Puma Energy Caribe LLC v. P.R., CIVIL 20-1591 (DRD)

CourtUnited States District Courts. 1st Circuit. District of Puerto Rico
Docket Number20-1725 (DRD),CIVIL 20-1591 (DRD)
Decision Date22 September 2021





CIVIL Nos. 20-1591 (DRD), 20-1725 (DRD)

United States District Court, D. Puerto Rico

September 22, 2021



On October 28, 2020, Puma Energy Caribe LLC (“Puma”) filed an Original Complaint. See Civil No. 20-1591 at Docket No. 1. In essence, Puma contends that Puerto Rico's Act No. 60-2020 (“Act No. 60-2020”) is unconstitutional. Puma asserts that Act No. 60-2020, “which prohibits Puma from exercising any operational control over other business on its property […, ] was intended to devastate Puma's business plans because Puma is an off-island company.” Id. at 3. In attention to said interpretation, Puma requests the Court to provide declaratory and injunctive relief, considering that “[(1)] Law 60 violates the Commerce Clause and the Federal Relations Act; [(2)] Law 60 is preempted by the federal Petroleum Marketing Practices Act (PMPA); and [(3)], Law 60 is a “taking” of Puma's property for which Puma has not been paid just compensation.” Id. at 4.

Similarly, on December 16, 2020, Total Petroleum Puerto Rico Corp. (“Total”) filed a Complaint, for declaratory judgement, requesting the Court to find that Sections 2 and 3 of Act. No. 60-2020 are preempted by the PMPA, pursuant to the Supremacy Clause of the United States


Constitution. See Civil No. 20-1725, Docket No. 1 at 1. Further, Total raises a claim under 42 U.S.C. § 1983 seeking redress for the deprivation of statutory rights under the color of state law. Id. at 39.[1]

The Commonwealth of Puerto Rico; Pedro R. Pierluisi, in his official capacity as Governor of Puerto Rico; Domingo Emanuelli-Hernández, in his official capacity as Designated Secretary of Justice; Johan M. Rosa-Rodríguez, in her official capacity as Interim Deputy Secretary of Antitrust Affairs; and Edan Rivera-Rodríguez, in his official capacity as Designated Secretary of the Department of Consumer Affairs (hereinafter “Defendants”), decided to file two Motions to Dismiss Pursuant to Rule 12(b)(6) of Federal Civil Procedure (“Motion to Dismiss”) as their responsive pleadings in each of the aforementioned cases. See Civil No. 20-1591, Docket No. 31.[2] The Motion to Dismiss essentially focuses on three matters; first, that Puma failed to plead an actionable claim pursuant to the dormant interstate commerce clause; second, that Act No. 60-2020 is not preempted by the PMPA; and, third, that Act No. 60-2020 does not constitute a “taking” under the Fifth Amendment of the United States Constitution.[3]


For the reasons discussed in detail below, the Court hereby GRANTS IN PART AND DENIES IN PART Defendants' Motions to Dismiss filed in Civil Case No. 20-1591. On the other hand, the Court hereby DENIES Defendants' Motion to Dismiss filed in Civil Case No. 20-1725.


A. Arguments as to Puma's Commerce Clause Claims.

As to the Dormant Commerce Clause claims, first, Defendants contend that Act No. 60-2020 is not discriminatory form its face since it “simply bars all wholesalers, be it in-state or out-of-state, from controlling the convenience stores and other businesses within the gasoline service stations to purport free market competence, fair pricing and avoid convenience store oligopolies, among other legitimate objectives”. Civil Case No. 20-1591, Docket No. 31 at 15. Second, they argue that Act No. 60-2020 was not enacted with a discriminatory purpose considering that the statute's plain text and statement of purpose[4] reveal that the Act's aim was to “prevent gasoline wholesalers, producers and refiners [, be that, in-state or out-of-state, ] from circumventing the statutory prohibition of operating retail stations by controlling the convenience stores and other businesses within the premises. Also,


Act No. 60 created a new direct private cause of action for persons affected by violations to the statute without the need to file the same through the Antitrust Affairs Office of the Commonwealth's Department of Justice.” Id. at 11. Third, Defendants aver that Act No. 60-2020 does not discriminate “in effect”. Defendants reason that Puma's argument is flawed considering that, first, as wholesalers they are not “similarly situated” to service station operators and, therefore, the analysis of discriminatory effect should not be performed. Moreover, Defendants highlight that “Puma does not state that the statute benefits the in-state wholesalers that are similarly situated but it simply claims that because it owns more service stations, the statute is discriminatory against out-of-state wholesalers.” Id. at 17.

