Vaqueria Tres Monjitas, Inc. v. Comas-Pagan , 748 F.3d 21 ( 2014 )


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  •           United States Court of Appeals
    For the First Circuit
    No. 13-2517
    VAQUERÍA TRES MONJITAS, INC.; SUIZA DAIRY, INC.,
    Plaintiffs, Appellees,
    v.
    MYRNA COMAS PAGAN, Secretary of the Department of Agriculture for
    the Commonwealth of Puerto Rico; EDMUNDO ROSALY, Administrator of
    the Office of the Milk Industry Regulatory Administration for the
    Commonwealth of Puerto Rico,
    Defendants, Appellants.
    APPEAL FROM THE UNITED STATES DISTRICT COURT
    FOR THE DISTRICT OF PUERTO RICO
    [Hon. Daniel R. Domínguez, U.S. District Judge]
    Before
    Lynch, Chief Judge,
    Selya and Howard, Circuit Judges.
    Edward W. Hill for appellants.
    Rafael Escalera Rodríguez, with whom Amelia Caicedo Santiago,
    Carlos M. Hernández Burgos, and Reichard & Escalera were on brief,
    for appellees.
    April 3, 2014
    LYNCH, Chief Judge. Understandably concerned by language
    in a district court order which opined that Puerto Rico had waived
    its Eleventh Amendment immunity by entering into a Settlement
    Agreement, the Commonwealth's milk regulatory agency (Spanish
    acronym "ORIL") appeals. The court's language on that immunity was
    in no sense necessary to the approval of the Settlement Agreement
    or to entry of the judgment.   In the motion seeking approval, no
    party raised any Eleventh Amendment issue, nor was such an issue
    briefed or argued.   The statement is contrary to the principle of
    constitutional avoidance.   We conclude that the language at issue
    is merely a statement of dicta and not a judgment.   The statement
    is wholly gratuitous, does not respond to any argument made in
    those proceedings, and has the obvious effect of causing confusion.
    We strongly suggest to the district court that it issue an amended
    order deleting the language.   We otherwise dismiss the appeal for
    want of appellate jurisdiction.
    I.
    The facts of this long running case are found in more
    detail in Puerto Rico Dairy Farmers Association v. Comas Pagan, ___
    F.3d __ (1st Cir. Apr. 3, 2014), and in our court's previous
    decision, Vaquería Tres Monjitas, Inc. v. Irizarry, 
    587 F.3d 464
    (1st Cir. 2009), reh'g en banc denied, 
    600 F.3d 1
    (1st Cir. 2010),
    cert. denied, 
    131 S. Ct. 2441
    (2011).   We assume familiarity with
    those decisions.
    -2-
    On October 29, 2013, the plaintiffs Suiza Dairy, Inc.
    ("Suiza")     and   Vaquería       Tres   Monjitas,    Inc.   ("VTM"),      and   the
    government defendants, Myrna Comas Pagan, the Secretary of the
    Department of Agriculture for the Commonwealth of Puerto Rico, and
    Edmundo Rosaly, the Interim Administrator of ORIL (the Office for
    the   Milk    Industry     Regulatory     Administration),       filed    with    the
    district court for its approval the Final Settlement Agreement and
    Memorandum of Understanding Between the Parties ("Agreement"),
    executed that day.
    We briefly describe the substance of the settlement. The
    Agreement      provided      for    the   adoption     and    implementation       of
    Regulation 12, which governs pricing mechanisms in Puerto Rico's
    milk industry.           In effect, Regulation 12 establishes the price
    margins      for   all    players    in   the   industry.      As    part   of    the
    implementation       of    Regulation     12,   ORIL   pledged      to   conduct    a
    comprehensive study of the milk industry within twelve months of
    the effective date of the Agreement.
    Under the Agreement, the government of Puerto Rico is
    also obligated to create a "Special Fund to promote the efficiency
    of the Milk Market in Puerto Rico."              In addition to the "Special
    Fund," the government agreed to contribute funds over four years to
    Suiza and VTM as part of a regulatory accrual mechanism designed to
    allow the processors to recoup a fair rate of return on their
    products.
    -3-
    We turn from this substantive summary to the Agreement's
    precise language.       The Agreement first recited that there was no
    concession of the validity of the plaintiffs' claims or of any
    court order entered and that the effect of entry of the order would
    be dismissal of the case with prejudice.              The substance of the
    Agreement was found in covenants, contained in subparagraphs 3
    through 17 of the paragraph.            The Agreement included a final
    paragraph stating the parties' rights moving forward:
    The terms and conditions of this settlement
    will be incorporated into the firm, final and
    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
    hereby waive any defense they may have to the
    enforcement of this Agreement.
    (emphasis added).
    At   the    hearing   on    whether   to   enter   the   Settlement
    Agreement as a judgment, counsel for Suiza added that although the
