In re Fin. Oversight
| Citation | 435 F.Supp.3d 377 |
| Decision Date | 23 January 2020 |
| Docket Number | Case No. 17-4780 (LTS),Adv. Proc. No. 19-00298-LTS,Case No. 17-3283 (LTS) (Jointly Administered) |
| Parties | IN RE: The FINANCIAL OVERSIGHT and Management Board for Puerto Rico, as representative of The Commonwealth of Puerto Rico, et al., Debtor. In re: The Financial Oversight and Management Board for Puerto Rico, as representative of Puerto Rico Electric Power Authority, Debtor. Electrical Industry and Irrigation Workers Union (Utier), Petitioner, v. Eng. José F. Ortiz Vázquez and Electric Power Authority, Respondents. |
| Court | U.S. District Court — District of Puerto Rico |
GUILLERMO RAMOS LUIÑA, By: Guillermo Ramos Luiña, P. O. Box 22763, UPR Station, San Juan, Puerto Rico 00931, Counsel for Unión de Trabajadores de la Industria Eléctrica y Riego
O'NEILL & BORGES LLP, By: Hermann D. Bauer, Carla García Benítez, Ubaldo M. Fernández, 250 Muños Rivera Ave., Suite 800, San Juan, Puerto Rico 00918, PROSKAUER ROSE LLP, By: Martin J. Bienenstock, Stephen L. Ratner, Timothy W. Mungovan, Jonathan E. Richman, Eleven Times Square, New York, New York 10036, Counsel for the Financial Oversight and Management Board for Puerto Rico, as representative of the Puerto Rico Electric Power Authority
Before the Court is Respondent Puerto Rico Electric Power Authority's Motion to Dismiss Plaintiff's Mandamus Petition Pursuant to Fed. R. Civ. P. 12 (b)(1) and 12(b)(6) (Docket Entry No. 13 in Adv. Proc. No. 19-298-LTS,2 the "Motion") filed by the Financial Oversight and Management Board for Puerto Rico (the "Oversight Board") as representative of the Puerto Rico Electric Power Authority ("PREPA") pursuant to Section 315(b) of the Puerto Rico Oversight, Management, and Economic Stability Act ("PROMESA").3 Petitioner Unión de Trabajadores de la Industria Eléctrica y Riego ("UTIER") filed an opposition to the Motion (Docket Entry No. 17, the "Opposition"). PREPA filed a reply (Docket Entry No. 18, the "Reply"). The Court has considered carefully all of the arguments and submissions made in connection with the Motion. Except to the extent specified in Section II, infra, the Court has subject matter jurisdiction of this action pursuant to 48 U.S.C. § 2166.
For the following reasons, PREPA's Motion is granted in part pursuant to Federal Rule of Civil Procedure 12(b)(1) and in part pursuant to Federal Rule of Civil Procedure 12(b)(6).
The following recitation of facts is drawn from UTIER's Petition (Docket Entry No. 1-2, the "Petition"), except where otherwise noted.
Plaintiff UTIER is a labor organization representing more than three thousand employees of PREPA. (Pet. ¶ 3.) PREPA filed its Title III petition pursuant to Section 304(a) of PROMESA on July 2, 2017. (Docket Entry No. 1 in Case No. 17-4780.) José F. Ortiz Vázquez ("Ortiz" and, together with PREPA, "Respondents") is the executive director of PREPA. (Pet. ¶ 4.)
On April 29, 2017, Puerto Rico enacted Act No. 26-2017, the Fiscal Plan Compliance Act.4 According to its Statement of Motives, the Act is intended to "provide[ ] for different measures that this Administration is taking in order to comply with the Fiscal Plan imposed under the provisions of PROMESA" and to "properly address the fiscal, economic, and budgetary crisis that Puerto Rico is undergoing." Fiscal Plan Compliance Act at 8, 27. To that end, Chapter 2 of Act No. 26-2017 recites that it "seeks to protect not only the jobs of thousands of public officials and employees of the Government of Puerto Rico, but also [Puerto Rico's] most vulnerable citizens" by "achiev[ing] additional savings" with respect to benefits and compensation for employees of agencies, instrumentalities, and public corporations of the government of Puerto Rico. Fiscal Plan Compliance Act § 2.03. Section 2.07 of Act No. 26-2017, 3 L.P.R.A. § 9477, which is titled "Uniform Employer Contribution to the Healthcare Plan of the Employees of Public Corporations," concerns contributions to employee healthcare plans and provides as follows:
The Executive and Legislative Branches shall identify additional savings and resources to prevent adversely affecting the employees' contributions to the payment of the healthcare plan. If the projected savings of the Fiscal Plan are not achieved, the difference shall be offset through a program to match the Government's contributions to the healthcare plan. Only then, as of July 1st, 2018, every official or government employee, whether union or nonunion, who works for any Public Corporation, except for the University of Puerto Rico, shall be entitled to an employer contribution to be determined by the Fiscal Plan Compliance Committee using as a basis the metrics established in the Fiscal Plan, but in no case said contribution shall be less than the one hundred dollar ($100)-employer contribution established by law for Central Government employees. [The Puerto Rico Fiscal Agency and Financial Advisory Authority ("FAFAA") ] may negotiate and reach agreements on an insurance coverage that is less expensive with private insurers or public coverage to be selected by the employees of the Government as Sole Employer or by agency or groups of agencies. Any reduction in the employer contribution to the healthcare plan shall require FAFAA to offer a less expensive insurance coverage to said government employees. However, every employee, or dependent thereof, of a public corporation who is currently enrolled in the healthcare plan and who suffers from a preexisting catastrophic, chronic, or terminal illness shall continue to receive the employer contribution in effect for his healthcare plan, without any change, for the term he remains in the public service.
