Garcia-Rubiera v. Fortuno ( 2011 )


Menu:
  •           United States Court of Appeals
    For the First Circuit
    No. 10-2507
    GLADYS GARCÍA-RUBIERA; DOMINGO A. CORPORAN-SUÁREZ; ADALBERTO
    RODRÍGUEZ; LOURDES MATOS; JOSÉ R. MALDONADO; JOSÉ PÉREZ-CANABAL;
    MANUEL MOLINA-GODÍNEZ; DAVID CASTRO; ADALBERTO AVILÉS; JORGE
    PLARD; LAURA PLARD-OCASIO; GINOVA TORO-MORALES; NOEMÍ
    VALENTÍN-MARRERO,
    Plaintiffs, Appellants,
    v.
    LUIS G. FORTUÑO, Governor; JUAN CARLOS PUIG-MORALES,
    Treasury Secretary,
    Defendants, Appellees,
    JUAN ANTONIO FLORES-GALARZA; SILA MARÍA CALDERÓN,
    Defendants.
    APPEAL FROM THE UNITED STATES DISTRICT COURT
    FOR THE DISTRICT OF PUERTO RICO
    [Hon. Gustavo A. Gelpí, U.S. District Judge]
    Before
    Lynch, Chief Judge,
    Torruella and Thompson, Circuit Judges.
    A.J. Amadeo Murga for appellants.
    Miguel A. Rangel-Rosas, with whom Angel E. Rotger-Sabat,
    and Maymí, Rivera & Rotger, P.S.C., were on brief, for appellees.
    December 2, 2011
    LYNCH, Chief Judge.       At stake in this case are the due
    process rights of privately-insured motor vehicle owners in Puerto
    Rico to over $100 million in insurance payments, which have been
    collected by the Commonwealth, and are owed back as reimbursement
    to these vehicle owners, but which have not been repaid and have
    been used instead for the Commonwealth's general budget.
    Puerto Rico law requires all motor vehicle owners to pay
    for   compulsory,      state-issued    automobile     insurance   when   they
    purchase or renew their vehicle registrations, even if they have
    obtained equivalent private insurance, with limited exceptions.
    
