Odebrecht Constr., Inc. v. Prasad

• Decision Date: 29 June 2012
• Docket Number: Case No. 12–cv–22072–KMM.
• Parties: ODEBRECHT CONSTRUCTION, INC., a Florida corporation, Plaintiff, v. Ananth PRASAD, in his official capacity as Secretary of the Florida Department of Transportation, Defendant.
• Court: U.S. District Court — Southern District of Florida

876 F.Supp.2d 1305

ODEBRECHT CONSTRUCTION, INC., a Florida corporation, Plaintiff,

v.Ananth PRASAD, in his official capacity as Secretary of the Florida Department of Transportation, Defendant.

Case No. 12–cv–22072–KMM.

United States District Court, S.D. Florida.

June 29, 2012.

James Elton Moye, Maitland, FL, Thomas Neal McAliley, Raoul G. Cantero, III, White & Case, Miami, FL, for Plaintiff.

Paul Jeffrey Martin, Florida Department of Transportation, Tallahassee, FL, for Defendant.

OPINION FOLLOWING ORDER GRANTING PRELIMINARY INJUNCTION

K. MICHAEL MOORE, District Judge.

THIS MATTER is before the Court upon Plaintiff's Motion for a Preliminary Injunction (ECF No. 5). Plaintiff challenges the constitutionality of an amendment to section 287.135, Florida Statutes, “Prohibition against contracting with scrutinized companies.” The amendment to section 287.135 can be found at Chapter 2012–196, Laws of Florida, and generally prohibits the State of Florida from awarding public contracts in excess of one million dollars to companies who have “business operations” in Cuba. Plaintiff argues that the amendment violates the following provisions of the United States Constitution: the Supremacy Clause, the Foreign Affairs Power, and the Foreign Commerce Clause. Plaintiff also argues the amendment is inoperative by its own terms. Defendant denies these claims and further argues Plaintiff cannot make the requisite showing necessary for this Court to issue a preliminary injunction. Following a hearing on Plaintiff's Motion for a Preliminary Injunction on Monday, June 25, 2012, and having considered Defendant's Response (ECF No. 15) and Plaintiff's Reply (ECF No. 16), this Court entered an Order Granting Plaintiff's Motion for a Preliminary Injunction (ECF No. 21). This opinion follows and sets forth more fully the reasons for this Court's Order Granting Plaintiff's Motion for a Preliminary Injunction.

I. THE PARTIES¹

Established in 1990, Plaintiff Odebrecht Construction, Inc. is a Florida corporation that maintains its principal place of businessin Coral Gables, Florida. Over the years, agencies of the State of Florida and local governments have awarded Plaintiff thirty-five projects amounting to approximately $3.9 billion, and in 2011, all of Plaintiffs revenue—approximately $214.5 million—was derived from public infrastructure and transportation projects. Recently, Broward County awarded Plaintiff a contract valued at approximately $226 million to renovate the Fort Lauderdale Airport.

Plaintiff is a subsidiary of Odebrecht S.A., a “diversified Brazilian conglomerate in the engineering, construction, water and wastewater, ethanol, real estate, chemical, and petrochemical fields.” Am. Compl., ¶ 20 (ECF No. 4). Odebrecht S.A. engages in business operations in South America, Central America, North America, the Caribbean, Africa, Europe, and the Middle East. Though Plaintiff maintains that it has never conducted business operations in the Republic of Cuba, one of Odebrecht S.A.'s subsidiaries, COI Overseas Ltd., is involved in a construction project to expand the Cuban Port of Mariel. The project, at a cost of nearly $1 billion, is funded substantially by the Brazilian Development Bank. Brazilian President Dilma Rousseff traveled to the Port of Mariel to view the progress of the port's renovation as recently as February 2012. See Matthew Bristow & Cris Valerio, Rousseff in Cuba Points to U.S. Human Rights Record,Bloomberg, Feb. 6, 2012, available at http:// www. bloomberg. com/ news/ 2012– 01– 31/ castro– rights– record– intrudes– on– rousseff– trade– mission– to– communist– cuba. html.

Defendant Ananth Prasad is Secretary of the Florida Department of Transportation (“FDOT”). Established in 1969, FDOT is a decentralized agency charged with coordinating, maintaining, and regulating public transportation in the State of Florida. In furtherance of this duty, each of the agency's subdivisions is responsible for acquiring commodities and contractual services under the direction and guidance of Defendant. As Secretary of FDOT, Defendant is charged with implementing and enforcing the Cuba Amendment with respect to FDOT contracts valued at one million dollars or more.

II. JURISDICTION

Plaintiff brings this action pursuant to 42 U.S.C. § 1983 to redress its claimed deprivation of rights, privileges, and immunities secured by the Constitution and the laws of the United States. Accordingly, jurisdiction lies in this Court pursuant to 28 U.S.C. §§ 1331, 1343(a), and 1367(a).

