USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 95-2170
ELIEZER BARRIOS-VELAZQUEZ, ET AL.,
Plaintiffs - Appellants,
v.
ASOCIACION DE EMPLEADOS DEL
ESTADO LIBRE ASOCIADO DE PUERTO RICO, ET AL.,
Defendants - Appellees.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Salvador E. Casellas, U.S. District Judge] ___________________
____________________
Before
Torruella, Chief Judge, ___________
Coffin, Senior Circuit Judge, ____________________
and Cyr, Circuit Judge. _____________
_____________________
Francisco R. Gonz lez-Col n, with whom Francisco R. Gonz lez ___________________________ _____________________
Law Firm was on brief for appellants. ________
Lino J. Salda a, with whom Carmen M. Dom nguez was on brief ________________ ___________________
for appellees.
____________________
May 24, 1996
____________________
TORRUELLA, Chief Judge. Appellants Eliezer Barrios- TORRUELLA, Chief Judge. ___________
Vel zquez ("Barrios"), Myrta Nieves-Vega ("Nieves") and Isidro
Collazo ("Collazo"), in their personal capacity and as
representatives of the "Comit de Delegados y Miembros Pro Sana
Administraci n de AEELA" ("SAAEELA") (collectively,
"Plaintiffs"), appeal the district court's dismissal for lack of
subject matter jurisdiction of their complaint brought pursuant
to 42 U.S.C. 1983 against the Asociaci n de Empleados del
Estado Libre Asociado de Puerto Rico ("AEELA") and Isaac Neftal
Rojas-Nater ("Rojas"), Roberto Aquino-Garc a ("Aquino") and
Miguel Mart nez-Williams ("Mart nez"), in their personal and
official capacities (collectively, "Defendants"). We affirm the
decision of the district court.
I. STANDARD OF REVIEW I. STANDARD OF REVIEW
"We review the grant of a motion to dismiss de novo, _______
taking the allegations in the complaint as true and making all
reasonable inferences in favor of plaintiff." Rockwell v. Cape ________ ____
Cod Hosp., 26 F.3d 254, 256 (1st Cir. 1994); see Rumford __________ ___ _______
Pharmacy, Inc. v. City of E. Providence, 970 F.2d 996, 997 (1st ______________ _____________________
Cir. 1992). "We must liberally construe [Plaintiffs'] complaint
and affirm its dismissal only if [they] cannot prove any set of
facts entitling [them] to relief." Rockwell, 26 F.3d at 255. ________
Although it does not affect the outcome, it would
appear that the motion to dismiss was converted to a motion for
summary judgment since the district court plainly considered
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"matters outside the pleadings." Fed. R. Civ. P. 12(c).1
Plaintiffs in fact argue in their brief that due to
representations made to them by defendants' attorney, they
postponed filing an opposition to defendants' motion to dismiss,
and they were therefore not afforded a "reasonable opportunity"
to present Rule 56 material. See Br. for Appellants at 12. The ___
answer to this argument, of course, is clear: even considering
this Rule 56 material, see supra note 1, we conclude that ___ _____
plaintiffs demonstrated no genuine issue of material fact.
II. BACKGROUND II. BACKGROUND
The instant case stems from a dispute over the
circumstances under which a Quadrennial Assembly (the "Assembly")
of the AEELA was held on July 8, 1995. The AEELA has
approximately 180,000 members, all of whom are regular or former
employees of the government of Puerto Rico. Of these members,
____________________
1 These "matters" included the following: 1) the AEELA was
created as a quasi-public entity to provide financial services to
government employees, which is a traditional government function; __________
2) membership in the AEELA is mandatory for most Commonwealth
employees as is the 3% payroll deduction to fund the AEELA's
operations; 3) the AEELA's operations and delegate elections are
heavily regulated by statute (e.g., number of members per
delegate); 4) heads of government departments appoint the
Election Committee to run the delegate elections; 5) the Board of
Directors and the Election committee members often work on
government time, and use government facilities and equipment; 6)
the AEELA's finances are supervised by the Commonwealth's
Comptroller; 7) the AEELA is exempt from state taxation; 8) the
Commonwealth collects the 3% membership fee for the AEELA by
making payroll deductions; 9) the AEELA may make investments only
"on advice" from the Commonwealth's Treasury Department; 10) the
AEELA's employees participate in the Commonwealth government's
pension plan; 11) the Commonwealth provides the AEELA with some
services free of charge; and 12) the AEELA's members, delegates,
and directors are all government employees.