    P.R. Laws Ann. tit. 26, § 8051
     et seq.         As a result, many vehicle
    owners who have already paid for private insurance must pay again
    for the same coverage through the Commonwealth.               By law, these
    privately-insured vehicle owners ("insureds") who pay twice for
    insurance coverage are entitled to reimbursements of the duplicate,
    state payments.     
    Id.
     § 8055(n).       For two years after the date of
    payment,    insureds    may   seek    reimbursement    from   their   private
    insurers.    However, a great deal of the money owed to insureds is
    not returned during this two-year period.             Although there is no
    doubt that insureds have a property interest in the duplicate
    payments, no statute or regulation provides notice to insureds of
    how to obtain reimbursement during this two-year period from their
    respective insurers, and apparently only some insurers provide
    their insureds with notice of how to obtain reimbursements.
    -2-
    By statute, every two years the Commonwealth transfers
    to itself the large pool of unreimbursed duplicate payments that
    have accumulated to the private insurers.          Act No. 230 of Sept. 11,
    2002, § 2 (codified at P.R. Laws Ann. tit 26, § 8055(l)).                  The
    Commonwealth holds this money in trust for the insureds for another
    five years, during which insureds can seek reimbursement directly
    from Puerto Rico's Treasury Department.            Id.    At the end of the
    five year period "these funds . . . become property of the
    Commonwealth of Puerto Rico and . . . pass to the General Fund of
    the Commonwealth Treasury."         Id.    However, the governing statute
    does not itself set up a procedure for reimbursement or tell
    insureds where or how to find such procedures.             The statute only
    requires Puerto     Rico's     Secretary    of   the   Treasury   to   issue   a
    procedure for reimbursement.
    The Secretary of the Treasury has established such a
    procedure, but has failed to give insureds notice of the contents
    of that procedure or where to find it.           In fact, insureds will not
    find it unless they go in person to the proper office of government
    and make an "appropriate request" for a copy of the regulation.
    In     addition      to   receiving     no     notice   about    the
    Commonwealth's procedures for reimbursement, insureds receive no
    individual     notice   that    their     duplicate    payments    have   been
    transferred from their private insurers to the Commonwealth, or
    that they may apply directly to the Secretary of the Treasury for
    -3-
    reimbursement after this transfer. They also receive no individual
    notice   that   their   duplicate     payments   will    escheat    to    the
    Commonwealth after five years, and so be permanently lost to them.
    A class of insureds owed reimbursement challenged the
    Commonwealth's compulsory insurance scheme in both Puerto Rico's
    courts and federal court.        In this federal suit, the insureds
    claim, inter alia, that the compulsory insurance scheme violates
    the fundamental requirements of procedural due process. The Puerto
    Rico suit, which has been stayed in favor of this suit, makes the
    additional claim that the Commonwealth has breached its fiduciary
    duties as trustee of the duplicate premiums on behalf of insureds.
    We    agree   that   the   Commonwealth   of   Puerto    Rico   has
    violated the notice requirements of the Due Process Clause and
    direct entry of a declaratory judgment and injunctive relief to
    that effect.    We reject plaintiffs' remaining federal claims.           The
    question of whether the Commonwealth has violated its fiduciary
    duties to plaintiffs under Puerto Rico trust law remains before the
    Puerto Rico courts.
    I.
    A.        Background
    In 1995, Puerto Rico passed Law 253, which requires all
    motor vehicles traveling on public roads to obtain liability
    insurance.   
    P.R. Laws Ann. tit. 26, § 8051
     et seq.       Pursuant to Law
    253, the owners of such vehicles are required to purchase either
    -4-
    the   Commonwealth's      liability     insurance      plan   or    an    equivalent
    private insurance plan.          Thus, at the time they acquire and each
    subsequent      year   when   they   renew    their    vehicle     registrations,
    vehicle owners must either pay premiums (of $99 for private and
    $148 for commercial vehicles) to the Commonwealth, 
    id.
     § 8053(a),
    or opt-out of the Commonwealth's insurance plan by using the
    appropriate procedures to present proof of private insurance, id.
    § 8061(a).
    Law    253   also    created    the   Asociación       de    Suscripción
    Conjunta del Seguro de Responsabilidad Obligatorio ("JUA") to
    administer      the    Commonwealth's      insurance    plan.           Id.    §   8055.
    Composed of and operated by Puerto Rico's largest private insurance
    companies, JUA insures vehicle owners who buy the Commonwealth's
    insurance product.       Id. § 8055(b).       Periodically, the Commonwealth
    remits to JUA the insurance premiums paid in by vehicle owners,
    which JUA then uses or distributes among its member companies. Id.
    § 8055(c), (e), amended by Act 201 of Dec. 29, 2009, art. 4.
    The Commonwealth insurance option provides only minimal
    coverage to vehicle owners (initially $3,000, but later increased
    to    $4,000,    worth   of     coverage   for    property    damage          to   other
    vehicles); thus, many drivers obtain private liability insurance
    for more complete coverage.          Id. § 8052(j), amended by Act 201 of
    Dec. 29, 2009, art. 2.          Under Law 253, drivers who obtain private
    insurance with coverage "similar to or greater than that of the
    -5-
    compulsory liability insurance" are not required to pay for state
    insurance on top of their private insurance, and may opt out of the
    state insurance option.      Id. § 8061.
    Puerto Rico's Insurance Commissioner has enacted varying
    procedures over the years designed to help these privately-insured
    vehicle owners avoid paying for both private and state insurance,
    but, in fact, a substantial percentage of privately-insured vehicle
    owners have not utilized these procedures successfully and so have
    been required to pay the state premium on top of their private
    insurance.1   In 2000, for example, only one-third of privately-
    insured   vehicle   owners   successfully   avoided   paying   the   state
    1
    In the first year of the scheme's operation, every
    vehicle owner was required to purchase state insurance regardless
    of whether he or she had also purchased adequate private insurance.
    In later years, millions of privately-insured vehicle owners have
    purchased both options.      A variety of reasons exist for why
    privately-insured vehicle owners also purchase the state option.
    Initially, the Insurance Commissioner required JUA to
    issue to these insureds a check in the amount of the requisite
    state premium made payable to the Secretary of the Treasury. See
    P.R. Ins. Comm'r, Regulation No. 5737 (Dec. 30, 1997). However,
    this process was rescinded in favor of the current method, by which
    insureds are automatically charged for the state insurance when
    they renew their registration unless they present a JUA-issued
    Certificate of Compliance certifying their private insurance. See
    Amendment to Regulation No. 5737 (Sept. 14, 2000).            These
    certificates must be ordered from one's private insurance company
    after the purchase of private insurance but well in advance of the
    state registration or renewal date. Id. This timing is critical:
    if an insured's private policy is up for renewal too close to or
    after the insured's vehicle registration date, he or she will not
    be able to obtain a certificate and will be forced to pay the state
    premium. Similarly, if an insured is late in paying his or her
    private insurance premium or makes any changes to the policy, he or
    she may be required to pay the state premium.
    -6-
    premium, and the remaining two-thirds had to pay for both private
    and state insurance.
    By law, when an insured pays twice, he or she is entitled
    to a reimbursement of the state premium fee.                  The Insurance
    Commissioner has promulgated regulations to this effect which
    direct private insurers to first reimburse their insureds who pay
    twice, and then seek their own reimbursement from JUA.                However,
    the Commissioner's regulations do not establish a uniform procedure
    for reimbursement or instruct insureds on precisely how to obtain
    reimbursement, but merely indicate that the insurance companies may
    establish their own internal reimbursement procedures.
    These internal procedures for reimbursement vary from one
    insurer to the next.     Significantly, the Insurance Commissioner's
    regulations instruct insurers to reimburse insureds where "the
    insured provides   evidence     that    the   payment   was   made    [to   the
    Commonwealth]," Amendment to Regulation No. 5737, art. 5(a) (Sept.
    14, 2000), but do not further delineate what constitutes this
    evidence of payment, and do not require insurers to notify their
    insureds of the proper procedures for proving payment or for
    obtaining reimbursements in general.            As a consequence, many
    insureds (in some years, a majority of insureds) do not receive
    their   reimbursements   from   their    insurers   and   their      duplicate
    payments simply remain in the custody of JUA.
    -7-
    The sums JUA has accumulated from this state of affairs
    are truly enormous.      By 2000, just three years after Law 253 went
    into    effect,   see   Act   253   of     Dec.   27,    1995,   §   16,    JUA   had
    accumulated $72 million worth of duplicate premiums which had not
    been reimbursed, a figure representing 42% of the total amount that
    should have been reimbursed by insurers to their insureds. Of this
    $72    million,   $24   million     was    owed   to    insureds     who    had   made
    duplicate    payments    that     year,     but   the   remaining     $42    million
    represented a backlog of unreimbursed payments from the previous
    two years.    By 2001, this sum had grown to almost $92 million.
    By law, JUA is required to keep all duplicate premium
    payments separate from other funds in a special "Reserve" account.
    Each year, JUA calculates how much money to place in this Reserve
    account by estimating what percentage of the total number of
    premium payments received will be "claimed" as duplicate payments
    by vehicle owners who are privately insured but who end up paying
    twice.     Typically, JUA estimates that 13% to 15% of the total
    number of premium payments received each year are in fact duplicate
    payments made by privately-insured vehicle owners.
    In most years, fewer insureds claim reimbursements than
    expected.    JUA thus designates some portion of the Reserve account
    as "excess," or money that will never be claimed by insureds.                       In
    2001, for example, JUA estimated that of the $73 million in the
    -8-
    Reserve account, somewhere between $8 and $10 million would never
    be claimed by insureds and thus constituted "excess" funds.
    JUA's accumulation of these large, unreimbursed sums did
    not go unnoticed.        In 2002, the Legislature of Puerto Rico enacted
    Law   230,   which   directed     JUA    to   transfer    all   of   the    funds
    accumulated in the Reserve account as of December 31, 2001 -- a sum
    of approximately $73 million -- to the Secretary of the Treasury,
    and to repeat this transfer every two years thereafter.                Act No.
    230 of Sept. 11, 2002, § 2.              The Law's Statement of Motives
    explained, "during the existence of [JUA], certain funds have been
    accumulated to it that do not belong to it. . . . [I]t is of
    greater benefit to the public interest in general to immediately
    transfer those funds to the . . . custody of the Department of the
    Treasury."     Id., Statement of Motives (emphasis added).
    Pursuant to Law 230, the Secretary of the Treasury is
    required to hold the transferred funds "as trustee" for five years,
    after which, any remaining funds that have not been reimbursed to
    insureds escheat to the Commonwealth.2            
    P.R. Laws Ann. tit. 26, § 8055
    (l).    Law 230 also states, without elaborating further: "The
    Secretary     of   the    Treasury   shall    establish    a    procedure    for
    processing the reimbursement request from any person alleging a
    2
    Under a provision of Law 230 challenged by plaintiffs in
    an earlier phase of this case, the Commonwealth also gained
    immediate title over any interest accrued to those funds
    transferred from JUA to the Treasury Department. García-Rubiera v.
    Flores-Galarza, 
    516 F. Supp. 2d 180
    , 197 (D.P.R. 2007).
    -9-
    right to the retained funds."        
    Id.
          Law 230 does not require the
    Secretary of the Treasury to give notice of that procedure to the
    insureds.
    In   2003,   the   Secretary      of    the   Treasury     formulated
    Procedure 96, under which insureds may seek reimbursement directly
    from the Treasury Department once JUA has transferred the funds
    there.    Thus, after making a duplicate payment, an insured has two
    years in which to submit a reimbursement request directly to his or
    her   insurer;    if     the   insured   is        unsuccessful   in    securing
    reimbursement during this period, he or she has five years in which
    to seek reimbursement from the Treasury Department.3
    Under Procedure 96, a claimant must obtain and fill out
    various forms and send these, as well as the following attachments,
    to the Secretary of the Treasury: (1) a copy of the motor vehicle
    license for which the reimbursement is being claimed; (2) a copy of
    the insurance policy for each year claimed; (3) certification from
    3
    Intervenor Attorney General of Puerto Rico argued on
    appeal that the Insurance Commissioner's regulations should be
    interpreted to permit insureds to obtain reimbursements directly
    from their private insurers even after their duplicate payments
    have been transferred by JUA to the Treasury Department.      The
    Attorney General's stated position in this case is vigorously
    disputed by the parties and was the subject of much confusion at
    oral argument. Our conclusion does not turn on this point, but we
    note that the Attorney General's interpretation is not the only
    interpretation   --  and  not   necessarily   the  most   natural
    interpretation -- of the regulations. The inordinate confusion
    over this point is further evidence of the inadequacy of the
    Commonwealth's notice to insureds of the procedures for
    reimbursement.
    -10-
    the insurance company of payment of the policy for each year
    claimed;    (4)    certification      that    the     claimant   has   not   been
    reimbursed; and finally, (5) verification that the applicant does
    not have any tax debts with the Treasury Department.              P.R. Dep't of
    Treasury, Procedure 96 (Apr. 1, 2003).                  If the claimant is a
    private    insurance        company   seeking       reimbursement,      it   must
    additionally attach certified copies of each insurance policy for
    which it is claiming, certification that it has not yet received
    reimbursement from JUA for each policy claimed, and verification
    that it does not have any tax debts outstanding with the Treasury
    Department.      
    Id.
    The parties have not disputed that Procedure 96 was
    promulgated      pursuant    to   Puerto     Rico's    Uniform   Administrative
    Procedure Act (UAPA). Under the UAPA, once the Treasury Department
    finalizes Procedure 96, it is required to forward the regulation to
    the Secretary of State for approval.                  
    P.R. Laws Ann. tit. 3, §§ 2128
    (a), 2131.           If approved, the Secretary of State must
    "publish in two newspapers of general circulation a summary of [the
    regulation]," which includes "its number, effective date and the
    agency    that    approved    it."    
    Id.
         §   2128(d)   (emphasis    added).
    Subsequently, the Secretary of State must keep in his office "a
    -11-
    permanent file of [the regulation] for public inspection."4 Id. § 2130.
    Thus, unlike federal regulations, which are published in
    multiple legal databases available both in print and for free
    online, under the Commonwealth's application of the UAPA in this
    case, the only way to obtain a full copy of Procedure 96 is to go
    to the Secretary of State's office, in person, and place a request
    to inspect the specific regulation.     Even the UAPA's "publication"
    requirement, as applied to Procedure 96 in this case, requires only
    that a summary be published one time in two newspapers, a summary
    which need only include the regulation's number, date, and agency
    of issuance.    Id. § 2128(d).
    Under    the   Treasury's   trusteeship,   reimbursements   to
    insureds slowed to a trickle.         The Secretary of the Treasury
    reimbursed just $500,000 in the first year of the administration of
    the trust.     By the summer of 2010, the Secretary of the Treasury
    4
    Under the original UAPA, enacted August 12, 1988, the
    requirement that the Secretary of State retain a copy of each
    regulation in his or her office for public inspection was the
    extent of the Act's filing requirement.      In 2008, the Act was
    amended to additionally require the Secretary of State to
    "establish and keep, permanently, in the webpage of the Department
    of State over the Internet, a copy of all regulations filed
    therewith for public access and inspection . . . free of charge and
    available in a format easily accessible for the public." 
    P.R. Laws Ann. tit. 3, § 2130
     (2009). The law is unclear as to whether the
    internet publication requirement is retroactive to regulations
    issued prior to July 16, 2008; however, the Attorney General of
    Puerto Rico has represented in its brief -- and a search of the
    Secretary of State's online collection of regulations confirms --
    that Procedure 96 is available only in hard copy in the Secretary
    of State's office.
    -12-
    had reimbursed     a   total of     $9   million in        duplicate     payments.
    Meanwhile,   as   of   the   last   accounting        in   2009,   the    Treasury
    Department has received approximately $157 million in duplicate
    payments from JUA.
    The     difference    has      been   used       to    supplement     the
    Commonwealth's    general    budget,     and    the    Commonwealth       has   not
    hesitated to use the funds for its own purposes both before and
    after the funds have officially escheated.             As early as 2002, when
    the Department of the Treasury acquired the first installment of
    $73 million in duplicate payments, it estimated that of this
    amount, only $20 million would ever be claimed by insureds in
    reimbursements (JUA had assessed this sum at $63 million), and
    promptly transferred the balance of $53 million in "excess" funds
    to the Commonwealth's budget for fiscal year 2001-2002, which, at
    that time, was running a deficit of approximately $200 million.
    Two years later, with the Treasury having reimbursed just
    $500,000 of the $20 million initially reserved for reimbursements,
    the Legislature passed Act 414, which permitted the Secretary of
    the Treasury to transfer the remainder of that $20 million to the
    Commonwealth's    2004-2005     budget,     less       another     $500,000     for
    reimbursements.    Act 414 of Sept. 22, 2004 (codified at 
    P.R. Laws Ann. tit. 26, § 8055
    (l)).       Act 414 required that in the case the
    sum of $500,000 proved insufficient to cover reimbursement claims
    made prior to the next transfer from JUA, funds for reimbursement
    -13-
    should   be    taken      out    of   the    Commonwealth's    General   Fund   and
    Budgetary Fund.        
    Id.
    In 2007, the first of the duplicate premiums transferred
    by JUA to the Treasury escheated to the Commonwealth; additional
    funds escheated in 2009, and more are scheduled to escheat at the
    end of this year. All told, the Commonwealth has obtained title by
    escheat to almost 95 percent of the duplicate premiums transferred
    under Law 230.
    B.            Procedural History
    Law   253    and    its   amendments   have     produced   extensive
    litigation.     This court has heard three other cases5 concerning the
    Law and its amendments in addition to the present litigation and
    its companion case,6 and the courts of Puerto Rico have heard
    additional cases.         In the present case, plaintiffs appeal to this
    court from the district court's grant of defendant's motion for
    summary judgment, entry of judgment for defendant, and denial of
    plaintiffs' summary judgment motion.                García-Rubiera v. Fortuño,
    
