Hermandad de Empleados v. FOMB

United States Court of Appeals
For the First Circuit
No. 19-2028
IN RE: THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO
RICO, AS REPRESENTATIVE FOR THE COMMONWEALTH OF PUERTO RICO; THE
FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS
REPRESENTATIVE FOR THE PUERTO RICO HIGHWAYS AND TRANSPORTATION
AUTHORITY; THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR
PUERTO RICO, AS REPRESENTATIVE FOR THE PUERTO RICO ELECTRIC
POWER AUTHORITY (PREPA); THE FINANCIAL OVERSIGHT AND MANAGEMENT
BOARD FOR PUERTO RICO, AS REPRESENTATIVE FOR THE PUERTO RICO
SALES TAX FINANCING CORPORATION, a/k/a Cofina; THE FINANCIAL
OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS
REPRESENTATIVE FOR THE EMPLOYEES RETIREMENT SYSTEM OF THE
GOVERNMENT OF THE COMMONWEALTH OF PUERTO RICO,
Debtors.
________________________
HERMANDAD DE EMPLEADOS DEL FONDO DEL SEGURO DEL ESTADO, INC.;
UNIÓN DE MÉDICOS DE LA CORPORACIÓN DEL FONDO DEL SEGURO DEL
ESTADO CORP. (UMCFSE),
Plaintiffs, Appellants,
v.
FINANCIAL OVERSIGHT AND MANAGEMENT BOARD; COMMONWEALTH OF PUERTO
RICO; STATE INSURANCE FUND CORPORATION; JAVIER RIVERA RÍOS, in
his official capacity as Administrator of the State Insurance
Fund Corporation; CHRISTIAN SOBRINO VEGA; JOSÉ IVÁN MARRERO
ROSADO; TERESITA FUENTES; WANDA VÁZQUEZ GARCED, in her official
capacity as Governor; OMAR J. MARRERO DÍAZ, in his official
capacity as Executive Director of AAFAF; FRANCISCO PARÉS ALICEA,
in his official capacity as Secretary of Treasury,
Defendants, Appellees,
NATALIE A. JARESKO,
Defendant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Laura Taylor Swain,* U.S. District Judge]
Before
Thompson, Kayatta, and Barron,
Circuit Judges.
Jessica E. Méndez-Colberg, with whom Rolando Emmanuelli
Jiménez and Bufete Emmanuelli were on brief, for appellants.
Mark D. Harris, with whom Timothy W. Mungovan, John E.
Roberts, Martin J. Bienenstock, Stephen L. Ratner, John E. Richman,
and Proskauer Rose LLP were on brief, for appellees.
October 28, 2020
* Of the Southern District of New York, sitting by
designation.
BARRON, Circuit Judge. In response to a mounting fiscal
crisis, Puerto Rico enacted a series of laws that affect the
relationship between public employees in the Commonwealth and
their employers. Two unions representing such employees filed
suit in federal district court in Puerto Rico in July 2018,
alleging that these laws impermissibly interfere with their
collective bargaining rights. We affirm the District Court's
dismissal of the complaint for failure to state a claim on which
relief may be granted.
I.
The Puerto Rico unions that bring this suit are Hermandad
de Empleados del Fondo del Seguro del Estado, Inc. and Unión de
Médicos de la Corporación del Fondo del Seguro del Estado Corp.
(collectively, the "unions"). Each represents workers at Puerto
Rico's State Insurance Fund Corporation ("CFSE," after the
organization's Spanish-language name), a Puerto Rico public
corporation that provides medical and related services to workers
in the Commonwealth who have suffered work-related injuries.
As the exclusive bargaining representatives for
approximately two thousand employees, these unions negotiate with
the CFSE over the terms of their members' employment. Both unions
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have collective bargaining agreements with the CFSE that are in
effect.1
To address Puerto Rico's fiscal crisis, the Puerto Rico
Legislative Assembly passed the four laws (collectively, the
"challenged laws") affecting the rights and benefits of public
sector workers within the Commonwealth that are at issue here.