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75% are required by law to participate in and be members of the
AEELA, and are required to provide 3% of their salary to be
administered by the AEELA. Only employees of public corporations
and municipalities may participate in the AEELA.
Plaintiffs contend, and this court must assume, given
our procedural posture, that Defendants have exercised control
over the AEELA since 1987, and used this control to handpick
delegates to the Assembly in question in order to maintain their
control, and that of the Popular Democratic Party ("PDP"), over
the AEELA. We must further infer that Defendants impermissibly
notified only those delegates who shared their political beliefs
that the Assembly would be held, and refused to take the
necessary measures to notify or confirm the membership of
delegates who do not support the PDP. Furthermore, we infer that
Defendants denied Plaintiff-Appellant Nieves a list of the
certified delegates, thus hindering her candidacy for President
of the AEELA's Board of Directors.
Plaintiffs charge that these actions amount to illegal
political discrimination in violation of their rights under the
Due Process Clause of the Fourteenth Amendment and the enabling
law of the Commonwealth Employees Association, 3 L.P.R.A.
862(b). They also contend, contrary to the district court
opinion dismissing their claim under 28 U.S.C. 1983, that the
acts of Defendants are state action.
III. DISCUSSION III. DISCUSSION
"Title 42 U.S.C. 1983 provides a remedy for
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deprivations of rights secured by the Constitution and laws of
the United States when that deprivation takes place 'under color
of any statute, ordinance, regulation, custom, or usage, of any
State or Territory . . . .'" Rockwell, 26 F.3d at 256 (quoting ________
Lugar v. Edmondson Oil Co., 457 U.S. 922, 924 (1982)). To state _____ _________________
a claim under 1983, a plaintiff must make two showings: the
existence of a federal or statutory right; and a deprivation of
that right by a person acting under color of state law.2 See ___
id.; Watterson v. Page, 987 F.2d 1, 7 (1st Cir. 1993). ___ _________ ____
The district court addressed only the second showing,
dismissing this action on the ground that Defendants did not act
under color of state law when they scheduled the general assembly
for July 8, 1995. We note in passing that at least two courts
have already concluded that the AEELA is not an agency,
department or instrumentality of the Government of Puerto Rico,
suggesting that the AEELA's actions and those of its members
cannot be labeled state action. Morales v. Chaves, No. 75-1087, _______ ______
slip op. at 2 (D.P.R. Dec. 9, 1975) (noting that while "[i]t is
true that the Association was created by statute and only
government employees may be members . . . there all relation with
the Commonwealth ceases"); Association of Employees of Puerto ____________________________________
Rico v. V squez-P rez, 92 JTS 52, slip op. at 26 (P.R. 1992) ____ _____________
____________________
2 For the purposes of section 1983, "Puerto Rico enjoys the
functional equivalent of statehood," and thus the term "state
law" includes Puerto Rico law. Mart nez v. Col n, 54 F.3d 980, ________ _____
984 (1st Cir. 1995); see Playboy Enters., Inc. v. Public Serv. ___ _____________________ ____________
Comm'n of P.R., 906 F.2d 25, 31 n.8 (1st Cir.), cert. denied, 498 ______________ ____________
U.S. 959 (1990).
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(official trans.) (stating, in the context of deciding whether
the AEELA was subject to the Truth in Lending Act, that "although
the Association is a highly regulated entity created by the
government, whose objective is to implement the government policy
of . . . encouraging saving among public employees . . . it
cannot be considered as a government agency, department,
instrumentality or public corporation"). While persuasive as to
certain points, these cases do not represent binding authority
for this court. As a result, like the district court before us,
we conduct our own inquiry into the issue.