    Agreement did not contain an explicit clause regarding contempt,
    the   plaintiffs      waived   all    attempts   to   find    the   government
    defendants in contempt.          Plaintiffs did not assert that the
    Commonwealth had waived its immunity either in the Agreement or
    specifically in the Agreement's "waive any defense" clause.              At no
    time did any issue concerning the Commonwealth's Eleventh Amendment
    -4-
    immunity come up at that hearing or in the settlement papers before
    judgment was entered.1
    The district court's order, entered on November 7, 2013,
    began with a paragraph identifying those who were parties to the
    Final Settlement Agreement.    The second paragraph approved and
    incorporated all of the covenants with numbered paragraphs, as
    follows:
    1.    All the covenants of the Settlement
    Agreement executed on October 29, 2013 are
    incorporated herein.
    2.      The   Court   has   original   federal
    jurisdiction in a federal question civil
    action, pursuant to 28 U.S.C. § 1331, and
    retains jurisdiction for compliance purposes,
    as to the terms and conditions of the
    Settlement Agreement of October 29, 2013 to
    ensure proper[] and timely implementation.
    The Court, hence, shall retain federal
    jurisdiction   to   enforce   the   Settlement
    Agreement until such time as the Commonwealth
    of Puerto Rico, the Puerto Rico Department of
    Agriculture and ORIL, as well as all signatory
    parties have complied fully and effectively
    with the Settlement Agreement, and have
    maintained such compliance for no less than
    four consecutive years, that is, December 31,
    2017.
    3.   The Commonwealth of Puerto Rico through
    the Secretary of Justice, the Puerto Rico
    Department of Agriculture and ORIL and its
    highest   executives,  shall   inform  their
    1
    The Commonwealth of "Puerto Rico enjoys the same immunity
    from suit that a State has under the Eleventh Amendment."
    Maysonet-Robles v. Cabrero, 
    323 F.3d 43
    , 53 (1st Cir. 2003).   It
    has consistently stated its Eleventh Amendment immunity at all
    stages of the litigation. See Vaquería Tres Monjitas, 
    Inc., 587 F.3d at 477-80
    .
    -5-
    successors as to the terms and conditions of
    this Settlement Agreement, particularly those
    economic terms and covenants that may remain
    to be fulfilled.
    4.   The Commonwealth of Puerto Rico, the
    Puerto Rico Department of Agriculture and ORIL
    shall require compliance with the Settlement
    Agreement by all of its agencies, departments,
    officials, employees, and their respective
    assigns and successors.
    5.   The Settlement Agreement of October 29,
    2013 does not include the Puerto Rico Dairy
    Farmers Association ("PRDFA"), hence, the
    PRDFA may proceed with their litigation filed
    under Civil No. 08-2191 (DRD).
    (footnote and internal citation omitted).
    After the numbered provisions of the second paragraph,
    there is a third paragraph, which is the source of Puerto Rico's
    concern:
    The Court is of the opinion that the voluntary
    signatures of the well represented authorized
    agents of the Commonwealth of Puerto Rico, the
    Puerto Rico Department of Agriculture and
    ORIL, constitutes a pellucid waiver of the
    Eleventh Amendment, as all the parties clearly
    stated that "[a]ll such parties hereby waive
    any defense they may have to the enforcement
    of this Agreement." . . . See also Watson v.
    Texas, 
    261 F.3d 436
    (5th Cir. 2001); Ellis v.
    University of Kansas Medical Center, 
    163 F.3d 1186
    (10th Cir. 1999).
    Unlike the earlier language, which imposes requirements consistent
    with the covenants of the Agreement, this paragraph signals merely
    that it states the view of the court.
    The final paragraph of the order closes the case for
    statistical   purposes   and   notes    that   the   court   will   "retain
    -6-
    jurisdiction for compliance purposes of all the covenants of the
    Settlement Agreement . . . or any other related matter and/or
    remedy related to the full compliance of the Settlement Agreement."
    On December 5, 2013, ORIL filed a motion to alter or
    amend the judgment pursuant to Fed. R. Civ. P. 59(e), in which it
    argued that there had been no Eleventh Amendment waiver and sought
    the elimination of the Eleventh Amendment paragraph in the district
    court's November 7 Order.     ORIL objected to the district court's
    sua sponte statements of opinion on Eleventh Amendment waiver.2
    ORIL stressed that it had asserted its Eleventh Amendment immunity
    continuously throughout the litigation and never waived it.         Not
    only did ORIL not intend to waive its immunity, it argued, but the
    language   of   the   Settlement   did   not   contain   the   "required
    unequivocal language" to support an Eleventh Amendment waiver
    finding.   In its motion, ORIL characterized the monetary relief
    included in the Settlement as an Ex parte Young-type remedy, see
    