Set forth in the order of their enactment from earliest to latest,
these measures are:
(1) Act 66-2014, the "Government of the Commonwealth of
Puerto Rico Special Fiscal and Operational Sustainability Act,"
which was passed on June 17, 2014;
(2) Act 3-2017, the "Law to Address the Economic, Fiscal,
and Budgetary Crisis to Guarantee the Operation of the Government
of Puerto Rico," enacted on January 23, 2017;
(3) Act 8-2017, the "Law for the Management and
Transformation of Human Resources in the Government of Puerto
Rico," passed on February 4, 2017; and, finally,
(4) Act 26-2017, the "Compliance with the Fiscal Plan
Act," which became law on April 29, 2017.
1 Both of the contracts were apparently intended to only cover
periods that expired prior to the initiation of this lawsuit. Yet,
each has a provision automatically extending the contract so long
as the parties fail to come to terms on a new agreement. The
unions contend that because no superseding contracts have been
agreed to, the old ones remain in effect. The defendants do not
contest this contention in their motion to dismiss.
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The unions filed suit in the United States District Court
for the District of Puerto Rico on July 25, 2018. The unions'
complaint, after an amendment, asserted claims against the
Commonwealth of Puerto Rico, the Financial Oversight and
Management Board for Puerto Rico ("FOMB"), the CFSE, and various
Puerto Rico government officials based on the way these measures
allegedly violated the Contract Clause of the United States
Constitution, see U.S. Const. art. I., § 10, cl. 1, and the
Collective Bargaining Clause of the Puerto Rico Constitution, see
P.R. Const. art. II, § 17. The unions requested both "full
compensatory and punitive damages" and declaratory relief. They
also requested "cost[s] and attorney fees."
More specifically, the unions alleged in their complaint
that, through these four laws, Puerto Rico took away in whole or
in part benefits that the unions bargained for on behalf of their
members and that their members would otherwise be entitled to under
the collective bargaining agreements. For instance, the unions
alleged that the collective bargaining agreements guarantee their
members a certain number of vacation days and give departing
workers the option to convert unused days into cash, but that Acts
66-2014 and 3-2017 eliminate the ability of workers to convert
unused days into cash, and that Act 26-2017 generally restricts
the maximum number of allowable vacation days to fifteen -- beneath
what the unions' contracts would otherwise guarantee. In addition,
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the unions alleged that the collective bargaining agreements
provide for fringe benefits, including reimbursement for certain
travel and clothing expenses, but that Act 66-2014 and Act 3-2017
reduce or eliminate some of these benefits.
Separately, the unions alleged that the collective
bargaining agreements establish processes that the CFSE must
follow before hiring new employees. But, the unions alleged, Act
8-2017 contains so-called "mobility" provisions that allow for the
transfer of employees from other government entities to the CFSE,
even when such transfers would bypass the hiring processes provided
for in the agreements.
The complaint contended that the District Court
possessed federal question jurisdiction to consider the unions'
claims under 28 U.S.C. § 1331 because, according to the complaint,
"th[e] action arises under PROMESA and the U.S. Constitution." It
also claimed that the District Court had subject-matter
jurisdiction under 48 U.S.C. § 2126(a), which gives the District
Court for the District of Puerto Rico jurisdiction over "action[s]
against the Oversight Board, and any action otherwise arising out
of [PROMESA]." Finally, it alleged that jurisdiction existed under
48 U.S.C. § 2166(a)(2), which gives the District Court of Puerto
Rico "original but not exclusive jurisdiction of all civil
proceedings arising under [Title III of PROMESA], or arising in or
related to cases under [Title III]." In a filing below, the FOMB
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and one of the individual defendants -- Natalie Jaresko, the
executive director of the FOMB -- agreed that the District Court
had subject-matter jurisdiction under 48 U.S.C. § 2166(a).2
On the defendants' motions, the District Court
determined that some aspects of the unions' claims for declaratory
relief had been rendered moot and dismissed those claims for lack
of jurisdiction. See Fed. R. Civ. P. 12(b)(1). It dismissed the
remainder of the plaintiffs' claims on the merits because it
concluded that they failed to state a claim on which relief could
be granted. See id. 12(b)(6). The unions then timely appealed.
