Garcia v. Bauza Salas, Civ. No. 87-0662 (PG).

• Decision Date: 08 June 1988
• Docket Number: Civ. No. 87-0662 (PG).
• Parties: Toribio GARCIA, Plaintiff, v. Hon. Juan BAUZA SALAS, et al., Defendants.
• Court: U.S. District Court — District of Puerto Rico

686 F. Supp. 965

Toribio GARCIA, Plaintiff, v. Hon. Juan BAUZA SALAS, et al., Defendants.

Civ. No. 87-0662 (PG).

United States District Court, D. Puerto Rico.

May 23, 1988.

As Amended June 8, 1988.

José Muñoz Silva, Mayaguez, P.R., for plaintiff.

Maria Jiménez, Dept. of Justice, Com. of Puerto Rico, San Juan, P.R., for defendants.

OPINION AND ORDER

PEREZ-GIMENEZ, Chief Judge.

Toribio García asks us for a preliminary injunction to stop Hon. Juan Bauzá Salas, Secretary of Agriculture of the Commonwealth of Puerto Rico ("the Secretary"), from enforcing a regulation that allegedly violates his rights under the Interstate Commerce Clause of the United States Constitution, U.S. Constitution, U.S.C. Art. I, § 8, cl. 3. Before going into the merits of the injunction, a factual and procedural background is necessary to rule on a res judicata defense raised by defendants.

García was engaged in the business of repacking refined sugar. He used to import the sugar in one-hundred pound bags from the United States and foreign countries, repack it in two and five-pound bags, and sell those to food stores serving individual consumers. On August 20, 1984, an amendment to Section 6 of the Secretary's Market Regulation # 13, which governs the sugar marketing in the Island, was made law. The new section 6 language expressly prohibited García's import-to-repack business. Prior to the amendment, Regulation 13 was silent as to García's line of business.

On October 9, 1984, García sued the Commonwealth of Puerto Rico and the Secretary in the Mayaguez Superior Court to enjoin them from enforcing Regulation 13 because it allegedly violated his rights under the Puerto Rico Constitution's Due Process and Equal Protection clauses.¹ P.R. Const., Art. II, § 7. No federal constitutional claims were raised.

While the Mayaguez's court decision was pending, the Sugar Corporation of Puerto Rico ("the Sugar Corporation"), an affiliate of the Secretary's department, and its suppliers sued García on August 23, 1985, in the Ponce Superior Court. Several causes of action were presented. On two of them the Sugar Corporation sought to enjoin García from using two and five-pound bags similar to those used by the corporation, their use allegedly constituting an unfair business practice and a violation of the corporation's trademark rights. In a third cause of action, the Sugar Corporation alleged that, according to Regulation 13, García needed a license issued by the Secretary to be able to engage in the repacking business. No counterclaims based on federal law were raised.

On September 26, 1985, the Mayaguez court held for García. It concluded that the 1984 amendments to Regulation 13 were not applicable to him because these would deprive him of his property without due process of law. This decision was appealed by the Commonwealth and the Secretary to the Supreme Court of Puerto Rico (RE 85-496).

On November 29, 1985, the Ponce court decided against García. It ordered him to recall all sugar packed in the bags he had been using. Furthermore, García was ordered to stop repacking refined imported sugar because such activity was illegal under Regulation 13.² This decision was appealed by García to the Puerto Rico Supreme Court (CE 85-841). The Court consolidated the two appeals.

While these were pending, plaintiff sued the Secretary in this Court on May 22, 1987. He brought five causes of action. He claimed violations of his rights under Due Process, Equal Protection and Interstate Commerce clauses of the United States Constitution, U.S. Const. U.S.C., Amend. 14; Art. I, § 8; as well as under the Sherman Act, 15 U.S.C. § 1. García also sued based on Puerto Rico's negligence law. 31 L.P.R.A. § 5141.

In our Opinion and Order of October 23, 1987, we stayed these proceedings pending the Puerto Rico Supreme court's decision on the two local appeals. We based our stay on the Colorado River doctrine.

On November 30, 1987, the Supreme Court announced its decision. It upheld the constitutionality of Regulation 13. The due process and equal protection claims founded on the Puerto Rican Constitution were deemed meritless.

García came back to this Court for relief. In our Opinion and Order of January 28, 1988, we dismissed García's claims of alleged violations of the Due Process and Equal Protection clauses of the United States Constitution. Claims based on the Interstate Commerce clause, the Sherman Act and the local negligence law remained pending.

