Asociacion de Detallistas de Gasolina de PR Inc. v. Commonwealth of Puerto Rico

138 F.4th 686
CourtCourt of Appeals for the First Circuit
DecidedMay 29, 2025
Docket24-1188
StatusPublished
Cited by1 cases

This text of 138 F.4th 686 (Asociacion de Detallistas de Gasolina de PR Inc. v. Commonwealth of Puerto Rico) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Asociacion de Detallistas de Gasolina de PR Inc. v. Commonwealth of Puerto Rico, 138 F.4th 686 (1st Cir. 2025).

Opinion

United States Court of Appeals For the First Circuit

No. 24-1188

ASOCIACIÓN DE DETALLISTAS DE GASOLINA DE PUERTO RICO, INC.; A&E SERVICE STATION, INC.; ANTONIO A. JUAN LEON; BAJURAS DEVELOPMENT, INC.; SAMI DAVIS SULEIMAN ABDELMAJED; Q&P FUEL MANAGEMENT, LLC; MEGA PUMA 129, INC.; MEGA JL, INC.; L&F SERVICE STATION, INC.; JOSÉ J. ARROYO NOVOA, d/b/a Garage Arroyo; WCL CORPORATION; MARACAIBO PETROLEUM, CORP.; ORLANDO GONZÁLEZ HERNÁNDEZ, d/b/a Raholisa Service Station; MATILDE COLLAZO VIERA, d/b/a Green Valley Service Station; JOSÉ A. COLÓN ALONSO, d/b/a Mobil Orocovis, Shell Utuado, and Gulf Utuado; ONCE 11 CORP.; JANET TORRES PAGÁN, d/b/a Gulf Aibonito; R2 BUSINESS, INC.; LUIS C. CRESPO ORTIZ, d/b/a Apolo Texaco; COOPERATIVA GASOLINERA Y SERVICIOS BUENA VISTA,

Plaintiffs, Appellants,

v.

COMMONWEALTH OF PUERTO RICO, represented by its Governor Hon. Jenniffer González-Colón; HON. JANET PARRA MERCADO, as Interim Attorney General of the Commonwealth of Puerto Rico; HON. VALERIE RODRÍGUEZ ERAZO, as Secretary of the Department of Consumer Affairs of Puerto Rico,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

[Hon. Raúl M. Arias-Marxuach, U.S. District Judge]

Before

 Public officers' successors have been automatically substituted as parties pursuant to Federal Rules of Appellate Procedure 43(c)(2). Barron, Chief Judge, Gelpí and Montecalvo, Circuit Judges.

Andrés C. Gorbea-Del Valle for appellants.

Omar J. Andino-Figueroa, Deputy Solicitor General, with whom Fernando Figueroa-Santiago, Solicitor General of Puerto Rico, and Mariola Abreu-Acevedo, Assistant Solicitor General, were on brief, for appellees.

May 29, 2025 GELPÍ, Circuit Judge. Plaintiffs-Appellants are

organizations and individuals who own or operate gasoline service

stations throughout Puerto Rico, as well as a nonprofit corporation

that represents more than 450 such businesses. To reduce the

transaction fees they owed to card companies, Appellants

incentivized consumers to pay in cash by offering two different

prices: a higher posted price for consumers using credit or debit

cards and a lower price for those paying with cash. In 2013,

however, Puerto Rico's legislature enacted Law 152-2013, which

amended Law 150-2008 by removing a provision that expressly

permitted merchants to offer discounts to consumers who paid for

goods and services in cash. Since then, Appellants have ceased

offering the lower posted price because of the threat of fines and

criminal prosecution. Appellants sued the Commonwealth of Puerto

Rico ("the Commonwealth")1 to enjoin Law 150, arguing first that

it is preempted by federal law and second that it is

unconstitutionally vague. The district court rejected those

arguments and granted the Commonwealth's motion to dismiss for

failure to state a claim. Appellants challenge that ruling on

appeal, advancing the same arguments.

