United States Court of Appeals
For the First Circuit
No. 05-2298
CARMEN D. PASTRANA-TORRES; BEATRIZ RIVERA CRUZ;
RENE RIVERA-MURILLO,
Plaintiffs, Appellees,
v.
CORPORACIÓN DE PUERTO RICO PARA LA DIFUSIÓN PÚBLICA,
Defendant, Appellant,
MYRNA YOLANDA ZABALA-CARRION, in her personal capacity and
in her official capacity as President of Corporacion de Puerto
Rico para la Difusión Pública,
Defendant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. José Antonio Fusté, U.S. District Judge]
Before
Lynch and Howard, Circuit Judges,
and Stafford,* Senior District Judge.
Juan M. Frontera-SUAU, on brief for appellants.
Pablo Landrau Pirazzi, with whom Aldarondo & López Bras was
on brief, for appellees.
August 18, 2006
*For the Northern District of Florida, sitting by designation.
HOWARD, Circuit Judge. This is an interlocutory appeal
brought by the Corporación de Puerto Rico Para La Difusión Pública
(WIPR), Puerto Rico's public broadcasting company. WIPR challenges
a district court ruling that it is not an arm of the Commonwealth
of Puerto Rico and therefore does not share in the Commonwealth's
Eleventh Amendment immunity from suit in federal court. See U.S.
Const. amend. XI. We affirm.
The plaintiffs are employees of WIPR who have filed a
federal court action, seeking damages and declaratory relief, that
alleges that WIPR took adverse employment actions against them in
retaliation for making statements that are protected by the First
Amendment.1 WIPR moved to dismiss the complaint on several
grounds. For present purposes, only its argument for dismissal of
the damages claims under the Eleventh Amendment is relevant. WIPR
claimed that it is an arm of the Commonwealth and is therefore
immune from liability for damages in federal court. See De Leon
Lopez v. Corporación Insular de Seguros, 931 F.2d 116, 121 (1st
Cir. 1991) (stating that the Commonwealth of Puerto Rico is treated
as a state for purposes of the Eleventh Amendment).
The district court rejected this argument. Pastrana
Torres v. Zabala Carrión, 376 F. Supp. 2d 209, 216-17 (D.P.R.
2005). It ruled that "WIPR is exactly the sort of municipal
1
The complaint also names WIPR's president Myrna Yolanda
Zabala-Carrión as a defendant in her individual and official
capacities. She is not a party to this appeal.
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corporation to which the Eleventh Amendment does not extend." Id.
at 216. It based this conclusion on WIPR's ability to "sue and be
sued" and the fact that it "has been separately incorporated." Id.
at 217. WIPR timely appealed this ruling. See Puerto Rico
Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc., 506 U.S. 139, 147
(1993) (holding that entities claiming to be "arms of the State"
may bring interlocutory appeals from district court orders denying
claims of Eleventh Amendment immunity).
We review de novo the conclusion that WIPR is not
entitled to Eleventh Amendment immunity. See Arecibo Cmty. Health
Care, Inc. v. Puerto Rico, 270 F.3d 17, 22 (1st Cir. 2001). As
this case is before us after the denial of WIPR's motion to
dismiss, we accept the well-pleaded allegations as true. See
Alternative Sys. Concepts, Inc. v. Synopsys, Inc., 374 F.3d 23, 29
(1st Cir. 2004). The burden of proving that Eleventh Amendment
immunity applies rests with WIPR. See Wojcik v. Mass. State
Lottery Comm'n, 300 F.3d 92, 99 (1st Cir. 2002).
"The Eleventh Amendment largely shields States from suit
in federal court without their consent, leaving parties with claims
against a State to present them, if the State permits, in the
State's own tribunals." Hess v. Port Auth. Trans-Hudson Corp., 513
U.S. 30, 39 (1994). This immunity applies only to the states
themselves and entities that are determined to be arms of a state.
See Metcalf & Eddy, Inc. v. Puerto Rico Aqueduct & Sewer Auth.,
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991 F.2d 935, 939 (1st Cir. 1993). Arm-of-the-state questions
often arise with respect to special-purpose public corporations
established by the state, such as WIPR. See Redondo Constr.
Corp. v. Puerto Rico Highway and Transp. Auth., 357 F.3d 124, 126
(1st Cir. 2004).
