Dantzler, Inc. v. Puerto Rico Ports Auth.

Citation335 F.Supp.3d 226
Decision Date26 September 2018
Docket NumberCivil No. 17-1447 (FAB)
Parties DANTZLER, INC., et al., Plaintiffs, v. PUERTO RICO PORTS AUTHORITY, et al., Defendants.
CourtU.S. District Court — District of Puerto Rico

Alberto J. Castaner-Padro, III, Castaner Law Offices P.S.C., Ian P. Carvajal-Zarabozo, Manuel Sosa-Baez, Luis N. Saldana-Roman, Saldana, Carvajal & Velez-Rive, PSC, San Juan, PR, Deborah C. Waters, Waters Law Firm, PC, Norfolk, VA, Elwood C. Stevens, Jr., James Parkerson Roy, John Parkerson Roy, Domengeaux Wright Roy & Edwards LLC, Lafayette, LA, for Plaintiffs.

Heriberto Lopez-Guzman, Melendez Torres Law, PSC, Thomas Trebilcock-Horan, Fernandez, Cuyar, Rovira, Trebilcock & Pla, Eyck O. Lugo-Rivera, Maria T. Figueroa-Colon, Edge Legal Strategies, PSC, San Juan, PR, Mark D. Campbell, Matthew W. Light, Sidley Austin LLP, Los Angeles, CA, for Defendants.


BESOSA, District Judge.

Defendants S2 Services Puerto Rico, LLC ("S2") and Rapiscan Systems, Inc. ("Rapiscan") move to dismiss the plaintiffs' amended complaint pursuant to Federal Rule of Civil of Procedure 12(b)(1) ("Rule 12(b)(1)") and Federal Rule Civil Procedure 12(b)(6) (" Rule 12(b)(6)"). (Docket No. 55.) Defendant Puerto Rico Ports Authority ("PRPA") also moves to dismiss the plaintiffs' amended complaint pursuant to Rule 12(b)(1), Rule 12(b)(6), and Federal Rule of Civil Procedure 12(b)(7) (" Rule 12(b)(7)"). (Docket No. 85.) For the reasons set forth below, the Court GRANTS IN PART and DENIES IN PART S2, Rapiscan, and PRPA (collectively, "defendants")'s motions to dismiss (Docket Nos. 55 and 85.) The defendants' motion to stay discovery pending the ruling on these motions is moot (Docket No. 89.)

I. Factual Background

The Court construes the following facts from the amended complaint "in the light most favorable to the plaintiffs" and "resolve[s] any ambiguities" in the plaintiffs' favor. See Ocasio-Hernández v. Fortuño-Burset, 640 F.3d 1, 17 (1st Cir. 2011) (discussing the Rule 12(b)(6) standard of review); see Viqueira v. First Bank, 140 F.3d 12, 15 (1st Cir. 1998) (discussing the Rule 12(b)(1) standard of review).

On December 17, 2009, PRPA and Rapiscan signed an agreement allowing Rapiscan "to conduct all services of non-intrusive scanning of shipping containers entering Puerto Rico through the port of San Juan," although PRPA "had not been expressly delegated legal authority or police powers to inspect cargo." (Docket No. 19 at pp. 9-10.) About eight months later, Rapiscan "assigned all of its purported rights and obligations under its agreement with PRPA to [S2], its wholly owned subsidiary." Id. at p. 10.

In February 2011, PRPA conceded that "it is not the government instrumentality with the proper legal jurisdiction and authority to intervene as of right in [the inspection of cargo containers]" in a "Memorandum of Understanding" executed by PRPA and the Puerto Rico Department of Treasury. See Docket No. 19 at pp. 10-11 (alteration in original). PRPA, nonetheless, approved Regulation 8067, which required "the ocean carriers or their agents" to "pay PRPA the Enhanced Security Fee to recover the costs incurred by PRPA in the scanning program." Id. at p. 11.2 "Ocean carriers and their agents, in turn, collected Enhanced Security Fees from shippers like named Plaintiffs ... who import cargo through the maritime ports of San Juan." Id. (internal quotation marks omitted).

On October 16, 2013, the Court enjoined Puerto Rico "from collecting enhanced security fees from shipping operators that are not being scanned pursuant to Regulation [ ] 8067." Cámara de Mercadeo, Industria y Distribución de Alimentos v. Vázquez, 2013 WL 5652076, at *15 (D.P.R. Oct. 16, 2013) (McGiverin, Mag. J.), aff'd on other grounds, Industria y Distribuctión de Alimentos v. Trailer Bridge, 797 F.3d 141 (1st Cir. 2015). The Court found that the "enhanced security fee is unconstitutional as applied to shipping operators without scanning facilities because it (1) does not fairly approximate their use or privilege of using port scanning facilities, and (2) is excessive relative to the benefits conferred." Id. at *12.

Regulation 8067 was set to expire in June 30, 2014, "unless such term was extended, modified or amended prior [to] its expiration." (Docket No. 19 at p. 12.) PRPA did not extend, modify, or amend Regulation 8067, "but continued to implement the cargo scanning program despite and beyond its expiration." Id.

