García-Rubiera v. Fortuño

• Decision Date: 16 August 2013
• Docket Number: No. 12–2002.,12–2002.
• Citation: 727 F.3d 102
• Parties: Gladys GARCÍA–RUBIERA et al., Plaintiffs, Appellants, v. Luis G. FORTUÑO, Governor of Puerto Rico; Juan Carlos Puig–Morales, Treasury Secretary, Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

727 F.3d 102

Gladys GARCÍA–RUBIERA et al., Plaintiffs, Appellants,

v.Luis G. FORTUÑO, Governor of Puerto Rico; Juan Carlos Puig–Morales, Treasury Secretary, Defendants, Appellees.

No. 12–2002.

United States Court of Appeals, First Circuit.

Aug. 16, 2013.

Antonio J. Amadeo–Murga, for appellants.

Susana I. Peñagarícano–Brown, Assistant Solicitor General, Department of Justice, for appellees.

Before LYNCH, Chief Judge, TORRUELLA and KAYATTA, Circuit Judges.

KAYATTA, Circuit Judge.

As this court has detailed in prior opinions, Puerto Rico law has operated since 1995 in a manner that effectively causes hundreds of thousands of motor vehicle owners to pay twice for liability insurance, once through a Commonwealth-run plan, and once in the private market. García–Rubiera v. Calderon (“ García–Rubiera I ”), 570 F.3d 443 (1st Cir.2009); García–Rubiera v. Fortuo (“ García–Rubiera II ”), 665 F.3d 261 (1st Cir.2011). Under this more-or-less duplicate premium regime, Commonwealth law declared motor vehicle owners to be entitled to a refund of the excess premiums paid. P.R. Laws Ann. tit. 26, §§ 8051, 8055(n). The procedures for seeking such refunds, however, were complicated, varied, and, most importantly, bereft of any meaningful notice; so much so as to be, in effect, hidden. See García–Rubiera II, 665 F.3d at 273 (no notice mailed, nothing posted online, no posting in any readily available publication, and no writing subject to easy discovery even by those who go in person to the pertinent government office). Large amounts of unclaimed refunds accumulated. Beginning in 2002, every two years the Commonwealth placed the unclaimed refunds with its Treasury Secretary to be held “in trust,” with the proviso that, if not claimed within five years, the funds escheated to the Commonwealth without notice to the owners of the funds.

In García–Rubiera I, this court held that vehicle owners who paid twice for private and Commonwealth-issued insurance possess a constitutionally protected property interest in those duplicate premiums. 570 F.3d at 452, 257. In García–Rubiera II, we concluded that the Commonwealth's failure to notify affected vehicle owners of their reimbursement rights amounted to a violation of the procedural due process guarantees of the Fifth and Fourteenth Amendments. 665 F.3d at 274–76. We held that “under these conditions the Commonwealth is required to give individual notice to insureds owed reimbursement to the maximum extent feasible,” and we instructed the district court to resolve factual issues as to “feasibility” on remand. Id. at 276. We also held that “the Commonwealth must publish Procedure 96, in full, online and in other places readily accessible by the public.” Id. at 277.

On remand, the district court ordered the Commonwealth to notify individual vehicle owners of their reimbursement rights, to publish information regarding the reimbursement procedure in two newspapers, and to allow at least 120 days for vehicle owners to claim the reimbursements to which they are entitled. The district court's order represents a marked improvement of the status quo. Even so, the relief ordered by the district court fails to satisfy the minimum requirements of procedural due process under the Fifth and Fourteenth Amendments. The Commonwealth has in its possession vehicle-specific information without which many insured owners will not be able to obtain the reimbursements to which they are entitled, yet the district court's order does not require the Commonwealth to release this information to vehicle owners. Moreover, although the district court's order only provides for a 120–day grace period in which vehicle owners can claim reimbursement before their premium payments escheat to the Commonwealth, the Commonwealth's counsel conceded at oral argument that a one-year grace period would be more appropriate in this context. And while the district court ordered the Commonwealth to publish two notices—one in an English-language newspaper and one in a Spanish-language newspaper—alerting vehicle owners of their reimbursement rights, the district court did not engage in the required balancing analysis to determine whether one-time notice in two newspapers is sufficient to satisfy the Commonwealth's constitutional obligations.

