Liquilux Gas Corp. v. Martin Gas Sales

First Circuit

Liquilux Gas Corp. v. Martin Gas Sales

CourtCourt of Appeals for the First Circuit

DecidedNovember 17, 1992

Docket92-1020

StatusPublished

This text of Liquilux Gas Corp. v. Martin Gas Sales (Liquilux Gas Corp. v. Martin Gas Sales) 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.

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Liquilux Gas Corp. v. Martin Gas Sales, (1st Cir. 1992).

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Opinion

USCA1 Opinion

November 17, 1992
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
_____________________
No. 92-1020

LIQUILUX GAS CORPORATION,

Plaintiff, Appellant,

v.

MARTIN GAS SALES, ET AL.,

Defendants, Appellees.

____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Jose Antonio Fuste, U.S. District Judge]
___________________

____________________

Before

Breyer, Chief Judge,
___________

Aldrich, Senior Circuit Judge,
____________________

and Boudin, Circuit Judge.
_____________

____________________

Fernando L. Gallardo with whom Woods & Woods was on brief for
_____________________ ______________
appellant.
Danilo M. Eboli, with whom Jose A. Axtmayer, Francisco A. Besosa,
_______________ _________________ ___________________
Goldman Antonetti Ferraiuoli & Axtmayer, Timothy McCormick and
___________________________________________ ___________________
Thompson & Knight were on brief for appellees.
_________________

____________________

____________________

ALDRICH, Senior Circuit Judge. In Puerto Rico,
_____________________

liquified petroleum gas (LPG) must be refined or imported.

In 1982 Caribbean Oil Refining Company, a main Puerto Rico

importer, closed operations, and Martin Gas Sales, Inc., a

Texas corporation, contemplated becoming a replacement. It

contracted with Empire Gas Company, a Puerto Rico wholesaler,

that Empire would buy all its gas from Martin. Allegedly to

reward Ramon Gonzalez Cordero, Empire's president, for

obtaining the contract, and to encourage him to seek other

Martin purchasers, Martin agreed to pay him 1 cents royalty

on every gallon of gas offloaded at Martin's terminal.

Thereafter Martin became an importer under the name of Puerto

Rico Fuels and duly paid the royalty.

Plaintiff Liquilux Gas Corporation, another Puerto

Rico wholesaler, and competitor of Empire, became a Martin

customer. It learned of the royalty agreement on June 25,

1987 and brought this Puerto Rico antitrust action against

Martin and Gonzalez on November 20, 1990. Without

considering the merits, the district court granted

defendants' motion to dismiss for lack of jurisdiction,

holding that original jurisdiction lay in the Puerto Rico

Public Service Commission (PSC). It denied plaintiff's

motion for reconsideration and entered judgment accordingly.

Liquilux duly appealed. We affirm.

-2-

Between 1982 and 1987 much occurred. Puerto Rico's

antitrust statute, known as Act 77, 10 L.P.R.A. 257 et
__

seq. (1988), exempts government-regulated companies.1
___

Section 1002(c) of PSC's enabling statute, Law 109, 27

L.P.R.A. 1001 et seq. (1988), granting it exclusive
__ ___

jurisdiction, reads,

"Public-service company" includes
any public carrier, conduit conveyance
enterprise, gas enterprise, electric
_______________
power enterprise, telephone enterprise,
telegraph enterprise, dry dock
enterprise, travel bureau, transportation
broker, dock operator, warehouser, toll
bridge enterprise, nuclear power
enterprise, communal television antenna
enterprise, and moving enterprise
offering to render or rendering their
services or offering to deliver or
delivering products, for pay, to the
_________________________________________
public in general or to a part thereof,
________________________________________
in Puerto Rico. It does not include
persons rendering service for their
exclusive use or that of their tenants.

(Emphasis supplied.) Until May 15, 1986 the definition of a

gas enterprise, section 1002(q), read in connection with

section 1002(c), did not expressly include Puerto Rico

refineries and importers. On February 27, 1984, however, the

____________________

1. The legal regulation of public utilities,
insurance companies and any other
enterprises or entities subject to
special regulation by the Government of
the Commonwealth of Puerto Rico or by the
United States Government, including
cooperatives, shall not be affected by
this act.

Section 257. (Historical note).

