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Date: 08-21-2021

Case Style:

Financial Oversight and Management Board and the Commonwealth of Puerto Rico v. United States of America

Case Number: 19-2243

Judge: David J. Barron

Court: United States Court of Appeals For the First Circuit

Plaintiff's Attorney: Mark D. Harris, with whom Timothy W. Mungovan, John E.
Roberts, Laura Stafford, Larry Alan Rappaport, Martin J.
Bienenstock, Stephen L. Ratner, Jeffrey W. Levitan, Shiloh
Rainwater, and Proskauer Rose LLP were on brief

Defendant's Attorney: Benjamin H. Torrance, Assistant United States Attorney, with
whom Geoffrey S. Berman, United States Attorney, and David S.
Jones, Assistant United States Attorney


Boston, MA - Public Service lawyer represented Plaintiffs, Appellants with a range of claims under federal constitutional and international law charges.

The plaintiffs are two unions, Hermandad de Empleados
del Fondo del Seguro del Estado, Inc., and Unión de Médicos de la
Corporación del Fondo del Seguro del Estado Corp., and one of their
members, Lizbeth Mercado Cordero.1 The unions have a combined
membership of about two thousand employees, and they have each
entered into collective bargaining agreements with CFSE, which is
Puerto Rico's State Insurance Fund Corporation.
The plaintiffs brought their suit in May 2018 and filed
their second amended complaint on October 5, 2018, against the
United States, the FOMB, and the Commonwealth of Puerto Rico. The
eighty-one-page complaint requests a declaration that the Puerto
Rico Oversight, Management, and Economic Stability Act
1 Francisco J. Reyes Márquez was an additional individual
plaintiff below, but has since passed away.
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("PROMESA"), see 48 U.S.C. § 2101 et seq., and all of the FOMB's
actions taken pursuant to it violate the First, Fifth, Thirteenth,
Fourteenth, and Fifteenth Amendments of the U.S. Constitution;
seeks to "enjoin[] and stay[]" the defendants "from pursuing this
and any . . . cases" under PROMESA and from taking any other
actions under that law; requests a declaration "overruling the
Insular Cases because they instituted an unconstitutional colonial
regime"; and requests an order "declar[ing] the existence of an
illegal colonial regime that is subject to the procedures enacted
by international law to decolonize[] Puerto Rico, under the
Declaration on the Granting of Independence to Colonial Countries
and Peoples, adopted by General Assembly resolution 1514 (XV) of
December 14, 1960."
On the defendants' motions, the District Court dismissed
the plaintiffs' claims for declaratory relief for lack of subject
matter jurisdiction. See Fed. R. Civ. P. 12(b)(1). It reasoned
that the plaintiffs had failed to allege concrete and
particularized injuries that their requested relief could redress.
It concluded on this ground that the plaintiffs had "failed to
demonstrate that they have standing to pursue their claims."2 The
plaintiffs timely appealed.
2 The District Court did not reach the defendants' Rule
12(b)(6) arguments.
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Article III limits the judicial power to actual cases
and controversies. See U.S. Const. art. III, § 2, cl. 1. An
actual case or controversy only exists if the plaintiff has
demonstrated "such a personal stake in the outcome of the
controversy as to assure that concrete adverseness which sharpens
the presentation of issues upon which the court so largely
depends." Baker v. Carr, 369 U.S. 186, 204 (1962).
"To satisfy the personal stake requirement, [the]
plaintiff must establish each part of a familiar triad: injury,
causation, and redressability." Katz v. Pershing, LLC, 672 F.3d
64, 71 (1st Cir. 2012) (citing Lujan v. Defs. of Wildlife, 504
U.S. 555, 560-61 (1992)). The redressability element of
constitutional standing requires that the plaintiff show "that a
favorable resolution of [the] claim would likely redress the
professed injury." Id. at 72. That means "it cannot be merely
speculative that, if a court grants the requested relief, the
injury will be redressed." Dantzler, Inc. v. Empresas Berríos
Inventory & Operations, Inc., 958 F.3d 38, 47 (1st Cir. 2020)
(citing Simon v. E. Ky. Welfare Rts. Org., 426 U.S. 26, 42-43
(1976)). And although the plaintiff "need not demonstrate that
[the] entire injury will be redressed by a favorable judgment,
[the plaintiff] must show that the court can fashion a remedy that
will at least lessen [the] injury." Id. at 49 (citing Antilles
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Cement Corp. v. Fortuño, 670 F.3d 310, 318 (1st Cir. 2012)). Our