    752 F. Supp. 2d 180
     (D.P.R. 2010).
    5
    See Asociación de Suscripción Conjunta del Seguro de
    Responsabilidad Obligatorio v. Juarbe-Jiménez, 
    659 F.3d 42
     (1st
    Cir. 2011); Asociación de Suscripción Conjunta del Seguro de
    Responsabilidad Obligatorio v. Flores-Galarza, 
    484 F.3d 1
     (1st Cir.
    2007); Arroyo-Melecio v. Puerto Rican Am. Ins. Co., 
    398 F.3d 56
    (1st Cir. 2005).
    6
    Colón-Rivera v. Asociación de Suscripción Conjunta del
    Seguro de Responsabilidad Obligatorio, No. 11-1148 (1st Cir. argued
    Sept. 8, 2011).
    -14-
    Plaintiffs       filed    their       complaint    in    this     case    in
    February, 2002 as an action under 
    42 U.S.C. § 1983
    .                         As amended,
    plaintiffs'          complaint    sought       the     following       relief:    (1)     a
    declaratory          judgment    that    Law     230    and    its     amendments       are
    unconstitutional under the Takings and Due Process Clauses, (2)
    reimbursement from the Commonwealth of their duplicate premiums
    with       accrued    interest,    (3)   injunctive       relief       to   prevent     the
    continued transfer and escheat of funds to the Commonwealth, and
    (4) damages from the Governor of Puerto Rico and the Secretary of
    the Treasury in their personal capacities.7
    The district court entered an order dismissing the case
    without prejudice as premature in 2004.                       See García-Rubiera v.
    Fortuño, No. 3:02-cv-01179 (D.P.R. Feb. 11, 2004). On a Rule 60(b)
    motion, the court heard additional motions in the case, at which
    time plaintiffs moved for class certification and for a preliminary
    injunction, and defendants moved to dismiss.                     On August 30, 2007,
    the district court granted the defendants' motion to dismiss with
    respect to plaintiffs' individual capacity claims for damages, and
    denied plaintiffs' motions with respect to all their claims, with
    the exception of their request for a preliminary injunction against
    any further deposit into Puerto Rico's General Fund of the interest
    7
    In 2001, plaintiffs filed a similar, but broader, action
    in the Puerto Rico court of first instance, which has been stayed
    pending the resolution of this case. García-Rubiera v. Asociación
    de Suscriptores Conjunta del Seguro de Responsabilidad Obligatorio,
    No. KDP01-1441 (P.R. Gen. Ct. of J. Cir. Mar. 16, 2011).
    -15-
    accrued    to     the    duplicate        premiums,     which       the    court   granted.
    García-Rubiera v. Flores-Galarza, 
    516 F. Supp. 2d 180
    , 197-98 &
    n.20 (D.P.R. 2007).
    The         district     court        rejected      all       of   plaintiffs'
    constitutional claims on their motion for a preliminary injunction
    with respect to the duplicate premiums themselves.                          The court held
    that plaintiffs' takings claim for the duplicate payments was not
    ripe because plaintiffs had failed to utilize Procedure 96 to
    retrieve their money, and that, while ripe, plaintiffs' due process
    claims failed because plaintiffs did not demonstrate either that
    "available      remedies       under      Commonwealth        law    are    inadequate   to
    redress    any     deprivation         resulting       from    the    transfer      of   the
    Duplicate Premiums to the Secretary," or that Procedure No. 96 is
    "onerous."       
    Id. at 196
    .
    In 2009, this court reversed the district court in part,
    affirmed     in       part,    and      remanded        for    further         proceedings.
    García-Rubiera v. Calderón, 
    570 F.3d 443
     (1st Cir. 2009). We held,
    under our circuit precedent, that plaintiffs' takings claims were
    ripe despite their failure to utilize state procedures to reclaim
    their money, 
    id.
     at 453-54 (citing Asociación de Suscripción
    Conjunta        del      Seguro      de        Responsabilidad            Obligatorio     v.
    Flores-Galarza,          
    484 F.3d 1
    ,    19    (1st    Cir.    2007)),      but   see
    Downing/Salt Pond Partners v. R.I. & Providence Plantations, 
    643 F.3d 16
    , 26 (1st Cir. 2011), cert. denied, 
    2011 WL 3794357
     (Oct.
    -16-
    31, 2011), and remanded for further consideration of plaintiffs'
    takings claims.
    We also held that plaintiffs retained a property interest
    in the transferred duplicate premiums sufficient for purposes of
    procedural due process.         
    Id. at 455
    .           Finding the district court
    had failed to directly address plaintiffs' due process claim, 
    id.,
    we remanded for further consideration of their claim, and for a
    specific    determination       as   to    whether      the   transfer    of   funds
    constituted a "deprivation" sufficient to require notice under the
    Due Process Clause, 
    id. at 458
    .8
    On remand, plaintiffs moved for summary judgment on their
    constitutional claims.      The district court denied their motion in
    full,    holding   that   Law    230      did   not    constitute   a    sufficient
    deprivation as to require notice under the Due Process Clause,
    García-Rubiera, 752 F. Supp. 2d at 186-88, and further, that the
    transfer of funds did not amount to a taking for which insureds
    were entitled to just compensation, id. at 188-89.                       The court
    denied plaintiffs relief under substantive due process, finding
    that Law 230 easily passed muster under rational basis review, id.
    8
    This court also affirmed the district court's holding
    that the Secretary of the Treasury and Governor were entitled to
    qualified immunity in their personal capacities and affirmed the
    district court's rejection of various of plaintiffs' other claims,
    including its equal protection claim. García-Rubiera v. Calderón,
    