Fiscal Plan Compliance Act § 2.07.
On January 21, 2018, Puerto Rico enacted Act No. 28-2018, the Special Leave for Employees with Serious Diseases of a Catastrophic Nature Act.5 Article 2(c) of Act No. 28-2018 contains a list of conditions that are defined as "Serious Illness[es] of a Catastrophic Nature," and Article 3 provides for "Special Leave" that certain public sector employees with such illnesses may use. (Docket Entry No. 13-3.)
On September 30, 2018, the Oversight Board certified the fiscal year 2019 budget for PREPA (the "Budget"). (Mot. at 5 & n.3.) The Budget allocates $120,888,000 for PREPA's pension and benefits. (Exhibit C to the Richman Declaration, Docket Entry No. 13-6.)
On December 28, 2018, Ortiz circulated a memorandum (the "December 28, 2018 Memorandum") to PREPA's employees announcing modifications to the health insurance plans available to PREPA's employees (the "Benefits Modifications"). (Pet. ¶ 6; Exhibit E to the Richman Declaration.) The December 28, 2018 Memorandum further stated that PREPA had selected Triple-S Salud Inc. ("Triple-S") as its health plan administrator. (Pet. ¶ 7.) In the December 28, 2018 Memorandum, Ortiz asserted that the Benefits Modifications were necessary in light of PREPA's fiscal challenges and in order to comply with the certified fiscal plan and Budget applicable to PREPA pursuant to PROMESA. (Pet. ¶ 6.) According to UTIER, the changes announced and implemented by Respondents substantially affected the coverage, copayments, deductibles, and employer contributions under PREPA's employee health plans, including such features for employees and dependents of employees suffering from catastrophic, chronic, or terminal illnesses. (Pet. ¶¶ 7, 8, 14, 15.) In particular, the Petition alleges, PREPA employees and their dependents who suffer from preexisting catastrophic, chronic, or terminal illnesses "now pay substantially higher sums than those paid prior to implementing the measure announced in, and unilaterally implemented pursuant to, the December 28, 2018 Memorandum ...." (Pet. ¶ 15.)
On April 24, 2019, UTIER commenced the instant proceeding in the Court of First Instance of Puerto Rico (the "Commonwealth Court"). UTIER alleges that Respondents have failed to execute two duties imposed by Section 2.07 of Act No. 26-2017. (Pet. ¶¶ 16-18.) First, PREPA and Ortiz allegedly failed to "identify additional savings and resources to prevent adversely affecting the employees' contributions to the payment of the healthcare plan." Fiscal Plan Compliance Act § 2.07. The Court will refer to this clause of Section 2.07 as the "Savings Provision." Second, Respondents allegedly failed to ensure that employees and their dependents who suffer from preexisting catastrophic, chronic, or terminal illnesses "shall continue to receive the employer contribution in effect ... without any change ...." Fiscal Plan Compliance Act § 2.07. The Court will refer to this clause as the "Preexisting Conditions Provision."6 UTIER petitioned the Commonwealth Court to issue a writ of mandamus compelling Respondents to comply with those provisions. (Pet. at 6.)
On May 8, 2019, PREPA removed the proceeding to this Court. (Notice of Removal , Docket Entry No. 1.)
PREPA seeks dismissal of the Petition pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) for lack of subject matter jurisdiction and for failure to state a claim upon which relief may be granted. A court presented with motions to dismiss under both Rules 12(b)(1) and 12(b)(6) should ordinarily decide jurisdictional questions before addressing the merits. Deniz v. Municipality of Guaynabo, 285 F.3d 142, 149 (1st Cir. 2002). The party invoking the jurisdiction of a federal court carries the burden of proving the existence of appropriate grounds for the exercise of jurisdiction. Johansen v. United States, 506 F.3d 65, 68 (1st Cir. 2007). The Court also has an independent duty to assess whether it has subject matter jurisdiction of an action. See Fed. R. Civ. P. 12(h)(3) ; FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 231...
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Unión de Trabajadores de la Industria Eléctrica y Riego v. Ortiz-Vázquez (In re Fin. Oversight & Mgmt. Bd. for P.R.)
...2020, the Title III court issued its decision granting the FOMB's motion and dismissing the petition. In re Fin. Oversight & Mgmt. Bd. for P.R., 435 F. Supp. 3d 377, 387-88 (D.P.R. 2020). First, the court held that, "to the extent that the Petition s[ought] to challenge the [FOMB]'s determi......