Negron-Almeda v. Santiago

United States Court of Appeals
For the First Circuit

No. 08-2360

MARIBEL NEGRÓN-ALMEDA, et al.,

Plaintiffs, Appellees,

v.

CARLOS GABRIEL SANTIAGO, et al.,

Defendants,

PUERTO RICO TRADE AND EXPORT COMPANY,

Intervenor, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. José Antonio Fusté, U.S. District Judge]

Before

Boudin and Lipez, Circuit Judges,
and Singal,* District Judge.

Eyck O. Lugo-Rivera, with whom Martinez Odell & Calabria were
on brief, for appellant.
Claudio Aliff-Ortiz, with whom Eliezer A. Aldarondo-López and
Aldarondo & López Bras, PSC were on brief, for appellees.

August 26, 2009

* Of the District of Maine, sitting by designation.
 LIPEZ, Circuit Judge. Plaintiffs were employees of a

government agency in Puerto Rico. After being dismissed, they

brought suit for political discrimination in violation of the First

Amendment. They sought, among other things, reinstatement to their

former positions. By the time plaintiffs obtained a jury verdict

in their favor, their former employer no longer existed, and its

assets had been transferred by the legislature to another entity,

the Puerto Rico Trade and Export Company ("COMEX"). COMEX moved to

intervene, but the district court denied the motion while still

ordering the remedy of reinstatement. In an earlier appeal, we

vacated the district court's denial of COMEX's motion for

intervention and reversed the judgment of the district court

awarding the plaintiffs reinstatement. On remand, the district

court permitted COMEX to intervene, but again imposed the

reinstatement remedy against it.

On appeal, COMEX argues that the district court should

not have enforced the reinstatement remedy against it for two

reasons. First, COMEX argues that reinstatement was not available

as a remedy, because the district court previously dismissed the

official-capacity claims against the defendants and is barred from

revisiting that order by the law of the case doctrine. Second,

COMEX argues that reinstatement could not be ordered against it

because it was not a party to the litigation and cannot be

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substituted for a party under Federal Rule of Civil Procedure 25(c)

or 25(d).

Finding no error in the district court's rejection of

these claims, we affirm.

I.

Because we have stated the facts of this case in our

previous decisions (this is the third appeal in this case), we only

briefly recapitulate them here. See Negrón-Almeda v. Santiago, 528

F.3d 15, 18-21 (1st Cir. 2008); cf. Peguero-Moronta v. Santiago,

464 F.3d 29, 34-53 (1st Cir. 2006) (discussing evidence presented

in first trial). Plaintiffs Maribel Negrón-Almeda, Aracelis

Gascot-Cuadrado, and Nilda Pérez-Montalvo (collectively

"plaintiffs") were career employees of Puerto Rico's Commercial

Development Administration ("CDA"). After general elections in

2000 produced a change in political leadership, Carlos Gabriel

Santiago ("Santiago") was appointed as Director of the CDA.

Santiago and a subordinate, Susana Hernández, dismissed the

plaintiffs from their jobs.

In April 2001, plaintiffs brought suit against Santiago

in his official and personal capacities and Susana Hernández in her

personal capacity (collectively "defendants").1 The complaint

1
The complaint also named as plaintiffs Miguelina Peguero-
Moronta, Asdrúbal Reyes-Lora, and Roberto Rubio-Rolón. It named as
a defendant Vilma Jiménez in her official capacity as CDA Director
of Human Resources. We do not consider here the claims brought by
these plaintiffs or against this defendant. See Negrón-Almeda, 528

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asserted, inter alia, that the defendants had violated 42 U.S.C.

§ 1983 by terminating the plaintiffs from their positions at CDA on

the basis of their membership in an opposition political party, in

violation of the First Amendment. Discovery was conducted and both

sides moved for summary judgment. On March 31, 2004, the district

court entered summary judgment ("the March 31, 2004 order")

dismissing the section 1983 claim brought against Santiago in his

official capacity, concluding that sovereign immunity precluded the

claim.2

The remaining claims went to trial, and the district

court twice granted motions for judgment as a matter of law in

favor of the defendants. See Fed. R. Civ. P. 50(a). Plaintiffs

appealed, and we affirmed in part and reversed in part, concluding

that the evidence was sufficient for several of the plaintiffs'

claims to go to the jury. See Peguero-Moronta, 464 F.3d at 54.