    209 U.S. 123
    (1908), which did not imply a broader Eleventh
    Amendment waiver. It cited Frazar v. Gilbert, 
    300 F.3d 530
    , 549-50
    2
    In an effort to reap a windfall, Suiza opposed ORIL's Rule
    59(e) motion even though it had not argued for or requested the
    district court's Eleventh Amendment statement.       In its newly
    adopted position, Suiza argued that the Settlement "contemplated
    enforcement proceedings on which the District Court could provide
    remedies for non-compliance" with the Agreement, and that the
    "waive any defense" language included a waiver of Eleventh
    Amendment immunity.
    -7-
    (5th Cir. 2002), rev'd on other grounds, Frew ex rel. Frew v.
    Hawkins, 
    540 U.S. 431
    (2004).
    The   district     court    issued   an   Opinion    and     Order   on
    December 30, 2013, denying ORIL's Rule 59(e) motion and reiterating
    its view that the Agreement constituted an Eleventh Amendment
    waiver.   The    rejection    of     reconsideration,   said     the    court's
    statement, was based on the "waive any defense" clause of the
    Settlement Agreement, along with the fact that the Agreement
    provided for public funds to be paid to the milk processors as part
    of the Settlement's regulatory solution.
    We stress ORIL disagrees only with the court's statement
    on Eleventh Amendment waiver in its opinion, and otherwise agrees
    with the court's approval of the Settlement Agreement.
    II.
    First, we think it is plain that the Eleventh Amendment
    waiver statement in the unnumbered third paragraph in the district
    court's order is pure dicta.           See Municipality of San Juan v.
    Rullan, 
    318 F.3d 26
    , 28 n.3 (1st Cir. 2003) ("Dicta comprises
    observations    in   a   judicial    opinion   or   order     that   are   'not
    essential' to the determination of the legal questions then before
    the court." (quoting Dedham Water Co. v. Cumberland Farms Dairy,
    Inc., 
    972 F.2d 453
    , 459 (1st Cir. 1992))).
    The district court's approval and incorporation of the
    Settlement Agreement between the parties did not in any way require
    -8-
    addressing or resolving Eleventh Amendment issues.           As the parties
    agree, both the approval Order and the underlying Agreement can
    stand without such a resolution.3           That it was not necessary is
    amply demonstrated by the Supreme Court's decision in Frew, 
    540 U.S. 431
    .     There, the Court considered whether a district court
    could enforce a consent decree entered into by state officials
    without violating the Eleventh Amendment.             There, as here, the
    state officials did not challenge the validity of the underlying
    agreement.     
    Id. at 437-38.
        The Court concluded that enforcement
    was proper because the consent decree and the requested remedy were
    enforceable under Ex parte Young.          
    Id. at 436-37.
       It declined to
    even address whether there had been an Eleventh Amendment waiver,
    and noted that "[w]hen a federal court has entered a consent decree
    under Ex parte Young, the law's primary response to these concerns
    has its source not in the Eleventh Amendment but in the court's
    equitable powers and the direction given by the Federal Rules of
    Civil Procedure."      
    Id. at 441.
    Second,   at   the   very     least,   the   district   court's
    unprompted expression of opinion about the Eleventh Amendment runs
    afoul of the mandated adherence to the general principle of
    constitutional avoidance. Under this doctrine, "federal courts are
    3
    The court retained jurisdiction over the case for
    compliance purposes. The district court's ability to enforce the
    Settlement going forward also does not require an Eleventh
    Amendment holding at this stage.
    -9-
    not to reach constitutional issues where alternative grounds for
    resolution are available."         Am. Civil Liberties Union v. U.S.
    Conference of Catholic Bishops, 
    705 F.3d 44
    , 52 (1st Cir. 2013).
    The canon of constitutional avoidance binds both this court and the
    district court. See Ashwander v. Tenn. Valley Auth., 
    297 U.S. 288
    ,
    347 (1936) (Brandeis, J., concurring) ("The Court will not pass
    upon a constitutional question although properly presented by the
    record, if there is also present some other ground upon which the
    case may be disposed of."); Sony BMG Music Entm't v. Tenenbaum, 
    660 F.3d 487
    , 508 (1st Cir. 2011).            The district court's Eleventh
    Amendment statement unnecessarily reached out into and purported to
    opine on a difficult and consequential constitutional issue.
    There is particular reason to practice avoidance of
    unnecessary   statements   about    Eleventh   Amendment   issues.   The
    Eleventh Amendment "largely shields States from suit in federal
    court without their consent."        Hess v. Port Auth. Trans-Hudson
    Corp., 
    513 U.S. 30
    , 39 (1994).       The "central purpose" of Eleventh
    Amendment immunity is "to 'accord the States the respect owed them
    as' joint sovereigns," Fed. Mar. Comm'n v. S.C. State Ports Auth.,
    