In October 2016, the Puerto Rico Court of Appeals ordered PRPA "to immediately cease and desist from carrying out any procedure under [Regulation 8067]" because Regulation 8067 "was not in force." Cámara de Mercadeo, Industria y Distribución de Alimentos v. Autoridad de los Puertos, 2016 WL 7046805, at *8 (P.R. Ct. App. Oct. 28, 2016) (official translation at Docket No. 73 at p. 9). Regulation 8067 required "the extension of the established term of validity" to "be done during its term," and because Regulation 8067 was not extended prior to its expiration, the Puerto Rico Court of Appeals held that the "decree had no effect." Id. at *7 (official translation at Docket No. 73 at p. 8).

The defendants, nevertheless, have "acted and/or continued to act in collecting [ ] Enhanced Security Fees in connection with the cargo scanning program." (Docket No. 19 at p. 13.) The defendants have also continued to collect enhanced security fees from the plaintiffs for "non-containerized cargo such as cars, ISO tanks, cargo on platforms, and other types of cargo which are imported without using shipping containers," as well as "cargo entering the Port of San Juan, through some marine terminals which do not have access to scanning stations," and "cargo ... that [is] not being scanned at all," Docket No. 19 at pp. 13-15, despite the Court's ruling that the defendants cannot collect such fees from "shipping operators that are not being scanned pursuant to Regulation [ ] 8067." Vázquez, 2013 WL 5652076, at *15. The defendants have "collected and derived economic benefit from the Enhanced Security Fees," and the plaintiffs have sustained "substantial and continuing economic losses" in amounts "believed to be in excess of $150,000,000.00" because of the defendants' actions. (Docket No. 19 at p. 15.)

II. Procedural History

The plaintiffs commenced this action on April 5, 2017 "as entities that paid fees for the scanning cargo imported into Puerto Rico through the maritime port of San Juan that were illegally collected by Defendants" in violation of federal and Puerto Rico law. (Docket No. 1 at p. 2; Docket No. 19 at pp. 2-3.) They filed an amended complaint approximately five months later seeking relief pursuant to 42 U.S.C. section 1983 (" section 1983"), based on the Fifth Amendment, the Fourteenth Amendment, and the Commerce Clause, and pursuant to Puerto Rico civil code, articles 7, 200, and 1795. Docket No. 19 at pp. 21-30; see 42 U.S.C. § 1983 ; P.R. Laws Ann. tit. 3, §§ 7, 901, 5121.

On December 19, 2017, S2 and Rapiscan moved to dismiss the amended complaint. (Docket No. 55.) According to S2 and Rapiscan, the plaintiffs "lack standing to challenge the Enhanced Security Fees at issue because they did not pay them—the fees were imposed on ocean freight carriers who independently decided whether, and in what amount, to pass their own costs onto merchants such as Plaintiffs." Id. at p. 1. S2 and Rapiscan argue that the amended complaint "fails to state cognizable claims against Rapiscan and S2 under 42 U.S.C. § 1983 because it does not allege that Rapiscan or S2 individually caused any violation of Plaintiffs' alleged constitutional rights." Id. In the alternative, S2 and Rapiscan contend that they are "entitled to qualified immunity from suit under § 1983 as a former and current government contractor, respectively, sued solely on the basis of their contracted services."Id. S2 and Rapiscan also maintain that the amended complaint "fails to state claims for unjust enrichment and undue collection under Puerto Rico law because it does not allege that Rapiscan or S2 received compensation for their services without cause." Id.

On May 23, 2018, PRPA moved to dismiss the amended complaint. (Docket No. 85.) Like S2 and Rapiscan, PRPA asserts that the plaintiffs' claims are "improperly anchored on their carriers' independent decisions to charge operating fees" and thus do "not satisfy the constitutional standing requirements." Id. at p. 1. In the alternative, PRPA argues that it "is an arm of the state cloaked with sovereign immunity," which "shields it from legal actions that precisely target its governmental functions." Id. at p. 2. PRPA also contends that:

(1) Plaintiffs' Section 1983 claims are mostly time barred; (2) Plaintiffs have failed to include the Ocean Freight Carriers, who are indispensable to any litigation challenging the collection of [enhanced security fees]; (3) the [ ] amended complaint fails to state a cause of action for unjust enrichment or undue collection; (4) Plaintiff's regulatory takings claim is flawed, inasmuch as it is incorrectly based on PRPA's alleged ultra vires acts; and (5) Plaintiffs' claim regarding PRPA's alleged ultra vires conduct are inapposite.

Id. While the Court disagrees with the defendants' arguments regarding standing and immunity, the Court agrees that the plaintiffs fail to establish takings, procedural due process, and substantive due process claims pursuant to section 1983. The Court, nevertheless, finds that the plaintiffs state a valid Commerce Clause claim pursuant to section 1983, as well as Puerto Rico law claims.

III. Standards of Review

Rule 12(b) permits a party to assert defenses against claims for relief. Fed. R. Civ. P. 12. A court, nonetheless, "must construe the complaint liberally," Aversa v. United States, 99 F.3d 1200, 1210 (1st Cir. 1996), and a complaint that adequately states a claim may still proceed even if "recovery is very remote and unlikely." Ocasio-Hernández, 640 F.3d at 13 (internal quotation marks and citations...

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    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • May 1, 2020
    ...September 26, 2018, the district court partially granted Rapiscan, S2, and PRPA's motions to dismiss. Dantzler, Inc. v. P.R. Ports Auth., 335 F. Supp. 3d 226 (D.P.R. 2018). It dismissed Dantzler's Fifth and Fourteenth Amendment claims brought under Section 1983, but it denied the motions as......

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