II.
We first address the question of Article III
jurisdiction. The question arises primarily because, according to
the District Court, the fourth and most recent of the challenged
laws, Act No. 26-2017, superseded the three earlier enacted laws
that the plaintiffs challenge: Act No. 66-2014, Act No. 3-2017,
and Act No. 8-2017. The District Court concluded that, in
consequence, the fourth measure mooted the plaintiffs' requests
for declaratory relief concerning the three earlier challenged
laws. Moreover, the defendants contend that the enactment of even
more recent legislation, as well as the expiration of some of the
2
None of the defendants have argued that any of the unions'
claims are subject to the automatic stay provisions of PROMESA.
See 48 U.S.C. § 2161(a) (incorporating 11 U.S.C. § 362).
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provisions of the first three challenged measures, moot still other
aspects of the unions' claims for declaratory relief. The unions
disagree on both counts, and so do we.
All four challenged measures were enacted before the
plaintiffs filed suit, and none of the provisions in them are
asserted to have expired prior to that time. This suggests that
insofar as there is an Article III issue for us to resolve, it has
to do with the plaintiffs' potential lack of Article III standing
to bring their claims for declaratory relief, rather than with the
fact that any post-suit developments rendered those claims moot.
See Friends of the Earth, Inc. v. Laidlaw Env't. Servs. (TOC),
Inc., 528 U.S. 167, 189-90 (2000).
Moreover, the unions raise claims for damages based on
the same alleged violations of the federal and Puerto Rico
constitutions that ground their declaratory judgment claims. And,
as we will explain, for that reason, Article III does not bar us
from addressing whether the plaintiffs are entitled to declaratory
relief.
To see why, it helps to understand that the plaintiffs
in their damages claim seek recompense only for the harm caused
during the period in which the challenged laws were in effect.
There is no doubt that the plaintiffs have standing to bring such
claims, and the defendants do not contend otherwise. There also
is no basis for concluding that the fourth challenged law's
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passage -- or any other development -- mooted those damages
claims. That being so, though, there also is no Article III bar
to requesting a declaration that the challenged laws are "null,"
"void," and "violat[ive]" of the federal and Puerto Rico
constitutions, because it is well established that claims for
declaratory relief can survive "as a predicate to a damages award"
based on the same alleged underlying legal violation. Wolff v.
McDonnell, 418 U.S. 539, 555 (1974); compare Adarand Constructors,
Inc. v. Pena, 515 U.S. 200, 210 (1995) (noting that while the
plaintiff contractor's "allegation that it has lost a contract in
the past" due to a certain type of contracting clause "of course
entitles it to seek damages for the loss of that contract," that
past harm alone cannot establish standing for "declaratory . . .
relief against any future use" of that type of clause (emphasis in
original)), with PETA v. Rasmussen, 298 F.3d 1198, 1202 n.2 (10th
Cir. 2002) ("consider[ing] declaratory relief" to be
"retrospective to the extent that it is intertwined with a claim
for monetary damages that requires us to declare whether a past
constitutional violation occurred").
Finally, nothing in the complaint expressly asks us to
pass on the validity of these laws in the hypothetical world in
which they are reinstated at some point in the future. Thus,
neither mootness nor standing concerns pose a bar to our
consideration of the unions' claims for declaratory relief from
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these challenged measures, insofar as they are injured by them.
See Wolff, 418 U.S. at 555 (noting that a declaratory judgment may
be proper "as a predicate to a damages award"); Dyer v. Wells Fargo
Bank, N.A., 956 F.3d 62, 65 & n.2 (1st Cir. 2020) (allowing a claim
seeking a declaration regarding the legality of a foreclosure sale
to proceed in spite of the sale's completion because the plaintiff
also sought damages based on the same legal theory as the claim
for declaratory relief); Lippoldt v. Cole, 468 F.3d 1204, 1217
(10th Cir. 2006) (determining that neither standing nor mootness
precluded declaratory relief where "the district court had to
determine whether a past constitutional violation occurred" to
resolve the plaintiffs' damages claim); Crue v. Aiken, 370 F.3d
668, 677 (7th Cir. 2004) ("When a claim for injunctive relief is
barred but a claim for damages remains, a declaratory judgment as
a predicate to a damages award can survive.").
