ARCAM PHARMACEUTICAL CORP. v. Faria

United States Court of Appeals
For the First Circuit

No. 07-1046

ARCAM PHARMACEUTICAL CORPORATION,

Plaintiff, Appellant,

DANIEL PAGÁN; INGRID LLORÉNS-ORLANDI; CONJUGAL PARTNERSHIP PAGÁN-
LLORÉNS; ERNESTO VILANOVA-VÉLEZ; MIRTA MORALES-MATOS; CONJUGAL
PARTNERSHIP VILANOVA-MORALES; CRISTINO AGOSTO-REYES; IRIS
HERNÁNDEZ-GONZÁLEZ; CONJUGAL PARTNERSHIP AGOSTO-HERNÁNDEZ; MARTIN
SOUTO; CARMEN DÍAZ-RODRÍGUEZ; CONJUGAL PARTNERSHIP SOUTO-DÍAZ;
CHRISTOPHER MOLINA; CARMEN VÁZQUEZ-BERMÚDEZ; CONJUGAL PARTNERSHIP
MOLINA-VÁZQUEZ,

Plaintiffs,

v.

ANTONIO FARÍA; VILMA PELLOT; BANCO DE DESARROLLO ECONÓMICO PARA
PUERTO RICO,

Defendants, Appellees,

SILA MARÍA CALDERÓN, in her official capacity as Governor of
Puerto Rico; RAMÓN CANTERO-FRAU; CONJUGAL PARTNERSHIP CANTERO-
CALDERON,

Defendants.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Daniel R. Domínguez, U.S. District Judge]

Before

Torruella and Howard, Circuit Judges,
and Smith,* District Judge.

*
Of the District of Rhode Island, sitting by designation.
 _________________________

José A. Ocasio-Robles and Ocasio-Robles Law Offices, P.S.C. on
brief for appellant.
Pedro Santiago-Rivera and Reichard & Escalera on brief for
appellees.

December 26, 2007
 SMITH, District Judge. When this case was last before

us, we stated unequivocally that the Complaint in this matter

failed to state any viable constitutional claims. Pagán v.

Calderón, 448 F.3d 16, 37 (1st Cir. 2006). Given the holding in

Pagán, dismissal on remand by the District Court of appellant ARCAM

Pharmaceutical Corporation’s (“ARCAM”) claims was inevitable.

Nevertheless, ARCAM now appeals the dismissal of its suit against

appellees Antonio Faría and Vilma Pellot. ARCAM argues that the

Pagán decision was not binding on its claims against Faría and

Pellot, and that the District Court erred in extending Pagán to

dismiss the claims against these Defendants. After reviewing

ARCAM’s arguments and the record, we affirm the District Court’s

dismissal of the suit.

The facts giving rise to the Complaint fully were set

forth by this Court in Pagán, and need not be repeated in detail

here. See Pagán, 448 F.3d at 23-26. To summarize, briefly, “[t]he

underlying action involves multiple plaintiffs and multiple

defendants . . . The plaintiffs’ overarching claim is that

Calderón, then the governor of Puerto Rico, improperly influenced

the decision of a government lender to reject a loan sought by the

main plaintiff, ARCAM.” Id. at 23. All that is necessary for

purposes of this appeal is as follows: Appellees Faría and Pellot

were President and a “high ranking” official, respectively, of the

Banco de Desarrollo Económico para Puerto Rico (“BDE”), the lender

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which denied ARCAM its sought after commercial loan for $5,000,000.

Plaintiffs alleged that Faría and Pellot were the vehicles through

which Calderón exerted undue influence over BDE’s directors in

order to prevent BDE from granting ARCAM’s loan request.

After this Court’s decision in Pagán, the remaining

claims of the underlying Complaint, if alive at all, were on life

support. In Pagán, we had before us Calderón’s appeal of the

District Court’s denial of her motion to dismiss all claims against

her on the grounds of qualified immunity. We first took up the

issue of justiciability, and concluded that only ARCAM had standing

to pursue its claims against Defendants. We therefore dismissed

the claims of all other Plaintiffs. With all Plaintiffs except

ARCAM out of the picture, and only ARCAM’s equal protection and

substantive due process claims remaining, we turned to Calderón’s

claim of qualified immunity. Id. at 23. Applying the usual

qualified immunity rubric, see, e.g., Limone v. Condon, 372 F.3d

39, 44 (1st Cir. 2004), we conclusively found that ARCAM “failed

adequately to plead a violation of its constitutional rights,”

directed the District Court to grant Calderón’s motion for

dismissal of all claims against her, and remanded for further

consistent proceedings.1 Pagán, 448 F.3d at 23.

