UTIER v. Ortiz Vazquez

• Court: Court of Appeals for the First Circuit
• Decided: January 15, 2021
• Docket: 20-1332P
• Status: Published

Opinion

United States Court of Appeals For the First Circuit

No. 20-1332

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; THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS REPRESENTATIVE OF THE PUERTO RICO PUBLIC BUILDINGS AUTHORITY,

Debtors.

UNIÓN DE TRABAJADORES DE LA INDUSTRIA ELÉCTRICA Y RIEGO (UTIER),

Petitioner, Appellant,

v.

JOSÉ F. ORTIZ-VÁZQUEZ; THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD, AS REPRESENTATIVE FOR THE PUERTO RICO ELECTRIC POWER AUTHORITY (PREPA),

Respondents, Appellees.

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

[Hon. Laura Taylor Swain, U.S. District Judge] Before

Lynch, Kayatta, and Barron, Circuit Judges.

Guillermo Ramos-Luiña on brief for appellant. Timothy W. Mungovan, John E. Roberts, Martin J. Bienenstock, Stephen L. Ratner, Jonathan E. Richman, Mark D. Harris, Shiloh Rainwater, and Proskauer Rose LLP on brief for appellees.

January 15, 2021 LYNCH, Circuit Judge. In this appeal from the Puerto

Rico Oversight, Management, and Economic Stability Act ("PROMESA")

Title III court in Puerto Rico, the sole remaining question is

whether that court appropriately dismissed the petitioner's

mandamus petition for failure to state a claim. The petition

alleges that the Puerto Rico Electric Power Authority ("PREPA")

violated two provisions of a Puerto Rican statute when PREPA

announced that it would increase some medical co-pays while

decreasing others in order to comply with its certified fiscal

plan. The petitioner, Unión de Trabajadores de la Industria

Eléctrica y Riego ("UTIER"), which represents the employees of

PREPA, seeks to compel PREPA to comply with what it says are the

requirements of Act No. 26-2017, P.R. Laws Ann. tit. 3, §§ 9461 et

seq. The Title III court concluded that UTIER did not meet its

burden of showing that there were no adequate alternative remedies,

which is a precondition for mandamus relief. We agree and affirm.1

I.

In 2016, Congress enacted PROMESA, 48 U.S.C. §§ 2101 et

seq., which established the Financial Oversight and Management

Board ("FOMB") to help address the fiscal emergency in Puerto Rico.

Id. § 2121; see also id. § 2194(m); Municipality of San Juan v.

1 Because UTIER did not request oral argument and the Financial Oversight and Management Board expressly requested that the case not be orally argued, this case was taken as submitted on the briefs.

- 3 - Puerto Rico, 919 F.3d 565, 568 (1st Cir. 2019); In re Fin.

Oversight & Mgmt. Bd. for P.R., 916 F.3d 98, 103-04 (1st Cir.

2019). The FOMB is authorized to review and certify all budgets

and long-term fiscal plans for the Commonwealth and its covered

instrumentalities, such as PREPA, to achieve fiscal responsibility

and access to capital markets. 48 U.S.C. §§ 2121(a), (d), 2141-

2142; see also In re Fin. Oversight & Mgmt. Bd. for P.R., 916 F.3d

at 104. The FOMB's decision to certify a budget or fiscal plan is

not subject to judicial review. 48 U.S.C. § 2126(e); see also In

re Fin. Oversight & Mgmt. Bd. for P.R., 916 F.3d at 112.

The FOMB is also authorized to file, and has filed, on

behalf of the Commonwealth and its covered instrumentalities a

Title III petition in federal district court for debt

restructuring. 48 U.S.C. §§ 2146, 2164(a), 2168(a); see also In

re Fin. Oversight & Mgmt. Bd. for P.R., 954 F.3d 1, 5-6 (1st Cir.

2020); Municipality of San Juan, 919 F.3d at 571; In re Fin.

Oversight & Mgmt. Bd. for P.R., 916 F.3d at 104. In such a Title

III case, creditors are authorized to assert claims against the

Commonwealth and its covered instrumentalities. See 48 U.S.C.

§ 2161(a); see also 11 U.S.C. § 101(5) (defining the term "claim"

for purposes of bankruptcy proceedings); id. § 501(a) (providing

that a creditor may file a proof of claim); In re Fin. Oversight

& Mgmt. Bd. for P.R., 954 F.3d at 5-6 (explaining that PROMESA

incorporates sections of the United States Bankruptcy Code and

- 4 - makes them applicable in Title III cases); Municipality of San

Juan, 919 F.3d at 571 (same).

