Town of Barnstable v. O'Connor

United States Court of Appeals
For the First Circuit
No. 14-1597
TOWN OF BARNSTABLE,
Plaintiff, Appellant,
HYANNIS MARINA, INC.; MARJON PRINT AND FRAME SHOP LTD.; THE
KELLER COMPANY, INC.; ALLIANCE TO PROTECT NANTUCKET SOUND; SANDRA
P. TAYLOR; JAMIE REGAN,
Plaintiffs,
v.
ANGELA M. O'CONNOR, in her official capacity as Chair of the
Massachusetts Department of Public Utilities; JOLETTE A.
WESTBROOK, in her official capacity as Commissioner of the
Massachusetts Department of Public Utilities; ROBERT HAYDEN, in
his official capacity as Commissioner of the Massachusetts
Department of Public Utilities; JUDITH JUDSON, in her official
capacity as Commissioner of the Massachusetts Department of
Energy Resources; CAPE WIND ASSOCIATES, LLC;
NSTAR ELECTRIC COMPANY,
Defendants, Appellees.
No. 14-1598
HYANNIS MARINA, INC.; JAMIE REGAN; ALLIANCE TO PROTECT NANTUCKET
SOUND,
Plaintiffs, Appellants,
MARJON PRINT AND FRAME SHOP LTD.; THE KELLER COMPANY, INC.;
SANDRA P. TAYLOR; TOWN OF BARNSTABLE,
Plaintiffs,
v.
ANGELA M. O'CONNOR, in her official capacity as Chair of the
Massachusetts Department of Public Utilities; JOLETTE A.
WESTBROOK, in her official capacity as Commissioner of the
Massachusetts Department of Public Utilities; ROBERT HAYDEN, in
his official capacity as Commissioner of the Massachusetts
Department of Public Utilities; JUDITH JUDSON, in her official
capacity as Commissioner of the Massachusetts Department of
Energy Resources; CAPE WIND ASSOCIATES, LLC; NSTAR ELECTRIC
COMPANY,
Defendants, Appellees.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Richard G. Stearns, U.S. District Judge]
Before
Lynch, Chief Judge,
Stahl and Kayatta, Circuit Judges.
Ira H. Zaleznik, Joshua M. D. Segal, and Lawson & Weitzen LLP,
on brief for appellant Town of Barnstable.
Matthew E. Price, with whom Adam G. Unikowsky, Jenner & Block
LLP, Robert A. Bianchi, and Robert A. Bianchi & Associates, were on
brief, for appellants Hyannis Marina, Inc., Jamie Regan, and
Alliance to Protect Nantucket Sound.
Laurence H. Tribe, Jonathan S. Massey, and Massey & Gail LLP,
on brief for appellant Alliance to Protect Nantucket Sound.
Timothy J. Casey, Assistant Attorney General, with whom Martha
Coakley, Attorney General of Massachusetts, was on brief, for
appellees Angela M. O'Connor, Jolette A. Westbrook, Robert Hayden,
and Judith Judson.
David S. Rosenzweig, with whom Erika J. Hafner, Michael J.
Koehler, Keegan Werlin LLP, Geraldine E. Edens, Christopher
Marraro, and Baker & Hostetler LLP, were on brief, for appellee
Cape Wind Associates, LLC.
John D. Donovan, Jr., Matthew L. McGinnis, and Ropes & Gray
LLP, on brief for appellee NSTAR Electric Company.
May 18, 2015
KAYATTA, Circuit Judge. This appeal arises from the
latest in a series of lawsuits by opponents of a proposed off-shore
wind power generation facility in Nantucket Sound. Plaintiffs--who
include the Town of Barnstable, a non-profit advocacy group named
Alliance to Protect Nantucket Sound, and businesses and individuals
residing near the proposed facility1–-sought an injunction and a
declaratory judgment in federal district court against officials of
the Massachusetts Department of Public Utilities ("DPU") and the
Massachusetts Department of Energy Resources ("DOER") (together,
the "state defendants"),2 and two private parties, Cape Wind
Associates, LLC and NSTAR Electric Company,3 whose contract to buy
wind power DPU approved. The district court granted defendants'
motions to dismiss after determining that the Eleventh Amendment
precluded the assertion of federal court jurisdiction. For the
1
The other plaintiffs are Hyannis Marina, Inc., Marjon
Print and Frame Shop Ltd., The Keller Company, Inc., Sandra P.
Taylor, and Jamie Regan.
2
The state defendants are Angela M. O'Connor, in her
official capacity as Chair of DPU; Jolette A. Westbrook and Robert
Hayden, in their official capacities as Commissioners of DPU; and
Judith Judson, in her official capacity as Commissioner of DOER.
The officeholders for the above-listed positions have changed
multiple times during this appeal. We list the current
officeholders in accordance with Federal Rule of Appellate
Procedure 43(c)(2), which provides that "[w]hen a public officer
who is a party to an appeal . . . ceases to hold office,
. . . [t]he public officer's successor is automatically substituted
as a party."