1 The Commonwealth is represented by the following individuals in their official capacity: Hon. Jenniffer González-Colón, Governor of Puerto Rico; Hon. Janet Parra Mercado, Interim Attorney General of Puerto Rico; and Hon. Valerie Rodríguez Erazo, Secretary of the Department of Consumer Affairs of Puerto Rico ("DACO," by its Spanish acronym).

- 3 - For the reasons stated below, we affirm.

I. BACKGROUND

We begin with a summary of the facts, taking "the

complaint's well-pleaded facts as true" and drawing "all

reasonable inferences in [Appellants'] favor." Frese v. Formella,

53 F.4th 1, 5 (1st Cir. 2022) (quoting Barchock v. CVS Health

Corp., 886 F.3d 43, 48 (1st Cir. 2018)).

A. Relevant Statutes

To place Appellants' preemption argument "in context, we

provide a brief overview of applicable federal and state regulation

and then trace the interaction of the two schemes." Grant's

Dairy-Me., LLC. v. Comm'r of Me. Dep't of Agric., Food & Rural

Res., 232 F.3d 8, 11 (1st Cir. 2000).

i. Puerto Rico Regulation

Merchants generally pay a transaction fee to the card

issuer every time a consumer uses a debit or credit card to pay

for their goods and services. This "swipe fee," as it is commonly

known within the credit card industry, typically ranges from 2% to

3% of the transaction total. To reduce the impact of the "swipe

fee" expense, merchants sought to discourage customers from paying

with a debit or credit card by charging a surcharge for card

transactions or offering a discount for paying with cash.

The Puerto Rico legislature enacted Law 150-2008 ("Law

150") in 2008. P.R. Laws Ann. tit. 10, § 11 (2008). Article 1

- 4 - provided, in relevant part, "[n]o merchant may impose a surcharge

on a consumer who chooses to use a credit card instead of

cash . . . ." Id. Article 2 stated, in relevant part, "[t]he

merchant may, however, offer discounts for the purpose of promoting

the payment in cash . . . ." Id. While Article 1 prohibited

merchants from imposing credit card surcharges, Article 2

recognized a merchants' right to provide discounts to consumers

who choose to pay for services in cash. Id. According to Article

4, merchants in violation of Law 150 "shall be penalized with" a

fine of up to five hundred dollars ($500) or up to six months in

prison, or both. Id.

Five years later, in 2013, the Puerto Rico legislature

amended Law 150 with the enactment of Law 152-2013 ("Law 152").

P.R. Laws Ann. tit. 10, § 11 (2013). That law eliminated Article

2 of Law 150. Id. In repealing Article 2, the Puerto Rico

legislature stated that its purpose was "to eliminate the duality

and coexistence of parallel markets" and that it was fulfilling

its duty to "protect the weakest party in a commercial transaction,

the consumer." Id.

Pursuant to Law 152's amendment to Law 150, DACO

promulgated Administrative Order 2014-002 ("Order 2014-002").

Aff., Order 2014-002 (Jan. 21, 2014),

https://www.daco.pr.gov/orden/orden-2014-002/

- 5 - [https://perma.cc/7EUM-4CR8].2 That order interpreted Law 152 as

having eliminated "the use of discounts as an incentive to pay in

cash" and, in turn, repealed or amended previous DACO orders

pursuant to that interpretation. Id. § II.

Appellants represent more than 450 retailers who own or

operate over 600 gasoline stations in Puerto Rico. The "swipe

fee" is the fourth largest business expense for most Appellants.

To encourage cash payments, Appellants displayed dual prices for

their goods and services: one price for costumers paying with a

debit or credit card and a discounted price for those paying in

cash. Appellants subsequently sued the Commonwealth to prevent

the enforcement of Law 150, as amended by Law 152.3

ii. Federal Regulation

a. TILA and the CDA

In 1968, Congress passed the Truth in Lending Act

("TILA"), Pub. L. No. 90-321, 82 Stat. 146 (1968) (codified as

amended at 15 U.S.C.

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Bluebook (online)
138 F.4th 686, Counsel Stack Legal Research, https://law.counselstack.com/opinion/asociacion-de-detallistas-de-gasolina-de-pr-inc-v-commonwealth-of-puerto-ca1-2025.