III.
As to the merits, we begin with the plaintiffs' claims
under the Contract Clause of the United States Constitution, which
provides that "No state shall . . . pass any . . . Law impairing
the Obligation of Contracts . . . ." U.S. Const. art. I., § 10,
cl. 1. The defendants do not contest that this prohibition applies
to Puerto Rico. See Redondo Constr. Corp. v. Izquierdo, 662 F.3d
42, 48 n.3 (1st Cir. 2011). We thus must evaluate these claims
with respect to each of the challenged laws by asking, first,
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"whether the . . . law has . . . operated as a substantial
impairment of a contractual relationship," UAW v. Fortuño, 633
F.3d 37, 41 (1st Cir. 2011) (quoting Energy Reserves Grp., Inc. v.
Kan. Power & Light Co., 459 U.S. 400, 411 (1983)), and, second,
whether any such impairment was "reasonable and necessary to serve
an important government purpose," id. (quoting U.S. Trust Co. v.
New Jersey, 431 U.S. 1, 25 (1977)).
The burden is on the plaintiffs to prove that Puerto
Rico's action with respect to each challenged law's impact on the
collective bargaining agreements was not reasonable or necessary
to serve an important interest. See id. at 41-42. Because the
plaintiffs allege that Puerto Rico impaired a "public contract"
for its own "benefit," however, its otherwise "broad discretion to
determine whether an impairment of a private contract is reasonable
or necessary" is more constrained than it ordinarily would be.
Parella v. Ret. Bd. of R.I. Emps.' Ret. Sys., 173 F.3d 46, 59 (1st
Cir. 1999).
Our review of the District Court's grant of a motion to
dismiss under Rule 12(b)(6) is de novo. See Starr Surplus Lines
Ins. Co. v. Mountaire Farms Inc., 920 F.3d 111, 114 (1st Cir.
2019). In conducting that review, we may "affirm the dismissal
only if, taking all the complaint's well-pled allegations as true
and viewing the other facts in the light most favorable to the
plaintiff, the complaint does not allege 'enough facts to state a
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claim to relief that is plausible on its face.'" Portugues-Santana
v. Rekomdiv Int'l Inc., 725 F.3d 17, 25 (1st Cir. 2013) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
Notably, "[w]e may augment these facts and inferences
with data points gleaned from documents incorporated by reference
into the complaint, matters of public record, and facts susceptible
to judicial notice." Starr Surplus Lines, 920 F.3d at 114 (quoting
Haley v. City of Boston, 657 F.3d 39, 46 (1st Cir. 2011)). That
means that we may consider the content of the four challenged laws
themselves, as well as translated portions of the unions'
collective bargaining agreements.
Against this background, the plaintiffs must have
pleaded "sufficient facts to allow a court to draw a reasonable
inference that" each of the challenged laws is "unreasonable or
unnecessary to effectuate an important governmental purpose."
Fortuño, 633 F.3d at 45 (citing Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009)). To do so, a plaintiff "can, in the complaint, list
the state's articulated motive(s), and then plead facts that
undermine the credibility of . . . those stated motives or plead
facts that question the reasonableness or necessity of the action
in advancing the stated goals." Id. For example, we have
explained, "if a state purports to impair a contract to address a
budgetary crisis, a plaintiff could allege facts showing that the
impairment did not save the state much money, the budget issues
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were not as severe as alleged by the state, or that other cost-
cutting or revenue-increasing measures were reasonable
alternatives to the contractual impairment at issue." Id.At oral argument, the unions explained that they allege
that most of the challenged laws impaired the collective bargaining
agreements by reducing or eliminating financial benefits -- like
vacation or sick leave -- that would otherwise be owed to the
workers under those agreements. We thus begin with this set of
alleged impairments.
We may assume, as the District Court did, that each of
these alleged impairments constitutes a substantial impairment of
the unions' contracts with the CFSE. For, even if we make that
assumption, we still conclude that the plaintiffs have not met
their burden to plausibly allege that they were not reasonable
ones.