This circuit has developed a two-part test to resolve
arm-of-the-state questions. See Fresenius Med. Care Cardiovascular
Res., Inc. v. Puerto Rico & the Caribbean Cardiovascular Ctr.
Corp., 322 F.3d 56 (1st Cir. 2003). The first part of the test
asks whether the state has structured the entity to share its
Eleventh Amendment immunity. See id. at 68. If the relevant
indicia conclusively demonstrate that it has, Eleventh Amendment
immunity applies. If, however, the indicia are inconclusive, the
second part of the test focuses on the risk that money damages will
be paid from the state's treasury if the entity is found liable.
See id. This analysis centers on whether the state has obligated
itself to pay the entity's debts. Id. If so, the entity is
entitled to Eleventh Amendment immunity. See id.
The Fresenius test incorporates the twin interests served
by the Eleventh Amendment: protecting the state's dignity interest
in avoiding being haled into federal court, see Fed. Mar. Comm'n v.
South Carolina Ports Auth., 535 U.S. 743, 760 (2002), and
protecting the public fisc, Edelman v. Jordan, 415 U.S. 651, 677
(1974). We perform the arm-of-the-state analysis with "caution,
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[as] it would be . . . an affront to the state's dignity and fiscal
interests were a federal court to find erroneously that an entity
was an arm of the state, when the state did not structure the
entity to share its sovereignty." Fresenius, 322 F.3d at 63.
We begin by considering whether the Commonwealth has
structured WIPR to share its sovereignty. See id. at 68. This
determination is a question of federal law but can be answered only
after consulting the provisions of Commonwealth law that define
WIPR's character. See Regents of the Univ. of Cal. v. Doe, 519
U.S. 425, 429 n.5 (1997). The control statutorily asserted by the
Commonwealth over WIPR is an important aspect of this inquiry.
Fresenius, 322 F.3d at 68.
WIPR operates with a significant degree of autonomy from
the Puerto Rico government. WIPR's enabling act describes it as a
"public corporation" with "a juridical personality that is
independent and separate from any other entity, agency, department
or instrumentality of the Government of Puerto Rico."2 Public
Broadcasting Corporation for Puerto Rico Act of 1996 ("1996 Act"),
Act No. 216, § 1, codified at P.R. Laws Ann. tit. 27, § 501; see
2
WIPR disputes the importance of this characterization,
relying heavily on another provision in the enabling act declaring
WIPR to be an "instrumentality of the Commonwealth of Puerto Rico."
P.R. Laws Ann. tit. 27, § 501. But similar language has appeared
in the enabling acts of other Commonwealth entities and has been
deemed not dispositive on arm-of-the-state questions. See Metcalf
& Eddy, 991 F.2d at 942; Ainsworth Aristocrat Int'l Pty. Ltd. v.
Tourism Co. of P.R., 818 F.2d 1034, 1038 (1st Cir. 1987).
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Fresenius, 322 F.3d at 68 (relying on similar language to support
a conclusion that an entity was not an arm of the state). Its
Board of Directors may "approve, amend, and repeal" regulations as
it deems necessary to fulfill its mission and may determine the
"use of its . . . operating budget." P.R. Laws Ann. tit. 27, §
503; see Royal Caribbean Corp. v. Puerto Rico Ports Auth., 973 F.2d
8, 11 (1st Cir. 1992) (stating that an entity's authority over its
expenditures is an indicator of autonomy from the state). There is
no provision for a veto by the Commonwealth over decisions by the
Board of Directors. See Fresenius, 322 F.3d at 71-72 (noting that
the Commonwealth's veto power over the decisions of a board is a
"key element of control"). Moreover, the Board of Directors is
permitted to select WIPR's president without interference from
other Commonwealth officials. P.R. Laws Ann. tit. 27, § 503; cf.
Wojcik, 300 F.3d at 100 (stating that the fact that the governor
could reject choice for director of the Lottery Commission
indicated that the Commission was an arm of the state).
Additionally, the enabling act empowers WIPR to sue and
be sued, to enter into contracts, and to acquire and maintain
property. P.R. Laws Ann. tit. 27, § 504(a)(5), (7), (8); see
Metcalf & Eddy, 991 F.2d at 942 (stating that the power to sue and
be sued and enter into contracts suggests that an entity is
autonomous from the state). WIPR also is permitted to raise
revenue for its operations by charging user fees "for the use of
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its broadcasting facilities," and by soliciting donations. P.R.