3
Cape Wind and NSTAR were added as required parties
pursuant to Federal Rule of Civil Procedure 19(a).
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reasons explained below, we disagree that the Eleventh Amendment
bars the assertion of federal court jurisdiction over plaintiffs'
claims, and we remand for resolution of the case's status and the
possible need to resolve a litany of other issues concerning the
viability of the complaint.
I. Background4
Cape Wind has pursued development of offshore wind power
in Nantucket Sound since at least 2001. See Alliance to Protect
Nantucket Sound, Inc. v. U.S. Dep't of the Army, 288 F. Supp. 2d
64, 67 (D. Mass. 2003). The company has faced a series of
challenges against its attempts to acquire the necessary permits
and approvals for a planned 130-turbine, twenty-five square mile
facility in the Sound. See Town of Barnstable v. Berwick, 17 F.
Supp. 3d 113, 116—20 (D. Mass. 2014).
Cape Wind's efforts at convincing electric utilities
(also known as "electric distribution companies") to purchase its
wind energy received a boost in 2008, when the Massachusetts
legislature enacted the Green Communities Act (the "GCA"). 2008
Mass. Acts ch. 169 ("An Act Relative to Green Communities").
Section 83 of the GCA requires each Massachusetts electric utility
to "solicit proposals from renewable energy developers and . . .
enter into cost-effective long-term contracts" with such developers
4
Our recital of the facts traces the allegations in the
complaint, although for context we flesh out the story it tells
with some additional facts from the record.
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for up to three percent of the total energy demand in the utility's
service territory. Id. at § 83. Section 83 further provides that
"[t]he timetable and method for solicitation and execution of such
contracts shall be proposed by the distribution company in
consultation with [DOER] and shall be subject to review and
approval by [DPU]." Id.
As originally enacted, Section 83 permitted Massachusetts
utilities to fulfill their renewable energy obligation only by
entering into contracts for power generated "within the
jurisdictional boundaries of the commonwealth, including state
waters, or in adjacent federal waters." Id. In 2009, while that
geographic limitation was still in place, Cape Wind entered into
no-bid negotiations with National Grid--a competitor of NSTAR
operating in Massachusetts--for National Grid's purchase of fifty
percent of the wind energy generated by Cape Wind's proposed
facility. Cape Wind and National Grid later executed a contract,
which they called a Power Purchase Agreement ("PPA"). According to
plaintiffs' complaint, "[t]he National Grid contract prices were
significantly above the market price for electricity and above the
price of other renewable energy generation."
In 2010, a Canadian energy generator named TransCanada
Power Marketing sued DPU, alleging that Section 83's geographic
limitation unconstitutionally discriminated against interstate
commerce in violation of the dormant Commerce Clause. DPU settled
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the suit by suspending the geographic limitation5 and directing
utilities such as NSTAR to reopen bidding opportunities to out-of-
state generators. DPU did not, however, require National Grid to
back out of its agreement with Cape Wind. DPU instead approved the
Cape Wind-National Grid PPA in DPU Order 10-54.6 See DPU Order 10-
54 (Nov. 22, 2010) (final order).
NSTAR, for its part, subsequently received bids from
forty-four renewable energy developers and entered contracts with
three land-based wind generators, one located in-state and two out-
5
The geographic limitation was initially suspended by
Emergency Regulation. DPU later made the Emergency Regulations
permanent, see 220 Mass. Code Regs. §§ 17.00—17.09, and the
Massachusetts legislature subsequently removed the limitation from
the statute by amendment, see 2012 Mass. Acts ch. 209, § 35 ("An
Act Relative to Competitively Priced Electricity in the
Commonwealth").
6
DPU's approval of the Cape Wind-National Grid PPA was
unsuccessfully challenged by the Alliance before the Massachusetts
Supreme Judicial Court, Alliance to Protect Nantucket Sound, Inc.
v. Dep't of Pub. Utils., 461 Mass. 166, 167—68, 189 (2011), and by
a separate group of plaintiffs before the Federal Energy Regulatory
Commission ("FERC"), Californians for Renewable Energy, Inc.
(Care), 137 FERC ¶ 61,113 (Nov. 7, 2011) (Order Dismissing
Complaint) (the "Care Complaint").
The Massachusetts SJC rejected the Alliance's argument that
the fact that the geographic limitation was still in effect
"'tainted' the contracting process and [DPU's] approval of [the
PPA] in violation of the commerce clause," finding instead that
"National Grid entered into [the PPA] for reasons unrelated to the
geographic limitation provision" and thus there was no commerce
clause violation. Alliance, 561 Mass. at 172—74. The Care
Complaint, according to FERC, "consist[ed] of a string of vague and
unsupported allegations that [DPU's] order violates the [Federal
Power Act], [Public Utility Regulatory Policies Act] and previous
[FERC] orders," none of which had merit. 137 FERC ¶ 61,113 at
para. 32.