1
Because only Calderón appealed the District Court’s Order,
this Court was compelled to return the case to the District Court
for appropriate disposition of ARCAM’s claims against Pellot and
Faría.

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 On remand, the District Court quite predictably ordered

the parties to show cause why the remaining claims should not be

dismissed based on the holding of Pagán. After considering the

parties’ submissions, the Court then incorporated in toto this

Court’s analysis in Pagán, and disposed of all further pending

matters, including supplemental claims raised under Puerto Rican

law.2 Now before us is ARCAM’s last-gasp appeal of the District

Court’s dismissal of its remaining claims against Pellot and Faría.

ARCAM stands on shaky ground when it claims that this Court’s

analysis in Pagán was little more than dicta as to Pellot and

Faría. We have held that “when a statement in a judicial decision

is essential to the result reached in the case, it becomes part of

the court’s holding.” Rossiter v. Potter, 357 F.3d 26, 31 (1st

Cir. 2004). The result, along with those portions of the opinion

necessary to the result, are binding, whereas dicta is not. Id.

“Dictum constitutes neither the law of the case nor the stuff of

binding precedent,” Dedham Water Co. v. Cumberland Farms Dairy,

Inc., 972 F.2d 453, 459 (1st Cir. 1992); rather, it “comprises

observations in a judicial opinion or order that are ‘not

essential’ to the determination of the legal questions then before

the court.” Municipality of San Juan v. Rullán, 318 F.3d 26, 29

n.3 (1st Cir. 2003) (quoting Dedham Water Co., 972 F.2d at 459);

2
These claims, sounding solely in the law of Puerto Rico,
were dismissed without prejudice.

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see also Pierre N. Leval, Judging Under the Constitution: Dicta

About Dicta, 81 N.Y.U. L. Rev. 1249, 1256 (2006) (Dictum is

superfluous content - “an assertion in a court’s opinion of a

proposition of law which does not explain why the court’s judgment

goes in favor of the winner”).

Because Calderón was the sole appellant in Pagán, our

reversal of the District Court’s refusal to dismiss ARCAM’s equal

protection and substantive due process claims technically related

only to those allegations aimed at Calderón. However, the holding

was premised on the essential finding that ARCAM’s allegations “do

not state viable constitutional claims,” a determination that was

by no means uniquely applicable to Calderón, but instead spoke

broadly to the failings of the Complaint as a whole. Pagán, 448

F.3d at 37.

As to ARCAM’s specific allegation that Calderón

transgressed its substantive due process rights when, through

Pellot and Faría, she exerted undue influence over BDE’s directors

so that they would deny ARCAM’s loan request, we concluded that

“the mere withholding of the loan, simplicitor, cannot support a

constitutional claim.” Id. at 33. This conclusion required

dismissal of ARCAM’s substantive due process claim, was not dicta,

and applies with equal force to the identical claims alleged

against Pellot and Faría. We were similarly forthright with regard

to ARCAM’s equal protection claim: “. . . [the claim] does not

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pass constitutional muster.” Id. at 35. Here, the analysis was

two-pronged: first, ARCAM failed to plead facts establishing that

a similarly situated borrower was treated differently than it; and

second, the Complaint offered no allegations indicating that the

disparate treatment of which ARCAM complains resulted from a gross

abuse of power, invidious discrimination, or fundamentally unfair

procedures.3 These flaws doomed ARCAM’s equal protection claims

against all remaining Defendants, not just Calderón.

Though our holding in Pagán was limited to Calderón’s

appeal, it cannot, as ARCAM urges, reasonably be read in isolation

from the case as a whole. Rather, as set forth above, the core

holding of Pagán – that the Complaint in this matter fails to

allege viable constitutional claims - extends with equal, if not

more force to allegations aimed at Pellot and Faría. In sum, with

our holding in Pagán, we sounded the death knell for ARCAM’s

remaining claims against Pellot and Faría, leaving the District

Court no choice but to bring down the axe.

The Order of the District Court dated November 27, 2006

is affirmed.

3
To the extent that ARCAM seeks to rely on its equal
protection and due process claims against Calderón, Pellot, and
Faría to redress what it alleges to have been unconstitutional
political discrimination or retaliation, it cannot do so. Pagán v.
Calderón, 448 F.3d 16, 34, 36-7 (1st Cir. 2006). Rather, the
proper avenue for such assertions is a First Amendment claim, one
which ARCAM brought, and which the District Court below dismissed
as to all Defendants in its March 30, 2005 Opinion and Order. See
id. at 36.

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