Cruz-Arce v. Mgmt. Admin. Services Corp. ( 2021 )

United States Court of Appeals
For the First Circuit
No. 20-1509
CHIANY CRUZ-ARCE, on her own behalf and as legal representative
of minor child H.V.C.,
Plaintiff, Appellant,
v.
MANAGEMENT ADMINISTRATION SERVICES CORPORATION and LEANETTE
VÉLEZ,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Silvia L. Carreño-Coll, U.S. District Judge]
Before
Howard, Chief Judge,
Selya and Barron, Circuit Judges.
Javier A Rivera-Vaquer and Rivera Mercado & Rivera Cordero on
brief for appellant.
Luis N. Blanco-Matos on brief for appellees.
December 6, 2021
SELYA, Circuit Judge. Plaintiff-appellant Chiany Cruz-
Arce, suing in her own right and on behalf of her minor child
(H.V.C.), seeks to hold private parties liable as state actors
under 42 U.S.C. § 1983. The plaintiff's federal claims hinge on
her allegation that the defendants were performing a function
traditionally and exclusively reserved to the state.1 Because the
amended complaint fails to allege sufficient facts to ground a
plausible conclusion that the function performed by the defendants
is, by tradition, an exclusive prerogative of the state, we affirm
the district court's order of dismissal.
I. BACKGROUND
Because this appeal arises out of a dismissal for failure
to state a claim upon which relief could be granted, see Fed. R.
Civ. P. 12(b)(6), we accept as true all well-pleaded facts
adumbrated in the plaintiff's amended complaint, see Haley v. City
of Boston, 657 F.3d 39, 46 (1st Cir. 2011); SEC v. Tambone, 597
F.3d 436, 438 (1st Cir. 2010) (en banc). We rehearse the
background of the case in that light and then trace its travel.
In 2015, the plaintiff was a tenant in the Manuel A.
Pérez low-income housing project (the Project) in San Juan, Puerto
For purposes of section 1983, Puerto Rico is the functional
1
equivalent of a state. See Santiago v. Puerto Rico, 655 F.3d 61,
69 (1st Cir. 2011); see also 42 U.S.C. § 1983 (providing for
liability for violations of federal rights "under color of any
statute, ordinance, regulation, custom, or usage, of any State or
Territory").
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Rico. The Project is owned by the Puerto Rico Department of
Housing (the Housing Department) and is administered through the
Puerto Rico Public Housing Administration (the PRPHA). The Housing
Department or the PRPHA, in turn, contracted with a private party,
defendant-appellee Management Administration Services Corporation
(MAS), to manage the Project.2
The plaintiff alleges that, following a change in her
employment situation, she contacted MAS and sought to modify her
monthly rent (as permitted by pertinent regulations). These
negotiations began in the spring of 2015. During the next two
years, the plaintiff and MAS wrangled over rent adjustments,
retroactivity issues, and ostensible rent arrearages. On July 19,
2017, MAS initiated eviction proceedings against the plaintiff in
a local Puerto Rico court. The plaintiff contested MAS's claims.
The plaintiff further alleges that — while the contested
eviction proceedings were pending — MAS gratuitously placed her
apartment on a list of vacant units given to the Puerto Rico Police
Department pursuant to a "policy and agreement." The purpose of
such a list was to help the police in identifying possible illegal
arms- and drug-trafficking activities conducted in vacant
2 In the amended complaint, the plaintiff refers to the
Housing Department as the contracting party. Her brief, however,
refers to the PRPHA as the contracting party. For present
purposes, this is a distinction without a difference. We therefore
assume — for ease in exposition — that the PRPHA engaged MAS.
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apartments. After receiving this listing, the police raided the
plaintiff's apartment, forcing the locks and ransacking the
interior. The plaintiff asserts that the officers' actions
incident to the search caused her and her autistic child "severe
emotional distress," requiring medical attention.
Based on the communication breakdowns and what she
deemed to be an illegal search, the plaintiff invoked section 1983
and brought this suit against MAS and its then-administrator,
Leanette Vélez, in the federal district court. The parties agreed
to proceed before a magistrate judge. See 28 U.S.C. § 636(c);
Fed. R. Civ. P. 73(b).3 In due course, the plaintiff served an
amended complaint containing three counts: count 1 alleged
violations of the Fourth and Fourteenth Amendments related to the
search; count 2 alleged denials of due process related to the
plaintiff's travails regarding the rent-adjustment negotiations
and eviction proceedings; and count 3 alleged pendant claims for
emotional distress under Article 1802 of the Puerto Rico Civil
Code.