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of-state. According to the complaint, NSTAR contracted to buy
energy with those three companies at half the initial price Cape
Wind was charging National Grid pursuant to the Cape Wind-National
Grid PPA.
Later in 2010, NSTAR filed an application with DPU
requesting that it approve NSTAR's proposed merger with Northeast
Utilities, a Connecticut-based electric utility distribution
company.7 At the time, DPU applied a "no net harm" standard in
assessing merger applications, meaning that mergers would be
approved so long as the public interest "would be at least as well
served by approval of a proposal as by its denial." See D.P.U.
Order 10-170 (Mar. 10, 2011) (interlocutory order on standard of
review). Cape Wind and DOER, among others, intervened in the DPU
proceeding. DOER proposed a more stringent "substantial net
benefit" standard that would take into account "the advancement of
clean energy goals established by the [GCA] and the Global Warming
Solutions Act ['GWSA']." DOER also asked DPU to require NSTAR to
purchase off-shore wind energy as a condition for approving the
merger with Northeast Utilities.
After taking the parties' and intervenors' positions
under advisement, DPU chose to adopt a "net benefit" standard for
7
DPU approval is required for all mergers of utilities
subject to its jurisdiction. Mass Gen. Laws ch. 164, § 96 (2012).
Approval is only permitted if DPU finds the merger is "consistent
with the public interest." Id.
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electric utility mergers, which was more demanding than the
existing "no net harm" standard but less stringent than the
"substantial net benefit" standard that DOER requested. DPU
justified the new standard in part by pointing out that this was
its first opportunity to consider a merger of electric utilities
since the Massachusetts legislature enacted (1) the GCA, which
specifically provided that DPU, in reviewing a merger transaction,
must consider whether the merger will contribute to a "reliable,
cost effective energy delivery system," 2008 Mass. Acts ch. 169,
§ 69, amending Mass. Gen. Laws ch. 164, § 96, and (2) the GWSA,
which required that all Massachusetts state agencies "consider
reasonably foreseeable climate change impacts" in issuing
administrative approvals and decisions, 2008 Mass. Acts ch. 298,
§ 7, amending Mass. Gen. Laws ch. 30, § 61. DPU reasoned that
these legislative changes required it to put more emphasis on the
"benefits" side of the equation than it had in the past.
DOER then moved for a stay of the merger proceeding,
ostensibly so that it could determine the effect the merger would
have on consumers' utility rates. NSTAR and Northeast Utilities
contested the stay, informing DPU that the delay jeopardized the
merger agreement due to the agreement's internal deadlines and
evolving circumstances that could "affect the financial
underpinnings of the transaction." The complaint alleges that the
foregoing actions of DOER represented an "implicit threat to
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scuttle the merger unless NSTAR entered into a contract with Cape
Wind."
Of course, it was DPU, not DOER, that got to decide
whether and on what terms the merger would be approved.
Nevertheless, the theory of the complaint is that DOER's
politically potent advocacy was enough of a threat to cause NSTAR
to enter into "secret negotiations" with the Massachusetts
Governor's administration in order to win the administration's
support for NSTAR's merger with Northeast Utilities. Those
negotiations culminated on February 15, 2012, with a settlement
agreement between NSTAR and DOER.
The settlement agreement included, among other
provisions, a clause that NSTAR would purchase 27.5% of Cape Wind's
output under a proposed fifteen-year power purchase agreement ("the
PPA"), and a clause stating that DOER agreed that the merger "is
consistent with the public interest." Under the settlement
agreement, Cape Wind and NSTAR's contract would contain terms
substantially the same as the terms of the Cape Wind-National Grid
PPA. Performance of that contract would cause NSTAR's renewable
energy usage to rise from 1.6% to 3.5% of its total production
portfolio, thus exceeding Section 83's statutory threshold. The
proposed contract was contingent upon, among other things, Cape
Wind's timely procurement of financing and building permits, DPU's
approval of the PPA itself, and FERC's approval of the PPA's rates.
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On February 24, 2012, after entering the settlement agreement,
NSTAR, Cape Wind, and DOER submitted a Memorandum of Understanding
("MOU") to DPU seeking approval of a method and timetable for
negotiating the Cape Wind-NSTAR PPA. DPU approved the MOU (but not
yet the PPA itself) on March 22, 2012, see DPU Order 12-19 (Mar.
22, 2012) (final order), and Cape Wind and NSTAR executed the PPA
the next day. On April 4, 2012, DPU approved NSTAR's merger with
National Grid. See DPU Order 10-170-B (Apr. 4, 2012) (final
order).
