Vaquería Tres Monjitas, Inc. v. Comas

• Decision Date: 30 December 2013
• Docket Number: Civil Nos. 04–1840 (DRD), 08–2191 (DRD), 08–2380(DRD).
• Citation: 992 F.Supp.2d 39
• Parties: VAQUERÍA TRES MONJITAS, INC. and Suiza Dairy, Inc., Plaintiffs, v. Myrna COMAS, in his official capacity, as the Secretary of the Department of Agriculture for the Commonwealth of Puerto Rico, and Edmundo Rosaly, in his official capacity, as Interim Administrator of the Office of the Milk Industry Regulatory Administration for the Commonwealth of Puerto Rico, Defendants.
• Court: U.S. District Court — District of Puerto Rico

992 F.Supp.2d 39

VAQUERÍA TRES MONJITAS, INC. and Suiza Dairy, Inc., Plaintiffs,

v.Myrna COMAS, in his official capacity, as the Secretary of the Department of Agriculture for the Commonwealth of Puerto Rico, and Edmundo Rosaly, in his official capacity, as Interim Administrator of the Office of the Milk Industry Regulatory Administration for the Commonwealth of Puerto Rico, Defendants.

Civil Nos. 04–1840 (DRD), 08–2191 (DRD), 08–2380(DRD).

United States District Court, D. Puerto Rico.

Dec. 30, 2013.

Enrique Nassar–Rizek, Maxine M. Brown–Vazquez, Enrique Nassar Rizek & Associates, Jose R. Lazaro–Paoli, Rafael Escalera–Rodriguez, Amelia Caicedo–Santiago, Carlos M. Hernandez–Burgos, Reichard & Escalera, San Juan, PR, for Plaintiffs.

OPINION AND ORDER

DANIEL R. DOMÍNGUEZ, District Judge.

Pending before the Court are the following motions: (a) Defendants' Motion to Alter, Amend or Relief from Judgment, Docket No. 2408; (b) Suiza's Response to Defendants' “Motion to Alter, Amend or Relief from Judgment” (Dkt. No. 2408), Docket No. 2418, and (c) Vaquería Tres Monjitas, Inc.'s Reply to Dockets 2408 and 2409, Docket No. 2428. Intervening Industria Lechera de Puerto Rico (“INDULAC”) also moved the Court to alter or amend judgment, Docket No. 2409; ¹ Suiza's opposition, Docket No. 2418, and VTM's reply to Docket entries No. 2408 and 2409, filed under Docket No. 2428. For the reasons set forth below, the requests filed by both the defendants and INDULAC to alter, amend or modify the Amended Order and Judgment of November 7, 2013, Docket No. 2351, are denied.

Factual and Procedural Background

On October 29, 2013, the parties, Vaquería Tres Monjitas, Inc. (“VTM”); Suiza Dairy, Inc. (“Suiza”), the Secretary of the Department of Agriculture of the Commonwealth of Puerto Rico (the “Puerto Rico Department of Agriculture”), the Hon. Myrna Comas in her official capacity, and as Acting Administrator of the Office of the Milk Industry Regulatory Administration (“ORIL”), and the Commonwealth of Puerto Rico through the Secretary of Justice of the Commonwealth of Puerto Rico, the Hon. Luis Sánchez Betances signed and filed a Final Settlement Agreement and Memorandum of Understanding Between the Parties (the “Settlement Agreement”), see Docket No. 2322.

The Court is cognizant that the PRDFA moved the Court since October 30, 2013 to stay the entry of judgment, see Docket No. 2324, on the grounds that the PRDFA were not part of the negotiations, hence, the terms and conditions of the settlement agreement are completely unknown to the PRDFA, including the amendments agreed to the provisions of Regulation No. 12. The PRDFA prayed for “a reasonable amount of time for the proper scrutiny of the new administrative Regulation and Price Order which affects not only the parties to the settlement, but all participants in the industry and the general public at large.” See Docket No. 2324. See also INDULAC's Urgent Opposition to the Adoption of Final Settlement Agreement and Memorandum of Understanding Between the Parties, Docket No. 2328. The record also shows that the PRDFA eventually filed a Notice of Appeal, Docket No. 2354. This matter is now pending before the United States Court of Appeals for the First Circuit (“First Circuit”), USCA Case No. 13–2412. However, since the PRDFA's request for stay was denied by both the District Court and the First Circuit, an order will be issued separately by the District Court in Civil No. 08–2191. Likewise, INDULAC's arguments regarding prejudice triggered by the Settlement Agreement will be addressed separately.

On November 7, 2013, the Court entered an Amended Order and Judgment, Docket No. 2351, approving the Final Settlement Agreement and Memorandum of Understanding Between the Parties of October 29, 2013 (“Settlement Agreement”), Docket No. 2322.

