Puerto Rico Ports v. Federal Maritime

• Decision Date: 08 July 2008
• Docket Number: No. 06-1407.,06-1407.
• Citation: 531 F.3d 868
• Parties: PUERTO RICO PORTS AUTHORITY, Petitioner v. FEDERAL MARITIME COMMISSION and United States of America, Respondents Odyssea Stevedoring of Puerto Rico, Inc. and International Shipping Agency, Inc., Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

531 F.3d 868

PUERTO RICO PORTS AUTHORITY, Petitioner v. FEDERAL MARITIME COMMISSION and United States of America, Respondents Odyssea Stevedoring of Puerto Rico, Inc. and International Shipping Agency, Inc., Intervenors.

No. 06-1407.

United States Court of Appeals, District of Columbia Circuit.

July 8, 2008.

On Petition for Review of an Order of the Federal Maritime Commission.

Gene C. Schaerr argued the cause for petitioner. With him on the briefs were Lawrence I. Kiern and Gerald A. Morrissey III.

Salvador J. Antonetti-Stutts, Solicitor General of Puerto Rico, Department of Justice of the Commonwealth of Puerto Rico, was on the brief for amicus curiae Commonwealth of Puerto Rico in support of petitioner.

Cory R. Cinque, Attorney, Federal Maritime Commission, argued the cause for respondents. With him on the brief were Thomas O. Barnett, Assistant Attorney General, U.S. Department of Justice, Robert B. Nicholson and Robert J. Wiggers, Attorneys, Amy W. Larson, General Counsel, Federal Maritime Commission, and Christopher Hughey, Deputy General Counsel.

Anne E. Mickey argued the cause for intervenors. With her on the brief were Heather M. Spring and Rick A. Rude.

Before: SENTELLE, Chief Judge, KAVANAUGH, Circuit Judge, and WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge KAVANAUGH, in which Chief Judge SENTELLE and Senior Circuit Judge WILLIAMS join.

Concurring opinion filed by Senior Circuit Judge WILLIAMS.

KAVANAUGH, Circuit Judge.

Several commercial marine terminal operators filed complaints with the Federal Maritime Commission against the Puerto Rico Ports Authority. The Authority, which is known as PRPA, asserted sovereign immunity. A divided panel of the Federal Maritime Commission ruled that PRPA is not an arm of the Commonwealth of Puerto Rico and thus not entitled to sovereign immunity. We disagree.

PRPA was created by Puerto Rico law as a "government instrumentality of the Commonwealth of Puerto Rico." P.R. LAWS ANN. tit. 23, § 333(a). By statute, PRPA operates as a "government controlled corporation." § 333(b). It performs governmental functions "for the benefit of the people of Puerto Rico," including managing Puerto Rico's ports and airports and regulating navigation in Puerto Rico's harbors. § 348(a). Four of PRPA's five directors are high-ranking Commonwealth officials who automatically serve on PRPA's Board by virtue of their government positions. The Governor of Puerto Rico controls the appointment of the directors; the Governor also possesses the power to remove four of the five directors at will and can remove the fifth for cause. The Board of Directors in turn appoints (and can remove at will) PRPA's Executive Director, who is currently Puerto Rico's Secretary of State. By law, moreover, the Commonwealth of Puerto Rico is responsible for paying certain potentially significant judgments arising from lawsuits targeting PRPA.

Considering those facts under the arm-of-the-state precedents of the Supreme Court and this Court, we hold that the Puerto Rico Ports Authority is an arm of the Commonwealth of Puerto Rico and is immune from suit absent its consent.

I

The Puerto Rico Ports Authority is a "government controlled corporation" and "government instrumentality of the Commonwealth of Puerto Rico" that owns and operates Puerto Rico's air and marine mass-transportation facilities and develops Puerto Rico's waterfront lands. P.R. LAWS ANN. tit. 23, §§ 333, 336, 2603. PRPA controls the movement of ships, passengers, and cargo in Puerto Rico's ports, docks, and harbor zones; regulates navigation and marine trade; issues pilot licenses; inspects ships; and leases its facilities to commercial marine terminal operators. §§ 2201, 2501, 2301, 2403, 336(l)(1).

In 1996, Puerto Rico's Governor decided that tourism could enhance Puerto Rico's future economic growth. The Governor launched an economic development project; the goal was to redevelop San Juan's waterfront and harbor by replacing cargo operations with a new convention center and cruise-ship terminals. To further the Governor's objectives, PRPA cleared facilities along the San Juan harbor and waterfront and relocated shipping operations to other ports.

The complaints at issue here stem from PRPA's relocation of private marine terminal operators, as well as certain post-relocation practices and conditions at the new facilities. Three commercial marine terminal operators — Odyssea Stevedoring of Puerto Rico, the International Shipping Agency, and San Antonio Maritime Corporation — filed separate complaints with the Federal Maritime Commission, an agency within the Executive Branch of the U.S. Government. The marine terminal operators alleged that PRPA's marine terminal leasing practices violated the federal Shipping Act of 1984, 46 U.S.C. §§ 41102(c), 41104, 41106. They contended that PRPA: (1) failed to establish reasonable receiving, handling, storing, or delivering practices; (2) gave other customers undue or unreasonable preferences; and (3) unreasonably refused to deal or negotiate with them. The marine terminal operators sought more than $100 million in total damages and a cease-and-desist order prohibiting PRPA from continuing to violate the Shipping Act.

