Iberia Lineas Aereas De Espana v. Velez-Silva
| Decision Date | 30 March 1999 |
| Docket Number | Civil No. 95-1768CCC. |
| Citation | 59 F.Supp.2d 266 |
| Parties | IBERIA LINEAS AEREAS DE ESPAÑA, Plaintiff, v. Xenia VELEZ-SILVA, in her official capacity as Secretary of the Treasury of Puerto Rico and Herman Sulsona, in his official capacity as Director of the Ports Authority of Puerto Rico, Defendants. |
| Court | U.S. District Court — District of Puerto Rico |
Ara Toledo-Danitz, for plaintiff.
Gloria Robinson Guarch, Dept. of Justice, Comm. of Puerto Rico, Guaynabo, PR, for defendant.
This action is before us on a Motion to Dismiss for Lack of Subject-Matter Jurisdiction under Rule 12(b)(1), Fed.R.Civ.P., filed by defendant Xenia Vélez-Silva in her official capacity as Secretary of the Treasury of the Commonwealth of Puerto Rico (docket entry 42) and opposed by plaintiff Iberia Líneas Aéreas de España (Iberia) (docket entry 44). The Secretary contends that plaintiff's causes of action should be dismissed because: (a) any monetary relief against the defendant, in her official capacity would be barred by the Eleventh Amendment; and, (b) the declaratory relief sought against the defendant is precluded by the Butler Act and principles of comity (Motion to Dismiss at, p. 2). Iberia's response is that neither the Eleventh Amendment nor the Butler Act (48 U.S.C. Sec. 872) are applicable. It asserts that: (a) the "Eleventh Amendment does not bar a foreign nation from challenging a state tax in federal court, (b) even if the amendment applied to this case, the Commonwealth waived its immunity through its conduct, (c) the Foreign Sovereign Immunities Act" (28 U.S.C. § 1602 et seq.) abrogated the state's immunity from suit in federal court when such action is pursued by a foreign state, and, (d) the Eleventh Amendment does not bar declaratory and injunctive relief. As to the Butler Act, plaintiff argues that it does not preclude a foreign nation from challenging a state tax in federal court (Opposition to Motion to Dismiss, at p. 2).
After careful consideration of the allegations and memoranda submitted by the parties, the Court finds that this case must be dismissed for lack of subject-matter jurisdiction.
Iberia is a corporation owned by the Spanish Government. Defendant Xenia Vélez-Silva is Secretary of the Treasury Department of the Commonwealth of Puerto Rico and successor of Manuel Díaz-Saldaña. See allegations 1 through 4 of the complaint.
Iberia is an airline company that conducts business in Puerto Rico, providing airline service between Puerto Rico and Spain. The Commonwealth of Puerto Rico, through its Department of Treasury, has levied an excise tax on all parts, supplies and equipment that plaintiff utilizes in its business. Iberia argues that the excise tax, as imposed by the Treasury Department, contravenes the terms and dispositions of the Air Transport Agreement (Treaty) subscribed between the United States and the Government of Spain. It contends that under the terms of the Treaty, Puerto Rico lacks the authority to impose such a tax and seeks various remedies: (a) reimbursement for the taxes already collected; (b) a permanent injunction restraining the Treasury Department from further enforcement of the challenged tax; and, (c) declaratory relief declaring the Treasury Department's action inconsistent with the Treaty. See allegations 12 through 29 of the complaint.
The Eleventh Amendment of the U.S. Constitution provides that:
"The judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State."
In Ramírez v. Puerto Rico Fire Service, 715 F.2d 694, 697 (1st Cir.1983), the First Circuit held that the Eleventh Amendment stands as a palladium of sovereign immunity. It bars federal court lawsuits by private parties insofar as they attempt to impose liabilities necessarily payable from public coffers. Such constitutional provision was adopted to protect the government's public fisc from suits seeking monetary restitution. Hafer v. Melo, 502 U.S. 21, 112 S.Ct. 358, 364, 116 L.Ed.2d 301 (1991). When a party sues a sovereign seeking monetary relief, federal courts will be barred from hearing such case. Puerto Rico Ports Authority v. M/V MANHATTAN PRINCE, 897 F.2d 1, 9 (1st Cir.1990). The state's dignity and solvency are concerns that underpin the Eleventh Amendment. Hess v. Port Authority Trans-Hudson Corp., 513 U.S. 30, 115 S.Ct. 394, 406, 130 L.Ed.2d 245 (1994). The Commonwealth of Puerto Rico also enjoys that constitutional protection. Figueroa-Rodriguez v. Aquino, 863 F.2d 1037, 1044 (1st Cir., 1988) (). See also. Trans Am. Recovery Services, Inc. v. P.R. Maritime Shipping Authority, 820 F.Supp. 38, 41(D.Puerto Rico 1993).