The unions do not dispute that resolving the fiscal
challenges of Puerto Rico's central government constitutes an
"important government purpose." See Aurelius Inv., LLC v. Puerto
Rico, 915 F.3d 838, 843-44 (1st Cir. 2019) (summarizing Puerto
Rico's financial difficulties), rev'd and remanded sub nom. Fin.
Oversight & Mgmt. Bd. for P.R. v. Aurelius Inv., LLC, 140 S. Ct.
1649 (2020); Fortuño, 633 F.3d at 46-47 (rejecting the plaintiffs'
"conclusory statement" that addressing Puerto Rico's then-$3.2
billion deficit was "neither [a] significant nor [a] legitimate"
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purpose); Buffalo Teachers Fed'n v. Tobe, 464 F.3d 362, 369 (2d
Cir. 2006) ("[C]ourts have often held that the legislative interest
in addressing a fiscal emergency is a legitimate public
interest."). They also do not dispute that, at least as a general
matter, limiting the amount of benefits paid out to workers would
produce cost savings that could be useful in resolving a fiscal
crisis.3
The unions nonetheless contend that none of the
financial savings from the benefit cuts to CFSE employees imposed
by the challenged laws accrued to the benefit of the Commonwealth,
because the CFSE is an independent governmental entity that "is
fiscally self-sufficient and . . . does not depend on
appropriations from the Commonwealth's General Fund for its
operations." Indeed, the unions allege that the CFSE itself is
"solvent." Thus, they suggest, the government "could have tailored
the challenged legislation" to exempt CFSE workers from the benefit
cuts while still generating savings by imposing cuts on the public
workers who do affect the Commonwealth's bottom line. Its failure
3 The unions do appear to suggest that certain cuts to fringe
benefits at the CFSE were not designed to reduce spending but
instead were intended to produce "[e]quity in [f]ringe [b]enefits"
between employees at public corporations like the CFSE and other
public employees. But, while the challenged laws do reflect a
concern about equity in this regard, context makes clear that in
seeking to "standardiz[e]" the benefits of public corporation
employees and other public employee, Puerto Rico was primarily
concerned with "reduc[ing] expenses" at public corporations and
saving money.
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to do so, according to the unions, renders these alleged
substantial impairments unreasonable or unnecessary to secure an
important government objective.
There is no basis, however, for the unions' contention
that the benefit cuts implemented by the challenged laws are
unrelated to Puerto Rico's interest in addressing the fiscal
challenges faced by its central government. In recent years,
Puerto Rico has passed a series of measures that enable its central
government to benefit from the fiscal savings generated at public
corporations. Most significantly, Act No. 26-2017, as described
in its own preamble, "orders the public corporations and
instrumentalities of the Government of Puerto Rico," including the
CFSE, "to transfer to the Department of the Treasury the necessary
funds to guarantee the government's liquidity" and establishes a
process for determining the precise amount to be transferred.
The unions separately ask us to conclude that they have
plausibly alleged that the imposition of the benefit cuts was
unreasonable or unnecessary to address Puerto Rico's fiscal
problems because "other cost-cutting or revenue-increasing
measures were reasonable alternatives" to the challenged laws.
Fortuño, 633 F.3d at 45. But, the unions alleged only the
following bare bones "possible options" as having been available
to the Puerto Rico government:
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a. Increase in compliance and revenue
collection across the major tax lines
(personal income tax, corporate income tax,
and [Sales and Use Tax])
b. Reduction or elimination of useless tax
credits or incentives.
c. Rightsizing measures within the
instrumentalities of the Commonwealth that do
not operate as private businesses or
enterprises.
d. Planning, development and investment in
economic growth projects to increase revenues
and collections.
Those listed options -- which do not, for instance, identify any
specific "useless tax credits or incentives" or explain why the
savings generated by eliminating such tax breaks would rival the
savings generated by benefit cuts -- are not adequate to support
the plaintiffs' claims that the cutting of CFSE benefits caused by
the challenged laws were unreasonable or unnecessary.4 See SEC v.
