzler alleges that, in response to that fee, ocean freight carriers were "forced" to be "collection agents" that collected fees from the shipper entities. Consequently, Dantzler brought a Section 1983 lawsuit against PRPA, Rapiscan, and S2 together, seeking money damages and requesting that the United States District Court for the District of Puerto Rico declare and enjoin the collection of the additional fee as violative of the United States Constitution and Puerto Rico law. The defendants filed motions to dismiss the complaint, which the district court granted in part and denied in part. They now appeal the partial denial of those motions.
In the end, their appeals reduce to a question of standing over which we have jurisdiction in these appeals from the denial of immunity. See Asociación De Subscripción Conjunta Del Seguro De Responsabilidad Obligatorio v. Flores Galarza, 484 F.3d 1, 20 n.22 (1st Cir. 2007). For the following reasons, we find that Dantzler has failed to establish its constitutional standing to sue PRPA, Rapiscan, and S2, and thus we vacate the district court's order and remand for dismissal on jurisdictional grounds.
Because these appeals follow from a decision on motions to dismiss, we draw the facts from Dantzler's amended complaint and any documents incorporated by reference therein. See Katz v. Pershing, LLC, 672 F.3d 64, 69 (1st Cir. 2012).
On February 18, 2008, the Puerto Rico legislature enacted Act No. 12 of 2008 ("Act 12"), which called for improved safety procedures in Puerto Rico's ports. P.R. Laws Ann. tit. 23, §§ 3221 - 3223. Prior to this law, port security "was predominantly limited to random and manual searches of cargo." Industria y Distribución de Alimentos v. Trailer Bridge, 797 F.3d 141, 143 (1st Cir. 2015).
As a result of Act 12, on December 17, 2009, PRPA contracted Rapiscan to provide cargo scanning services for the scanning of containerized inbound cargo at the Port of San Juan on behalf of PRPA. On August 6, 2010, with PRPA's consent, Rapiscan assigned its rights and obligations under the contract to its wholly-owned subsidiary, S2.
On February 16, 2011, PRPA and the Puerto Rico Treasury Department executed a "Memorandum of Understanding" ("MOU") in which PRPA acknowledged that "it [was] not the government instrumentality with the proper legal jurisdiction and authority to intervene as of right" in the "well known" practice of concealing items in cargo containers "to avoid -- among other reasons -- paying the applicable excise or other related taxes." The authority to inspect cargo containers upon their arrival in Puerto Rico inhered in the Puerto Rico Treasury Department "as one of its powers in furtherance of its goal to collect taxes." However, the MOU recalled that on August 2, 2007, PRPA and the Treasury Department had signed a multi-party agreement with other Puerto Rico agencies and instrumentalities whereby they "agreed to cooperate in order to implement Puerto Rico's tax laws."1 Because of "the important public policy interest involved and in the spirit of interagency cooperation," PRPA and the Puerto Rico Treasury Department agreed that PRPA, via S2, would assist in the scanning of cargo that arrived at the Port of San Juan.
Subsequently, on September 2, 2011, PRPA approved Regulation 8067,2 which enabled PRPA to "implement a fast[-]track method of inspecting inbound [c]argo [c]ontainers which will detect undisclosed taxable goods, as well as increase port security in the Port of San Juan, while preserving a free flow of commerce and the efficient movement of cargo." To recover the heightened costs associated with the scanning program incurred by PRPA, Regulation 8067 established a system of "Enhanced Security Fees" ("ESFs"), which were assessed by PRPA on ocean freight carriers or their agents arriving and unloading cargo in the Port of San Juan (in addition to existing fees already charged for use of the port).3 Dantzler alleges, without any substantiation, that the defendants "forced ocean carriers ... into becoming [d]efendants' [ESF] collection agents" that "collected [ESFs] from shippers like [Dantzler]."
On October 16, 2013, a federal court found the ESFs unconstitutional "as applied to shipping operators that neither use nor have the privilege of using PRPA scanning facilities," because the imposition of such fees on those entities violated the Commerce Clause. Cámara de Mercadeo, Industria, y Distribución de Alimentos v. Vázquez, No. 11-1978, 2013 WL 5652076, at *12, *14 (D.P.R. Oct. 16, 2013). The court also enjoined PRPA from collecting ESFs from "shipping operators [whose cargo is] not being scanned pursuant to Regulation No. 8067." Id. at *15.4 We upheld these rulings as well as the constitutionality of PRPA's scanning program as applied to shipping operators who have access to the scanning service. See Trailer Bridge, 797 F.3d at 143, 145. PRPA, through S2 and Rapiscan, allegedly continued to assess ESFs on shippers that imported cargo that was not containerized, on shippers which did not have access to scanning stations, and on shippers whose cargo was not scanned at all.
Pursuant to Regulation 8067, the authorization for using the scanning program would end on June 30, 2014, "unless [the] term was extended, modified[,] or amended prior [to] its expiration." Although PRPA never modified, extended, or amended such term prior to June 30, 2014, it nevertheless "continued to implement the cargo scanning program despite and beyond its expiration." On October 28, 2016, the Puerto Rico Court of Appeals issued a judgment ordering PRPA to cease and desist from continuing to implement the program because Regulation 8067 had expired. See Cámara de Mercadeo, Industria y Distribución de Alimentos v. Autoridad de Los Puertos, No. 2015-002, 2016 WL 7046805, at *8 (P.R. Ct. App. Oct. 28, 2016). Nevertheless, PRPA, Rapiscan, and S2 allegedly continued to assess and collect ESFs in connection with the scanning program.
PRPA, Rapiscan, and S2 have jointly "collected and derived economic benefit from the [ESFs]," which has caused Dantzler to "sustain[ ] substantial and continuing economic losses in total amounts ... reasonably believed to be in excess of $150,000,000.00."
On April 5, 2017, Dantzler sued PRPA, Rapiscan, and S2 in the United States...
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