The Eleventh Amendment not only protects the sovereign from suits brought by private parties, but also against actions instituted by foreign states. United Mexican States v. Woods, 126 F.3d 1220, 1222 (9th Cir.1997); Principality of Monaco v. Mississippi, 292 U.S. 313, 330, 54 S.Ct. 745, 78 L.Ed. 1282 (1934) ().
In some instances, state instrumentalities will also benefit from the Eleventh Amendment's protection. Two factors must be considered to determine if the instrumentality is shielded against monetary relief. Trans Am. Recovery Serv., supra, at 42. It must first be ascertained if the funds to satisfy the potential adverse judgment will be drawn from the public treasury or from independent funds pertaining to the agency. The court must also determine whether the agency exercises a traditional governmental function as opposed to a proprietary function. Id. Notwithstanding, the Supreme Court has characterized the vulnerability to the state's purse as the most "salient factor" in an Eleventh Amendment determination. Hess, supra, 115 S.Ct. at 404.
["As the Morris court concluded: `where an agency is so structured that, as a practical matter, if the agency is to survive, a judgment must expend itself against state treasuries, common sense and rationale of the eleventh amendment require that sovereign immunity attach to the agency.'"] Id. at 405.
If the funds to satisfy the judgment are to be drawn from the public coffers, plaintiff's case will be barred by the Eleventh Amendment. Id. at 404.
However, there are situations where plaintiff opts to sue a state officer in his or her official capacity, instead of suing the State. When that occurs, the court must ascertain who is the real party being sued, the state or the officer. If the remedy sought by plaintiff has an effect upon the state's treasury, the state is considered to be the real party, not the officer. In Regents of the University of California v. Doe, 519 U.S. 425, 117 S.Ct. 900, 903, 137 L.Ed.2d 55 (1997), the Supreme Court held that when a claim for recovery of money is made, the state is the real, substantial party in interest, not the officer being sued, and is entitled to invoke its sovereign immunity even if individual officials are nominal defendants. Pennhurst State and School Hospital v. Halderman, 465 U.S. 89, 104 S.Ct. 900, 908, 79 L.Ed.2d 67 (1984); De León López, supra, at 121.
There are instances in which an action brought against a state officer, in her or his official capacity, is not barred by the Eleventh Amendment. Cases against an officer seeking to prevent future violations of federal law are not precluded by the constitutional provision. Melof v. Hunt, 718 F.Supp. 877, 879 (M.D.Ala. 1989).1
Eleventh Amendment immunity may be abrogated in various ways: "a state may randomly consent to suit in a federal forum; a state may waive its own immunity by the statute or the like; Congress may abrogate state immunity or under certain circumstances other constitutional imperatives may take precedence over the Eleventh Amendment's federal court bar." Futura Devel. of Puerto Rico v. Estado Libre Asociado, 962 F.Supp. 248, 254 (D.P.R.1997). In those cases where Congress has decided to abolish the state's immunity, it must express its intention unequivocally. Vásquez-Morales v. Estado Libre Asociado, 967 F.Supp. 42, 46 (D.P.R.1997); Atascadero State Hospital v. Scanlon, 473 U.S. 234, 105 S.Ct. 3142, 3148, 87 L.Ed.2d 171 (1985) () (emphasis provided); Blatchford v. Native Village of Noatak, 501 U.S. 775, 111 S.Ct. 2578, 2584, 115 L.Ed.2d 686 (1991). If the state has not waived its immunity it cannot be hailed into federal court, even in cases where a federal question controversy is said to be involved.
None of the arguments raised by plaintiff convince us that Congress abrogated Eleventh Amendment protection enjoyed by the Commonwealth of Puerto Rico by way of the Foreign Sovereign Immunities Act (FSIA). According to plaintiff, the terms of the Foreign Sovereign Immunities Act must be interpreted broadly. Nolan v. Boeing, 919 F.2d 1058, 1068 (5th Cir.1990). That is irrelevant. Nolan does not discuss at all whether the Eleventh Amendment proscribed a lawsuit by a foreign state against a state in federal court because that question was simply not before it. There is no basis to conclude that because the FSIA grants a foreign state defendant or third-party defendant a right of removal under 28 U.S.C. Sec. 1441(d), and it can remove not only the third-party claims against it, but the main...
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...parties insofar as they attempt to impose liabilities necessarily payable from public coffers." Iberia Líneas Aéreas de España v. Vélez-Silva, 59 F. Supp. 2d 266, 269 (1st Cir. 1999). This immunity protects not only states, but also "arm[s] of the state." In re San Juan Dupont Plaza Hotel F......