PRPA filed motions for summary judgment, arguing that it is an arm of the Commonwealth and that sovereign immunity therefore barred adjudication of the complaints.

By a 3-2 vote, a divided Federal Maritime Commission held that PRPA is not "an arm of the Commonwealth, and is therefore not entitled to sovereign immunity from the regulatory adjudication of privately-filed complaints before the Federal Maritime Commission." Odyssea Stevedoring of P.R., Inc. v. PRPA, at 1, Nos. 02-08, 04-01, 04-06 (Fed. Mar. Comm'n Nov. 30, 2006) (Order), Joint Appendix ("J.A.") 158. Commissioners Brennan and Creel dissented, stating that "the facts relating to control, statewide concerns, and state-law treatment of the entity," among other things, established that PRPA is an "arm of the Commonwealth of Puerto Rico." Order at 47 (Brennan and Creel, Commissioners, dissenting), J.A. 204.

PRPA now petitions for review of the Commission's order.

II

A

The text of the Eleventh Amendment does not expressly provide for state sovereign immunity; the text merely denies federal court jurisdiction over suits against one State by citizens of another State. But under long-standing Supreme Court precedent, the Constitution has been interpreted to encompass a principle of state sovereign immunity and to largely shield States from suit without their consent. See Alden v. Maine, 527 U.S. 706, 745-46, 119 S.Ct. 2240, 144 L.Ed.2d 636 (1999); Seminole Tribe of Fla. v. Florida, 517 U.S. 44, 54, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996); P.R. Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc., 506 U.S. 139, 144, 113 S.Ct. 684, 121 L.Ed.2d 605 (1993); Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 100, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984); Hans v. Louisiana, 134 U.S. 1, 20-21, 10 S.Ct. 504, 33 L.Ed. 842 (1890). The Supreme Court has held that sovereign immunity bars not only the courts but also federal agencies such as the Federal Maritime Commission from adjudicating complaints against non-consenting States. Fed. Mar. Comm'n v. S.C. State Ports Auth., 535 U.S. 743, 751 n. 6, 760, 122 S.Ct. 1864, 152 L.Ed.2d 962 (2002). As we have held and as the parties here agree, moreover, the Puerto Rican Federal Relations Act grants Puerto Rico the same sovereign immunity that the States possess from suits arising under federal law. Rodriguez v. P.R. Fed. Affairs Admin., 435 F.3d 378, 381-82 (D.C.Cir.2006); see also 48 U.S.C. § 734.¹

Even where, as here, the State itself is not a named party, sovereign immunity bars suits against an arm of the State. See, e.g., Regents of the Univ. of Cal. v. Doe, 519 U.S. 425, 429, 117 S.Ct. 900, 137 L.Ed.2d 55 (1997); Hess v. Port Auth. Trans-Hudson Corp., 513 U.S. 30, 32-34, 115 S.Ct. 394, 130, 115 S.Ct. 394, 130 L.Ed.2d 245 (1994); Mt. Healthy City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S. 274, 280, 97 S.Ct. 568, 50 L.Ed.2d 471 (1977). Courts have held that state entities as varied as universities, transportation authorities, and port authorities can be arms of the State immune from suit. See, e.g., Doe, 519 U.S. at 429, 431, 117 S.Ct. 900 (university); Morris v. Wash. Metro. Area Transit Auth., 781 F.2d 218, 219-20 (D.C.Cir.1986) (transportation authority); Ristow v. S.C. Ports Auth., 58 F.3d 1051, 1054-55 (4th Cir.1995) (port authority). Whether an entity is an arm of the State for purposes of sovereign immunity under the U.S. Constitution is a question of federal law. See Doe, 519 U.S. at 429 n. 5, 117 S.Ct. 900.

Determining whether a particular entity is an arm of the State can be a difficult exercise. The cases generally arise in three different factual settings involving: (1) agencies that are either arms of the State or political subdivisions, such as cities or counties, that are not entitled to sovereign immunity; (2) special-purpose public corporations (like PRPA) established by States to perform specific functions; these may be either arms of the State or non-governmental corporations not entitled to sovereign immunity; and (3) Compact Clause entities established by two or more States by compact and approved by Congress; these are sometimes considered arms of their constituent States for sovereign immunity purposes, although the Supreme Court has recognized a presumption against sovereign immunity for Compact Clause entities, see Hess, 513 U.S. at 42, 115 S.Ct. 394.²

The courts' arm-of-the-state analysis "has moved freely amongst these three categories, applying common principles." Fresenius Med. Care Cardiovascular Res., Inc. v. P.R. & Caribbean Cardiovascular Ctr., 322 F.3d 56, 61 (1st Cir.2003). To determine whether an entity is an arm of the State, the Supreme Court and this Court have generally focused on the "nature of the entity created...