Tambone, 597 F.3d 436, 442 (1st Cir. 2010) (en banc) ("If the
factual allegations in the complaint are too meager, vague, or
conclusory to remove the possibility of relief from the realm of
4 The unions briefly suggest that the transfer of funds from
the CFSE to other governmental entities is itself an alternative
to the challenged laws. But, even setting aside the underdeveloped
nature of this argument and the resulting waiver problem, see
United States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990), here,
too, the unions failed to plead facts showing that this alternative
was an adequate one, see Fortuño, 633 F.3d at 45. Indeed, as
explained above, Puerto Rico is already using savings generated by
the CFSE to address budgetary shortfalls elsewhere in the
government.
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mere conjecture, the complaint is open to dismissal."); Fortuño,
633 F.3d at 47 (affirming a motion to dismiss a Contract Clause
claim where the plaintiffs did not "explain how" increased use of
federal aid could "alleviate a $3.2 billion deficit to such an
extent as to render [the challenged] contractual impairments
unnecessary").
There remains, then, only the unions' Contract Clause
challenge to the "mobility" provisions of the challenged laws.5
These provisions authorize the Government of Puerto Rico to move
employees between different units of the Puerto Rico government,
including to and from public corporations like CFSE. The unions
contend that these provisions impair their collective bargaining
agreements by, among other things, undermining provisions in those
agreements that govern the process for hiring and promoting
workers.
Here, too, we may assume that the challenged measures
substantially impair the unions' collective bargaining
5 To the extent that any of the numerous provisions challenged
by the unions cannot fairly be classified as belonging to one of
the two categories of actions that we address and cannot be
justified by the same reasoning as the Commonwealth offered for
the other actions, the unions fail to identify those provisions or
explain why the justifications offered for their enactment were
legally inadequate. See Fortuño, 633 F.3d at 45 (requiring a
plaintiff raising a Contract Clause claim to "list the state's
articulated motive(s)" for the action and "plead facts" that cast
doubt on the adequacy of those explanations); Zannino, 895 F.2d at
17 ("[I]ssues adverted to in a perfunctory manner, unaccompanied
by some effort at developed argumentation, are deemed waived.").
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agreements.6 For, even if we make that assumption, the unions have
not plausibly alleged that this substantial impairment was
unreasonable or unnecessary to secure an important government
objective.
In enacting the mobility provisions, the Puerto Rico
Legislative Assembly was mindful, given the Commonwealth's fiscal
state, of what it believed to be a need to "consolidate[]"
services, "delegate[]" them "to the private sector," and, in some
cases, "eliminate[]" ones that it believed to be wholly
unnecessary. The mobility provisions were intended to facilitate
these service cuts while continuing to "guarantee[]" "the offer of
services to our citizens" "without involving the dismissal of
public employees." The alternative to enacting the challenged
mobility provisions and other similar flexibility measures,
according to the legislature, was heavy-handed layoffs of
"thousands of employees."
6We do not, however, understand the challenged laws to have
wholly eliminated the collective bargaining rights of the unions
or the workers they represent. The parties, it is true, do not
clearly explain how the "mobility" provisions allowing for
employee transfers in and out of the CFSE affect the rights of the
transferred employees, their membership in the bargaining unit, or
their employer for bargaining purposes. But, neither party
contends that the unions or their right to collectively bargain
have been eliminated by the challenged laws, and, indeed, the
challenged laws themselves appear to contemplate a continued role
for public sector unions in collectively bargaining on behalf of
their employees.
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The unions do not dispute that Puerto Rico's goal of
resolving its budgetary crisis while minimizing service disruption
and layoffs was a legitimate one, see Buffalo Teachers Fed'n, 464
F.3d at 369, nor do they argue that the legislature's acknowledged
alternative of simply terminating large numbers of public
employees would have been an adequate substitute for the
Commonwealth's chosen course of action. They likewise do not voice
any disagreement with the Commonwealth's apparent conclusion that
it was necessary to apply the mobility provisions to workers at
the CFSE to achieve this goal. Instead, the only alleged
inadequacies that they identify with these provisions are the same
inadequacies that they identify with the Commonwealth's general
approach to addressing its fiscal problems. For the reasons we
have already stated, though, those cursory allegations do not
suffice to meet the plaintiffs' pleading burden in alleging
violations of the Contracts Clause.
