Camacho v. Puerto Rico Ports Authority

United States Court of Appeals
For the First Circuit

No. 03-2113

OSCAR CAMACHO,

Plaintiff, Appellee,

v.

PUERTO RICO PORTS AUTHORITY,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Justo Arenas, U.S. Magistrate Judge]

Before

Selya and Howard, Circuit Judges,

and Singal,* District Judge.

Lizabel M. Negrón, with whom Jorge A. Fernández-Reboredo and
Rivera & Fernández-Reboredo, P.S.C. were on brief, for appellant.
Harry A. Ezratty for appellee.

May 21, 2004

*
Of the District of Maine, sitting by designation.
 SELYA, Circuit Judge. This interlocutory appeal raises

a discrete and important question: Can an agency, for purposes of

the Age Discrimination in Employment Act (ADEA), 29 U.S.C. §§ 621-

634, be regarded as the employer of those whom it licenses and

regulates? The court below answered this question in the

affirmative and, accordingly, ruled that the Puerto Rico Ports

Authority (the Authority) was, for ADEA purposes, the de facto

employer of the harbor pilots whom it licenses and regulates. See

Camacho v. P.R. Ports Auth., 254 F. Supp. 2d 220, 227-28 (D.P.R.

2003) (Camacho I).

Whatever the theoretical possibilities, we do not agree

that, in the circumstances of this case, a de facto employment

relationship exists. The sockdolager here is that the statutory

power to license and regulate harbor pilots does not imbue the

Authority with the level of control necessary to make it their

employer for ADEA purposes. Consequently, we reverse.

I. BACKGROUND

Oscar Camacho worked for over eighteen years as a harbor

pilot in the port of San Juan. All harbor pilots are required to

be licensed, 23 P.R. Laws Ann. § 2403, and at all times relevant

hereto the Authority — a government instrumentality and public

corporation whose prerogatives include the regulation of pilotage

in Puerto Rico's ports and harbors, id. §§ 333, 2401 — functioned

-2-
as the licensing agency. In that capacity, the Authority licensed

Camacho to serve as a harbor pilot.

On June 15, 2000, the Authority reversed course and

summarily revoked the license. At that time, Camacho had

celebrated his seventieth birthday, and the Authority acted

pursuant to a statute providing that "[e]very license shall

automatically expire on the date in which the pilot reaches seventy

(70) years of age." Id. § 2406.

Camacho did not take the revocation lightly. After

exhausting his administrative remedies, he sued the Authority in

the United States District Court for the District of Puerto Rico.

In pertinent part, his complaint alleged that the Authority had

discriminated against him on account of his age in violation of the

ADEA, specifically, 29 U.S.C. § 623(a)(1).1

Section 623(a) of the ADEA imposes liability only on

employers. See Kimel v. Fla. Bd. of Regents, 528 U.S. 62, 67-68

(2000). Seizing upon this limitation, the Authority moved for

summary judgment on the ground that it was not Camacho's

"employer." Camacho objected and the parties consented to proceed

before a magistrate judge. See 28 U.S.C. § 636(c).

1
The complaint also contained claims under the Equal
Protection Clause, other federal statutes, and Puerto Rico's labor
discrimination law (29 P.R. Laws Ann. §§ 146-151). These claims
fall outside the compass of this interlocutory appeal and we take
no view of them.

-3-
 The magistrate judge rejected the Authority's position.

Examining the relationship between the Authority and the harbor

pilots through the prism of common law agency, he concluded that

although "harbor pilots are not employees in the typical sense,"

the statutory scheme gives the Authority such "wide latitude to

control the daily activities of harbor pilots" as to make the

Authority the pilots' employer for ADEA purposes. Camacho I, 254

F. Supp. 2d at 226; see also id. at 227-28.

Moving to the next issue, the magistrate judge declared

that compulsory retirement of harbor pilots at age seventy would

violate the ADEA unless age was shown to be a bona fide

occupational qualification within the ambit of 29 U.S.C. §

623(f)(1). Id. at 229-30. Since that entailed a disputed question

of material fact, he denied the Authority's motion for summary

judgment on the ADEA claim. Id. at 230.