After three public comment hearings and two evidentiary
hearings, DPU issued a final decision on November 26, 2012,
approving the Cape Wind-NSTAR PPA. See DPU Order 12-30 (Nov. 26,
2012) (final order) (hereinafter "Order 12-30"). Pursuant to Order
12-30, DPU has an ongoing responsibility to review NSTAR's recovery
of above-market costs in its annual reconciliation filings.
According to the PPA itself, DPU will also serve as the arbiter for
determining when "Physical Construction" of the Nantucket Sound
facility commences under the PPA. The PPA provides that if Cape
Wind fails to begin Physical Construction prior to December 31,
2015, NSTAR "shall terminate" the PPA on that date.
Plaintiffs declined to appeal Order 12-30 directly to the
Massachusetts Supreme Judicial Court, as was their right under
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Mass. Gen. Laws ch. 25 § 5,8 and instead filed this action in
federal district court fourteen months later, claiming that they
would incur higher electricity rates under the PPA and suffer
"negative impacts to the environment, regional economy, historic
and cultural resources, public safety, and recreational
opportunities."
Plaintiffs' complaint sought "a declaration that the
Commonwealth of Massachusetts violated both the dormant Commerce
Clause and the Supremacy Clause when it used its influence over
NSTAR's merger request to bring about NSTAR's entry into an above-
market wholesale electricity contract with Cape Wind," and
"appropriate injunctive relief to remedy the constitutional
violation and invalidate the contract that Massachusetts compelled
NSTAR to enter." More specifically, Count 1 of the complaint
alleged that by "requiring" NSTAR to enter the PPA with a
particular party at a particular price instead of allowing NSTAR to
freely negotiate the contract, DOER "violated federal law and
policy which requires wholesale electric energy prices to be set
pursuant to freely-negotiated market transactions."9 Count 2
8
"An appeal as to matters of law from any final decision,
order or ruling of [DPU] may be taken to the supreme judicial court
by an aggrieved party in interest by the filing of a written
petition praying that the order of [DPU] be modified or set aside
in whole or in part." Id.
9
The Federal Power Act places the regulation of interstate
wholesale electric energy transmission and rates exclusively under
federal control. See 16 U.S.C. § 824(a) and (b); Nantahala Power
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alleged that "[b]y conditioning its approval of the merger on the
execution of a PPA between NSTAR and Cape Wind, DOER prevented out-
of-state generation facilities from competing with Cape Wind," and
"[t]herefore, DOER's actions had a discriminatory effect on out-of-
state business and violated the dormant Commerce Clause."10
The state defendants (collectively), Cape Wind, and NSTAR
each submitted their own motions seeking dismissal on grounds of
sovereign immunity, preclusion, lack of ripeness, and plaintiffs'
failure to state a plausible claim under either the Supremacy or
Commerce Clause. The district court, in an opinion we describe in
more detail below, determined that "the debate begins and ends with
the Eleventh Amendment," and held that sovereign immunity barred
the court's jurisdiction to hear plaintiffs' claims. In a series
of footnotes, the district court also expressed doubts about
whether plaintiffs had standing to press their claims and the
merits of their underlying substantive allegations. This timely
& Light Co. v. Thornburg, 476 U.S. 953, 966 (1986). As the Third
Circuit recently explained, "[w]hile FERC once directly considered
whether the wholesale rates submitted to it were 'just and
reasonable,'" the agency now "favors using market mechanisms to
produce competitive rates for interstate sales and transmissions of
energy." PPL Energyplus, LLC v. Solomon, 766 F.3d 241, 247 (3d
Cir. 2014).
10
The clause of the Constitution granting Congress the
power to regulate interstate commerce, U.S. Const. art. I, § 8, cl.
3, "embodies a negative aspect as well--the 'dormant Commerce
Clause,'" which "prohibits protectionist state regulation designed
to benefit in-state economic interests by burdening out-of-state
competitors." Alliance of Auto. Mfrs. v. Gwadosky, 430 F.3d 30, 35
(1st Cir. 2005) (internal quotation marks omitted).
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appeal from the district court's dismissal with prejudice
followed.11
II. Discussion
A. Standard of Review
A district court's dismissal for lack of subject matter
jurisdiction under Federal Rule of Civil Procedure 12(b)(1) is
reviewed de novo. See Murphy v. United States, 45 F.3d 520, 522
(1st Cir. 1995). As when we review a dismissal for failure to
state a claim under Federal Rule of Civil Procedure 12(b)(6), "we
construe the Complaint liberally and treat all well-pleaded facts
as true, according the plaintiff[s] the benefit of all reasonable
inferences." Id.; accord Negron-Gaztambide v. Hernandez-Torres, 35
F.3d 25, 27 (1st Cir. 1994).
B. Sovereign Immunity
1. The Applicable Law
The Eleventh Amendment of the United States Constitution
provides that "[t]he judicial power of the United States shall not
be construed to extend to any suit in law or equity, commenced or
prosecuted against one of the United States by Citizens of another
State, or by Citizens or Subjects of any Foreign State." U.S.