Laws Ann. tit. 27, § 504(a)(10), (13); Royal Caribbean, 973 F.2d at
10 (stating that the ability of an entity to generate revenue
indicates autonomy).3
Balanced against these indicators of autonomy are factors
suggesting Commonwealth control. WIPR is bound by Puerto Rico's
Administrative Procedures Act in promulgating regulations to govern
its affairs. P.R. Laws Ann. tit. 27, § 504(a)(3); Breneman v.
United States ex. rel the Fed. Aviation Admin., 381 F.3d 33, 39
(1st Cir. 2004) (that entity must comply with the state
administrative procedures act suggests state control). It is
governed by a Board of Directors comprised of certain government
officials and private citizens appointed by the Governor and
confirmed by the Senate. P.R. Laws Ann. tit. 27, § 503; Wojcik,300
F.3d at 100 (that state commission was made up of government
officials and politically-appointed citizens indicates state
control). And it is required to submit reports on certain subjects
to the Governor and Legislature. P.R. Laws Ann. tit. 27, § 505;
Royal Caribbean, 973 F.2d at 12 (that entity must submit reports to
the Governor is an indication of state control).
3
There are indicia besides state control that inform the first
aspect of the Fresenius test, including whether WIPR is performing
a proprietary or government function and the existence of
Commonwealth court decisions showing that WIPR is a part of the
government of Puerto Rico. See Fresenius, 322 F.3d at 70-71. But
WIPR has not argued that either factor supports its immunity claim,
and it has the burden to do so. See id. at 70.
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As the above discussion shows, the relevant factors point
in different directions. WIPR therefore has not demonstrated that
the Commonwealth structured WIPR to share its sovereignty. See
Fresenius, 322 F.3d at 72. Accordingly, we turn to consider
whether the Commonwealth is obligated to pay WIPR's debts. Id. In
conducting this inquiry, we examine "what is said by state law on
the topic and what in fact has happened." Id.
WIPR's enabling act does not explicitly obligate the
Commonwealth to pay WIPR's debts. But even without such an
explicit promise, the Commonwealth may have assumed this obligation
by binding itself to provide virtually all of the funds that WIPR
needs to operate. See id. We therefore examine WIPR's statutory
scheme, with particular emphasis on the provisions for raising
revenue and funding. See id.
As mentioned above, WIPR is empowered to raise revenues
through soliciting donations and charging user fees. See supra at
7-8. The enabling act requires WIPR to submit an annual work plan
to the Governor and Legislature identifying specific activities and
anticipated expenditures for the upcoming year. P.R. Laws Ann.
tit. 27, § 505. In the session laws, the Legislature promised to
authorize "all additional fiscal resources that are needed to carry
out the annual" work plan. 1996 Act P.R. Laws § 14, codified at
P.R. Laws Ann. tit. 27, § 501 (emphasis supplied). Thus, the
Legislature has undertaken only a limited funding obligation for
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WIPR. It will pay the difference between WIPR's revenues and the
resources needed to implement WIPR's work plan. It has not,
however, committed itself to provide all of WIPR's budget, and has
not promised to cover unforeseen expenses that WIPR may incur.
We turn finally to the practical reality of WIPR's
funding situation. "If the [Commonwealth] substantially funds
[WIPR], those funds would be the probable source to satisfy any
judgment against [WIPR]," and therefore the public fisc would be
jeopardized by an adverse judgment. Fresenius, 322 F.3d at 73.
WIPR asserts that its "entire budget comes from the
Commonwealth of Puerto Rico General Fund." If true, this could be
a significant (although not necessarily dispositive) fact. See Mt.
Healthy Sch. Bd. of Educ. v. Doyle, 429 U.S. 274, 280 (1977)
(concluding that a public school district was not an arm of the
state even though it received "a significant amount of money from
the State"). In any event, WIPR has offered no materials
substantiating its assertion and, as mentioned above, it has the
burden of proof. See Fresenius, 322 F.3d at 70.
In sum, WIPR's enabling act does not unequivocally
indicate that the Commonwealth structured WIPR to share its
sovereignty, and there is no indication that the Commonwealth has
bound itself to pay WIPR's debts. Accordingly, the district court
correctly denied WIPR's motion to dismiss on Eleventh Amendment
grounds.
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Affirmed.
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