Dismayed with the denial of its motion and with the

reasoning upon which that denial rested, the Authority asked the

magistrate judge to certify various aspects of his ruling for

immediate appeal. See 28 U.S.C. § 1292(b) (allowing, subject to

certain conditions, interlocutory review of an order that "involves

a controlling question of law as to which there is substantial

ground for difference of opinion" if its resolution "may materially

advance the ultimate termination of the litigation"). Section

1292(b) is meant to be used sparingly, and appeals under it are,

-4-
accordingly, hen's-teeth rare. They require, among other things,

leave of both the trial and appellate courts. See id.; see

generally In re San Juan Dupont Plaza Hotel Fire Litig., 859 F.2d

1007, 1010 & n.1 (1st Cir. 1988); Heddendorf v. Goldfine (In re

Heddendorf), 263 F.2d 887, 888-90 (1st Cir. 1959).

In this case, the magistrate judge granted the request,

noting that the Authority's status qua ADEA employer constitutes an

open question and that the litigation would benefit from prompt

resolution of that question. Camacho v. P.R. Ports Auth., 267 F.

Supp. 2d 174, 178 (D.P.R. 2003). Sharing this appraisal, we agreed

to consider whether the harbor pilots could be considered employees

of the Authority for purposes of the ADEA.

II. DISCUSSION

We review a district court's rulings on summary judgment

de novo. Plumley v. S. Container, Inc., 303 F.3d 364, 369 (1st

Cir. 2002); Garside v. Osco Drug, Inc., 895 F.2d 46, 48 (1st Cir.

1990). The facts that bear upon the certified question are, for

all intents and purposes, undisputed. Thus, we may decide the

employment status issue as a matter of law to the extent that the

undisputed facts point so favorably in one direction that a

factfinder could not reasonably reach the opposite conclusion.

Alberty-Velez v. Corporación de P.R. para la Difusión Publica, 361

F.3d 1, 7 (1st Cir. 2004). This is such a case.

-5-
 A.

The relevant section of the ADEA makes it unlawful "for

an employer . . . to discharge any individual . . . because of such

individual's age." 29 U.S.C. § 623(a)(1). The statute defines an

employer as a "person engaged in an industry affecting commerce who

has twenty or more employees." Id. § 630(b). For this purpose,

the word "person" includes state agencies and instrumentalities.2

Id. Absent a covered employment relationship, ADEA liability does

not attach. See generally Speen v. Crown Clothing Corp., 102 F.3d

625, 629 (1st Cir. 1996) (explaining that the prophylaxis of the

ADEA does not reach independent contractors); Frankel v. Bally,

Inc., 987 F.2d 86, 89 (2d Cir. 1993) (same).

The Authority does not dispute that it could be

considered an ADEA employer of those persons it hires and fires.

It insists, however, that it is not an employer of harbor pilots.

Accordingly, the question in this case reduces to whether harbor

pilots, who lack a conventional employment relationship with the

Authority, properly may be regarded as the Authority's employees

for ADEA purposes. The statutory definition of an employee as "an

individual employed by any employer," id. § 630(f), is circular

and, thus, affords us scant guidance in our attempt to answer this

question.

2
Puerto Rico is deemed a state for ADEA purposes. See 29
U.S.C. § 630(i); see also Ramirez v. P.R. Fire Serv., 715 F.2d 694,
696 n.2 (1st Cir. 1983).

-6-
 Given the opacity of the statutory text, courts have been

forced to develop their own approaches to determining whether an

entity is acting as an employer within the purview of the ADEA.

Some courts attempt to answer that question by a hybrid test that

marries traditional common law agency principles with the economic

realities of a particular relationship. See, e.g., Mangram v. Gen.

Motors Corp., 108 F.3d 61, 62-63 (4th Cir. 1997); Oestman v. Nat'l

Farmers Union Ins. Co., 958 F.2d 303, 305 (10th Cir. 1992); Fields

v. Hallsville Indep. Sch. Dist., 906 F.2d 1017, 1019 (5th Cir.