-3-

PSC decided that they fell within the statutory language.

See Caribbean Gulf Refining Corp. v. Public Service
___ _________________________________ _______________

Commission, Superior Court, San Juan Part, Civil No. 84-1534
__________

(May 5, 1986). Martin disagreed, and litigation ensued.

While this was in progress the legislature concerned itself

with an amendment. The Superior Court moved faster. On May

5, 1986 it decided that importers, Puerto Rico Fuels v.
___________________

Public Service Commission, Civil No. 84-1533, as well as
__________________________

refineries, Caribbean Gulf Refinery, supra, were not within
_______________________ _____

the statute.

Martin's comfort was short lived. Ten days later

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USCA1 Opinion



November 17, 1992
                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT
                                _____________________
        No. 92-1020

                              LIQUILUX GAS CORPORATION,

                                Plaintiff, Appellant,

                                          v.

                              MARTIN GAS SALES, ET AL.,

                                Defendants, Appellees.

____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

                           FOR THE DISTRICT OF PUERTO RICO

                    [Hon. Jose Antonio Fuste, U.S. District Judge]
                                              ___________________

                                 ____________________

                                        Before

                                 Breyer, Chief Judge,
                                         ___________

                            Aldrich, Senior Circuit Judge,
                                     ____________________

                              and Boudin, Circuit Judge.
                                          _____________

                                 ____________________

Fernando L.  Gallardo with  whom Woods  & Woods  was on brief  for
            _____________________            ______________
        appellant.
            Danilo M. Eboli, with whom Jose  A. Axtmayer, Francisco A. Besosa,
            _______________            _________________  ___________________
        Goldman  Antonetti  Ferraiuoli  &  Axtmayer,  Timothy   McCormick  and
        ___________________________________________   ___________________
        Thompson & Knight were on brief for appellees.
        _________________

____________________

____________________

ALDRICH,  Senior  Circuit Judge.   In  Puerto Rico,
                                _____________________

            liquified petroleum  gas (LPG)  must be refined  or imported.

            In 1982  Caribbean Oil Refining  Company, a main  Puerto Rico

            importer, closed  operations, and  Martin Gas Sales,  Inc., a

            Texas corporation, contemplated becoming  a replacement.   It

            contracted with Empire Gas Company, a Puerto Rico wholesaler,

            that Empire would buy all its gas from Martin.  Allegedly  to

            reward  Ramon  Gonzalez  Cordero,  Empire's   president,  for

            obtaining the  contract, and to  encourage him to  seek other

            Martin purchasers, Martin agreed to pay  him 1  cents royalty

            on  every  gallon  of  gas offloaded  at  Martin's  terminal.

            Thereafter Martin became an importer under the name of Puerto

            Rico Fuels and duly paid the royalty.

                      Plaintiff Liquilux Gas Corporation,  another Puerto

            Rico wholesaler,  and competitor  of Empire, became  a Martin

            customer.   It learned of  the royalty agreement  on June 25,

            1987 and  brought this  Puerto Rico antitrust  action against

            Martin  and   Gonzalez  on   November  20,  1990.     Without

            considering   the  merits,   the   district   court   granted

            defendants'  motion  to  dismiss for  lack  of  jurisdiction,

            holding  that original  jurisdiction lay  in the  Puerto Rico

            Public  Service  Commission  (PSC).   It  denied  plaintiff's

            motion for reconsideration and entered  judgment accordingly.

            Liquilux duly appealed.  We affirm.

-2-

Between 1982 and 1987 much occurred.  Puerto Rico's

            antitrust statute,  known as  Act 77, 10  L.P.R.A.    257  et
                                                                       __

            seq.   (1988),   exempts   government-regulated   companies.1
            ___

            Section  1002(c)  of  PSC's  enabling statute,  Law  109,  27

            L.P.R.A.     1001  et  seq.  (1988),  granting  it  exclusive
                               __  ___

            jurisdiction, reads,

                           "Public-service   company"  includes
                      any  public  carrier, conduit  conveyance
                      enterprise,   gas  enterprise,   electric
                                    _______________
                      power  enterprise,  telephone enterprise,
                      telegraph     enterprise,    dry     dock
                      enterprise, travel bureau, transportation
                      broker,  dock operator,  warehouser, toll
                      bridge    enterprise,    nuclear    power
                      enterprise,  communal television  antenna
                      enterprise,    and    moving   enterprise
                      offering  to  render  or rendering  their
                      services  or  offering   to  deliver   or
                      delivering  products,  for  pay,  to  the
                      _________________________________________
                      public in  general or to  a part thereof,
                      ________________________________________
                      in  Puerto Rico.    It  does not  include
                      persons   rendering  service   for  their
                      exclusive use or that of their tenants.