    570 F.3d 443
    , 461 (1st Cir. 2009). We ordered certification of
    plaintiffs' class action. 
    Id.
    -17-
    at 186, and additionally denied plaintiffs' evidentiary requests.
    The court granted defendants' motion for summary judgment.
    II.
    Plaintiffs appeal the district court's decision as to all
    their claims.    Our review of the district court's disposition of
    plaintiffs' legal claims is de novo, Rodriguez v. Am. Int'l Ins.
    Co. of P.R., 
    402 F.3d 45
    , 46-47 (1st Cir. 2005); our review of the
    court's denial of plaintiffs' evidentiary requests is for abuse of
    discretion, Doe v. Solvay Pharm., Inc., 153 Fed. App'x 1, 1-2 (1st
    Cir. 2005) (per curiam).
    A.        Procedural Due Process Claim
    Plaintiffs     argue        that    Law   230   and   its   companion
    regulations    deprive   them    of    their    property   interests    in   the
    duplicate premiums without constitutionally adequate process.                 To
    establish a procedural due process claim under § 1983, plaintiffs
    must demonstrate that they have "a property interest as defined by
    state law" and that the defendants deprived them of this property
    interest without constitutionally adequate process.               SFW Arecibo,
    Ltd. v. Rodríguez, 
    415 F.3d 135
    , 139 (1st Cir. 2005) (quoting PFZ
    Properties, Inc. v. Rodriguez, 
    928 F.2d 28
    , 30 (1st Cir. 1991)).
    1.       Deprivation of a Property Interest
    In García-Rubiera v. Calderón, 
    570 F.3d 443
    , this court
    held that plaintiffs have a property interest in their duplicate
    premiums both before and after the premiums are transferred from
    -18-
    JUA to the Treasury Department, 
    id. at 455
    , and remanded for a
    determination as to whether Law 230 and its companion regulations
    effect a deprivation of plaintiffs' property for purposes of the
    Due Process Clause, 
    id. at 458
    .
    The district court held that because Law 230 and its
    amendments      merely    substitute       one    custodian   of   the   duplicate
    payments for another, and replace one reimbursement procedure with
    another, they do not "deprive" plaintiffs of any property interests
    in the funds.      García-Rubiera v. Fortuño, 752 F. Supp. 2d at 187.
    The     court     also        rejected    plaintiffs'      argument      that    the
    Commonwealth's reimbursement procedure is too burdensome.                  Id.   We
    disagree with the first holding, and agree as to the second.
    Law 230 and its companion regulations, viewed in the full
    context of the Commonwealth's compulsory insurance scheme, clearly
    effect a deprivation of property for purposes of due process
    analysis.
    Law    253        contemplates       and   empowers    the   Insurance
    Commissioner to establish a system to exempt privately-insured
    vehicle owners from paying duplicate state fees for insurance.
    