Because section 1983 does not reach private actions,
the key issue before us is whether the conduct at issue in this
case may be "'fairly attributable to the State,'" Rodr guez- __________
Garc a v. D vila, 904 F.2d 90, 94 (1st Cir. 1990) (quoting Lugar, ______ ______ _____
457 U.S. at 937); see Ponce v. Basketball Fed'n of Puerto Rico, ___ _____ ________________________________
760 F.2d 375, 377 (1st Cir. 1985). The state action inquiry is
"'necessarily fact-bound.'" Id. (quoting Lugar, 457 U.S. at ___ _____
937). "In cases under 1983, 'under color' of law has
consistently been treated as the same thing as the 'state action'
required under the Fourteenth Amendment." Rendell-Baker v. Kohn, _____________ ____
457 U.S. 830, 838 (1982). "The ultimate issue in determining
whether a person is subject to suit under 1983 is the same
question posed in cases arising under the Fourteenth Amendment:
is the alleged infringement of federal rights 'fairly
attributable to the State?'" Id. (quoting Lugar, 457 U.S. at ___ _____
937).
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On appeal, Plaintiffs contend that the AEELA is an
extension of the government of the Commonwealth of Puerto Rico,
and that the conduct at issue may be fairly attributed to the
state on that basis as direct state action. Alternatively,
Plaintiffs argue that even if the AEELA is a private
organization, the actions that give rise to the instant case may
still be fairly attributed to the state as indirect state action.
Ultimately, a finding of either direct or indirect state action
would suffice to sustain Plaintiffs' section 1983 action. See ___
Rodr guez-Garc a, 904 F.2d at 95. ________________
A. Direct State Action A. Direct State Action
Plaintiffs contend that Defendants' actions may be
fairly attributed to the state because, they claim, the AEELA is
a public corporation and therefore, an "arm of the state."
Although "[t]he Act which creates the Association does not define
whether it is an agency, a department, an instrumentality or a
public corporation," V squez-P rez, slip op. at 24, both federal _____________
and state courts have held that the AEELA is not a governmental
agency, see Morales, slip op. at 2 (noting that "the Supreme ___ _______
Court of Puerto Rico has, since 1932, consistently ruled that the
Employees Association is not a part of the Government"); V squez- ________
P rez, slip op. at 26. _____
Admittedly, technical labels are not dispositive. In
Lebr n v. National R.R. Passenger Corp., ___ U.S. ___, 115 S. Ct. ______ _____________________________
961 (1995), the Supreme Court addressed direct state action and
technical labels, ruling that, despite a statutory disclaimer of
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agency status, the National Railroad Passenger Corp. ("Amtrak")
was nonetheless a government entity. In deciding that Amtrak was
a state actor when it refused to lease advertising space to an
artist's display because it was "political," the Court stated
that "it is not for Congress to make the final determination of
Amtrak's status as a government entity for purposes of
determining the constitutional rights of citizens affected by its
actions." Id. at 971. The Court, in dicta, indicated that the ___
issue of state action and technical labels that it was addressing
also had relevance to the states, stating that "it cannot be that
government, state or federal, is able to evade the most solemn
obligations imposed in the Constitution by simply resorting to
the corporate form [since] [o]n that thesis, Plessy v. Ferguson ______ ________
can be resurrected by the simple device of having the State of
Louisiana operate segregated trains through a state-owned
Amtrak." Id. at 972 (citations omitted). ___
While the logic of Lebr n applies to the present case, ______
we conclude that it does not avail Plaintiffs. The Court held
that where
the Government creates a corporation by
special law, for the furtherance of
governmental objectives, and retains for
itself permanent authority to appoint a
majority of the directors of that
corporation, the corporation is part of
the Government for purposes of the First
Amendment.
Id. at 974-75. The Supreme Court in Lebr n focused on the degree ___ ______
of control that the federal government had over Amtrak. In
contrast, neither party in the instant case has contended that
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the Government of Puerto Rico has retained permanent authority
over the directors of the AEELA. This distinction becomes
clearer when we compare the facts surrounding Amtrak and the
AEELA. The President appoints the majority of Amtrak's
directors, the federal government owns all of Amtrak's voting
stock, and the government subsidizes Amtrak's "perennial losses."
Id. at 967. By contrast, the government of Puerto Rico does not ___
retain the power to appoint any of the AEELA's directors.
