United States Court of Appeals
For the First Circuit
No. 05-2859
OVERSEAS MILITARY SALES CORPORATION, LTD.,
Plaintiff, Appellant,
v.
NOEMA GIRALT-ARMADA, in her capacity as
Secretary of the Department of Consumer Affairs of the
Commonwealth of Puerto Rico; ERNESTO NIEVES-NIEVES,
Defendants, Appellees.
ON APPEAL FROM THE UNITED STATES
DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO
[Hon. Carmen Consuelo Cerezo, U.S. District Judge]
[Hon. Camille L. Vélez-Rivé, U.S. Magistrate Judge]
Before
Torruella and Lipez, Circuit Judges,
and DiClerico, Jr.* District Judge.
Jesús E. Cuza Abdala, with whom Linda M. Reck and Greenberg
Traurig, PA, were on brief for appellant.
September 14, 2007
* Of the District of New Hampshire, sitting by designation.
LIPEZ, Circuit Judge. Appellant Overseas Military Sales
Corporation, Ltd. ("OMSC"), a government contractor operating at
Fort Buchanan, Puerto Rico, seeks reversal of the district court's
order dismissing its complaint for declaratory and injunctive
relief to prevent the Department of Consumer Affairs of the
Commonwealth of Puerto Rico ("DACO") from enforcing Puerto Rico's
consumer protection law against it. This appeal is unopposed. In
fact, the Commonwealth of Puerto Rico concedes that the position
taken by OMSC is correct. Nevertheless, OMSC urges us to decide
this case and to issue a fully reasoned opinion reaching the merits
of its claim. We decline to do so. In light of the Commonwealth's
concession, this case has become moot. We therefore dismiss this
appeal and vacate the district court's judgment.
I.
Appellant OMSC serves as an intermediary through which
authorized customers working on U.S. military bases may purchase
automobiles from manufacturers that have contracted with the United
States Army and Air Force Exchange Service ("AAFES").1 Under this
arrangement, OMSC administers the AAFES vehicle program, accepting
orders from authorized customers and relaying them to the
manufacturers. This case arises from a dispute between OMSC and
1
As defined by the United States Department of Defense, an
authorized purchaser must be: (1) validly authorized by the
military to purchase through AAFES; and (2) assigned overseas for
thirty days or more on active or reserve duty, or be a retired
service member.
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Ernesto Nieves-Nieves, who purchased an automobile from OMSC at
Fort Buchanan in Puerto Rico. All relevant parties stipulated
before the district court that Fort Buchanan is a federal enclave
under the exclusive legislative jurisdiction of the United States
government.
On March 18, 2004, Nieves filed an administrative
complaint against OMSC with DACO, alleging that the vehicle he had
purchased from OMSC was defective. DACO has the authority to
adjudicate consumer disputes under Puerto Rico law and may refer
complaints to other Puerto Rico agencies or to the federal
government. P.R. Laws Ann. tit. 3, §§ 341i-1, 341n.
Before DACO took action on Nieves's complaint, OMSC filed
a suit in federal district court in August 2004 seeking declaratory
and injunctive relief against Nieves and Noema Giralt-Armada, in
her capacity as Secretary of DACO. OMSC argued that the federal
enclave doctrine barred DACO from adjudicating Nieves's complaint
and that Giralt-Armada had violated that doctrine by allowing
Nieves's complaint (and others like it) to be brought before DACO.
The federal enclave doctrine provides that "[t]he
Congress shall have Power . . . [t]o exercise exclusive Legislation
in all Cases whatsoever, over . . . all Places purchased by the
Consent of the Legislature of the State in which the Same shall be,
for the Erection of Forts, Magazines, Arsenals, dock-Yards, and
other needful Buildings." U.S. Const. art. I, § 8, cl. 17. In
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addition, a provision in Article IV states in relevant part: "The
Congress shall have Power to dispose of and make all needful Rules
and Regulations respecting the Territory or other Property
belonging to the United States." Id., art. IV, § 3, cl. 2.
Accordingly, OMSC argued that neither Puerto Rico's consumer
protection laws nor DACO's authority to resolve disputes under that
law applied to consumer complaints arising from activities at Fort
Buchanan – including any complaints against OMSC. OMSC filed an
emergency request for a preliminary injunction to prevent Nieves
from proceeding with his particular claim and to bar DACO from
exercising jurisdiction over OMSC in any further complaints against
it.
The district court referred the matter to a magistrate
judge. After an evidentiary hearing, the magistrate judge
recommended denying the preliminary injunction for three reasons.
First, she found that the court lacked subject matter jurisdiction
over the claim under the Rooker-Feldman doctrine.2 Second, she
found OMSC's claim barred by principles of claim and issue
preclusion. Finally, she found that, even if the court could
consider OMSC's petition, OMSC was unlikely to succeed on the
merits of its claim. See Esso Std. Oil Co. v. Monroig-Zayas, 445
2
The Rooker-Feldman doctrine bars a plaintiff who lost in
state court proceedings from "implicitly or explicitly . . .
seeking an opposite result . . . [in] the lower federal courts."