Fourth, Defendants contend that Puma admitted that it is a “limited liability company organized pursuant to the laws of the Commonwealth of Puerto Rico” and, therefore, must be considered as an in-state wholesaler that “cannot raise an interstate commerce claim arguing that Act No. 60 was discriminatory to out-of-state wholesalers because if favoritism existed it could have not suffered any harm as a result of it.” Id. at 19. Further, Defendants reason that, if the Court were to consider Puma's contradictory statement that it is also an out-of-state wholesaler, the whole interstate commerce argument would be invalid considering that they assert that “its sole member […] is domiciled and registered in the Netherlands”; that is, Puma's argument would have to be made in the context of foreign commerce, which is not asserted in Puma's Complaint. Id. Finally, Defendants argue that Puma does not pass the muster of the “Pike balancing test” as articulated by the Supreme Court in Pike v. Bruce Curch, Inc., 397 U.S. 137 (1970). Specifically, Defendants find that Act No. 60-2020 “does not burden interstate commerce and, if it does, it is merely incidental.” Id. at 21. Also, Defendants highlight that Act No. 60-2020 has public benefits that must be considered when implementing the “Pike balancing test”; these are: (1) the Act eliminates the possibility of wholesalers from having control over service stations through the businesses within the same; and (2) the Act established a direct cause


of action that would allow claimants to evade the “often-slow administrative process” that has been used up to this point. Id.

In response, Puma contends that their claims of discriminatory purpose and, alternatively, discriminatory effect, pass the “plausibility” standard set by Rule 12 (b)(6). See Civil Case No. 20-1591, Docket No. 41 at 6-8. Hence, Puma advances the theory that Act No. 60-2020's statement of purpose is nothing but pretext. Plaintiff reasons that Act No. 60-2020 does not state a “harm that needs to be remedied”; instead, it reveals a protectionist purpose. Id. at 9. Further, Puma believes that Act No. 60-2020 has a disparate impact between “retailer dealers (all of whom are Puerto Rican Residents) [that] benefit from [Act No. 60-2020], while the law's harm falls solely on two off-island wholesalers: Puma and Total.” Id. at 10. In support of said theory, Puma references expressions made by the Act's sponsor on the Senate floor and media outlets, and other supporting groups -such as, Puerto Rico's retail dealers' association- which, in Plaintiffs' opinion, reveal the discriminatory purposes of protecting local retailers only. See id.

Alternatively, as to the purported discriminatory effect, Puma first contends that the “similarly situated” criteria is met since the effect of Act No. 60-2020 is not at the gasoline retail operation level but in the context of other businesses where they are similarly situated to gasoline retailers who operate them. See id. at 15. On the other hand, Puma reiterates the representation that they are “off-island wholesalers” and that they -and Total- are the only wholesalers affected by Act No. 60-2020's effects. As to the Pike v. Bruce Curch, Inc. test, Puma avers that the burden Act No. 60-2020 imposes on interstate commerce is clearly excessive, in relation to the putative local benefits. Specifically, Puma contends that Act No. 60-2020 “burdens interstate commerce by preventing Puerto Rico's two off-island wholesalers from exercising operational control over other businesses conducted on their properties, which in turn discourages off-island wholesalers from entering the Puerto Rico market, making investments in Puerto Rico, and conducting business in Puerto Rico.” Id. at 16. Finally, Puma


avers that discovery is needed to ascertain all of the above referenced arguments; therefore, the Court should deny Defendants' Motion to Dismiss.

In their Reply, Defendants further their attack on Puma's reliance on Senator Rios' comments as to the purported discriminatory purpose of Act No. 60-2020 and restate the importance of considering the Act's text, the statement of purpose and the corresponding Senate's Committee Report when performing the analysis under the commerce clause. See Civil Case No. 20-1591, Docket No. 50 at 4-6. Also, Defendants counter Puma's narrative on discrimination by referencing case law, including Exxon Corp. v. Maryland, 437 U.S. 117 (1978), where the Supreme Court explained that merely because “the burden of a state regulation falls on some interstate companies does not, by itself, establish a claim of discrimination against interstate commerce”. Exxon Corp. v. Maryland, 437 U.S. at 126. In the Surreply, Puma essentially focuses on distinguishing Defendants' cited case law with the facts of the instant case. See Civil Case No. 20-1591, Docket No. 59 at 2-4.

B. Arguments as to Plaintiffs' PMPA Preemption Claims.

Defendants explain that the PMPA was, essentially, “designed to establish a uniform regulation governing the grounds for termination or nonrenewal of a franchise.” Civil Case No. 20-1591, Docket No. 31 at 23....

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