    535 U.S. 743
    , 765 (2002) (quoting P.R. Aqueduct & Sewer Auth. v.
    Metcalf & Eddy, Inc., 
    506 U.S. 139
    , 146 (1993)), and it is
    "concerned not only with the States' ability to withstand suit, but
    with their privilege not to be sued," Metcalf & Eddy, 
    Inc., 506 U.S. at 147
    n.5.
    -10-
    In   light   of   the   Eleventh   Amendment's   importance   to
    protecting both the state fisc and the dignity of the state,
    Fresenius Med. Care Cardiovascular Res., Inc. v. P.R. & Caribbean
    Cardiovascular Ctr. Corp., 
    322 F.3d 56
    , 64-65 (1st Cir. 2003), the
    standard for finding a waiver is a stringent one.4           We will not
    find waiver unless it is "stated 'by the most express language or
    by such overwhelming implications from the text as [will] leave no
    room for any other reasonable construction.'"        Edelman v. Jordan,
    
    415 U.S. 651
    , 673 (1974) (quoting Murray v. Wilson Distilling Co.,
    
    213 U.S. 151
    , 171 (1909)); see College Sav. Bank v. Fla. Prepaid
    Postsecondary Educ. Expense Bd., 
    527 U.S. 666
    , 675-76 (1999).
    Apart from a clear declaration of waiver, a state may also waive
    4
    We note, without addressing any substantive question of
    Eleventh Amendment waiver, the district court's citation of Ellis
    v. University of Kansas Medical Center, 
    163 F.3d 1186
    (10th Cir.
    1998), in its statement does not support the court's language.
    Ellis states:
    [T]he fact that the defendants here entered into a
    settlement agreement with Ellis does not act as a waiver
    of the defendants' constitutionally protected immunity
    because the settlement agreement does not itself
    indicate, nor does the record otherwise reflect, an
    unequivocal intent to waive the immunity by the
    agreement.   See Johns v. Stewart, 
    57 F.3d 1544
    , 1554
    (10th Cir. 1995) (because constructive consent is
    insufficient, state's partial settlement does not
    constitute a waiver of Eleventh Amendment immunity in
    absence of unequivocal expression of a waiver); see also
    Saahir v. Estelle, 
    47 F.3d 758
    (5th Cir. 1995) (state's
    participation in settlement agreement not sufficient to
    waive its sovereign immunity).
    