IV.
We come, then, to the unions' claims under the Collective
Bargaining Clause of the Puerto Rico Constitution. That provision
guarantees employees of "instrumentalities of the government
operating as private businesses or enterprises . . . the right to
organize and to bargain collectively with their employers through
representatives of their own free choosing in order to promote
their welfare." P.R. Const. art. II, § 17.
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The District Court dismissed these claims as barred by
the applicable statute of limitations. It relied on P.R. Laws
Ann. tit. 31, § 5298, which establishes a one-year statute of
limitations for "[a]ctions to recover or retain possession" and
"[a]ctions to demand civil liability for grave insults or calumny,
and for [certain] obligations arising from . . . fault or
negligence . . . ." See also Quality Cleaning Prod. R.C., Inc. v.
SCA Tissue N. Am., LLC, 794 F.3d 200, 204 (1st Cir. 2015) (noting
that state statute of limitations law applies to state law claims).
Our review is de novo. See Santana-Castro v. Toledo-Dávila, 579
F.3d 109, 113 (1st Cir. 2009).
We may quickly dispose of as waived the plaintiffs'
contention that § 5298 does not set forth the applicable statute
of limitations for these claims, due to its late-breaking and
underdeveloped nature. See Rife v. One W. Bank, F.S.B., 873 F.3d
17, 19 (1st Cir. 2017); Zannino, 895 F.2d at 17. The plaintiffs
first challenge the statute's application in their reply brief,
even though the District Court had applied § 5298 below and even
explained its holding. We thus take up the plaintiffs' contention
that, under Puerto Rico law, § 5298 did not begin to run so long
as the "challenged [laws] [were] still valid and enforced," and
hence that there is no statute of limitations bar to their claims.
To support that contention, they assert that they are challenging
"tortious . . . act[s]" that are "of a continuing nature" and thus
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that, under Puerto Rico law, the limitations period could only
have begun to run "when the last acts . . . [were] verified or the
definitive result [was] produced," whichever occurred later.
Rivera-Ruiz v. Municipality of Ponce, 196 D.P.R. 410 (2016)
[Transl. at 14].
Under Puerto Rico law, "continuing acts or omissions"
toll § 5298's limitations period. Id. at 15. But, we are dealing
here with harm resulting from the enactment of a statute, and the
plaintiffs point to no authority to support their assertion that
the alleged interference with their bargaining rights constitutes
such "continuous acts or omissions" when it results from the
passage of legislation alone. Certainly Rivera-Ruiz, on which
they rely, did not deal with harms caused by a statutory enactment.
Moreover, we have previously held that "the continuing violation"
doctrine does not apply "to facial takings claims" under the
Takings Clause of the federal Constitution, see Asociación de
Suscripción Conjunta del Seguro de Responsabilidad Obligatorio v.
Juarbe-Jiménez, 659 F.3d 42, 51 (1st Cir. 2011), because such a
claim necessarily targets "the mere enactment of a statute," id.
at 48 (quoting Keystone Bituminous Coal Ass'n v. DeBenedictis, 480
U.S. 470, 494 (1987)), and so "accrues at the time the offending
statute . . . is enacted or becomes effective" even though "the
precise dollar amount that would be" lost over time is unknown,
id. at 50-52.
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To be sure, unlike in Asociación de Suscripción
Conjunta, Puerto Rico rather than federal law governs the accrual
date here. See Quality Cleaning, 794 F.3d at 204. But, we do not
see why we should presume that the Puerto Rico Supreme Court would
disagree with our reasoning in Asociación de Suscripción Conjunta,
which rejected the notion that a challenge to the "mere enactment"
of a statute takes aim at a "continuing violation," 659 F.3d at
51-52, especially given that the unions identify no contrary
authority from any court, whether in the Commonwealth or not.
V.
Accordingly, we affirm the dismissal of the unions'
claims.
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