Notably, plaintiffs did not appeal the district court's earlier

F.3d at 19 n.1.
2
The March 31, 2004 order dismisses the section 1983
claims brought against Santiago and Vilma Jiménez, another
official-capacity defendant who was later dismissed from the case
in an individual capacity. In the order, the district court wrote:

As to plaintiff's section 1983 cause of action against
the named Defendants in their official capacity, '[i]t is
well settled "that neither a state agency nor a state
official acting in his official capacity may be sued for
damages in a section 1983 action."' Wang v. N.H. Bd. of
Registration in Med., 55 F.3d 698, 700 (1st Cir. 1995)
(citing Johnson v. Rodriguez, 943 F.2d 104, 108 (1st Cir.
1991)).

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entry of summary judgment in favor of Santiago on the section 1983

claim brought against him in his official capacity.

The case was retried, and the jury found for the

plaintiffs on the section 1983 claim, awarding them both

compensatory and punitive damages. Plaintiffs then moved the

district court to award the equitable relief sought in the

complaint, including "reinstatement to career positions equal or

similar to" positions they would have occupied if they had not been

unlawfully terminated. Defendants opposed the request for

equitable relief, arguing that reinstatement was inappropriate

because no public officer remained in the case. Defendants also

pointed out that during the pendency of the litigation, CDA had

been dissolved and replaced with a new public corporation, COMEX,

which had eliminated plaintiffs' former positions. The court

denied the defendants' motion and, on April 30, 2007, entered

judgment ordering the plaintiffs' reinstatement ("the April 30,

2007 judgment").

Defendants subsequently moved to clarify the April 30,

2007 judgment, again drawing the district court's attention to the

fact that it had previously dismissed the official-capacity claims

from the case, and the remedy of reinstatement was unavailable

against the individual defendants. COMEX moved to intervene as of

right, see Fed. R. Civ. P. 24(a), arguing that it had only recently

learned of the suit, that CDA had not adequately represented its

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interests in the litigation, and that it had an interest in the

action and would suffer undue prejudice if forced to reinstate

plaintiffs. Simultaneously, COMEX filed a provisional motion with

the district court to alter or amend the April 30, 2007 judgment,

or in the alternative to vacate it.3 See Fed. R. Civ. P. 59(e),

60(b). COMEX argued that judgment could not be enforced against

it, see Fed. R. Civ. P. 25, and that the controversy was moot in

light of the dissolution of the CDA. The district court dismissed

COMEX's motion to intervene as untimely, ruling that its March 31,

2004 order, see supra note 2, had "left reinstatement within the

realm of remedial possibilities," and concluding that the order

should have apprised COMEX that its interests might be affected.

On appeal, we vacated the district court's denial of

intervention. See Negrón-Almeda, 528 F.3d at 27. We noted that

the March 31, 2004 order had unambiguously dismissed the official-

capacity claim against Santiago and removed the reinstatement

remedy from the case. Thus, "COMEX had no reason to believe that

its interests, as opposed to the interests of the individual

defendants, were implicated in the ongoing litigation." Id. at 23-

24. We remanded the matter to the district court, and expressly

left open the possibility that

3
In its motion, COMEX erroneously states that the April 30
judgment was entered on May 5, 2007. Reference to the docket
entries shows that COMEX means the April 30 judgment.

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 the plaintiffs, on remand, may seek to vacate
or amend the pertinent provision of the [March
31] 2004 order so as to revive the issue of
reinstatement. Should such a motion be made,
the district court shall first reconsider
COMEX's motion for intervention. Thereafter,
it shall afford the intervenor . . . and the
defendants an opportunity to be heard on the
motion to vacate and/or amend.
In that regard, the court shall
consider, among other things, that in their
earlier appeal to this court the plaintiffs
could have, but did not, mount a challenge to
the [March 31,] 2004 order. Thus, the court
will have to determine whether that foregone
opportunity precludes it from revisiting the
[March 31,] 2004 order.

Id. at 27 (internal citations omitted).