    Id. at 1195.
    And Ellis holds the agreement could be enforced under
    Ex parte Young. 
    Id. at 1198.
    Watson v. Texas, 
    261 F.3d 436
    (5th
    Cir. 2001), also cited by the district court, is likewise
    distinguishable and involves different settlement language.
    -11-
    the Eleventh Amendment "by consent to or participation in a federal
    program for which waiver of immunity is an express condition," or
    by "affirmative conduct in litigation."          New Hampshire v. Ramsey,
    
    366 F.3d 1
    , 15 (1st Cir. 2004).
    Suiza    has    conceded    the   district      court's   Eleventh
    Amendment statement was not necessary to the judgment. We construe
    the statement as being merely an expression of opinion.                     Cf.
    Watchtower Bible & Tract Soc'y of N.Y., Inc. v. Colombani, 
    712 F.3d 6
    , 11 (1st Cir. 2013) (construing language in a district court
    order as not being final order). Consistent with our construction,
    we strongly suggest the district court strike the statement.                The
    statement    has    resulted      in   considerable   confusion       and   has
    unnecessarily prolonged this litigation.              Cf. Sony BMG Music
    
    Entm't, 660 F.3d at 508
    (vacating and remanding part of a district
    court's judgment where "[a] decision on a constitutional due
    process   question    was   not    necessary,   was   not    inevitable,    had
    considerable impermissible consequences, and contravened the rule
    of constitutional avoidance").
    Part of the obligation of federal appellate courts is not
    to engage in premature assessment of issues not presented by appeal
    from a judgment. As former Circuit Judge, now Justice, Breyer said
    in United States v. Ottati & Goss, Inc., 
    900 F.2d 429
    , 443 (1st
    Cir. 1990), we do not hear appeals from statements made by district
    courts which are not, "in any sense, necessary to the [district
    -12-
    court's] judgment."   See also In re Williams, 
    156 F.3d 86
    , 90 (1st
    Cir.   1998)   ("[F]ederal     appellate   courts   review   decisions,
    judgments, orders, and decrees -- not opinions . . . ."); accord
    Harrison v. United States, 
    284 F.3d 293
    , 302 (1st Cir. 2002)
    (because the district court did not need to reach the issue of
    damages, any findings regarding damages are dicta).
    III.
    The case will be remanded to the district court in
    accordance with this opinion.      We dismiss the appeal for want of
    appellate jurisdiction.      Costs are awarded to ORIL.
    -13-
    

Document Info

Docket Number: 13-2517

Citation Numbers: 748 F.3d 21, 2014 WL 1325755, 2014 U.S. App. LEXIS 6182

Judges: Lynch, Selya, Howard

Filed Date: 4/3/2014

Precedential Status: Precedential

Modified Date: 10/19/2024

Authorities (17)

Ashwander v. Tennessee Valley Authority , 56 S. Ct. 466 ( 1936 )

Murray v. Wilson Distilling Co. , 29 S. Ct. 458 ( 1909 )

Federal Maritime Commission v. South Carolina State Ports ... , 122 S. Ct. 1864 ( 2002 )

United States v. Ottati & Goss, Inc., United States of ... , 900 F.2d 429 ( 1990 )

julie-l-ellis-plaintiff-appellantcross-appellee-v-university-of-kansas , 163 F.3d 1186 ( 1999 )

Frew Ex Rel. Frew v. Hawkins , 124 S. Ct. 899 ( 2004 )

College Savings Bank v. Florida Prepaid Postsecondary ... , 119 S. Ct. 2219 ( 1999 )

michael-c-johns-and-john-davies-individually-and-on-behalf-of-all-other , 57 F.3d 1544 ( 1995 )

Dedham Water Co., Inc. v. Cumberland Farms Dairy, Inc. , 972 F.2d 453 ( 1992 )

Saahir v. Estelle , 47 F.3d 758 ( 1995 )

Harrison v. United States , 284 F.3d 293 ( 2002 )

Hess v. Port Authority Trans-Hudson Corporation , 115 S. Ct. 394 ( 1994 )

Watson v. State of Texas , 261 F.3d 436 ( 2001 )

Maysonet-Robles v. Cabrero , 323 F.3d 43 ( 2003 )

Sony BMG Music Entertainment v. Tenenbaum , 660 F.3d 487 ( 2011 )

Vaqueria Tres Monjitas, Inc. v. Irizarry , 600 F.3d 1 ( 2010 )

Municipality of San Juan v. Rullan , 318 F.3d 26 ( 2003 )

View All Authorities »