1990) (per curiam). This court has rejected that approach and

chosen instead to apply common law agency principles simpliciter in

determining when an employment relationship exists for purposes of

the ADEA. See Speen, 102 F.3d at 631; cf. Alberty-Velez, 361 F.3d

at 6 (adopting the same test to determine whether an employment

relationship exists for purposes of Title VII). We are not alone;

several other circuits have made the same choice. See, e.g., Shah

v. Deaconess Hosp., 355 F.3d 496, 499 (6th Cir. 2004); Barnhart v.

N.Y. Life Ins. Co., 141 F.3d 1310, 1313 (9th Cir. 1998); Frankel,

987 F.2d at 90. We adhere to that test here.

The common law agency test is familiar. The Supreme

Court restated the baseline formulation in Nationwide Mutual

Insurance Co. v. Darden, 503 U.S. 318 (1992). There, the Court

posited that, "[i]n determining whether a hired party is an

employee under the general common law of agency, [an inquiring

-7-
court should] consider the hiring party's right to control the

manner and means by which the product is accomplished." Id. at

323. The Court then elaborated:

Among the other factors relevant to this
inquiry are the skill required; the source of
the instrumentalities and tools; the location
of the work; the duration of the relationship
between the parties; whether the hiring party
has the right to assign additional projects to
the hired party; the extent of the hired
party's discretion over when and how long to
work; the method of payment; the hired party's
role in hiring and paying assistants; whether
the work is part of the regular business of
the hiring party; whether the hiring party is
in business; the provision of employee
benefits; and the tax treatment of the hired
party.

Id. at 323-24 (quoting Cmty. for Creative Non-Violence v. Reid, 490

U.S. 730, 751-52 (1989)). No one factor is outcome determinative;

rather, all the incidents of a given relationship must be weighed

in order to reach a conclusion as to whether that relationship fits

within the confines of the employer-employee taxonomy. Id. at 324.

Of course, this case presents an unusual twist. As a

general matter, liability under section 623(a) depends upon the

existence of a direct employer-employee relationship, and none

exists here. But there is what some have called an exception to

this general rule for an entity that so extensively controls an

aggrieved party's employment relationship as to become that party's

de facto employer. See EEOC v. Illinois, 69 F.3d 167, 171 (7th

-8-
Cir. 1995) (Posner, C.J.) (discussing doctrine).3 We proceed,

therefore, to determine whether the Authority can be regarded as

the de facto employer of the harbor pilots.

B.

The Authority is a creature of statute, see Puerto Rico

Ports Authority Act of 1942, 23 P.R. Laws Ann. §§ 331-354 (as

amended) (creating the Authority and describing its broad

contours), and it would seem logical to begin our analysis of its

right to control harbor pilots with the legislation delineating the

scope of its powers. Although the Ports Authority Act vests the

Authority with general power to "develop and improve, own, operate,

and manage any and all types of air and marine transportation

facilities and services, as well as to establish and manage mass

marine transportation systems in, to and from the Commonwealth of

3
We consider this less an exception and more a restatement of
the rule, as the analysis for discerning a de facto employment
relationship mirrors the common law agency analysis in important
respects. See, e.g., EEOC v. Illinois, 69 F.3d at 171-72. It
might be argued that a true exception exists, providing for
liability if an entity interferes with an individual's employment
with another employer in ways that violate the ADEA. See id. at
169 (discussing this arguable exception in the ADEA context and
questioning its validity); cf. Sibley Mem'l Hosp. v. Wilson, 488
F.2d 1338, 1341 (D.C. Cir. 1973) (fashioning interference liability
in Title VII context). Even if we were to indulge, for argument's
sake, the dubious assumption that this exception exists in ADEA
cases, it would have no currency here. Camacho has not maintained
that he is an employee of the shipowners and, thus, if he is not an
employee of the Authority, he must be regarded as an independent
contractor. Consequently, there is no "prime" employer with whom
the Authority's actions might be said to have interfered. See,
e.g., Alexander v. Rush N. Shore Med. Ctr., 101 F.3d 487, 491-92
(7th Cir. 1997).

-9-
Puerto Rico," id. § 336, we must look elsewhere for a specific

grant of licensing and regulatory authority over pilotage services.