Federacion de Maestros de P.R. v. Junta de Relaciones del Trabajo
de P.R., 410 F.3d 17, 24 (1st Cir. 2005).
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F.3d 13, 17-18 (1st Cir. 2006). The magistrate judge based this
assessment on her view that the federal enclave doctrine permitted
the application of state law to activities on federal enclaves
except where federal and state law conflict. The magistrate judge
found no conflict between federal and state law in this instance.
The district court subsequently issued a decision
adopting the magistrate judge's report and recommendation in its
entirety and denying OMSC's motion for a preliminary injunction.3
Less than a month later, the district court sua sponte entered an
order dismissing the entire case "for the reasons stated in [its
prior] Opinion and Order." OMSC timely filed this appeal,
challenging the order dismissing the case.
Two months after OMSC filed its brief in this court, the
parties filed a joint motion informing the court that they had
settled the case. The settlement agreement explained that the
parties had agreed to "abide by the Agreed Opinion and Order
attached to this Settlement Agreement . . . as though it were
properly and duly issued by the United States Court of Appeals for
the First Circuit." It also explained that:
The Parties agree that the Agreed Opinion and
Order . . . shall have preclusive effect under
the doctrines of res judicata, collateral
estoppel, issue preclusion, and/or the Rooker-
3
The magistrate judge had also recommended that the court
enter a final default judgment against Nieves, who had failed to
submit an answer or to take part in any of the proceedings; the
district court declined to do so.
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Feldman doctrine as to all issues described
therein. The Parties agree that any and all
decisions, opinions, or judgments entered in
the [district court's opinion and order] shall
not have any preclusive effect under the
doctrines of res judicata, collateral
estoppel, and/or issue preclusion, and the
Parties have agreed to voluntarily set aside
all decisions, opinions and judgments entered
in the [district court's opinion and order].
The settlement agreement also made it clear that settlement was
conditional on this court's approval:
The Parties will jointly request that this
Settlement Agreement be approved by the United
States Court of Appeals for the First Circuit.
To ensure the enforcement of this Settlement
Agreement, the Parties will further request
the United States Court of Appeals for the
First Circuit to issue the injunction order
attached as Exhibit 'B'. The parties agree
and understand that an injunction order by the
United States Court of Appeals for the First
Circuit shall have preclusive effect under the
doctrines of res judicata, collateral
estoppel, and/or issue preclusion. Should the
United States Court of Appeals for the First
Circuit decide not to approve this Settlement
Agreement or deny the Parties' request that it
enter the order attached to this Settlement
Agreement as Exhibit 'B,' the Parties will
continue with the Appeal until the United
States Court of Appeals for the First Circuit
rules on the merits of the Appeal.
(Emphasis added). An eleven-page proposed order discussing and
confirming the merits of OMSC's claims was attached as "Exhibit A"
and a one-page injunction order permanently enjoining DACO from
exercising jurisdiction over OMSC's operations within Fort Buchanan
was attached as "Exhibit B."
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We did not approve the settlement agreement or the
attached orders. Our order denying the joint motion explained:
[T]heir settlement agreement, if approved by
this Court, would effectively reverse the
judgment of the district court. Generally, we
are not at liberty to vacate the judgment of
the district court on the basis of a
settlement, let alone to reverse it. See U.S.
Bancorp Mortgage Co. v. Bonner Mall
Partnership, 115 S. Ct. 386, 393-94 (1994)
(vacatur is generally not justified when "the
party seeking relief from the judgment below
caused the mootness by voluntary action" in
settling the case).
The order went on to state: "Our denial is without prejudice to the
parties' requesting vacatur of the district court judgment by
filing in the district court a joint motion pursuant to Fed. R.
Civ. P. 60(b) in an effort to preserve settlement." Instead of
pursuing this suggested course of action in the district court,
OMSC chose to continue with its appeal in the hope of obtaining
from us a decision on the merits that mirrored the decision that it
had asked us to adopt on the basis of its settlement with the
Secretary.
Shortly thereafter – and in response to an order alerting
appellees that they would not be heard at oral argument because
they had failed to timely file a brief – Giralt-Armada submitted an
informative motion explaining this failure: "[G]iven that appellee
has attempted to settle this case and, indeed, concedes that
appellant's arguments are correct as a matter of law, it is
unnecessary to file our brief in the instant case." Three days
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before we heard oral argument in this case, the new Secretary of
the Department of Consumer Affairs, Alejandro García Padilla, filed
an urgent informative motion reiterating appellees' position that
"appellant's arguments on appeal [are] correct as a matter of law"
and noting that, while appellees would not take part in oral
argument, they would attend in order to answer any questions we
might pose. Indeed, Puerto Rico's Solicitor General appeared at
oral argument to confirm his agreement with OMSC's arguments.
II.
A. Mootness
In continuing with this appeal after we rejected their
proposed settlement agreement, the parties overlooked the doctrine
of mootness. However, even though neither party raised this issue,
we must inquire sua sponte whether an appeal has been rendered moot
by subsequent events. See North Carolina v. Rice, 404 U.S. 244, 246
(1971).
Article III of the Constitution restricts federal courts
to the resolution of actual cases and controversies. See U.S.