On remand, COMEX again moved to intervene and to alter or

amend the April 30, 2007 judgment. In the latter motion, COMEX

argued that the district court could not revisit its March 31, 2004

order because the order now constituted the law of the case. Even

if the district court could revisit the order, COMEX argued, the

district court could not enforce reinstatement against COMEX. In

response, plaintiffs asked the court to revisit the March 31, 2004

order, permit them to reintroduce the claim for reinstatement into

the case, and enforce a judgment against COMEX under Federal Rule

of Civil Procedure 25(c), which governs substitution of parties in

cases where a party transfers an interest during litigation.

The district court granted COMEX's motion to intervene

and denied its motion to alter or amend the April 30, 2007 judgment

ordering reinstatement of the plaintiffs. The district court

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agreed that the March 31, 2004 order constituted the law of the

case, but concluded that it could nonetheless revisit the order

under the "manifest injustice" exception to that doctrine. The

court then determined that reinstatement was an appropriate

equitable remedy for the plaintiffs' section 1983 claim, and that

judgment could be enforced against COMEX pursuant to Federal Rule

of Civil Procedure 25(c).

COMEX appeals. It argues that the law of the case

doctrine barred the district court from revisiting the March 31,

2004 order, and that the reinstatement remedy could not be enforced

against it under Rules 25(c) or 25(d).

II.

We turn first to COMEX's contention that the district

court erred in revisiting the March 31, 2004 order. We then

address COMEX's argument that the reinstatement remedy can not be

enforced against it.

A. Law of the Case

We review de novo whether the law of the case doctrine

applies. Harlow v. Children's Hosp., 432 F.3d 50, 55 (1st Cir.

2005). Under the law of the case doctrine, "when a court decides

upon a rule of law, that decision should continue to govern the

same issues in subsequent stages in the same case." United States

v. Wallace, No. 07-1884, 2009 WL 2184670, at *4 (1st Cir. July 23,

2009) (internal quotation marks and citation omitted). We have

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sometimes said that law of the case has "two branches" or two

forms. See, e.g., United States v. Moran, 393 F.3d 1, 7 (1st Cir.

2004); Ellis v. United States, 313 F.3d 636, 646 (1st Cir. 2002).

The first branch, called the "mandate rule," "prevents relitigation

in the trial court of matters that were explicitly or implicitly

decided by an earlier appellate decision in the same case." Moran,

393 F.3d at 7. The second branch "contemplates that a legal

decision made at one stage of a criminal or civil proceeding should

remain the law of that case throughout the litigation, unless and

until the decision is modified or overruled by a higher court."

Id.; accord Ellis, 313 F.3d at 646. For example, this branch binds

successor appellate panels in a second appeal in the same case

unless certain circumstances justify reconsideration. Wallace,

2009 WL 2184670, at *4-5.

COMEX argues that the district court's March 31, 2004

order granting summary judgment now constitutes the law of the

case, and that the district court erred in concluding that it could

revisit the order. COMEX points out that the plaintiffs had an

opportunity to appeal the March 31, 2004 order when the district

court entered final judgment on plaintiffs' claims on September 28,

2004, but that the plaintiffs failed to do so. In reply,

plaintiffs argue, inter alia, that the March 31, 2004 order is not

the law of the case because it was interlocutory. Even if the

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order is the law of the case, they say, the "manifest injustice"

exception to the doctrine applies here.

It is true that "[i]nterlocutory orders . . . remain open

to trial court reconsideration, and do not constitute law of the

case." Pérez-Ruiz v. Crespo-Guillén, 25 F.3d 40, 42 (1st Cir.

1994), quoted in Harlow, 432 F.3d at 55; Vintilla v. United States,

931 F.2d 1444, 1447 (11th Cir. 1991). When it was issued, the

March 31, 2004 order did not dispose of the rights and liabilities

of all the parties and therefore was not a "final judgment." See

Guillemard-Ginorio v. Contreras-Gómez, 490 F.3d 31, 37 n.4 (1st

Cir. 2007). Moreover, as the plaintiffs rightly observe, the

district court did not certify the order as a partial final

judgment under Rule 54(b). See Fed. R. Civ. P. 54(b); In re United

Chair, No. 94-1175, 1994 WL 102203, at *1 (1st Cir. Mar. 14, 1994).