Instead, the directors are elected by delegates who themselves
are elected by the AEELA's membership at large. Furthermore, the
AEELA's losses, if any, are not regularly subsidized by the
government of Puerto Rico. As a result of these facts, we
conclude that the AEELA does not constitute an extension of the
government of Puerto Rico, and so Defendants must be treated as
private parties. Thus, direct state action is not present in
this case.
B. Indirect State Action B. Indirect State Action
We therefore turn to the question of whether the
conduct at issue, while not that of the government of Puerto Rico
directly, may be nonetheless fairly attributed to the state. A
private entity's conduct is not actionable under section 1983 if
the challenged action results from the exercise of private choice
and not from state influence or coercion. See id. at 980 ___ ___
(O'Connor, J., dissenting) (concluding that Lebr n did not ______
involve direct state action, and therefore, unlike the majority,
inquiring as to indirect state action); San Francisco Arts & _____________________
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Athletics, Inc. v. United States Olympic Comm., 483 U.S. 522, 547 _______________ ___________________________
(1987) (stating that "[t]here is no evidence that the Federal
Government coerced or encouraged the USOC in the exercise of its
right [to deny use of its copyright]"); Rendell-Baker, 457 U.S. _____________
at 841 (holding that discharge decisions of largely publicly-
funded private school for troubled students were not subject to
constitutional challenge because those actions "were not
compelled or even influenced by any state regulation").
As a result, this court must determine whether the
conduct of Defendants, as private parties, rises to the level of
state action. As this court has previously spelled out, the
relevant inquiries consist of whether there was
(1) . . . an elaborate financial or
regulatory nexus between [Defendants] and
the government of Puerto Rico which
compelled [Defendants] to act as they
did, (2) an assumption by [Defendants] of
a traditional public function, or (3) a
symbiotic relationship involving the
sharing of profits.
Rodr guez-Garc a, 904 F.2d at 96; see Ponce, 760 F.2d at 377. We ________________ ___ _____
examine each test in turn, as satisfaction of any one of the
three tests requires that we find indirect state action.
1. Nexus Analysis 1. Nexus Analysis
As both parties acknowledge, "the challenged action of
the regulated entity . . . may be fairly treated as that of the
State itself . . . only when it can be said that the State is
responsible for the specific conduct of which the plaintiff
complains." Blum v. Yaretsky, 457 U.S. 991, 1004 (1982), cited ____ ________ _____
in Rodr guez-D vila, 904 F.2d at 97. The test is whether the __ ________________
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government exercised coercive power or provided such significant
encouragement that the complained-of misconduct surrounding the
Assembly and the Board elections must be deemed to be the conduct
of the government. Id., 904 F.2d at 90. ___
We emphasize that our examination focuses on the
government's connection to the complained-of action, not the
government's connection to the AEELA itself. See Blum, 457 U.S. ___ ____
at 1004. As a result, we find extraneous Plaintiffs' arguments
highlighting the facts that the AEELA was created by law, that
its members and Directors are public employees, and that the
elective process is regulated by law, except to the degree that
these facts demonstrate government coercion or encouragement of
the complained-of conduct.
Plaintiffs contend that Defendants derived their
authority to schedule the Assembly and election from a Puerto
Rico law, 3 L.P.R.A. 862(d), and that Defendants were
government employees who performed their duties during working
time and using government equipment and materials. However,
Plaintiffs have hung their claim on the proposition that state-
granted authority suffices to find state action, since they have
failed to allege that the government coerced or encouraged the
specific election rigging that gives rise to their complaint. We
believe that the state's grant of authority alone cannot justify
a conclusion of state action in this case.