Const. art. III, § 2, cl. 1; see also Shelby v. Superperformance
Int'l, Inc., 435 F.3d 42, 45 (1st Cir. 2006). The case or
controversy requirement ensures that courts do not render advisory
opinions. Put another way, "those words limit the business of
federal courts to questions presented in an adversary context."
See Flast v. Cohen, 392 U.S. 83, 95 (1968). We have previously
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held that a "case is moot . . . when the issues presented are no
longer live or when the parties lack a legally cognizable interest
in the outcome." Cruz v. Farquharson, 252 F.3d 530, 533 (1st Cir.
2001). See also Black's Law Dictionary 1025 (7th ed. 1999)
(defining "mootness doctrine" as "[t]he principle that American
courts will not decide moot cases – that is, cases in which there
is no longer any actual controversy"). In these circumstances, a
"case or controversy ceases to exist, and dismissal of the action
is compulsory." Cruz, 252 F.3d at 533. The controversy between
OMSC and appellees expired when OMSC conceded that "appellant's
arguments on appeal were correct as a matter of law." Given that
the issues presented in the initial appeal are "no longer live," we
conclude that OMSC's appeal is moot.4
B. Vacating the Judgment Below
A series of Supreme Court cases describes the conditions
under which vacatur is appropriate when a case has become moot –
and therefore nonjusticiable5 – after an appeal has been filed. A
4
Nieves's continued status as a defendant in this case and
his failure to join in the Commonwealth of Puerto Rico's concession
that OMSC is correct as a matter of law is irrelevant to our
mootness analysis. Although he initiated the original claim
against OMSC before DACO from which this case arises, Nieves took
no further action before either the district court or this court.
His non-participation cannot provide the "concrete dispute between
adversaries" upon which our jurisdiction depends. Neely v.
Benefits Review Bd., 139 F.3d 276, 279 (1st Cir. 1998).
5
Mootness is one of several grounds rendering a case
nonjusticiable. See, e.g., Renne v. Geary, 501 U.S. 312, 320-21
(1991) (explaining that "[j]usticiability concerns not only the
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"pivotal" consideration in determining whether to "disturb prior
judgments in a case rendered nonjusticiable" is whether the party
seeking such relief caused the nonjusticiability through its
voluntary action. Anderson v. Green, 513 U.S. 557, 560 (1995) (per
curiam). Where a settlement occurs, see U.S. Bancorp, 513 U.S. at
21, or the losing party declines to pursue an appeal, Karcher v.
May, 484 U.S. 72, 83 (1987), no vacatur is appropriate. This is so
because, "[w]here mootness results from settlement, . . . the
losing party has voluntarily forfeited his legal remedy by the
ordinary processes of appeal or certiorari, thereby surrendering
his claim to the equitable remedy of vacatur." U.S. Bancorp, 513
U.S. at 25. In such cases, the "judgment is not unreviewable, but
simply unreviewed by [the losing party's] own choice." Id.; see
also Karcher, 484 U.S. at 83. Although OMSC entered into a
settlement agreement with the Commonwealth of Puerto Rico, that
agreement was conditioned upon our approval. When we rejected that
settlement, OMSC continued with its appeal. Hence, OMSC is not
before us as a party who has settled and seeks reversal of a
judgment below on that basis.
standing of litigants to assert particular claims, but also the
appropriate timing of judicial intervention," requiring an inquiry
into both mootness and ripeness).
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Vacatur is an appropriate remedy for parties in OMSC's
position. As the Supreme Court has explained, "[a] party who seeks
review of the merits of an adverse ruling, but is frustrated by the
vagaries of circumstance, ought not in fairness be forced to
acquiesce in the judgment. The same is true when mootness results
from unilateral action of the party who prevailed below." U.S.
Bancorp, 513 U.S. at 25 (citations and footnote omitted). Here,
that unilateral action takes the form of the decision by the
Commonwealth – the prevailing party below – to reject its victory
in the trial court and acquiesce in the position taken by OMSC on
appeal.
Although OMSC is entitled to vacatur of the judgment
below, we refuse to go further and reverse the lower court's
judgment on the merits. Such a request "invites us to reach the
merits of the order in question and adopt the [appellant's]
unopposed view of them." Shelby, 435 F.3d at 46. As we have
previously explained, such an "invitation seriously distorts the
U.S. Bancorp standard, and we decline to accept it." Id.
We understand that the vacatur of the district court's
judgment represents only a partial victory for OMSC, which wanted
not only vacatur of the district court's judgment but also a
decision from us on the merits that would have preclusive effect.
However, as described above, we can only render such decisions in
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the context of a live controversy. We do not have such a
controversy here.
Accordingly, we dismiss the appeal, vacate the judgment
of the district court and remand to the district court for
dismissal of the complaint. See United States v. Hamburg-
Amerikanische Packetfahrt-Actien Gesellschaft, 239 U.S. 466, 478
(1916) ("[T]he ends of justice exact that the judgment below should
not be permitted to stand when without any fault of the Government
there is no power to review it upon the merits."). No costs are awarded.
So Ordered.
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