However, after the district court entered final judgment pursuant

to Rule 50(a) on September 28, 2004, the March 31, 2004 order

became final. See United States v. Lummi Indian Tribe, 235 F.3d

443, 449 (9th Cir. 2000); United Chair, 1994 WL 102203, at *1. At

that point, the order became appealable and the plaintiffs' failure

to challenge it fits within the law of the case doctrine. United

States v. Connell, 6 F.3d 27, 30 (1st Cir. 1993) ("'[A] legal

decision made at one stage of a civil or criminal case,

unchallenged in a subsequent appeal despite the existence of ample

opportunity to do so, becomes the law of the case for future stages

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of the same litigation.'" (alteration in original) (quoting United

States v. Bell, 988 F.2d 247, 250 (1st Cir. 1993))).

As both parties acknowledge, however, this conclusion

does not end the analysis. While law of the case "directs a

court's discretion, it does not limit the tribunal's power."

Arizona v. California, 460 U.S. 605, 618 (1983); accord

Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 817

(1988). COMEX argues that although courts have the power to

revisit prior holdings, this power should only be exercised

"sparingly." We agree that law of the case serves important

interests, such as "stability in the decisionmaking process,

predictability of results, proper working relationships between

trial and appellate courts, and judicial economy." United States

v. Rivera-Martinez, 931 F.2d 148, 151 (1st Cir. 1991); accord

Ellis, 313 F.3d at 646-47 (discussing policy behind law of the

case). Courts should therefore be "loathe" to disturb prior

decisions in a case. Christianson, 486 U.S. at 817. Nevertheless,

courts may reopen a matter previously decided on "a showing of

exceptional circumstances-a threshold which, in turn, demands that

the proponent accomplish one of three things: show that controlling

legal authority has changed dramatically; proffer significant new

evidence, not earlier obtainable in the exercise of due diligence;

or convince the court that a blatant error in the prior decision

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will, if uncorrected, result in a serious injustice." Bell, 988

F.2d at 251.

Plaintiffs argue that the district court was correct to

revisit and revise its March 31, 2004 order. We agree on the basis

of the serious injustice exception to the law of the case doctrine.

See Wallace, 2009 WL 2184670, at *5. First, in our most recent

decision in this case, we directed the district court to consider

the application of the law of the case doctrine to plaintiffs'

motion to vacate and/or amend the March 31, 2004 order. We would

not have done that if we had concluded that law of the case

necessarily barred reconsideration.

Second, as the district court acknowledged, its original

decision to grant summary judgment in favor of defendant Santiago

on the claims against him in his official capacity was obviously

wrong. The very authority on which the district court relied in

granting summary judgment, Wang v. New Hampshire Board of

Registration in Medicine, 55 F.3d 698 (1st Cir. 1995), states that

"it is well settled that neither a state agency nor a state

official acting in his official capacity may be sued for damages in

a section 1983 action." Id. at 700 (emphasis added) (internal

quotation marks and citation omitted). In contrast to damages, the

Eleventh Amendment does not bar claims for prospective injunctive

relief against state officials in their official capacity. See

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Rosie D. ex rel. John D. v. Swift, 310 F.3d 230, 234 (1st Cir.

2002) (discussing Ex parte Young, 209 U.S. 123, 159-60 (1908)).

Third, the grant of summary judgment was highly

prejudicial to the plaintiffs. It prevented them from obtaining

the equitable relief they sought and to which the district court

determined they were otherwise entitled after hearing objections

from COMEX. Cf. Sulik v. Taney County, Mo., 393 F.3d 765, 766 (8th

Cir. 2005) (holding that to let stand a dismissal that was based on

an error about the statute of limitations would work a manifest

injustice).

Because the serious injustice exception to the law of the

case doctrine applies, the district court did not err in revisiting

and amending the March 31, 2004 order.4

B. Substitution of Parties

COMEX argues that even if it was proper for the district

court to revisit the March 31, 2004 order, reinstatement could not

be ordered against it, because it was never a party to the

litigation and cannot be substituted for a party under Federal Rule

of Civil Procedure 25(c) or 25(d), which govern the substitution of

4
We reject COMEX's contention that principles of res
judicata also bar the district court from revisiting its March 31,
2004 order. "[L]aw of the case is concerned with the extent to
which law applied in a decision at one stage of litigation becomes
the governing principle in later stages of the same litigation.
Res judicata does not speak to direct attacks in the same case, but
rather has application in subsequent actions." Rezzonico v. H & R
Block, Inc., 182 F.3d 144, 148 (2d Cir. 1999).