    P.R. Laws Ann. tit. 26, § 8061
    (b); see also Act No. 94 of Aug. 20,
    1997,    Statement       of    Motives,    §   12.     However,    the   Insurance
    Commissioner has chosen not to establish a reliable method for
    exempting insureds from the fees up front, but has chosen to rely
    on a reimbursement scheme, at least as to some insureds.
    -19-
    Specifically,        the     Commissioner      has   instituted       a
    "Certificate    of    Compliance"      process    for     avoiding    payment    of
    duplicate fees.       See Amendment to Regulation No. 5737 (Sept. 14,
    2000).   However, by the Commonwealth's own admission, this process
    is not available to all insureds,9 and plaintiffs have presented
    evidence that many, if not most, insureds pay twice.                 Insureds who
    do not obtain a Certificate of Compliance are forced to pay the
    Commonwealth's       duplicate    fees     or    suffer    serious    sanctions,
    including the impounding of their license plate, revocation of
    their    driving     privileges    for    the    vehicle    in   question,      and
    imposition of a misdemeanor charge and fine.               P.R. Laws Ann., tit.
    26, §§ 8053, 8060.
    Thus, instead of determining whether insureds actually
    owe the state fees, in many cases the Commissioner simply charges
    insureds automatically for the state insurance product, and relies
    on a refund process for returning moneys paid but not actually owed
    to the state.
    9
    As discussed above, whether an insured can obtain a
    certificate depends on, among other things, his or her timing in
    purchasing or renewing his or her insurance policy.          If an
    insurance policy is altered or renewed within one and a half months
    of an insured's vehicle registration renewal date, JUA will not
    issue a certificate at all. See Amendment to Regulation No. 5737
    (Sept. 14, 2000).    Further, the record reveals that even when
    Certificates of Compliance are issued, only a fraction of these are
    successfully redeemed. In 2000, for example, approximately 33% of
    issued certificates were successfully redeemed by insureds. The
    Commonwealth does not currently provide any pre-payment procedures
    other than the certificate of compliance for avoiding the duplicate
    fees.
    -20-
    Although    the       Commissioner      could    have    established     a
    broader     pre-payment        exemption        process,      or     given     insureds
    information about the refund process at the time they make the
    duplicate payments, the Commissioner has chosen to rely on a post-
    payment refund application process for returning plaintiffs' money.
    Under these conditions, the Commonwealth has an obligation to set
    up    a   meaningful    procedure       for    reimbursement,        which     includes
    adequate notice of the procedure.
    The Commonwealth does not contest its obligation to
    return plaintiffs' money upon a proper application for refund. The
    lawfulness of the Commonwealth's initial duplicate collection of
    the   payments   does        not   insulate     it   from    providing       meaningful
    procedures     for     the     return    of     property      that    is     rightfully
    plaintiffs', and as to which the Commonwealth has no valid claim
    prior to escheat.        See City of West Covina v. Perkins, 
    525 U.S. 234
    , 240 (1999) ("At this stage, no one contests the right of the
    State to have seized the property in the first instance or its
    ultimate obligation           to   return     it.    So     rules    restricting    the
    substantive power of the State to take property are not implicated
    by this case.").
    The Supreme Court has held in the tax context that "[i]f
    a State places a taxpayer under duress promptly to pay a tax when
    due and relegates him to a postpayment refund action in which he
    can challenge the tax's legality, the Due Process Clause . . .
    -21-
    obligates the State to provide meaningful backward-looking relief."
    McKesson Corp. v. Div. of Alcoholic Beverages & Tobacco, 
    496 U.S. 18
    , 31 (1990).   In such circumstances, a state must ensure that its
    tax scheme comports with due process.
    The right focal point for the due process deprivation
    analysis is thus not on the moment of transfer of funds from the
    custody of JUA to that of the Commonwealth, but on the overriding
    obligation of the Commonwealth, throughout the total process, to
    provide notice and a meaningful procedure to return to plaintiffs
    the property that is rightfully theirs.             That plaintiffs have two
    years in which to seek a refund from JUA before the funds are
    transferred    does     not    obviate     the   Commonwealth's    independent
    obligation to provide a meaningful refund procedure after the funds
    have been transferred and before their final escheat. See Jones v.
    Flowers, 
    547 U.S. 220
    , 232-33 (2006).
    2.          What Process is Due?
    Plaintiffs          make   two   basic   procedural     due   process
    arguments that the refund process provided by the Commonwealth is
    inadequate under the Due Process Clause.             The first is that they
    have not been given adequate notice as to what procedures are
    available or from whom they should obtain reimbursement.                  This
    encompasses the argument that they have not been given notice that
    the funds have been transferred from JUA to the Commonwealth.              The
    second argument is that the Commonwealth's application process for
    -22-
    reimbursement of individual requests is too burdensome.         We take
    each argument in turn.
    As to plaintiffs' first argument, it is true that the
    requirements of due process vary with the particulars of the
    circumstance at issue.    See Morrissey v. Brewer, 
    408 U.S. 471
    , 481
    (1972); Boddie v. Connecticut, 
    401 U.S. 371
    , 378 (1971).        One such
    variation turns on whether the government conduct affecting the
    protected property interest is legislative or adjudicative in
    nature.    This is often put in terms of two poles, with a continuum
    in between.     At one end is legislative action.     Where property is
    affected   by   generally-applicable    legislative   action,   property
    owners are not entitled to notice above and beyond the notice
    provided by the enactment and publication of the statute.          See,
    e.g., United States v. Locke, 
    471 U.S. 84
    , 108 (1985); Bi-Metallic
    Inv. Co. v. State Bd. of Equalization, 
    239 U.S. 441
    , 445 (1915).
    At the other end are individual adjudications, which require more
    specific procedures, see, e.g., Mathews v. Eldridge, 
    424 U.S. 319
    ,
    335 (1976), as well as more specific notice, see Dusenbery v.
    United States, 
    534 U.S. 161
    , 167-68 (2002); Mullane v. Cent.
    Hanover Bank & Trust Co., 
    339 U.S. 306
    , 314 (1950).              In our
    previous opinion in this case, we cited to Mullane for the scope of
    due process notice guarantees, implicitly recognizing that this
    case is not at the legislative end.       García-Rubiera v. Calderón,
    