III. BACKGROUNDA. The Cuba Amendment

On May 1, 2012, Florida Governor Rick Scott signed into law Committee Substitute for Committee Substitute for House Bill 99, which was codified at Chapter 2012–196, Laws of Florida (the “Cuba Amendment”).² The Cuba Amendment is the most recent effort ³ by the State of Florida to place pressure on Cuba ⁴ and provides, in relevant part, that a company “engaged in business operations in Cuba” may not “bid on, submit a proposal for, or enter into or renew a contract with an agency or local governmental entity for goods or services of $1 million or more.” 2012 Fla. Laws 196, § 2(2) (amending Fla. Stat. § 287.135).

For the purposes of the Cuba Amendment, a “company” is defined to mean any “entity or business association, including all wholly owned subsidiaries, majority-owned subsidiaries, parent companies, or affiliates of such entities or business associations, that exists for the purpose of making profit.” Fla. Stat. § 215.473(c). “Business operations” is defined as “engaging in commerce in any form in Cuba or Syria.” 2012 Fla. Laws 196, § 2(b). Taken together, the Cuba Amendment effectively encompasses domestic companies with no connection to Cuba other than by proxy.

The Cuba Amendment enforces its provisions through a certification requirement. Before submitting a bid or proposal for a contract, a company must certify that it does not have business operations in Cuba. Companies found to have submitted a false certification are subject to a “civil penalty equal to the greater of $2 million or twice the amount of the contract for which the false certification was submitted.” Id. § 2(5)(a)(1). Additionally, once it has been determined that a company's certification was false, the company is rendered ineligible to bid on any contract with an agency or local governmental entity for three years. Id. § 2(5)(a)(2).

B. Federal Law Relating to Cuba

In the five decades following the communist takeover of Cuba in 1959, the federal government has enacted a complex and comprehensive set of sanctions against Cuba. The Cuban Assets Control Regulations, 31 C.F.R pt. 515 (the “Regulations”), were issued by the federal government on July 8, 1963, under the Trading With the Enemy Act (“TWEA”), 50 U.S.C. app. § 5(b).⁵ The Regulations apply to all personsand entities subject to United States jurisdiction and generally prohibit trade with Cuba and travel to Cuba. See 31 C.F.R pt. 515. The Regulations are administered by the Department of the Treasury's Office of Foreign Assets Control (“OFAC”) and the Executive Branch has considerable discretion regarding the scope and implementation of the Regulations. Id.

The Cuban Democracy Act of 1992 (“CDA”), 22 U.S.C. §§ 6001–6010, was enacted in response to the Cuban government's “consistent disregard for internationally accepted standards of human rights and ... democratic values.” Id. § 6001. The CDA, inter alia, prohibits foreign-based subsidiaries of companies located in the United States from trading with Cuba, see id. § 6005(a), and empowers the President, subject to the President's own discretion, to sanction other countries doing business with Cuba by withholding aid under the Foreign Assistance Act of 1961, 22 U.S.C. § 2151. See22 U.S.C. § 6003(b)(A). The CDA allows the President to waive the sanctions imposed by the CDA should the President determine that the Cuban government has taken action consistent with the promotion of democracy as specifically delineated by the CDA. See id. § 6007.

The Cuban Liberty and Democratic Solidarity Act of 1996 (“Libertad Act”), 22 U.S.C. §§ 6021–6091,⁶ was enacted shortly after the Cuban government downed two private planes carrying anti-Castro Cuban–Americans. See22 U.S.C. § 6046; see also Tim Weiner, Clinton Considers Punishing Cubans for Plane Attack, N.Y. Times, Feb. 25, 1996, at A1. The Libertad Act is divided into four titles, preceded by sections containing Findings, Purposes, and Definitions. Title I, “Strengthening International Sanctions Against the Castro Government,” codifies economic sanctions against Cuba, while also, inter alia, prohibiting indirect financing of Cuba and instructing the President to oppose Cuban membership at various international organizations and institutions. See22 U.S.C. §§ 6021– 6046. Title II, “Assistance to a Free and Independent Cuba,” authorizes the President, after consulting with Congress, to take different steps to assist a “transition government or a democratically elected government in Cuba.” See id. §§ 6061–6067. This includes empowering the President to suspend economic sanctions. Id. § 6064. Title III, “Protection of Property Rights of United States Nationals,” creates a statutory right of action against any person or entity who traffics property confiscated by the Cuban government from any American citizen or company. See id. §§ 6081–6085. Title IV, “Exclusion of Certain Aliens,” excludes from the United States, inter alia, any alien who “traffics in confiscated property, a claim to which is owned by a United States national,” or any “corporate officer, principal, or shareholder with a controlling interest of an entity which has been involved in the confiscation of property or trafficking in confiscated property, a claim to which is owned by a United States national.” Id. § 6091.

The passage of the Libertad Act caused an international uproar among United States' allies due to the extraterritorial reach of ...