Const. amend XI. "Long interpreted as an affirmation of state
sovereign immunity[,] . . . [the] amendment (despite its literal
11
The Town of Barnstable and the Alliance (joined by
Hyannis Marina, Inc. and Jamie Regan) filed separate notices of
appeal, which we consolidated.
-13-
text) also bar[s] a citizen from bringing a federal court action
against his or her own State," Maysonet-Robles v. Cabrero, 323
F.3d 43, 48 (1st Cir. 2003) (citation and footnote omitted),
including instrumentalities of the state, such as state agencies,
see Regents of the Univ. of Cal. v. Doe, 519 U.S. 425, 429–30
(1997).
Broad as it may seem, "[t]his proscription is subject to
a well recognized exception memorialized in Ex parte Young," 209
U.S. 123, 159—60 (1908), which permits "federal courts,
notwithstanding the absence of consent, waiver or evidence of
congressional assertion of national hegemony, [to] enjoin state
officials to conform future conduct to the requirements of federal
law." Rosie D. ex rel. John D. v. Swift, 310 F.3d 230, 234 (1st
Cir. 2002) (alteration in original) (internal quotation marks
omitted). A "pivotal question" under Ex parte Young is whether the
relief "serves directly to bring an end to a present violation of
federal law." Whalen v. Mass. Trial Court, 397 F.3d 19, 29 (1st
Cir. 2005) (internal quotation marks omitted). The exception
memorialized in Ex parte Young, in turn, itself has exceptions.
The Constitution does not permit relief that "would have much the
same effect as a full-fledged award of damages or restitution by
the federal court, the latter kinds of relief being of course
prohibited by the Eleventh Amendment." Mills v. Maine, 118 F.3d
37, 55 (1st Cir. 1997) (internal quotation marks omitted) (quoting
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Green v. Mansour, 474 U.S. 64, 73 (1985)); see also Edelman v.
Jordan, 415 U.S. 651, 668 (1974). And Congress may render the Ex
parte Young exception inapplicable by "prescrib[ing] a detailed
remedial scheme for the enforcement against a State of a
statutorily created right." Seminole Tribe of Fla. v. Florida, 517
U.S. 44, 74 (1996).
In Verizon Maryland, Inc. v. Public Service Commission of
Maryland, 535 U.S. 635 (2002), where, as here, plaintiffs sued a
state regulatory commission for issuing an order that was allegedly
preempted by federal law, the Supreme Court articulated the
sovereign immunity inquiry as follows: "In determining whether the
doctrine of Ex parte Young avoids an Eleventh Amendment bar to
suit, a court need only conduct a straightforward inquiry into
whether [the] complaint alleges an ongoing violation of federal law
and seeks relief properly characterized as prospective." Id. at
645 (alteration in original) (internal quotation marks omitted).
The Court reasoned that a request "that state officials be
restrained from enforcing an order in contravention of controlling
federal law . . . clearly satisfies our 'straightforward inquiry.'"
Verizon, 535 U.S. at 646. Moreover, a declaration of the "past, as
well as the future, ineffectiveness of the [state commission's]
action" was not barred because it did "not impose upon the State 'a
monetary loss resulting from a past breach of a legal duty on the
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part of the defendant state officials.'" Id. (quoting Edelman, 415
U.S. at 668).
Critically for our decision in this case, the Supreme
Court in Verizon also expressly rejected the Fourth Circuit's
suggestion that the claim could not be brought due to the latter's
view that "the [state commission's] order was probably not
inconsistent with federal law after all." Id. The Court responded
by stating that the "inquiry into whether suit lies under Ex parte
Young does not include an analysis of the merits of the claim."
Id. (citing Idaho v. Coeur d'Alene Tribe of Idaho, 521 U.S. 261,
281 (1997) ("An allegation of an ongoing violation of federal law
. . . is ordinarily sufficient to invoke [Ex parte Young].")).
This "straightforward inquiry" is not always so
straightforward. See Verizon, 535 U.S. at 648—49 (Kennedy, J.,
concurring) (calling the Verizon test "deceptively simple").
Rather, "the difference between the type of relief barred by the
Eleventh Amendment and that permitted under Ex parte Young will not
in many instances be that between day and night." Edelman, 415
U.S. at 667. Also, there are "certain types of cases that formally
meet the [Ex parte] Young requirements of a state official acting
inconsistently with federal law but that stretch that case too far
and would upset the balance of federal and state interests that it
embodies." Papasan v. Allain, 478 U.S. 265, 277 (1986).
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With the foregoing as our guide, we examine plaintiffs'
complaint, with special attention to the ongoing nature of the
alleged offense and the type of relief sought.