    570 F.3d at 456-57
    .
    -23-
    The Commonwealth argues that this is a case of clear
    statutory notice.    That is plainly not so, since Law 230 gives no
    notice to insureds of how to obtain reimbursement; it merely
    directs the Secretary of the Treasury to "establish a procedure for
    processing the reimbursement request from any person."     
    P.R. Laws Ann. tit. 26, § 8055
    (l).   This administrative procedure, in turn,
    cannot be found in any readily available publication or online, and
    even if insureds go to the Treasury Department in person, they will
    not find the regulations.    This is not the notice due insureds, and
    on this basis alone, this scheme is constitutionally deficient.
    However, plaintiffs' argument that Procedure 96 is like
    a full adjudicatory hearing is also not fully accurate.          But
    plaintiffs are not entirely off the mark. Procedure 96 falls along
    the continuum between legislative and adjudicative action.     Thus,
    we do not say that the procedural due process inquiry ends if the
    Commonwealth, today, were to publish the terms of Procedure 96
    online and/or in some other publically available source.     Rather,
    we turn to useful analogies for guidance on what form of notice
    will satisfy the Commonwealth's obligations under the Due Process
    Clause to give notice to insureds of the administrative procedure
    for reimbursement.
    -24-
    i.       The Commonwealth Has Not Established Legislative
    Notice
    We explain why we reject the Commonwealth's argument that
    plaintiffs have been provided with adequate legislative notice of
    the procedures for reimbursement.
    In     some   circumstances,    the   publication   of     clear,
    reasonably comprehensible regulations publically available in hard
    copy and/or online may suffice to provide adequate notice of the
    procedures for reclaiming property.          In City of West Covina v.
    Perkins,   for    example,   the   Supreme   Court   held   that    although
    government agents must give notice to property owners that their
    property has been taken "so that the owner[s] can pursue available
    remedies for [the] return" of their property, individualized notice
    of the remedies for return is not required where those remedies are
    "established by published, generally available state statutes and
    case law."       
    525 U.S. at 240-41
    .       The Court held that property
    owners can turn to these readily available "public sources" for
    specific instructions on how to reclaim their property.              
    Id. at 241
    ; see also Reetz v. Michigan, 
    188 U.S. 505
    , 509 (1903) (holding
    that when a statute clearly fixes the time and place of meeting of
    a permitting board or tribunal, additional notice to persons
    wishing to attain a permit may not be required).
    However, the principle of legislative notice does not
    extend to regulations that are not publically available.                See,
    e.g., City of West Covina, 
    525 U.S. at 242
     ("[N]otice of the
    -25-
    procedures for protecting one's property interests may be required
    when those procedures are arcane and are not set forth in documents
    accessible to the public." (discussing Memphis Light, Gas & Water
    Div. v. Craft, 
    436 U.S. 1
     (1978))); Butler v. Castro, 
    896 F.2d 698
    ,
    703 (2d Cir. 1990) (holding that where New York City's procedures
    for returning seized property were contained in an unpublished
    judicial order, and not reflected in the most updated version of
    the municipal code, the City failed to demonstrate legislative
    notice and the administrative scheme violated the basic notice
    requirements of the Due Process Clause).
    In the present case, the Commonwealth's notice falls
    below the     standard    for    legislative   notice.      The    Puerto   Rico
    statutes do not give any notice of the Commonwealth's reimbursement
    procedures.    Law 230 merely directs the Secretary of the Treasury
    to "establish a procedure for processing the reimbursement request
    from any person."        
    P.R. Laws Ann. tit. 26, § 8055
    (l) (emphasis
    added).     The   Treasury      Department's   "procedure    for    processing
    reimbursement," Procedure 96, has not been published in hard copy
    or online and is not readily available to the public.
    As the Attorney General of Puerto Rico has admitted, once
    the   Secretary   of     the    Treasury   formulated    Procedure    96,   the
    Commonwealth took only the following two actions.                   First, the
    Secretary of the Treasury submitted the regulation to the Secretary
    of State, who published a "summary" of the regulation "in two
    -26-
    newspapers of general circulation", "including its number, its
    effective date and the agency that approved it."               No information
    has   been   provided   as   to    when   or   where   these   summaries   were
    published, their content, or where an insured might search to
    obtain this information.          Second, the Secretary of State retained
    a copy of the regulation in an office, for public inspection upon
    a proper request.       The regulation is thus not readily available
    online or in other publically accessible hard copy sources or
    databases.    Nor would insureds know to look for the regulation at
    the office of the Secretary of State instead of the Treasury
    Department.
    Moreover, neither Law 230 nor any of its companion
    regulations require private insurance companies or JUA to provide
    insureds with notice of the Commonwealth's reimbursement process.
    Although there is evidence that some private insurance companies
    may have informed insureds of the proper procedures for obtaining
    reimbursement through the Treasury Department, there is ample
    evidence that many insurance companies have not provided their
    insureds with any information whatsoever concerning the existence
    or particulars of Procedure 96.
    Absent a trip, in person, to the appropriate office of
    government and a proper request to inspect the regulation, the
    Commonwealth has left plaintiffs in the dark as to every aspect of
    -27-
    Procedure 96.     The Commonwealth's statutory notice argument thus
    fails.
    ii.      What Notice Is Required?
    Plaintiffs argue that the Commonwealth's reimbursement
    procedure constitutes an individual adjudication to which the full
    array of procedural due process protections attach.              This is not
    entirely accurate either.      The Commonwealth's reimbursement scheme
    falls    somewhere   in   between   legislative   action   and    individual
    adjudications.
    As courts have recognized, the line between legislative
    and adjudicative action for purposes of procedural due process
    analysis is not always easy to draw.       See United States v. Fla. E.
    Coast Ry. Co., 
    410 U.S. 224
    , 245 (1973) ("[T]he line dividing them
    may not always be a bright one . . . ."); L C & S, Inc. v. Warren
    Cnty. Area Plan Comm'n, 
    244 F.3d 601
    , 603 (7th Cir. 2001) ("[T]he
    line between legislation and adjudication is not always easy to
    draw . . . ."); Thomas v. City of New York, 
    143 F.3d 31
    , 36 n.7 (2d
    Cir. 1998) (examining whether the government action at issue "[is],
    in fact, fully legislative or, at least in part, adjudicative");
    see also Gallo v. U.S. Dist. Court For The Dist. of Ariz., 
    349 F.3d 1169
    , 1182 (9th Cir. 2003); 75 Acres, LLC v. Miami-Dade Cnty.,
    Fla., 
    338 F.3d 1288
    , 1296 (11th Cir. 2003).
    More importantly, not all government actions fall neatly
    into these polar categories.          As with the requirements of due
    -28-
    process    in   general,    the    "'notice     required     will    vary     with
    circumstances and conditions.'"            Jones, 
    547 U.S. at 226
     (quoting
    Walker v. City of Hutchinson, 
    352 U.S. 112
    , 115 (1956)).               A complex
    administrative scheme, like the one challenged in this case, may
    contain both legislative elements -- the application of a general
    rule to a large number of people -- as well as adjudicative
    elements -- fact-specific determinations of rule compliance in
    individual instances.       See Texaco, Inc. v. Short, 
    454 U.S. 516
    ,
    534-36 (1982) (contrasting the lapse of a mineral interest as
    provided for by statute with an adjudicative determination as to
    whether that interest has in fact lapsed and if so, to whom, which
    requires individualized notice).
    In   this     case,    the    Secretary    of   the   Treasury     has
    instituted an individualized process for evaluating and processing
    specific   claims   for    reimbursement.        Under     Procedure    96,   the
    Treasury Department must grant or deny individual claims for
    reimbursement     from     both    individuals       and   private     insurance
    companies, verifying in each instance that the claimant has paid
    the compulsory premium, has purchased valid alternative insurance
    for the coverage period, has not been reimbursed by a private
    insurer or by the Treasury Department, and has submitted proper
    documentation for each claim.           Where the claimant is an insurance
    company, the Treasury Department must verify additional facts,
    -29-
    including that the company has not yet received reimbursement from
    JUA.
    Significantly,    all      claimants   must   additionally
    demonstrate that they do not owe any taxes to the Commonwealth.
    The regulation provides that if a claimant has any tax debts, the
    Treasury Department "shall inform the Collections Bureau to apply
    this amount to the debt."    P.R. Dep't of Treasury, Procedure 96
    (Apr. 1, 2003).     This appears to be an attempt to give the
    Commonwealth a priority right to set off any purported tax debt
    against the reimbursement owed. Further, there are no instructions
    as to what an insured should do if he or she disputes the tax debt.
    There is, moreover, no mention of further steps that may be taken
    when claims generally are denied by the Treasury Department.
    However, plaintiffs do not specifically complain about the tax set
    off procedure or the absence of an appeals process.
    Procedure 96 thus has elements of an individualized
    adjudicative process. As a consequence, more than statutory notice
    is required.   We have found no Supreme Court case on point, but we
    do find useful analogies in a variety of other contexts, including
    seizure and forfeiture, unclaimed property laws, and tax refund
    laws, in which courts have analyzed what process is required when,
    after taking property belonging to others, the government sets up
    some form of claims process for returning that property to its
    rightful owners.
    -30-
    In one analogous situation, the Second Circuit has held
    in a series of cases that New York City's procedure for returning
    property seized from arrestees failed to meet the minimum due
    process   requirements      for    notice.       Under    the    City's       original
    forfeiture procedure, property seized from arrestees could be
    disposed of without any individualized notice to the property
    owners.   In McClendon v. Rosetti, 
    460 F.2d 111
     (2d Cir. 1972), the
    Second Circuit struck down this procedure for the first time,
    holding   that     the   City's    practice     of   releasing       or   forfeiting
    property seized from arrestees without providing any meaningful
    individualized notice to the owners of that property violated the
    notice requirements of the Due Process Clause.                   
    Id. at 114-115
    .
    Later, in Alexandre v. Cortes, 
    140 F.3d 406
     (2d Cir. 1998), the
    court held that the City's procedures continued to violate due
    process where they failed to provide any notice or procedure for
    resolution of disputes concerning the ownership of property prior
    to releasing the property to a lienholder.             See also Frith v. Hill,
    No. 07-5899, 
    2009 WL 3073716
    , at *5 (S.D.N.Y. Sept. 23, 2009)
    (rejecting      City's   argument    that      arrestee   had        notice    of   the
    procedures for recovery of his property).
    In these cases, although the plaintiffs typically knew
    that their property had been seized, the City did not provide any
    notice    to    the   plaintiffs    of   the    existence       or    specifics      of
    procedures for reclaiming property.             The Second Circuit held that
    -31-
    the City must provide the plaintiffs with that information, on an
    individualized basis, to meet the basic notice requirements of due
    process.    See Alexandre, 140 F.3d at 412-13; cf. United States v.
    James Daniel Good Real Prop., 
    510 U.S. 43
    , 53 (1993) (requiring
    notice and a hearing before proceedings for forfeiture of real
    property in order "to protect [the individual's] use and possession