            (Emphasis  supplied.)  Until May 15, 1986 the definition of a

            gas  enterprise, section  1002(q),  read in  connection  with

            section  1002(c),  did  not  expressly  include  Puerto  Rico

            refineries and importers.  On February 27, 1984, however, the

____________________

            1.        The legal regulation of public utilities,
                      insurance   companies   and   any   other
                      enterprises   or   entities  subject   to
                      special regulation by  the Government  of
                      the Commonwealth of Puerto Rico or by the
                      United   States   Government,   including
                      cooperatives,  shall  not be  affected by
                      this act.

            Section 257.  (Historical note).

                                         -3-

PSC  decided that  they fell  within the  statutory language.

            See   Caribbean  Gulf  Refining   Corp.  v.   Public  Service
            ___   _________________________________       _______________

            Commission, Superior Court, San  Juan Part, Civil No. 84-1534
            __________

            (May  5, 1986).    Martin disagreed,  and litigation  ensued.

            While this  was in progress the  legislature concerned itself

            with an amendment.  The Superior Court  moved faster.  On May

            5,  1986  it decided  that  importers, Puerto  Rico  Fuels v.
                                                   ___________________

            Public  Service Commission,  Civil  No. 84-1533,  as well  as
            __________________________

            refineries,  Caribbean Gulf Refinery,  supra, were not within
                         _______________________   _____

            the statute.

                      Martin's comfort  was short lived.   Ten days later

            the legislature amended section 1002(q), the underlined words

            being the additions.

                      "Gas enterprise" includes any  person who
                      owns,  controls, operates or manages as a
                      public  service  company  any   plant  or
                      business   in   Puerto   Rico   for   the
                      importing,     production,    generation,
                      _________
                      transmission,    delivery,   supply    or
                      distribution  of  natural,  processed  or
                      derived gas, or any liquid susceptible to
                      be converted into  gas and distributed by
                      pipelines,  cylinders  or  any   type  of
                      container for residential, commercial and
                                    ___________________________
                      industrial   purposes  [substituted   for
                      _____________________
                      "lighting, heating, or power"].  It being
                                                       ________
                      understood  that   gas  "production"  and
                      _________________________________________
                      "import"  enterprises are,  among others,
                      _________________________________________
                      those   refineries,   import   companies,
                      _________________________________________
                      distribution-wholesale  companies  and/or
                      _________________________________________
                      seaport   terminals    engaged   in   the
                      _________________________________________
                      importing,     production,    processing,
                      _________________________________________
                      traffic, storage, distribution or sale of
                      _________________________________________
                      liquified  petroleum  gas  or  any  other
                      _________________________________________
                      mixture of hydrocarbons known as refinery
                      _________________________________________
                      gas, regardless of  whether they sell  or
                      _________________________________________

-4-

serve their product  to a limited  number
                      _________________________________________
                      of persons and/or wholesalers.
                      _____________________________

                      Rather   than  applying   for  a   license,  Martin

            terminated  its Puerto  Rico  business  the following  month,

            selling  out,  lock,  stock  and  barrel  to  an  independent

            corporation,  known  as Puerto  Rico  Fuels, Inc.    For some

            reason,  not presently  important,  Martin continued  to make

            royalty  payments  to Gonzalez  to  October  17, 1986.    The

            district  court ruled  that as  at the  time of  suit section

            1002(q)   included  importers,  the   district  court  lacked

            jurisdiction as to  all payments after May 15, 1986.  It went

            on  to  hold   that  the  amendment  was  retroactive  as  to

            jurisdiction, sweeping up all previous acts as well.

                      Since  the amendment  made no  provision as  to its

            retroactivity, we  decide for  ourselves how the  Puerto Rico

            Supreme  Court would  resolve that  question.   As this  is a

            question  of law we owe  no deference to  the district court.