A hearing was held on February 19, 1988, to discuss whether a preliminary injunction should be granted based on the Interstate Commerce clause claim. On March 23, 1988, we ordered plaintiff to show cause as to why the antitrust and negligence claims should not be dismissed given that these had not been pursued since the complaint was filed. Plaintiff asked us to dismiss the former without prejudice and the latter with prejudice. We so ordered.

The only pending claim is thus the one grounded on the Interstate Commerce clause. The Secretary alleges that García should have raised it in the local lower courts. In the alternative, the Secretary claims plaintiff should have notified local courts that he was reserving the claim for our resolution. England v. Louisiana State Board of Medical Examiners, 375 U.S. 411, 84 S.Ct. 461, 11 L.Ed.2d 440 (1964). By failing to follow either procedure, the Secretary believes García is barred from bringing the claim here in light of res judicata principles.

In order to rule on such defense, we must look at Puerto Rican law.

The preclusive effect of a state court judgment in a subsequent federal law suit generally is determined by the full faith and credit statute, which provides that state judicial proceedings "shall have the same full faith and credit in every court within the United States ... as they have by law or usage in the courts of such state ... from which they are taken." 28 U.S.C. § 1738; Marrese v. American Academy of Ortho. Surgeons, 470 U.S. 373, 380, 105 S.Ct. 1327, 1331, 84 L.Ed.2d 274 (1984).

Puerto Rico's res judicata law is codified in P.R. Laws Ann. tit. 31, § 3343:

In order that the presumption of the res judicata may be valid in another suit, it is necessary that, between the case decided by the sentence and that in which the same is invoked, there be the most perfect indentity between things, causes, persons of the litigants, and their capacity as such.

Thus, in order for the res judicata defense to be effective, there must be identity between "things", "causes" and parties. Lausell Marxuach v. Díaz de Yañez, 103 D.P.R. 533, 535 (1975). Futura Development Corp. v. Centex Corp., 761 F.2d 33, 42 (1st Cir.1985). If these three conditions are met, a judgment rendered constitutes an impediment in a subsequent action as to claims that were or could have been litigated in the former action. Id. citing Capó Sánchez v. Secretary of Treas., 91 P.R.R. 817, 819 (1965).

These three identities are present here. The "thing" and "cause" at issue here are the same as the ones that were in controversy at the two local courts—Regulation 13 and its prohibition of plaintiff's import-to-repack business. The parties here are also the same as the ones in the proceedings at the Mayaguez Superior Court and the Puerto Rico Supreme Court.

However, the commerce clause claim before us was not litigated in the local forae. And we believe it could not have been adjudicated there because, under Puerto Rican law, as exposed by the Puerto Rico Supreme Court, the clause is inapplicable to the Island. Thus, the res judicata defense has no merit. We explain.

The Puerto Rico Supreme Court has dealt directly with the applicability of the Interstate Commerce clause on three occasions. RCA v. Govt. of The Capital, 91 P.R.R. 404 (1964); South P.R. Sugar Corporation v. Public Service Comm., 93 P.R. R. 11 (1966); Marketing and Brokerage Specialists, Inc. v. Secretary of Agriculture, 87 J.T.S. 12 (1987).³ In RCA, the court ruled on the legality of a license levied by the Municipality of San Juan. The tax was challenged because it allegedly interfered unduly with commerce between Puerto Rico and the United States as that trade should flow in light of the Interstate Commerce clause. The court held:

It is a historical fact that the constitutional provision which reserves to Congress the power to regulate commerce with foreign nations, between the states and with Indian tribes, the Interstate Commerce clause has only not governed, nor governs by its own force in Puerto Rico, but, on the contrary, Congress Expressly provided that neither the Interstate Commerce Act ... nor an Act to regulate commerce of February 4, 1907, and the Act amendatory thereof according to § 38 of the Organic Act of 1917, 39 Stat. 964, and which are still in force as part of the Federal Relations Act, shall apply to Puerto Rico.

RCA, 91 P.R.R. at 418 (emphasis supplied).

And, based on that "fact" the Court said:

The interstate commerce relation between Puerto Rico and the United States has constitutionally had, and still has, contours which are different from the relation which under the Constitution prevails among the states of the Union. That is why even under the former systems Puerto Rico was able to exercise the taxing power, and the Commonwealth may exercise that power at present expecting interstate commerce in a manner that perhaps it would not be permissible to a state covered by the provisions of the Federal Constitution.

Id. at 419 (emphasis supplied).

The Court's implication in the latter phrase is clear: the Interstate Commerce clause of the United States Constitution does not apply to Puerto Rico. With that in mind, the Court held:

Knowing the nature of the tax in litigation, we must say that even if the Commonwealth's taxing power and the taxes in litigation were in the constitutional orbit of the States themselves respecting interstate commerce—and we see that such power is not thus limited

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