PREPA is a public corporation responsible for providing

reliable electric power to the citizens of Puerto Rico and managing

Puerto Rico's energy resources. P.R. Laws Ann. tit. 22, § 196.

UTIER is a labor organization that represents more than three

thousand employees of PREPA.

In April 2017, the Puerto Rico legislature enacted Act

No. 26-2017, known as the "Fiscal Plan Compliance Act" ("Act 26"

or "the Act"). H.B. 938, 18th Leg. Assemb. (P.R. 2017), 2017 P.R.

Leyes 26 (codified as amended at P.R. Leyes An. tit. 3, §§ 9461 et

seq.).2 The Act was designed to implement the fiscal plan certified

by the FOMB in March 2017. Among other things, the Act addressed

health insurance and other benefits provided to employees by

Commonwealth employers. UTIER attempts to assert mandamus claims

as to Article 2.07 of Act 26, which is titled "Uniform Employer

Contribution to Public Corporation Employees Health Plan." See

P.R. Leyes An. tit. 3, § 9477.

Article 2.07 of the Act provides that "[t]he Executive

and Legislative Branches will identify additional savings and

resources to avoid affecting employee contributions to the payment

2 There is currently no official English translation of the codified statute, and so we rely on the certified English translation of the Act provided by the parties in their appendix.

- 5 - of health plans" ("the Savings Provision"). It also provides that

"any employee of a public corporation or dependent who is currently

enrolled in the health plan and who suffers from a catastrophic,

chronic, or pre-existing terminal illness will keep unaltered the

current employer's health insurance contribution for as long as he

remains linked to public service" ("the Pre-existing Conditions

Provision").3 Act 26 does not define what constitutes a

"catastrophic" illness. The FOMB does not challenge UTIER's

assertion that the definition of "catastrophic" illnesses is

provided in a later Act, Act No. 28-2018, titled the "Special Leave

for Employees with Serious Diseases of a Catastrophic Nature Act"

3 In PREPA's motion before the Title III court to dismiss UTIER's petition for a writ of mandamus, PREPA quoted a slightly different translation of Article 2.07 than the certified English translation provided elsewhere in the record. In that motion, PREPA quoted the English translation of the Savings Provision as stating "[t]he Executive and Legislative Branches shall identify additional savings and resources to prevent adversely affecting the employees' contributions to the payment of the healthcare plan," and the Pre-existing Conditions Provision as stating every employee, or dependent thereof, of a public corporation who is currently enrolled in the healthcare plan and who suffers from a preexisting catastrophic, chronic, or terminal illness shall continue to receive the employer contribution in effect for his healthcare plan, without any change, for the term he remains in the public service. The Title III court relied on this translation of the Savings and Pre-existing Conditions Provisions in its decision dismissing the petition for writ of mandamus. See In re Fin. Oversight & Mgmt. Bd. for P.R., 435 F. Supp. 3d 377, 382-83 (D.P.R. 2020). For purposes of this appeal, there is no material difference between the two translations of Article 2.07 of the Act.

- 6 - ("Act 28"), which contains a list of conditions defined as "Serious

Illness[es] of a Catastrophic Nature" for purposes of a "Special

Leave" provision for employees suffering from such illnesses. S.B.

461, 18th Leg. Assemb. (P.R. 2018), 2018 P.R. Leyes 28 (codified

as amended at P.R. Leyes An. tit. 29, §§ 508 et seq.).4

In July 2017, the FOMB filed a Title III debt-

restructuring case on behalf of PREPA as a covered instrumentality

pursuant to 48 U.S.C. § 2164(a). In September 2018, the FOMB

certified a budget for PREPA for fiscal year 2019, which allocated

$120,888,000 for PREPA's employee pensions and benefits. In

December 2018, the FOMB approved a contract between PREPA and

Triple-S Salud Inc. for Triple-S Salud to act as PREPA's employee

health-plan administrator for 2019. On December 28, 2018, PREPA's

then-Chief Executive Officer, José Ortiz-Vázquez ("Ortiz"),

circulated a memorandum to all PREPA employees announcing changes

to the employees' health insurance plans effective January 1, 2019.

The memorandum stated that PREPA would continue its prior policy

of the employees not being required to contribute a payment to the

cost of their health insurance and that their coverage would remain

unaltered. It also stated that "to meet the financial challenges

of [PREPA's] Certified Fiscal Plan, some changes were required in

4 There is also currently no official English translation of this codified statute, and so we rely on the certified English translation provided by the parties in their appendix.