2. Application of that Law to this Case
The complaint first asks the court to "[e]njoin[] the DPU
from enforcing its order approving the PPA"--a contract that is
enforceable purely due to DPU's (allegedly unconstitutional)
Order 12-30. And it requests a declaratory judgment that DPU
Order 12-30, which plaintiffs say is in effect "forc[ing] [NSTAR]
to purchase power pursuant to the Cape Wind-NSTAR contract," be
nullified. As pled by plaintiffs, the continued enforceability of
the PPA represents an ongoing violation of federal law because
Order 12-30 binds the parties to abide by the PPA's allegedly
unconstitutional terms. The relief requested is "properly
categorized as prospective" because it is trained at preventing
future contract performance and avoiding damages that plaintiffs
have yet to incur. Verizon, 535 U.S. at 645 (internal quotation
marks omitted).
The district court did not claim that plaintiffs sought
damages from the state treasury. It also implicitly recognized
that a claim for money damages is not a sine qua non for finding a
lack of federal court jurisdiction. See Coggeshall v. Mass. Bd. of
Registration of Psychologists, 604 F.3d 658, 666 n.4 (1st Cir.
2011) ("We do not imply that the Eleventh Amendment bars claims
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only for money damages. That is not the case."). In this manner,
the district court correctly reached the key question: is the
requested relief "properly characterized as prospective." Va.
Office for Prot. & Advocacy v. Stewart, 131 S. Ct. 1632, 1639
(2011) (quoting Verizon, 535 U.S. at 645 (internal quotation marks
omitted). In answering this question in the negative, the district
court found that:
[T]he effect of a declaration that
Massachusetts had illegally compelled [NSTAR]
and Cape Wind to enter an above-market price
contract for wind energy would inevitably lead
to restitutionary claims against the
Commonwealth by NSTAR and Cape Wind, while an
injunction ordering DPU to cease enforcement
of the PPA and to take remedial measures for
the alleged constitutional harms would
restrain the State from acting by frustrating
its efforts to implement the policies
enunciated in the GCA and the GWSA, while
further bleeding the treasury.
(Footnote omitted). We agree with plaintiffs that the district
court erred in this crucial finding.
First, the hypothetical future "restitutionary claims"
the district court forecasts are both conjectural and capable of
being addressed on their own terms. As plaintiffs persuasively
argue, "even if NSTAR or Cape Wind could identify some plausible
claim for damages against the state and were thereupon to file
suit, that suit could then be dismissed on grounds of sovereign
immunity, and the State's treasury would be undisturbed." So,
whether a future suit by plaintiffs, NSTAR, or someone else that
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would in fact "bleed the treasury" may be barred by the
Commonwealth's sovereign immunity, we need not decide in this case.
Second, a conclusion that the requested equitable relief
"would restrain the State from acting by frustrating its efforts to
implement the policies enunciated in the GCA and the GWSA" does not
resolve the sovereign immunity inquiry. The Ex parte Young
doctrine's very existence means that a plaintiff may frustrate the
efforts of a state policy when those efforts violate or imminently
threaten to violate the plaintiff's constitutional rights and the
plaintiff confines its request to the proper form of relief.
Defendants also argue that DPU has no ongoing role in
enforcing the PPA, and that therefore there can be no "ongoing
violation" of federal law under Verizon. They reiterate the
district court's observation that the complaint itself does not
refer to "any future actions the State Defendants must take with
respect to the contract." Thus, defendants say, the relief
plaintiffs seek is "entirely retrospective" and falls outside of
the Ex parte Young doctrine.
On this point, too, plaintiffs have a persuasive
response. DPU does in fact possess an ongoing responsibility with
respect to the PPA, because Order 12-30 states that DPU will
"review NSTAR Electric's recovery of above-market costs in its
annual reconciliation filings" to "ensure that [NSTAR] recovers
such costs in a manner approved by [DPU]." The PPA itself, which
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DPU approved, also provides that "upon petition by" NSTAR, DPU
shall determine whether "Physical Construction" has commenced by
December 31, 2015, and if it has not commenced, NSTAR "shall
terminate" the PPA as of said date.12 The fact that Order 12-30
occurred in the past therefore does not itself push the complaint
outside the confines of the Ex parte Young doctrine. Logic
supports this conclusion: most unconstitutional agency
determinations will have occurred in the past by the time a lawsuit
is brought; sovereign immunity does not necessarily prevent suits
against such state actions when the alleged violation they spur is
ongoing and no raid on the state treasury will result. See
Verizon, 535 U.S. at 646.
For the foregoing reasons, we conclude that the district
court erred in finding that the relief sought by plaintiffs is
retroactive and thus outside the reach of the Ex parte Young
exception.
12
Plaintiffs did not attach the PPA or Order 12-30 to their
complaint. Each was introduced below for the first time as an
exhibit to the defendants' motions to dismiss. Ordinarily, in
considering a motion to dismiss, we would not consider extraneous
documents unless they are attached to the complaint or expressly
incorporated therein, or unless the proceeding was properly
incorporated into one for summary judgment under Federal Rule of
Civil Procedure 56. Watterson v. Page, 987 F.2d 1, 3 (1st Cir.