            Brewer v. Madigan, 945 F.2d 449, 452 (1st Cir. 1991).  We see
            ______    _______

            several possible conclusions.

                      1.   The  PSC's initial  interpretation of  section

            1002(q) prior to the amendment was correct.

                      2.   The amendment was a legislative pronouncement,

            or clarification, of original  intent that was  automatically

            retroactive.

-5-

3.    The  amendment  was an  alteration,  but  was

            intended to  be, and  could be, retroactive  in effect;  this

            being the district court's view.

                      The Superior Court's  principal opinion,  Caribbean
                                                                _________

            Gulf Refinery, had held  that the phrase "delivering products
            _____________

            . . . to the  public in general,  or to  a part thereof,"  in

            section 1002(c) did not clearly cover local refiners who sold

            only to a few wholesalers, and that in view of the ambiguity,

            they were not within  the act, citing Puerto Rico  Lighterage
                                                  _______________________

            v. Caribe Tugboat Corp., 111 D.P.R.  686 (1981) (ambiguity as
               ____________________

            to jurisdiction  is to  be resolved against  the Commission).

            We  do not  need to  determine the  correctness of  this pre-

            amendment  analysis.    Neither  do  we  need  to  review the

            district  court's  holding  that  the 1986  amendment  was  a

            procedural  change only,  that,  as such,  is presumed  to be

            retroactive.   White Star Bus Line, Inc. v. District Court of
                           _________________________    _________________

            San Juan,  60  P.R.R. 348,  349-350  (1942).   The  amendment
            ________

            included   substantive   effects,  notably   the  retroactive

            remission of what otherwise would have  been a triple damages

            penalty,  that could raise  questions.  We  are not required,

            however, to consider this approach.  Rather, we hold that the

            amendment was not a  change at all, but a  clarification that

            did not alter the law, and merely explicated it.

                      Clarification,  effective  ab  initio,  is  a  well
                                                 __  ______

            recognized principle.   Red Lion Broadcasting Co. v. FCC, 395
                                    _________________________    ___

-6-

U.S. 367  (1969).   Determination of whether  new legislative

            action is alteration, or  merely clarification, may depend on

            a  number of factors.   One may  be the  fit in language.   A

            significant one is the fact that the new enactment  clarifies

            an ambiguity.  United States v. Montgomery Cty, 761 F.2d 998,
                           _____________    ______________

            1003 (4th Cir. 1985).   Especially is this so when,  as here,

            the enactment  follows fast  upon the  ambiguity's discovery,

            Callejas v. McMahon, 750  F.2d 729, 731 (9th Cir.  1984), and
            ________    _______

            the legislature  affirms the  agency.  Red  Lion Broadcasting
                                                   ______________________

            Co.
            ___

                      In  addition the Red  Lion court said,  395 U.S. at
                                       _________

            380-381, "Subsequent legislation declaring  the intent of  an

            earlier  statute is  entitled  to great  weight in  statutory

            construction."   In accordance with  this we note  the Puerto

            Rico legislature's expression of what it understood itself to

            be doing.  See Report of the Comm'n on Gov't of the Senate of
                       ___

            Puerto Rico on  S.B. 819  of April 10,  1986 and  Explanatory

            Memo, cited  in E.L.A. v.  Enron Corp., P.R.  Superior Court,
                            ______     ___________

            San Juan Part, Civil No. KPE 90-90-185 (904) (Nov. 14, 1990).

                      [The] extremely broad definition  of "gas
                      enterprise"  was  incorporated in  Public
                      Law No.  24 of May  15, 1986 to  clear up
                      unequivocally  that  the jurisdiction  of
                      the  Commission included  producers . . .
                      and   importers   that   had   previously
                      questioned the  Commission's jurisdiction
                      over their operations.

                      We need not pursue the matter further.  Examination

            shows that the 1986 amendment satisfies all the requirements,

-7-

including good  sense, that point to  its being clarification

            rather than an alteration of the earlier statute.  It follows

            that Martin was within  PSC's exclusive jurisdiction from the

            outset and,  accordingly, exempt from Act 77.   The dismissal

            for lack of jurisdiction must be affirmed.
                                             ________

-8-

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