We draw this conclusion by comparing two of our
previous cases. First, like the district court, we are persuaded
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by our holding in Rockwell, 26 F.3d at 258, that state-granted ________
authority making possible a private party's actions does not,
without more, sufficiently show that the specific action taken
under that authority constitutes state action. Id. In Rockwell, ___ ________
we concluded that the fact that a Massachusetts statute
authorized public health professionals to hospitalize persons
believed to present a likelihood of serious harm by reason of
mental illness, did not suffice to create a sufficient link
between the state and the plaintiff's own detention to classify
the hospital as a state actor. Id. By contrast, in Rodr ques v. ___ _________
Furtado, 950 F.2d 805, 814 (1st Cir. 1991), we held that a _______
physician "functioned as a state actor" where he performed a body
cavity search of the plaintiff pursuant to a search warrant. We
justified our conclusion on the ground that the scope and
motivation for the specific conduct occasioning the complaint
"were established solely by the state's investigatory goals and
justified solely by the search warrant." Id. at 814. ___
We conclude that to the extent that state-granted
authority can justify a finding of state action, that authority
must be connected to the aim of encouraging or compelling the
specific complained-of conduct. Because we conclude that the
district court correctly found that no state-linked financial or
regulatory nexus compelled Defendants to act as they did, we find
no state action under the nexus test.
2. Traditional Public Function Analysis 2. Traditional Public Function Analysis
"[F]or a private actor to be deemed to have acted under
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color of state law, it is not enough to show that the private
actor performed a public function." Rockwell, 26 F.3d at 258. ________
Rather, "[t]he plaintiff must show that the private entity
assumed powers 'traditionally exclusively reserved to the
State.'" Id. (quoting Rodr ques, 950 F.2d at 813). The ___ _________
exclusive function test screens for situations "where a state
tries to escape its responsibilities by delegating them to
private parties." Id. at 258; see Johnson v. Pinkerton Academy, ___ ___ _______ _________________
861 F.2d 335, 338 (1st Cir. 1988). If the convening of the
AEELA's assembly or the election of its board are traditional,
exclusively sovereign functions which have merely been delegated
to private actors, then the state cannot escape responsibility
for constitutional deprivations caused by private parties acting
pursuant to the delegation. Rockwell, 26 F.3d at 258. ________
In Rendell-Baker, 457 U.S. at 352, the Supreme Court _____________
discussed the "public function" analysis of state action. The
Court concluded that although the education of maladjusted high
school students is a public function for which the state intends
to provide services at public expense, that "legislative policy
choice in no way makes these services the exclusive province of
the State . . . . That a private entity performs a function which
serves the public does not makes its acts state action." Id.; ___
see also Ponce, 760 F.2d at 381. ________ _____
Plaintiffs contend that for public interest purposes,
the government of Puerto Rico has delegated to the AEELA the
traditional activity of promoting savings among government
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employees, and providing them benefits such as loans, insurance
and medical services. We agree with Plaintiffs that providing
such benefits to public employees probably does promote the
public interest. However, these services cannot reasonably be
characterized as the exclusive province of the State, since
banks, credit unions, savings and loans associations, brokerage
firms, mutual funds, and insurance companies traditionally have
existed to promote savings, loans and health and other insurance.
As a result, we conclude that Defendants cannot be found to have
engaged in state action under the "traditional public function"
test.
3. Symbiotic Relationship 3. Symbiotic Relationship
State action can be found by way of a symbiotic
relationship. Under this test, a private party's acts "are
attributable to the state only if the government 'has so far
insinuated itself into a position of interdependence with [the
private entity] that it must be recognized as a joint participant
in the challenged activity . . . .'" Ponce, 760 F.2d at 381 _____
(quoting Burton v. Wilmington Parking Auth., 365 U.S. 715, 725 ______ ________________________
(1961)). While "one of the key factors in determining whether a
symbiotic relationship exists is certainly whether the state
shared in any profits made," the lack of a financial partnership
is not necessarily dispositive. Rodr guez-Garc a, 904 F.2d at ________________
98-99 (listing several factors relevant to finding "symbiotic
relationship").
In Burton, the Court found state action where the state ______
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leased public property to a private restaurant owner, who
maintained a racially discriminatory policy, acknowledged to be
indispensable to the success of the venture. Burton, 365 U.S. at ______
723-24. In contrast, there is no evidence that the government of
Puerto Rico somehow profited from the allegedly discriminatory
actions of Defendants. Even though the AEELA receives legally
mandated funds from public employees, no contention has been made
that this money becomes the property of the AEELA or the
government. In fact, Plaintiffs have not disputed that, upon
termination of employment, public employees receive back their
funds. While the Puerto Rico Secretary of the Treasury does
approve the investments made by the AEELA with these funds,
Plaintiffs have not contended that these funds are somehow used
to the benefit of the government of Puerto Rico, rather than
invested at a market rate of return. Also, Plaintiffs have not
even attempted to link the alleged election rigging to some
financial gain to the government of Puerto Rico, in the way that
the discrimination in Burton was linked to the state's returns ______
from the venture. Thus, whatever financial success the AEELA may
achieve is not shared with the government of Puerto Rico.