    of   property      from     arbitrary   encroachment       --     to    minimize
    substantively      unfair    or   mistaken    deprivations       of    property")
    (quoting Fuentes v. Shevin, 
    407 U.S. 67
    , 81 (1972)).
    Courts have also required individualized notice in the
    context of unclaimed property laws. See Taylor v. Westly, 
    488 F.3d 1197
     (9th Cir. 2007) (issuing preliminary injunction against the
    operation of California's Unclaimed Property Law, under which
    California seized dormant property from known persons and then
    placed that property in a custodial trust ad infinitum or until the
    property was reclaimed by owners without individualized notice at
    any point, and holding that California must provide individualized
    notice of seizure to property owners); Taylor v. Westly, 
    402 F.3d 924
     (9th Cir.       2005)    (finding   Eleventh     Amendment    did    not   bar
    plaintiffs' claims).
    The Supreme Court has also held in the due process notice
    context that "a party's ability to take steps to safeguard its
    interests   does    not     relieve   the    State   of   its   constitutional
    obligation." Mennonite Bd. of Missions v. Adams, 
    462 U.S. 791
    , 799
    -32-
    (1983).   Significantly, in Jones v. Flowers, the state argued that
    an owner has "inquiry" notice that her property may be subject to
    forfeiture if she fails to receive a property tax bill and fails to
    pay property taxes.       
    547 U.S. at 231-32
    .            Recognizing that it is
    "common knowledge that property may become subject to government
    taking when taxes are not paid," the Supreme Court nevertheless
    held that "inquiry" notice "does not excuse the government from
    complying with its constitutional obligation of notice."                    
    Id. at 232
    .   Where a state affords a person "the right to settle accounts
    with the State and redeem his property," the state must provide
    constitutionally adequate notice even to citizens who fail to take
    the initiative to inquire about their property.                   
    Id. at 233
    .     In
    Jones, the Court held that adequate notice for the tax forfeiture
    of a person's home required personalized notice mailed to the
    homeowner's last known address, and additional reasonable steps
    toward    notification    where     this        mailed   notice     was    returned
    unclaimed.   
    Id. at 234
    .
    These cases have all required the government to provide
    some form of individualized notice where the government has in its
    possession   property     belonging        to    others,    and    where    it   has
    instituted   a   claims   process     or    other    form    of    individualized
    adjudication for returning or disposing of this property.                   In some
    cases, the property owners knew or should have known that the state
    had possession of their property, see, e.g., Jones, 547 U.S. at
    -33-
    231-32; Butler, 896 F.2d at 699, and in all of the cases, the
    government placed the impetus upon the property owners to reclaim
    their property, see, e.g., Jones, 
    547 U.S. at 233
    ; Taylor, 
    402 F.3d at 927
    ; Butler, 896 F.2d at 699.
    In the present case, much like in the cases described
    above, the Commonwealth has set up a claims process for property
    that it has exacted from insureds, but provides individual insureds
    with no information about how to reclaim their property.
    We hold that under these conditions the Commonwealth is
    required to give individual notice to insureds owed reimbursement
    to the maximum extent feasible.    On remand, the district court can
    resolve any factual issues as to feasibility.
    Plaintiffs   have     produced   some   evidence   that   the
    Commonwealth keeps current a list of the names of insureds, their
    addresses, and other identifying information, and thus, could
    easily provide individualized notice.      The Commonwealth disputes
    this, at least in part.       If, in fact, the Commonwealth has the
    names and addresses of those insureds owed reimbursement, or can
    obtain that information readily, then it must send individualized
    notice.   If it has in its possession, or can readily obtain, only
    the names, but not addresses, of insureds owed reimbursement, it
    must publish that list of names online and in other places readily
    accessible by the public.     If the Commonwealth does not have any
    way to determine the identities or addresses of those insureds owed
    -34-
    reimbursement, it must arrange to obtain this information -- either
    from JUA or from the private insurance companies -- and must
    subsequently provide individualized or publication notice.
    This notice must include notice of the transfer of funds
    from JUA to the Commonwealth, of Procedure 96, and of Law 230's
    escheat provisions, and must be provided either individually or via
    publication,   to   those   insureds   whose   duplicate   premiums   are
    currently or will be in the possession of the Commonwealth.           In
    addition, the Commonwealth must publish Procedure 96, in full,
    online and in other places readily accessible by the public.
    B.        Plaintiffs' Other Federal Claims Fail
    Plaintiffs raise three additional constitutional claims,
    all of which fail. First, plaintiffs argue that the Takings Clause
    prohibits the Commonwealth from collecting and asserting custody
    over the duplicate payments because no legitimate purpose is
    fulfilled by the Commonwealth's scheme.        Plaintiffs characterize
    Law 230 and its Amendments as a "forced loan" imposed on plaintiffs
    by the Commonwealth in "an illegitimate use of government powers"
    to "cover[] its budget shortfall."
    Although plaintiffs raise this claim under the Takings
    Clause, and rely on the Supreme Court's decision in Lingle v.
    Chevron U.S.A. Inc., 
    544 U.S. 528
     (2005), as the Court explained in
    that case, such a challenge to the underlying validity of a
    regulation "is logically prior to and distinct from the question
    -35-
    whether a regulation effects a taking."      
    Id. at 543
    .        The Takings
    Clause does not prohibit government from interfering with property
    rights, but rather requires just compensation for an "otherwise
    proper interference amounting to a taking."         
    Id.
     (emphasis added)
    (quoting First English Evangelical Lutheran Church of Glendale v.
    Cnty. of Los Angeles, 
    482 U.S. 304
    , 315 (1987)).
    Plaintiffs' grievance is with what they characterize as
    the Commonwealth's "misuse" of governmental powers.             They argue
    that "[t]he takings clause cannot be used to obtain forced loans
    from citizens even if the government institutes a fair repayment
    procedure."   (Emphasis added).
    Plaintiffs thus have mischaracterized what is in fact a
    substantive due process claim as a takings claim.               Plaintiffs'
    argument   that   the   Commonwealth's    purpose    in    collecting   and
    retaining custody over the duplicate payments "is not legitimate"
    is an argument that goes to the core of substantive due process
    law. See Cnty. of Sacramento v. Lewis, 
    523 U.S. 833
    , 845-46 (1998)
    ("We have emphasized time and again that '[t]he touchstone of due
    process is protection of the individual against arbitrary action of
    government,' whether the fault lies in a denial of fundamental
    procedural fairness, or in the exercise of power without any
    reasonable    justification   in    the   service     of    a   legitimate
    governmental objective." (internal citations omitted)). Plaintiffs
    -36-
    concede as much at points in their "takings" argument, in which
    they rely heavily on substantive due process law.
    We reject this attempt by plaintiff to cast their due
    process claim as an independent takings claim.              If plaintiffs have
    another theory of takings, they have not clearly articulated it and
    we deem their takings claim waived.
    However, plaintiffs do raise an independent substantive
    due process challenge to the compulsory insurance reimbursement
    scheme, which we now address.           Plaintiffs argue that Law 230 and
    its amendments are so arbitrary and illegitimate as to violate the
    substantive component of the Due Process Clause.
    We reject this challenge to the underlying validity of
    the compulsory insurance scheme.              It is not unconstitutional for
    the Commonwealth to charge plaintiffs the duplicate fees upfront in
    order to guarantee coverage, and thereafter take custody of the
    payments,    provided    that   the     Commonwealth       also   implements    a
    meaningful   notice     and   refund    process     that   complies   with     due
    process.
    Plaintiffs also argue that the burdens Procedure 96
    imposes on individual claimants constitutes a separate violation of
    procedural due process.       The district court rejected this argument
    finding that plaintiffs failed to demonstrate on the facts that
    Procedure 96 was excessively burdensome under the Due Process
    -37-
    Clause.    García-Rubiera v. Fortuño, 752 F. Supp. 2d at 187.                     We
    agree with the district court.
    We      also   reject      plaintiffs'     remaining    claims    and,
    reviewing for abuse of discretion, Mack v. Great Atl. & Pac. Tea
    Co., 
    871 F.2d 179
    , 186 (1st Cir. 1989), affirm the district court's
    decisions denying plaintiffs' request for disclosure of a sealed
    agreement between JUA and the Commonwealth and request to deem
    certain    facts     presented     by   plaintiffs      as   conceded   by    the
    Commonwealth.      García-Rubiera v. Fortuño, No. 3:02-cv-01179 (Sept.
    14, 2010).
    C.         The Puerto Rico Litigation Concerning the Commonwealth's
    Fiduciary Duties
    Law 230 directs the Commonwealth to take into trust
    property belonging to plaintiffs for a statutorily prescribed
    period, during which it is required to administer that trust. 
    P.R. Laws Ann. tit. 26, § 8055
    (l). The Commonwealth's status as trustee
    over the funds was conceded by all the parties in this case, and
    has been recognized repeatedly by both the district court and this
    court over the course of this litigation, see García-Rubiera, 
    570 F.3d at 452
     ("Furthermore, upon transfer to the Secretary, Law 230
    requires   the     Secretary     to   hold     the   duplicate   premiums    in    a
    fiduciary capacity." (citing 
    P.R. Laws Ann. tit. 26, § 8055
    (1)
    ("The Secretary of the Treasury shall retain these funds as trustee
    . . . ."))); 
    id.
     (comparing the funds entrusted to the Commonwealth
    to "funds held in trust in an IOLTA account or an interpleader
    -38-
    account");    García-Rubiera,         752   F.    Supp.    2d   at     184,   188-89;
    García-Rubiera, 
    516 F. Supp. 2d at
    191 n.14 ("Therefore, it appears
    that the trust continues even after the Secretary has transferred
    the money to the General Fund."); 
    id. at 198
     (directing the
    Commonwealth to cease its acquisition of any interest accrued on
    the duplicate payments).
    The fact that the Commonwealth holds the funds in trust
    presents several important questions of the possible breach of
    fiduciary duties under Puerto Rico trust law, as to the notice
    requirements for fiduciaries, the complexity and burdens of the
    refund procedure, and its tax set off provision.                  We leave to the
    Puerto Rico courts the question of whether the particulars of
    Procedure    96     violate   the   Commonwealth's         fiduciary      duties   to
    plaintiffs under Puerto Rico trust law.
    III.
    In summary, we affirm the district court's rejection of
    plaintiffs'       substantive   due    process     claim    and      procedural    due
    process burdensomeness claim and reject plaintiffs' takings claim.
    We   also    affirm    the    district      court's   denial      of    plaintiffs'
    evidentiary requests.
    We reverse the district court's rejection of plaintiffs'
    notice claim, and direct the court to enter a declaratory judgment
    in   favor   of    plaintiffs   that     the     Commonwealth's       reimbursement
    scheme, as embodied in Law 230 and its companion amendments and
    -39-
    regulations, violates the notice requirements of the Due Process
    Clause.    We further direct the district court to enter injunctive
    relief    requiring   the   Commonwealth   to   provide   adequate   public
    notice, as well as individualized notice to those insureds owed
    reimbursement, of the Commonwealth's procedures for reimbursement,
    consistent with this opinion.
    We remand to the district court for entry of declaratory
    and injunctive relief consistent with this opinion.
    So ordered.    Costs are awarded to plaintiffs.
    -40-
    