1993). However, we have made an exception "for documents the
authenticity of which are not disputed by the parties; for official
public records; for documents central to plaintiffs' claim; or for
documents sufficiently referred to in the complaint." Id. at 3—4
(collecting cases). That exception applies to both the PPA and
Order 12-30.
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C. Alternative Arguments For Affirmance
Anticipating the possibility that we would reverse the
sovereign immunity holding, defendants point us to several other
alternative arguments for affirming a judgment of dismissal, all of
which were advanced in the district court, but not addressed by the
court other than signaling that it tended to find at least some of
those grounds for dismissal persuasive. Our precedent gives us the
discretion whether to reach those arguments in the first instance,
or to remand. See, e.g., United States ex rel. Estate of
Cunningham v. Millennium Labs. of Cal., Inc., 713 F.3d 662, 675—76
(1st Cir. 2013) (remanding for a determination of whether relator's
claims were well-pled under Fed. R. Civ. P. 12(b)(6) and 9(b) after
finding error in the district court's decision that it lacked
jurisdiction); Aguilar v. U.S. Immigration & Customs Enforcement,
510 F.3d 1, 21 (1st Cir. 2007) (assessing the viability of
petitioners' claims on the merits after finding that the district
court erroneously dismissed the case on jurisdictional grounds).
Our exercise of that discretion in this instance is guided by
developments that occurred after briefing was complete.
On December 31, 2014, a week before we heard oral
arguments in this case, Cape Wind notified NSTAR that it had failed
to timely meet certain financing deadlines ("Critical Milestones")
defined in the PPA. NSTAR then sent a letter dated January 6, 2015
to Cape Wind, stating that NSTAR was invoking its right to
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terminate the PPA due to that default, in accordance with the
rights reserved to NSTAR by the PPA's remedies provisions. On the
next day, NSTAR filed a letter with this court notifying us of the
termination and opining that the termination mooted this appeal.
We responded by instructing the parties to submit supplemental
briefing to explain what had occurred and to set forth any
arguments about the mootness or ripeness of the appeal following
NSTAR's purported termination. Predictably, the parties disagree
about whether NSTAR's termination is "valid" under the contract,
whether Cape Wind has taken the steps necessary to preserve the
contract in the face of NSTAR's attempted termination, and whether
Cape Wind has a plausible defense to NSTAR's termination under the
PPA's "Force Majeure" Clause.
The parties also advance different views on the
mootness/ripeness issue: NSTAR argues that the appeal is both moot
and unripe; plaintiffs argue that the appeal is unripe but not
moot; Cape Wind says it is neither; and the state defendants take
no position on the mootness/ripeness issue.
The Supreme Court has placed the "heavy burden of
persuasion" with respect to mootness on the party advocating for
it. United States v. Concentrated Phosphate Exp. Ass'n, 393 U.S.
199, 203 (1968); accord Adarand Constructors, Inc. v. Slater, 528
U.S. 216, 222 (2000). The Court has used strong limiting language
to describe the mootness inquiry: Intervening events must "have
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completely and irrevocably eradicated the effects" of the parties'
conduct in order for a case to be deemed moot. Cnty. of Los
Angeles v. Davis, 440 U.S. 625, 631 (1979); accord Knox v. Serv.
Emps. Int'l Union, Local 1000, 132 S. Ct. 2277, 2287 (2012) ("[A]s
long as the parties have a concrete interest, however small, in the
outcome of the litigation, the case is not moot." (alteration in
original) (internal quotation marks omitted)).
If Cape Wind agreed that NSTAR's termination of the PPA
was valid, we would have little difficulty determining that the
case was moot. There would be no legally binding contract
enforcement to enjoin, and a declaration of the defunct PPA's
illegality would be "merely advisory." Am. Civil Liberties Union
of Mass. v. U.S. Conference of Catholic Bishops, 705 F.3d 44, 53,
58 (1st Cir. 2013) ("The expiration of a contract on its own terms
constitutes . . . a mooting event."); cf. Lake Coal Co., Inc. v.
Roberts & Schaefer Co., 474 U.S. 120, 120 (1985) (per curiam)
(complete, uncontested settlement moots appeal).
NSTAR's termination of the contract, however, is
contested by Cape Wind. Therefore, to find that NSTAR's purported
contract termination "completely and irrevocably eradicated the
effects" of Order 12-30, Cnty. of Los Angeles, 440 U.S. at 631, we
would need to adjudicate the merits of the termination dispute.