There is some uncertainty about which legislative scheme confers

that authority for purposes of this case. After considerable study

— and with surprisingly little assistance from the parties — we

conclude that the controlling legislation is the Dock and Harbor

Act of 1968, 23 P.R. Laws Ann. §§ 2101-2801.

The Dock and Harbor Act took effect on September 27,

1968. It specifically places pilotage services in the harbors of

Puerto Rico under the Authority's control, id. § 2401, and grants

the Authority a panoply of powers to accomplish that mission.

Though amended from time to time, the Dock and Harbor Act remained

largely intact for the next three decades.

On August 12, 1999, the waters grew murky; on that date,

the legislature enacted the Puerto Rico Harbor Pilotage Commission

Act (Act 226), 1999 P.R. Laws 226 (codified at 23 P.R. Laws Ann. §§

361-361v). The new law was to take effect thirty days after

passage. It purported to establish a Harbor Pilotage Commission

(the Commission) and to vest in that body most of the licensing and

regulatory functions previously assigned to the Authority. See 23

P.R. Laws § 361b. It also repealed conflicting provisions of the

Dock and Harbor Act. See Act 226, Preamble & § 27. Since

Camacho's license was revoked on June 15, 2000 — nine months after

-10-
Act 226's effective date — the new law would at first blush seem to

apply.

Appearances can be deceiving, however — and the mills of

government oftentimes grind slowly. There were delays in setting

up the Commission, and these delays became so intractable that on

April 11, 2000, the legislature amended Act 226 to provide that

"until the Commission is established according to the parameters of

[Act 226] . . . the code of laws and administrative rules in effect

prior to the approval of [Act 226] regarding the pilotage

profession, shall be maintained." 2000 P.R. Laws 66, § 1. There

is no evidence that the Commission had become an actuality at any

time material hereto.4 Thus, the Dock and Harbor Act controls the

events at issue here. We proceed accordingly.

C.

The Dock and Harbor Act gives the Authority control over

"the navigation and . . . marine trade in navigable waters of

Puerto Rico in its harbors and docks." Id. § 2201. This

suzerainty extends to pilotage services throughout Puerto Rico.

Id. § 2401. Pertinently, the Dock and Harbor Act cedes to the

Authority explicit power to issue, renew, suspend and revoke harbor

pilots' licenses, id. §§ 2403, 2406, 2407; to limit licenses to

4
There is some indication that the Commission may have been
revivified in 2002. See P.R. Reg. No. 6384 (Jan. 25, 2002)
(purporting to resuscitate Act 226). Since that activity plainly
postdates the events at issue here, we need not definitively
resolve the question of the Commission's current status.

-11-
certain ports, id. § 2403; to fine or otherwise discipline pilots

for improper conduct, id. § 2409; and to fix rates for pilotage

services, id. § 2414.

The regulations promulgated by the Authority pursuant to

the Dock and Harbor Act are also relevant to our inquiry. Among

other things, these regulations set out certain standard procedures

to guide pilots in boarding and taking command of ships. See P.R.

Reg. No. 4286, §§ 30-32 (Sept. 2, 1990). For example, pilots are

directed to board outside the harbor, identify themselves, present

appropriate papers, discuss the vessel's specifications with the

master, and follow the applicable traffic rules governing navigable

waters.

There is another point that may bear on the issue. In

1988, the Authority, acting in conjunction with representatives of

both the harbor pilots and a trade association composed of shipping

interests, established a retirement plan (the Plan) for the benefit

of the harbor pilots. The Plan is funded entirely by shipowners'

contributions, at rates determined by the Authority. The Plan is

qualified under the Employee Retirement Income Security Act

(ERISA), 29 U.S.C. §§ 1001-1461, and is administered by a governing

board that includes appointees of the Authority, the harbor pilots,

and the shipowners.

Although pilotage is a heavily regulated profession,

harbor pilots nonetheless retain important badges of autonomy.