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parties. Plaintiffs respond that COMEX can be substituted for CDA

under Rule 25(c), and we agree.

Rule 25(c) governs substitution where a party to a

lawsuit transfers an interest during the pendency of the lawsuit or

after judgment has been rendered. Explosives Corp. of Am. v.

Garlam Enters. Corp., 817 F.2d 894, 905 (1st Cir. 1987). According

to the rule, "[i]f an interest is transferred, the action may be

continued by or against the original party unless the court, on

motion, orders the transferee to be substituted in the action or

joined with the original party." Fed. R. Civ. P. 25(c). As we

have described it, the rule is a discretionary "procedural vehicle"

in which "the transferee is brought into court solely because it

has come to own the property in issue." Maysonet-Robles v.

Cabrero, 323 F.3d 43, 49 (1st Cir. 2003) (internal quotation marks

and citation omitted). The rule applies to a wide variety of

transfers in interest. 6 Jerry E. Smith, Moore's Federal Practice

- Civil § 25.32 (2009). We have noted, for example, that Rule

25(c) has been "invoked to substitute a successor in interest who

. . . obtained the assets of the corporation against whom judgment

had been rendered." Explosives Corp., 817 F.2d at 906 (citing

Panther Pumps & Equip. Co. v. Hydrocraft Inc., 566 F.2d 8 (7th Cir.

1977)).

In this case, CDA was initially the real party in

interest in the plaintiffs' official-capacity claim against

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Santiago. See Will v. Mich. Dep't of State Police, 491 U.S. 58, 71

(1989) ("[A] suit against a state official in his or her official

capacity is not a suit against the official but rather is a suit

against the official's office."); Kentucky v. Graham, 473 U.S. 159,

165 (1985) ("Official-capacity suits . . . generally represent only

another way of pleading an action against an entity of which the

officer is an agent." (internal quotation marks and citation

omitted)). Plaintiffs argue that CDA's interest in the litigation

was transferred by legislative act, namely, Act 323 of December 28,

2003, in which the Puerto Rico Legislative Assembly repealed the

statute creating the CDA and transferred all CDA assets to COMEX.

See 2003 P.R. Laws Act 323 (codified at P.R. Laws Ann. tit. 7, §§

1227, 1227a-r). Section 21(a) of Act 323 "conveyed and

transferred" to COMEX "[a]ll assets of every type, including

copyrights, agreements, liabilities, licenses and permits belonging

to the [Commercial Development] Administration." See id. (codified

at P.R. Laws Ann. tit. 7, § 1227q). We have previously held that

a statutory provision expressly transferring "all assets" from a

defendant to a governmental entity constituted a transfer in

interest for purposes of Rule 25(c). Barrows v. Resolution Trust

Corp., No. 94-1555, 1994 U.S. App. LEXIS 32038, at *5 (1st Cir.

Nov. 15, 1994); see also Payne v. Sec. Sav. & Loan Ass'n, 924 F.2d

109, 111 (7th Cir. 1991) (similar).

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 COMEX argues that Rule 25(c) is an inappropriate

mechanism of transfer in a section 1983 action against an officer

in his official capacity, and that the transferee COMEX cannot be

substituted for CDA because it enjoys CDA's Eleventh Amendment

sovereign immunity. We disagree that Rule 25(c) is always

inappropriate in a section 1983 action against an officer in his

official capacity. Rather, we have held that where a government

entity was substituted under Rule 25(c) for an official-capacity

defendant in a section 1983 action, the substituted entity was

entitled to its sovereign immunity. See Maysonet-Robles, 323 F.3d

at 49-50. In this case, however, CDA and COMEX do not enjoy

sovereign immunity against the plaintiffs' requests for

reinstatement. As discussed, supra, "consistent with the Eleventh

Amendment . . . federal courts may, notwithstanding the absence of

consent, waiver or evidence of congressional assertion of national

hegemony, enjoin state officials to conform future conduct to the

requirements of federal law." Lane v. First Nat'l Bank of Boston,

871 F.2d 166, 172 n.5 (1st Cir. 1989) (internal quotation marks and

citation omitted). This rule includes ordering reinstatement.

Nelson v. Univ. of Tex., 535 F.3d 318, 321-22, 324 (5th Cir. 2008).

Affirmed.

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