Such a need itself suggests that there presently remains a live
controversy. See Chico Serv. Station, Inc. v. Sol P.R. Ltd., 633
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F.3d 20, 36 (1st Cir. 2011) (deciding that "[w]e cannot conclude
that [the plaintiff's] claim . . . is moot," because "there appear
to be unresolved disputes as to whether [the defendant] has met its
. . . obligations" under the relevant statute); cf. United States
v. Hahn, 359 F.3d 1315, 1323 (10th Cir. 2004) (en banc)
(distinguishing an earlier-decided, mooted case because the parties
to a civil settlement agreement did not challenge the agreement's
validity, whereas the plea agreement in the instant case did not
moot defendant's sentencing challenge because defendant sought to
void the agreement). We find particularly instructive the fact
that NSTAR predicates its mootness argument on its own
interpretations of the PPA's termination and force majeure clauses,
while simultaneously telling us that, due in part to the contract's
dispute resolution provisions, federal courts lack jurisdiction to
decide that its (contested) interpretations are correct.13
Nor does NSTAR's challenged contract termination lead us
to conclude that the ripeness doctrine divests this court (or the
district court on remand) of jurisdiction to adjudicate plaintiffs'
claims. "[W]here challenges are asserted to government actions and
ripeness questions arise, a court must consider both 'fitness' for
13
More specifically, NSTAR claims in its supplemental brief
that both this court and the federal district court lack
jurisdiction to adjudicate a contractual dispute concerning the PPA
due to the PPA's forum selection clause and the absence of federal
subject matter jurisdiction. We take no position on either
argument.
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review and 'hardship.'" Verizon New England, Inc. v. Int'l Bhd. of
Elec. Workers, Local No. 2322, 651 F.3d 176, 188 (1st Cir. 2011).
The "fitness for review" inquiry centers upon "whether
the claim involves uncertain and contingent events that may not
occur as anticipated or may not occur at all." Ernst & Young v.
Depositors Econ. Prot. Corp., 45 F.3d 530, 536 (1st Cir. 1995)
(internal quotation marks omitted). Resolution of the actual claim
here--that Massachusetts officials unconstitutionally forced NSTAR
to enter a contract with Cape Wind--hinges on an assessment of
events that have already occurred. All that is contingent and
uncertain is the possibility that the dispute about the lawfulness
of the Commonwealth's actions may become moot. If we were to find
the possibility of future mootness to be the type of contingency
that would create a lack of ripeness, we would simply be changing
mootness doctrine to signal a lack of jurisdiction not merely when
a controversy is moot, but also when it might become moot.
The hardship inquiry is best articulated in a "positive
vein." Verizon New England, 651 F.3d at 188 (quoting Rhode Island
v. Narragansett Indian Tribe, 19 F.3d 685, 693 (1st Cir. 1994)).
It turns on "whether granting relief would serve a useful purpose,
or, put another way, whether the sought-after declaration would be
of practical assistance in setting the underlying controversy to
rest." Id. (internal quotation marks omitted). That standard is
satisfied here because Cape Wind and/or NSTAR would undoubtedly act
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differently tomorrow, and be able to spend their resources with
less risk of waste, if they learned today that DPU's approval of
the PPA is invalid. See Weaver's Cove Energy, LLC v. R.I. Coastal
Res. Mgmt. Council, 589 F.3d 458, 468—69 (1st Cir. 2009) (deciding
that case was ripe in part because a holding on the merits would
cause the contested agency decisions and regulations to "cease to
be barriers to ultimate approval of the project"). Of course, the
added factor of potential mootness may make it easier to bet on how
best to act in the face of any dilemma created by plaintiffs' legal
challenge. But, again, we can find no basis for expanding the
grounds for finding jurisdictional mootness simply by relabeling
the potential for future mootness to be a lack of ripeness.
We conclude, therefore, that for our purposes there
remains a case or controversy. That being said, however, what
facially appears to be a serious potential for this case to become
moot does cause us to decline to exercise our discretion to reach
out now to decide questions of law upon which the district court
has itself not yet focused or addressed other than in passing. The
district court is better able than is this court to determine the
imminency of the contract termination dispute's resolution and,
within reason, set the schedule for resolving plaintiffs' claims
accordingly. It may be, too, that with the Ex parte Young issue
resolved, the parties may themselves agree on a sensible priority
for resolving the contract issues and the remaining legal
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challenges to the contract's validity.
III. Conclusion
We express no view on whether the complaint's factual
allegations with respect to either substantive claim are otherwise
sufficiently well-pled to survive a Rule 12(b)(6) motion for
failure to state a claim. See Schatz v. Republican State
Leadership Comm., 669 F.3d 50, 55 (1st Cir. 2012). Nor do we
express any opinion on the validity of defendants' other bases for
a motion to dismiss such as whether plaintiffs have standing to
press their claims or whether they possess a private right of
action under the Supremacy Clause. We simply hold that: the
district court erred in concluding that plaintiffs' claims fall
outside the Ex parte Young exception to the Eleventh Amendment; and
that the case is now neither moot nor unripe.
We therefore vacate the judgment of dismissal, and remand
this case to the district court for actions consistent with this
opinion.
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