-12-
Pilots are highly skilled entrepreneurs who themselves provide the

training, tools, and instruments needed to perform their work; they

own and maintain their own launches and equipment; they set their

own schedules for working watches; they choose the routes that

ships under their tutelage will take; and they are paid directly by

the shipowners. Moreover, harbor pilots carry out their work on

board the shipowners' vessels, not at sites maintained by the

Authority. And although they are subject to some strictures

consistent with Puerto Rico's police power — specifically, the

Commonwealth's interest in ensuring safe and efficient nautical

operations in its ports and harbors — they exercise considerable

discretion in the mode and manner in which they perform their

duties.

Camacho, hawking the regulations, suggests that the

Authority exercises an unusually high level of control over the

pilots' day-to-day activities. In our view, the regulations fall

far short of evincing the degree of control and supervision

traditionally considered sufficient to create an employer-employee

relationship. As described above, the regulations direct pilots to

board three miles outside of the harbor, identify themselves,

present appropriate papers, and discuss the ship's capabilities

with the captain. P.R. Reg. No. 4286, § 30. These directions

merely establish a framework, consistent with the prudent exercise

of the Commonwealth's police power, for the rendition of pilotage

-13-
services — much as, say, a state supreme court might establish a

framework for the practice of law (e.g., a lawyer must maintain an

office in the jurisdiction, prominently display his or her diploma

and bar admission certificate, and discuss past experience and fees

candidly with potential clients). Within these broad parameters,

each pilot remains free to guide vessels using his or her skill and

discretion (just as each attorney remains free to counsel clients

using his or her skill and discretion). There is no evidence

suggesting that the Authority superintends or otherwise attempts to

control the pilot's actions on the bridge. The absence of that

degree of control defeats Camacho's argument. Cf. Ost v. W.

Suburban Travelers Limousine, Inc., 88 F.3d 435, 438 (7th Cir.

1996) (holding that dispatcher does not "control" the details of

limousine driver's work for Title VII purposes where driver

provides her own vehicle, chooses her own route, and is paid

directly by her passenger, even though dispatcher sets rates and

influences schedules).

The Authority's real-world role confirms this intuition.

In practice, it simply does not act like an employer vis-à-vis the

harbor pilots. After all, it does not hire or fire harbor pilots,

withholds no taxes from their earnings (which come wholly from the

shipowners), pays no F.I.C.A. premiums, carries no workers'

compensation insurance referable to them, affords them no paid

vacations or other fringe benefits, and furnishes them no gear. To

-14-
cinch matters, the Authority is not engaged either in selling

pilotage services or in contracting with others to make such

services available. These attributes militate strongly against a

finding that the Authority functions as the de facto employer of

the harbor pilots.

That the Authority administers a fund for the pilots'

benefit does not alter this conclusion. When an entity establishes

and contributes to a fund for another's benefit, courts often

mention that activity as a hallmark of an employment relationship.

See, e.g., Barnhart, 141 F.3d at 1313. That is not the situation

here.

In establishing the Plan, the Authority acted as a

middleman, herding shipowners and harbor pilots into a

collaborative effort. It has never contributed to the Plan,

leaving that obligation exclusively to the shipowners. And while

the Authority appoints some members of the board charged with

administering the Plan, so do the pilots and the shipowners.

In all events, one swallow does not a summer make, see

Aristotle, Nicomachean Ethics, vol. 1, ch. 7, and the Authority's

purely ministerial actions with respect to the Plan's

administration are not enough, on their own, to justify treating it

as the pilots' de facto employer for ADEA purposes. See id.; Ehret

v. Louisiana, 862 F. Supp. 1546, 1550 (E.D. La. 1992); see also

Darden, 503 U.S. at 324 (noting that no one factor is to be given

-15-
determinative weight); cf. Dykes v. DePuy, Inc., 140 F.3d 31, 39

(1st Cir. 1998) (holding, in ERISA context, that the availability

of a retirement compensation program — subject to certain vesting

requirements — was insufficient to overcome other indicia of

independent contractor status).