Document Info

Docket Number: 10-2507

Filed Date: 12/2/2011

Precedential Status: Precedential

Modified Date: 9/22/2015

Authorities (31)

Garcia-Rubiera v. Flores-Galarza , 516 F. Supp. 2d 180 ( 2007 )

Mennonite Board of Missions v. Adams , 103 S. Ct. 2706 ( 1983 )

Reetz v. Michigan , 23 S. Ct. 390 ( 1903 )

Texaco, Inc. v. Short , 102 S. Ct. 781 ( 1982 )

United States v. James Daniel Good Real Property , 114 S. Ct. 492 ( 1993 )

City of West Covina v. Perkins , 119 S. Ct. 678 ( 1999 )

mervyn-thomas-minority-livery-owners-and-drivers-coalition-neville , 143 F.3d 31 ( 1998 )

David J. Gallo, Movant-Appellant v. United States District ... , 349 F.3d 1169 ( 2003 )

chris-lusby-taylor-nancy-a-pepple-gonsalves-gary-kesselman-william-j , 488 F.3d 1197 ( 2007 )

Memphis Light, Gas & Water Division v. Craft , 98 S. Ct. 1554 ( 1978 )

Dusenbery v. United States , 122 S. Ct. 694 ( 2002 )

United States v. Florida East Coast Railway Co. , 93 S. Ct. 810 ( 1973 )

County of Sacramento v. Lewis , 118 S. Ct. 1708 ( 1998 )

Mathews v. Eldridge , 96 S. Ct. 893 ( 1976 )

DOWNING/SALT POND v. RI & Providence Plantations , 643 F.3d 16 ( 2011 )

Harold McClendon v. Thomas E. Rosetti, Individually and as ... , 460 F.2d 111 ( 1972 )

75 Acres, LLC v. Miami-Dade County , 338 F.3d 1288 ( 2003 )

McKesson Corp. v. Division of Alcoholic Beverages and ... , 110 S. Ct. 2238 ( 1990 )

Morrissey v. Brewer , 92 S. Ct. 2593 ( 1972 )

Thomasina Mack v. The Great Atlantic and Pacific Tea ... , 871 F.2d 179 ( 1989 )

View All Authorities »