As pleaded, the two counts of the amended complaint that
invoked section 1983 (counts 1 and 2) hinged on the question of
whether the defendants were "acting under color of state law" and,
3 While the case was pending, the magistrate judge was
appointed to the district court. In that capacity, she retained
jurisdiction over the case.
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thus, could be held liable as state actors. The operative
allegations of the amended complaint that bore on this question
were sparse. First, the plaintiff alleged that "[b]y law, the
Government of Puerto Rico[,] through the Housing Department, is in
charge of the operations and administration of the residential
community of Manuel A Perez." Second, she alleged that the Housing
Department, "instead of administrating the residential community,
entered into a services contract with [MAS] to supply the same in
[its] stead." The plaintiff made no other allegations concerning
the relationship between MAS and the government of Puerto Rico,
nor did her amended complaint contain any facts bearing on the
issue of whether MAS was carrying out a traditional and exclusive
state function.
The defendants moved to dismiss the amended complaint
for failure to state a claim upon which relief could be granted.
See Fed. R. Civ. P. 12(b)(6). The plaintiff opposed the motion.
She contended, in conclusory fashion, that MAS was exercising an
exclusive public function and could therefore be considered a state
actor. Surveying the plaintiff's allegations and contentions, the
district court found her federal claims wanting and granted the
defendants' motion to dismiss. The court determined that the
amended complaint failed to state any actionable federal claims
because it did not contain sufficient facts to ground a conclusion
that MAS was performing an exclusive public function. See, e.g.,
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Santiago v. Puerto Rico, 655 F.3d 61, 68-69 (1st Cir. 2011). It
then dismissed the remaining state-law claims without prejudice.
This timely appeal followed.
II. ANALYSIS
We review a dismissal for failure to state a claim de
novo. See Haley, 657 F.3d at 46; Tambone, 597 F.3d at 441. In
conducting this tamisage, we accept all well-pleaded, non-
conclusory facts set forth in the complaint as true and draw all
reasonable inferences therefrom to the pleader's behoof. See
Ashcroft v. Iqbal, 556 U.S. 662, 681 (2009); Haley, 657 F.3d at
46. As relevant here, we may augment those facts and inferences
with facts that are matters of public record or otherwise
susceptible to judicial notice. See Haley, 657 F.3d at 46.
It is by now common ground that a complaint must contain
only a "short and plain statement of the claim showing that the
pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Although
this is a low bar, it still requires more than a cascade of
conclusory allegations: at a minimum, the complaint must "contain
sufficient factual matter . . . to 'state a claim to relief that
is plausible on its face.'" Iqbal, 556 U.S. at 678 (quoting Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). As we have
explained, "[i]f the factual allegations in the complaint are too
meager, vague, or conclusory to remove the possibility of relief
from the realm of mere conjecture, the complaint is open to
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dismissal." Tambone, 597 F.3d at 442 (citing Twombly, 550 U.S. at
555). It is against this backdrop that we scrutinize the
plaintiff's amended complaint.
We begin with bedrock. Section 1983 furnishes a private
right of action against any person who, while acting under color
of state law, deprives another (or causes another to be deprived)
of rights secured either by the Constitution or by federal law.
See 42 U.S.C. § 1983; see also Santiago, 655 F.3d at 68. To make
out a section 1983 claim, a plaintiff must allege facts sufficient
to show that the defendants acted under color of state law and
caused the deprivation of federal rights. See Santiago, 655 F.3d
at 68. This "under color of state law" requirement lies at the
epicenter of the appeal that is before us.
Section 1983's "under color of state law" requirement
has long been regarded as functionally equivalent to the "state
action" requirement of the Fourteenth Amendment. See United States
v. Price, 383 U.S. 787, 794 n.7 (1966); Perkins v. Londonderry
Basketball Club, 196 F.3d 13, 17 n.1 (1st Cir. 1999). If the
challenged conduct cannot be classified as state action, a section
1983 claim necessarily fails. See Santiago, 655 F.3d at 68.
In the mine-run of cases, state action will derive from
the conduct of government actors, that is, government officials or
employees. See, e.g., Lugar v. Edmondson Oil Co., 457 U.S. 922,
936-39 (1982). Even so, when the conduct of a private party can
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be "fairly attributable to the State," that conduct may constitute
state action and, as such, engage the gears of section 1983. Id.
at 937. Determining whether a private party's conduct amounts to
state action demands a fact-intensive and context-specific
inquiry. See Burton v. Wilmington Parking Auth., 365 U.S. 715,
722 (1961) (observing that "[o]nly by sifting facts and weighing
circumstances can the nonobvious involvement of the State in
private conduct be attributed its true significance").