Similarly, while the lack of financial enrichment is
not dispositive, and "[t]he test is one of interdependence and
joint participation," we agree with the district court that
Plaintiffs have failed to contest the proposition that the AEELA
is essentially independent in the conduct of its daily affairs.
And no attempt has been made to link the government of Puerto
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Rico to the decisions of when to hold the Assembly and how to
conduct Board elections. As a result, we conclude that no
symbiotic relationship exists between the government of Puerto
Rico and the AEELA.
In passing, we observe that in the instant case,
Plaintiffs have not premised their claim on a private party's
specific act, directed by the government of Puerto Rico, which
somehow benefits the government via a symbiotic relationship with
the private actor. This point can be illustrated by comparison
with the symbiotic relationship that led to a finding of state
action in Schneider v. Colegio de Abogados de Puerto Rico, 565 F. _________ __________________________________
Supp. 963, 974, stay denied, 572 F. Supp. 957 (D.P.R. 1983), ___________
vacated on other grounds Romany v. Colegio de Abogados de Puerto _________________________ ______ _____________________________
Rico, 742 F.2d 32 (1st Cir. 1984) (holding that the district ____
court should have abstained from reaching the merits of the First
Amendment claims until the Puerto Rico Supreme Court decided a
pending controversy). In Schneider, the plaintiffs charged that _________
Puerto Rico laws forcing them to be members of Puerto Rico's
integrated bar association violated their rights to free speech
and free association, since those laws forced them to belong to,
and financially support, an organization (the Colegio) which
promoted ideological and political causes contrary to their
personal beliefs. Id. at 965-66. The court found state action, ___
noting not only that Puerto Rico law required attorneys to
maintain membership in the Colegio, but also emphasizing that
required membership aided the Colegio's public function of
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regulating lawyers, from which the government was found to
benefit. Id. at 973-74. Essentially, the government of Puerto ___
Rico was found to be advantaged by the specific act on which the
complaint was grounded, namely, forced membership in the Colegio.
By contrast, plaintiffs in the instant case do not
mount a facial challenge to the laws that create the AEELA or
require that it hold elections. Instead, they argue that the
AEELA's leadership committed discretionary acts of
discrimination, and did so while exercising authority granted by
the government of Puerto Rico. But plaintiffs fall short of
Schneider in at least two ways. First, the conduct they complain _________
of -- discrimination -- is not specifically mandated by Puerto
Rico law, as forced membership in the Colegio was for lawyers in
Schneider. Unlike the plaintiffs in Schneider, Plaintiffs do not _________ _________
challenge conduct specifically directed by Puerto Rico law; for
example, their forced membership in the AEELA or the requirement
that the AEELA hold assemblies and elections. Instead,
Plaintiffs complain of the manner in which the assembly and the ______
elections were held -- this manner is not directed by statute. ______
Second, Plaintiffs have failed to link these specific acts of
discrimination in the holding of AEELA's assembly and elections
to any symbiotic relationship by which the government profits
from these specific discriminatory acts. No allegation has been
made that the government of Puerto Rico is somehow advantaged by
the alleged misconduct in AEELA's assembly or elections. By
contrast, in Schneider, bar membership required by Puerto Rico _________
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law constituted the conduct complained of, and also was alleged
to benefit the government of Puerto Rico, since compulsory
membership made possible the Colegio's regulatory functions. As
a result of these distinctions, we conclude that Schneider does _________
not avail Plaintiffs.
CONCLUSION CONCLUSION
To maintain a Section 1983 action, state action must be
present. Because we conclude that, reading the pleadings in the
best light for Plaintiffs, they can prove no set of facts that
would implicate state action, the judgment of the district court
is
affirmed. affirmed. ________
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