On December 5, 2013, the defendants, Hon. Myrna Comas Pagán, in her official capacity as Secretary of Agriculture of the Commonwealth of Puerto Rico (the “Secretary of Agriculture”), and the Hon. Edmundo Rosaly, in his official capacity as Interim Administrator of ORIL, moved the Court to amend or alter judgment, see Defendants' Motion to Alter, Amend or Relief from Judgment, Docket No. 2408. Suiza and VTM duly opposed the defendants' request, see Suiza's Response to Defendants' “Motion to Alter, Amend or Relief from Judgment” (Dkt. No. 2408), Docket No. 2418, and Vaquería Tres Monjitas, Inc.'s Reply to Dockets 2408 and 2409, Docket No. 2428. On the same date, that is, December 5, 2013, intervening INDULAC, also moved the Court to alter or amend judgment pursuant to Rule 59(e) [Federal Rules of Civil Procedure 59(e) ], see Docket No. 2409. Suiza filed its Response in Opposition to INDULAC's Motion to Alter or Amend Judgment (Dkt. No. 2409), Docket No. 2427. VTM filed its opposition under Docket No. 2428. INDULAC filed its reply, INDULAC's Reply to Opposition to Motion to Alter or Amend Judgment filed by Suiza Dairy, Inc. (Dkt. No. 2427), Docket No. 2437.

On December 6, 2013, the defendants filed a Notice of Appeal, Docket No. 2413, USCA Case No. 13–2517, on the grounds that the “Settlement Agreement cannot be construed as a waiver of Eleventh Amendment immunity, [as] the official Defendants did not have the intent or the authority to waive sovereign immunity and that the regulatory accrual as a mechanism for recovery of losses has not been finally determined to violate Puerto Rico's immunity from suit in federal court or from damage awards.” See Docket No. 2408, page 2.

Issue

Whether or not the Secretary of Agriculture and/or ORIL and/or the Commonwealth of Puerto Rico through the signature of the Secretary of Justice “waived” the Eleventh Amendment immunity when signing the Settlement Agreement?

Analysis

To answer defendants' question, we refer first to the covenants of the Settlement Agreement. Paragraph No. 5 of the Settlement Agreement provides:

In consideration and recognition of the vital importance of the Milk Industry in Puerto Rico, upon the execution of this agreement, The Commonwealth of Puerto Rico will take the necessary steps to create a Special Fund to promote the efficiency of the Milk Market in Puerto Rico ... (Emphasis ours).

Paragraph No. 14 of the Settlement Agreement provides:

In order to protect the Puerto Rican consumers, the Government of Puerto Rico [the Commonwealth of Puerto Rico] by means of any of its instrumentalities [the Department of Agriculture or ORIL], has agreed to contribute the following amounts to the regulatory accrual payout, [of the industrial milk processors, VTM and Suiza] which will be invested with preference in Puerto Rico:

• $50 million during calendar year 2014 no later that December 31, 2014;

• $15 million during calendar year 2015 no later than December 31, 2015;

• $15 million during calendar year 2016 no later than December 31, 2016;

• $15 million during calendar year 2017 no later than December 31, 2017.

The distribution of the above identified payments between the milk processors will be made pursuant to Exhibit 4, Table 1.S.6.2, using the “accumulated regulatory accruals net of collections” estimated as of November 6, 2013. (Emphasis ours).

The last unnumbered covenant of the Settlement Agreement, which appears at the bottom of page 5, Docket No. 2322, provides:

The terms and conditions of this agreement will be incorporated into the firm, final an unappealable judgment to be issued by the District Court. That Judgment will be equally binding to and enforceable against all signatories of this Agreement and the Government of Puerto Rico. All such parties[the Department of Agriculture, ORIL, the Commonwealth of Puerto Rico]hereby waive any defense they may have to the enforcement of this Agreement. (Emphasis ours).²

The Eleventh Amendment

The Eleventh Amendment of the Constitution of the United States of America provides:

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.

Moreover, the record is pellucid as to the intention of the Government of Puerto Rico at the time when the Settlement Agreement was finalized, hence, reference is made to the Transcript of the Hearing held on October 29, 2013, before the undersigned, particularly as to the statement made by counsel Gerardo De Jesús–Annoni, in his capacity of Deputy Secretary of Justice in Charge of Litigation of the Puerto Rico Department of Justice, see Docket No. 2329, pages 3–4.³

Mr. De Jesus: If I may, Your Honor. Gerardo De Jesús Annoni, counsel for the Secretary of Agriculture. Your Honor, after a few hours of sleep during the last week and a lot of hard work, I am happy to inform the Court that this evening the parties have reached an agreement to end this case. I must say that the agreement that has been reached is quite innovative and creative, when adopting most of the methodology agreed by the parties' experts and suggested or ordered by the Court, all the times, to compensate plaintiffs for lost profits. The moneys that Suiza and Vaqueria will end up receiving will be invested in part in plant enhancements and more efficient manufacturing procedures. Moreover, the producers of raw milk will receive a few perks themselves, such as a significant amount of money for the purchase of animal food. Finally, and most importantly, all of this has been done, Your Honor, without having to impose an increase in the price of milk, something that considering the hard economic times we are living in, would have caused great damages to the consumers and to the future of the industry. I commend brother counsel and sisters for all their efforts during the last week, and I thank the Court for its patience and guidance during all these years. Indeed, Your Honor, this case now is cosa finita. Thanks. (Emphasis ours).

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