- 7 - deductibles and co-pays." A table attached to the memorandum

showed that co-pays in some instances were increased, while in

other instances they were decreased.5

On April 24, 2019, UTIER commenced this action in a

Puerto Rico court. The FOMB, on behalf of PREPA and Ortiz, removed

it to the federal Title III court on May 8, 2019. UTIER alleged

that PREPA violated Article 2.07 of Act 26 by (1) failing to

"identify savings and additional resources to avoid affecting the

contributions of the employees for the payment of health plans"

and (2) failing to ensure that employees and their dependents who

suffer from pre-existing catastrophic, chronic, or terminal

diseases continue to receive the same employer contribution for

the entire term of their public employment. UTIER argued that as

a result of the changes to the employee health insurance plans,

employees suffering from serious pre-existing conditions would

"now pay substantially higher sums" than before. UTIER sought a

writ of mandamus compelling PREPA and Ortiz to comply with the

Savings and Pre-existing Conditions Provisions of Article 2.07 of

Act 26.

5 Although the memorandum also said there were some changes in deductibles and UTIER claims that its members' deductibles were modified, neither the memorandum nor UTIER's petition for writ of mandamus identified specifically any such changes. The table attached to the memorandum also showed both increasing and decreasing co-insurance percentages, but UTIER provides no specific allegations concerning those changes.

- 8 - The FOMB filed a motion to dismiss the mandamus petition

for lack of jurisdiction and failure to state a claim. The Title

III court took briefing on the issues from both sides. On January

23, 2020, the Title III court issued its decision granting the

FOMB's motion and dismissing the petition. In re Fin. Oversight

& Mgmt. Bd. for P.R., 435 F. Supp. 3d 377, 387-88 (D.P.R. 2020).

First, the court held that, "to the extent that the Petition

s[ought] to challenge the [FOMB]'s determination that the [2019

PREPA] Budget is compliant with a fiscal plan which meets the

requirements of" PROMESA, the court lacked subject matter

jurisdiction because of the jurisdictional bar of 48 U.S.C.

§ 2126(e).6 Id. at 385. Second, "to the extent that the Petition

ask[ed] that [PREPA] be directed to comply with duties imposed by

a Commonwealth statute and plausibly allege[d] that such

compliance is inconsistent with PREPA's certified Budget," the

court held that UTIER failed to state a plausible claim for

mandamus relief because it did not allege there was no other

adequate alternative remedy available. Id. at 385-87. The court

held, and UTIER does not contest, that the PREPA employees

represented by UTIER could assert financial claims against PREPA

6 UTIER has made clear on appeal that it does not intend its action to be a challenge to the FOMB's certification of PREPA's 2019 budget, given that any such challenge would raise the jurisdictional bar set forth in 48 U.S.C. § 2126(e). We focus only on the Title III court's decision to dismiss the mandamus petition for failure to state a claim.

- 9 - as creditors to a Title III debtor under PROMESA. Id. at 386.

The court also rejected as unsupported UTIER's argument that an

adequate alternative remedy exists for purposes of denying a writ

of mandamus only if the alternative remedy is provided by the same

statute the petitioner seeks to enforce. Id. at 386-87. The court

did not address the FOMB's alternative arguments for dismissal of

the mandamus petition. Id. at 385 n.8.

UTIER timely appealed. We address only the single

remaining issue.

II.

UTIER challenges the Title III court's conclusion that

it failed to meet its burden of showing there are no adequate

alternative remedies which would allow its use of mandamus. None

of the arguments advanced on appeal have merit.7

7 As an initial matter, we reject UTIER's argument that the district court engaged in an impermissible "sua sponte" dismissal of its mandamus petition. The Title III court dismissed the mandamus petition only after the FOMB had filed a motion to dismiss for failure to state a claim and the motion had been fully briefed, and the fact that the court relied on cases not cited in the parties' briefs was not improper and did not make its dismissal of the mandamus petition sua sponte. See, e.g., Goya Foods, Inc. v. Unanue, 233 F.3d 38, 45 & n.7 (1st Cir. 2000) (citing cases not cited by the parties); Bay State HMO Mgmt. v. Tingley Sys., Inc., 181 F.3d 174, 180-82 (1st Cir. 1999) (relying on a case not cited by the parties). Also in its brief, UTIER makes the cursory argument that Act 26 is unconstitutional under the Contracts Clause, U.S. Const. art. I, § 10. UTIER does not develop this argument and so it is waived. See United States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990).

- 10 - We review de novo the district court's analysis of a

motion to dismiss for failure to state a claim, taking all well-

pleaded facts as true and determining whether those facts and the

inferences reasonably drawn therefrom plausibly state a claim.

Doe v. Pawtucket Sch. Dep't, 969 F.3d 1, 7 (1st Cir. 2020) (first

citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); and then citing

Penate v. Hanchett, 944 F.3d 358, 365 (1st Cir. 2019)).