Accordingly, we will remand this case to the district court once again, this time to allow it to craft with the benefit of further guidance an injunction that more fittingly remedies the Commonwealth's constitutional violations. In the meantime, we order that no duplicate premiums shall escheat to the Commonwealth until it has established and complied with a reimbursement procedure which meets the basic requirements of constitutional due process.

Finally, we reverse the district court's denial of plaintiffs' request for an award of interim attorneys' fees. This lawsuit is now entering its twelfth year. Our decision today means that many more months may elapse before a judgment is final. Throughout this extended period, plaintiffs' attorney has sought to vindicate the constitutional rights of hundreds of thousands of vehicle owners across Puerto Rico. Plaintiffs have already prevailed in this court on the merits of their procedural due process claims. Accordingly, as prevailing parties in a civil rights action, plaintiffsare statutorily entitled to an award of attorney's fees from the Commonwealth. On remand, the district court should make such an award in an amount determined by the court to be sufficient to cover the compensable work performed from the beginning of this action through the date of this opinion.

I. Background

For a detailed description of the background of this case prior to 2012, we refer the reader to our opinions in García–Rubiera I and II. We note here only that the rulings in those opinions are not subject to reconsideration on this third appeal. United States v. Matthews, 643 F.3d 9, 13 (1st Cir.2011)(“[A] legal decision made at one stage of a criminal or civil proceeding should remain the law of that case throughout the litigation, unless and until the decision is modified or overruled by a higher court” (quoting United States v. Moran, 393 F.3d 1, 7 (1st Cir.2004))).

On remand following our decision in García–Rubiera II, plaintiffs sought a permanent injunction requiring the Commonwealth ¹ to send individualized notices to all vehicle owners who are entitled to reimbursements. Plaintiffs requested that the notices be sent by certified mail and that each notice state the amount of the refund (including interest) to which the owner is entitled, the license plate and vehicle identification number (“VIN”) associated with each vehicle for which a duplicate premium was paid, and basic information regarding the corresponding insurance policy. ² Plaintiffs also sought to require the Commonwealth to publish a list of the vehicle owners entitled to reimbursement in two daily newspapers of general circulation once a week for two consecutive weeks.

For vehicle owners whose premiums had not yet been transferred from the Asociacin Conjunta del Seguro de Responsabilidad Obligatorio (“JUA”) to the Treasury Department, plaintiffs' proposed injunction would allow the owners at least 120 days in which to seek reimbursement from the JUA. After the transfer of funds from the JUA to the Treasury Department (and for vehicle owners whose premiums have previously been transferred to the Treasury), plaintiffs' proposed injunction would allow an additional five-year grace period during which the vehicle owners could file for reimbursement. Plaintiffs sought the appointment of an independent monitor to ensure compliance with the injunction.

Plaintiffs also filed a motion in district court for an award of attorney's fees. The motion sought an interim fee award of $1.5 million and a final award equal to 25 percent of “the common fund and interest created by [plaintiffs' attorney's] efforts.” Plaintiffs suggested that the “common fund” should include not only the premium payments that are ultimately reimbursed, but all duplicate premium payments held by the JUA or transferred to the Treasury (apparently without regard to whether these monies are ever claimed by the vehicle owners). Plaintiffs estimated that this fund amounted to more than $180 million before interest—in which case plaintiffs' percentage-of-funds proposal would allow their attorney to recover an award of at least $45 million.

The district court referred the matter of injunctive relief to a magistrate judge, whose report and recommendation the court ultimately adopted with only minor modifications. See García–Rubiera v. Fortuño, 873 F.Supp.2d 421 (D.P.R.2012). The district court's permanent injunction required the Commonwealth to compile the names and addresses of all motor vehicle owners who paid a duplicate premium that has not been refunded, and to send individual notices by mail ³ to all such persons. Id. at 426. The district court further ordered that each notice include (1) the fact that the vehicle owner is entitled to a refund; (2) the date that the vehicle owner's premium was or will be transferred to the Treasury; (3) the text of Procedure 96; and (4) the relevant portions of Law 230.⁴Id. However, the district court did not require the notices to include the amounts of the refunds, the license plate numbers and VINs associated with each refund, or any information regarding the insurance policies corresponding to each refund. Id.

The district court also ordered the JUA to publish notice once in an English-language newspaper of general circulation and once in an Spanish-language newspaper of general circulation, and to make the text of Procedure 96 freely available online and at the government offices that collect JUA premiums. Id. According to the permanent injunction, the Commonwealth must allow at least 120 days from the time of notice before any additional premiums are transferred from the JUA to the Treasury. I...