review of a ruling as to whether the requirements of Article III
standing have been met is de novo. See Me. People's All. v.
Mallinckrodt, Inc., 471 F.3d 277, 283 (1st Cir. 2006).
The plaintiffs contend that the District Court erred in
dismissing their suit on Article III grounds in part because their
second amended complaint had alleged that "the enactment of laws
by the Commonwealth that were incorporated to the Fiscal Plans
certified by the FOMB" "inva[ded]" their "pecuniary interest,
collective bargaining agreement and property (employment,
salaries, bonuses, pensions and health plans)." The laws in
question are Acts 66-2014, 3-2017, 8-2017, and 26-2017, each of
which the plaintiffs allege "impair[s] . . . labor rights and
benefits" that their collective bargaining agreements had
previously secured. The fiscal plan in question is the
Commonwealth's Fiscal Plan of 2018, certified by the FOMB on June
29 of that year. That plan provides in relevant part that a
payroll and hiring freeze for public employees as well as certain
restrictions to their healthcare and to their sick and vacation
days "must be continued."
The problem with the plaintiffs' contention is that none
of the relief that they seek would prevent any of the laws that
they contend caused them pecuniary harm from continuing to have
full force and effect. For that reason, it is entirely speculative
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on this record that any of that relief would spare the plaintiffs
the pecuniary harm that they trace back to those laws. And,
because it is entirely speculative on this record that such relief
would redress the claimed pecuniary harm, that claimed pecuniary
harm provides no support for the plaintiffs' argument that the
District Court erred in dismissing their claims for lack of Article
III standing. See Dantzler, 958 F.3d at 47, 49.
The plaintiffs do separately contend that they have
standing to seek the relief at issue because PROMESA's constraints
and the FOMB's oversight powers dilute the power of their vote in
elections in Puerto Rico due to the limits that PROMESA and the
FOMB place on the powers of the Puerto Rico government. But, the
plaintiffs do not contend that any of these limits have diluted
their voting power within Puerto Rico vis-à-vis others in Puerto
Rico. Thus, the precedents on which they rely to show that the
burden imposed on their right to vote suffices to secure their
standing under Article III are readily distinguished. See, e.g.,
Baker, 369 U.S. at 207-08 (explaining that the statute in question
inflicted an injury on the plaintiffs because it "disfavor[ed] the
voters in the counties in which they reside, placing them in a
position of constitutionally unjustifiable inequality vis-à-vis
voters in irrationally favored counties").
In the end, the plaintiffs are contending that the harm
they have suffered results from the fact that PROMESA and the
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FOMB's actions are preemptive of local law. The plaintiffs fail
to explain, however, why this type of harm is not a generalized
grievance of just the sort that cannot suffice the demands of
Article III. See Gill v. Whitford, 138 S. Ct. 1916, 1923 (2018)
(explaining that plaintiffs must show a concrete and
particularized injury to demonstrate that they have a "'personal
stake in the outcome,' distinct from a 'generally available
grievance about government'" (citation omitted) (first quoting
Baker, 369 U.S. at 204; and then quoting Lance v. Coffman, 549
U.S. 437, 439 (2007))).
The plaintiffs do assert at one point in their briefing
that "the fact that they do not have a right to vote for the
federal officers who appointed and imposed PROMESA, aggravates
their [voting rights] injury." But, even assuming that this
assertion is responsive to the concern that the plaintiffs are
seeking relief for what is merely a generalized grievance, none of
the relief that they seek would redress their injury insofar as it
inheres in restrictions in their ability to vote in federal
elections. Thus, this argument, too, fails to show that the
District Court erred in dismissing their claim on standing grounds.

Outcome: The issues that the plaintiffs' complaint raises
concerning the legal status of Puerto Rico are weighty ones. But,
to be fit for adjudication in federal court, they must be raised
in a suit that satisfies the requirements of Article III. Because
we agree with the District Court that the plaintiffs have not met
their burden to satisfy those federal constitutional requirements,
we affirm the order dismissing their claims for lack of standing

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