A writ of mandamus is an extraordinary remedy that is

available only when certain conditions are met, and this is true

under both federal and Puerto Rico law.8 See, e.g., Gulfstream

Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, 289 (1988); In

re Cargill, Inc., 66 F.3d 1256, 1259 (1st Cir. 1995); Purcell Ahmed

v. Pons Núñez, 129 P.R. Dec. 711, 714 (1992). "[T]he party seeking

mandamus has the 'burden of showing that its right to issuance of

the writ is "clear and indisputable."'" Gulfstream Aerospace

Corp., 485 U.S. at 289 (quoting Bankers Life & Cas. Co. v. Holland,

346 U.S. 379, 384 (1953)).

Under both federal and Puerto Rico law, the party seeking

mandamus relief must demonstrate that there are no adequate

alternative remedies available. See Mallard v. U.S. Dist. Ct. for

8 UTIER assumes that the question of mandamus relief is governed by Puerto Rico law, and both parties cite Puerto Rico law with respect to mandamus in their briefs. We do not have to address this assumption because the outcome here is the same whether Puerto Rico or federal law applies.

- 11 - S. Dist. of Iowa, 490 U.S. 296, 309 (1989) ("To ensure that

mandamus remains an extraordinary remedy, petitioners must show

that they lack adequate alternative means to obtain the relief

they seek . . . ." (collecting cases)); Wilson v. Sec'y of Health

& Hum. Servs., 671 F.2d 673, 679 (1st Cir. 1982) ("[I]t is apparent

to us that this 'extraordinary' statutory remedy [of mandamus under

28 U.S.C. § 1361] is inappropriate, both because appellant has

failed to meet the showing of exceptional circumstances required

by [Supreme Court cases and First Circuit cases] and because an

alternative remedy -- through administrative proceedings and

[review under a different statutory provision] -- was available."

(citations omitted)); Matos v. Sec'y of Health, Educ. & Welfare,

581 F.2d 282, 286 n.6 (1st Cir. 1978) (noting that "the

extraordinary remedy of mandamus . . . might be available in those

extreme situations where no other remedy was available");

Hernández Agosto v. Romero Barceló, 12 P.R. Offic. Trans. 508, 521

(1982) (stating that, applying Puerto Rico law, "the writ of

mandamus is the appropriate remedy for compelling performance of

a duty allegedly imposed by law . . . when there is no other

adequate remedy at law"); see also P.R. Laws Ann. tit. 32, § 3423

("This writ may not be issued in any case where there is plain and

adequate remedy in the ordinary course of the law.").

UTIER does not argue that its members cannot assert

financial claims against PREPA in PREPA's Title III case for

- 12 - alleged overpayments in health insurance, nor does it argue that

this alternative mechanism for relief under PROMESA is somehow

inadequate.

Rather, UTIER's sole argument is that Act 26 does not

contain a mechanism for compelling PREPA to comply with the Savings

and Pre-existing Conditions Provisions of Article 2.07 and that

the Commonwealth statute it seeks to enforce must contain such

relief in order for the remedy to be adequate for purposes of

denying mandamus relief. UTIER cites no authority for this

proposition. The proposition is simply wrong. The case law

establishes that denial of mandamus relief is appropriate if there

is some adequate alternative remedy available, even if the source

of the remedy is distinct from the statute sought to be enforced.

See, e.g., In re City of Fall River, 470 F.3d 30, 32-33 (1st Cir.

2006) (denying a writ of mandamus where conventional review of

agency action under another statute was available pursuant to the

Administrative Procedure Act); Burgos v. Milton, 709 F.2d 1, 3

(1st Cir. 1983) (holding that the district court lacked mandamus

jurisdiction in an action against the IRS for damages because the

Tucker Act provided the ability to seek adequate relief in the

Court of Federal Claims); Guadalupe Pérez v. Saldaña, 133 P.R.

Dec. 42, 54-57 (1993) (denying mandamus relief under Puerto Rico

law where, among other things, the petitioner, who was asserting

a right to University information under the Puerto Rico

- 13 - Constitution, could pursue an administrative remedy under the

policy of the University of Puerto Rico).9

The Title III court correctly dismissed the petition for

writ of mandamus because UTIER did not demonstrate that there was

no adequate alternative remedy available for its members to recover

from PREPA.10

Affirmed.

9 Because we cannot locate an English translation of Guadalupe Pérez, we rely on a translated copy of the case provided by the FOMB in the addendum to its appellate brief. 10 Because we agree with the Title III court's holding on this issue, we need not address the FOMB's alternative arguments for dismissal, which the Title III court also did not address.

- 14 -