The short of the matter is that the harbor pilots

function as independent contractors and the Authority's role vis-à-

vis the harbor pilots can best be described as that of a licensing

and regulatory agency overseeing independent contractors in a

heavily regulated industry. See Prof'l Pilots Fed'n v. FAA, 118

F.3d 758, 763 (D.C. Cir. 1997) (holding that the FAA acts as a

regulator, not an employer, of pilots for ADEA purposes). Insofar

as the Darden factors apply in this situation, the overwhelming

weight of those factors supports this result. Accordingly, we hold

that the harbor pilots are not employees of the Authority for ADEA

purposes. See Ehret, 862 F. Supp. at 1550-51 (holding that neither

pilot association nor state licensing board is an employer of river

pilots under the ADEA); EEOC v. Waterfront Comm'n of N.Y. Harbor,

665 F. Supp. 197, 199-200 (S.D.N.Y. 1987) (holding that state

licensing commission is not the ADEA employer of pier guards); see

also Nat'l Org. for Women v. Waterfront Comm'n of N.Y. Harbor, 468

F. Supp. 317, 320 (S.D.N.Y. 1979) (holding that state licensing

commission is not an employer under Title VII for either

longshoremen or cargo checkers).

-16-
 This holding is in line with our prior precedents. We

previously ruled, in a negligence case, that the Authority could

not be held liable for a pilot's carelessness on a respondeat

superior theory. See P.R. Ports Auth. v. M/V Manhattan Prince, 897

F.2d 1, 12 (1st Cir. 1990). Implicit in this holding is the

determination that, as a licensing and regulatory body, the

Authority does not exercise the type of control over harbor pilots

that would be needed to qualify it as their employer under common

law agency principles. See id. (observing that the Authority's

"functions are related to licensing and the competency of pilots"

and that it "acts like a public service commission, setting and

enforcing the standards within the industry") (citation and

internal quotation marks omitted); see also Royal Caribbean Corp.

v. P.R. Ports Auth., 973 F.2d 8, 12 (1st Cir. 1992) (distinguishing

the Authority's regulatory role in overseeing pilot services from

its proprietary role in maintaining pier areas).

Our holding also jibes with a long line of cases standing

for the proposition, under either the ADEA or Title VII, that state

licensing and regulatory agencies generally are not regarded as

employers vis-à-vis those whom they license and regulate.5 See,

e.g., Fields, 906 F.2d at 1020; George v. N.J. Bd. of Veterinary

5
We have held before, and today reaffirm, that the ADEA and
Title VII "stand[] in pari passu" and that "judicial precedents
interpreting one such statute [are] instructive in decisions
involving [the other]." Serapion v. Martinez, 119 F.3d 982, 985
(1st Cir. 1997).

-17-
Med. Exam'rs, 794 F.2d 113, 114 (3d Cir. 1986); Haddock v. Bd. of

Dental Exam'rs, 777 F.2d 462, 464 (9th Cir. 1985). But cf. Ass'n

of Mexican-Am. Educators v. California, 231 F.3d 572, 582-84 (9th

Cir. 2000) (en banc) (holding that state agency could be held

liable under Title VII for its quasi-proprietary role in requiring

and implementing teacher certification examination, even without a

direct employment relationship). While a state licensing and

regulatory agency may qualify as an employer of those individuals

it hires and supervises to fulfill its statutory mission, see 29

U.S.C. § 630(b) (expressly including "any agency or instrumentality

of a State or a political subdivision of a State" in the definition

of an ADEA employer), the agency does not become an employer of

those individuals whom it neither hires, compensates, nor

supervises day-to-day even though it licenses and regulates them.

See Fields, 906 F.2d at 1020; Haddock, 777 F.2d at 464. To hold

otherwise would require us to rewrite the ADEA despite the utter

absence of any hint that Congress intended to extend liability to

state agencies that merely exercise licensing and regulatory

authority pursuant to a state's police power. We refuse to start

down so slippery a slope.

III. CONCLUSION

We need go no further. Because the lower court erred in

holding that the Authority is a de facto employer of the harbor

pilots, Camacho's ADEA claim necessarily founders. We therefore

-18-
answer the certified question in the negative, reverse the decision

of the magistrate judge, and remand for further proceedings with

respect to the other issues raised by Camacho's complaint. See

supra note 1.

Reversed and remanded.

-19-