Because some constitutionally assured rights (such as
the right to due process) may be manifested in a nearly infinite
variety of applications, courts have resisted attempts to define
with granular precision the universe of circumstances in which a
private party may be considered to be acting under color of state
law. See id. Notwithstanding this need for individualized
consideration, we have noted three general ways in which a private
party may become a state actor within the purview of section 1983.
See Santiago, 655 F.3d at 68. First, a private party may be
considered a state actor if it assumes a public function which, by
tradition, is exclusively reserved to the state (the public
function test). See id. Second, a private party may be considered
a state actor if its conduct is coerced or significantly encouraged
by the state (the state compulsion test). See id. Third, a
private party may be considered a state actor if it and the state
have entered into so symbiotic a relationship that they have become
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joint participants in the challenged conduct (the nexus/joint
action test). See id.To defeat a motion to dismiss predicated on the "under
color of state law" requirement, a plaintiff need not specifically
allege which of these three tests applies in her particular case.
Cf. Bennett v. Schmidt, 153 F.3d 516, 518 (7th Cir. 1998)
(explaining that "[c]omplaints need not plead law or match facts
to every element of a legal theory"). Nor must the plaintiff
intone some catechism of magic words to describe the relationship
between the private party and the state. In the last analysis,
the allegations in the complaint, supplemented with reasonable
inferences therefrom and matters susceptible to judicial notice,
must comprise a factual predicate sufficient to render it plausible
that one of these tests can be satisfied. See Mead v. Indep.
Ass'n, 684 F.3d 226, 232 (1st Cir. 2012).
Here, the plaintiff stakes her section 1983 claims
solely on the public function test.4 But even when we take as true
all well-pleaded facts set forth in the amended complaint and draw
4The plaintiff did not argue below, and does not argue in
this court, that either the state compulsion test or the
nexus/joint action test applies to her case. Because no such
arguments have been made, we deem them waived. See Teamsters
Union, Local No. 59 v. Superline Transp. Co., 953 F.2d 17, 21 (1st
Cir. 1992); United States v. Zannino, 895 F.2d 1, 17 (1st Cir.
1990); see also Mead, 684 F.3d at 231-32 (analyzing claims under
state compulsion test alone because plaintiff only made arguments
under that test).
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all reasonable inferences therefrom in the plaintiff's favor, the
function that the plaintiff has attributed to the defendants is
not plausibly a public function that, by tradition, is exclusively
reserved to the state. We explain briefly.
The public function test "is designed to flush out a
State's attempt to evade its responsibilities by delegating them
to private entities." Perkins, 196 F.3d at 18-19. This test
prevents a state from shirking its traditional and exclusive
sovereign responsibilities by the simple expedient of recruiting
a private party to act in its stead. See Ponce v. Basketball Fed'n
of P.R., 760 F.2d 375, 379 (1st Cir. 1985). So, too, it prevents
a state from turning a blind eye to unconstitutional conduct
committed by a private party carrying out traditionally exclusive
sovereign responsibilities under a contract with the state. See
id.Importantly, the public function test does not turn
solely on whether a private party is performing some public
function (that is, a public purpose being executed on behalf of
the state). It turns instead on whether the public function is
one that has been "traditionally exclusively reserved to the
State." Jackson v. Metro. Edison Co., 419 U.S. 345, 352 (1974);
see Santiago, 655 F.3d at 69 (explaining that "[e]xclusivity is an
important qualifier, and its presence severely limits the range of
eligible activities"). The Supreme Court has found this aspect of
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the test to be satisfied only in narrowly circumscribed contexts
— contexts in which a particular function rests at the core of a
state's sovereign responsibilities. These contexts include the
administration of elections, see Nixon v. Condon, 286 U.S. 73, 89
(1932); the management of a town in which the private party serves
almost all the functions of government, see Marsh v. Alabama, 326
U.S. 501, 509 (1946); the administration and provision of health
care in prisons, see West v. Atkins, 487 U.S. 42, 54 (1988); and
— in special circumstances — the operation of a municipal park,
see Evans v. Newton, 382 U.S. 296, 301 (1966).
Cases in which courts have rejected claims that the
public function test has been satisfied are equally illuminating.
Many of those cases involve services rendered by private parties
in areas that are highly regulated, proximate to social welfare
programs, or both. For example, courts have held that the public
function test has not been satisfied when a private party has
assumed responsibility for the bonded warehousing of guns
confiscated by state police, see Jarvis v. Village Gun Shop, Inc.,
805 F.3d 1, 11-12 (1st Cir. 2015); the involuntary commitment of
the mentally ill, see Estades-Negroni v. CPC Hosp. San Juan
Capestrano, 412 F.3d 1, 8-9 (1st Cir. 2005); the education of
disadvantaged high school students, see Rendell-Baker v. Kohn, 457
U.S. 830, 842 (1982); and the transportation of students to and
from public schools, see Santiago, 655 F.3d at 69-70.
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These authorities guide our inquiry. The plaintiff
argues, in effect, that low-income public housing, by definition,
is the exclusive responsibility of the state. But placing the
adjective "public" as a descriptor of any service would operate to
place that service exclusively in the public domain. We reject so
facile a use of a self-fulfilling prophecy. It would defeat the
purpose of the public function test if qualifying functions could
be defined tautologically by plaintiffs.
The short of it is that the outcome of the public
function test does not depend on creative labeling. It is the
historical facts that matter most. See, e.g., id. at 70 (noting
history of school buses in public function test analysis); Rockwell
v. Cape Cod Hosp., 26 F.3d 254, 258-60 (1st Cir. 1994) (surveying
history of involuntary commitment of mentally ill persons when
deciding whether public function test has been satisfied).
Although we do not gainsay that the state is the exclusive provider
of state-owned low-income housing, it is not — and has not been —
the exclusive provider of low-income housing writ large.
The crux of the matter is that the provision of low-
income housing has never been exclusive to the government, either
in Puerto Rico or elsewhere in the United States. The plaintiff's
amended complaint contains no facts that support a contrary
conclusion. Nor does the historical record counsel in favor of
such a conclusion: over time, much low-income housing has been
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provided by private landlords, operating in a wide variety of
guises. See, e.g., AMTAX Holdings 227, LLC v. Tenants' Dev. II
Corp., 15 F.4th 551, 553 (1st Cir. 2021) (describing tax credit
incentivizing private development of low-income housing); One &
Ken Valley Hous. Grp. v. Maine State Hous. Auth., 716 F.3d 218,
220-21 (1st Cir. 2013) (discussing rental subsidies to private
landlords for low-income housing).
In an effort to change the trajectory of the debate, the
plaintiff relies heavily on the purposes and functions of the PRPHA
under Puerto Rico law. In particular, she cites a statute that
created the PRPHA. See P.R. Laws Ann. tit. 17, § 1002. That
statute, she notes, ascribes to the PRPHA the "purpose and function
of achieving a highly efficient administration of public
residential projects." Id. And as the plaintiff points out, that
statute also declares that the PRPHA "shall have the responsibility
of making decisions and executing the programs, systems, methods
and procedures to . . . [p]lan, organize, direct and coordinate
all ordinary and extraordinary administrative activities." Id.§ 1002(a).
We do not quarrel with the plaintiff's description of
what Puerto Rico law provides. But nothing in the statutory scheme
suggests — let alone requires — that the administration and
provision of low-income housing in Puerto Rico is the exclusive
prerogative of the state. By the same token, the other housing
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regulations (federal and state) mentioned by the plaintiff, see,
e.g., Admission to, and Occupancy of, Public Housing, 24 C.F.R.
§§ 960.101-960.707; P.R. Regs. Vivienda Reg. 6391, repealed by
Reg. 8624, show little more than that the field of low-income
housing is subject to significant regulation. They do not indicate
that the asserted public function — providing low-income housing
— is an exclusive function of the state.
To withstand a Rule 12(b)(6) motion, a plaintiff must
plead "sufficient factual matter . . . to 'state a claim to relief
that is plausible on its face.'" Haley, 657 F.3d at 46 (quoting
Iqbal, 556 U.S. at 678). In this instance, the plaintiff has
failed to marshal facts sufficient to render plausible her claim
that the defendants were exercising powers "traditionally
exclusively reserved to the State." Jackson, 419 U.S. at 352. It
follows inexorably that the district court did not err in
determining that the plaintiff's amended complaint failed to state
a claim under section 1983. Consequently, the district court did
not err in granting the defendants' motion to dismiss.5
Once the district court concluded that the plaintiff had
5
failed to plead a plausible claim under section 1983, it
appropriately declined to exercise supplemental jurisdiction over
the plaintiff's state-law claims (count 3). See 28 U.S.C.
§ 1367(c)(3); see also Rivera-Díaz v. Humana Ins. of P.R., Inc.,
748 F.3d 387, 392 (1st Cir. 2014).
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III. CONCLUSION
We need go no further. For the reasons elucidated above,
the judgment of the district court is
Affirmed.
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