Casiano-Montanez v. State Insurance Fund Corp. , 707 F.3d 124 ( 2013 )

United States Court of Appeals
For the First Circuit
No. 12-1453
NANCY CASIANO-MONTAÑEZ; MIGUEL A. REYES-VARGAS;
JAVIER TORRES-GONZÁLEZ; RAQUEL VILLEGAS-ROSA;
WILMA J. ROSA-MÉNDEZ; LETICIA SANTIAGO-REYES;
GLORIA D. SOTO-MALDONADO; NEXAIDA CUSTODIO;
JUANA TORRES-ESCRIBANO; ROSAURA REYES-RAMOS;
MIGDALIA ESPINO-PITRE; FELICITA OTERO-BARBOSA,
Plaintiffs, Appellants,
v.
STATE INSURANCE FUND CORPORATION ("SIFC"); ZOIME ÁLVAREZ-RUBIO;
SAÚL RIVERA-RIVERA; CONJUGAL PARTNERSHIP RIVERA-DOE;
JORGE GARCÍA-ORTIZ; CONJUGAL PARTNERSHIP GARCÍA-DOE; ERNESTO
SANTIAGO-SAYAS; CONJUGAL PARTNERSHIP SANTIAGO-DOE,
Defendants, Appellees.
JOSÉ IGNACIO COBIÁN;
CONJUGAL PARTNERSHIP COBIÁN-ÁLVAREZ,
Defendants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Daniel R. Domínguez, U.S. District Judge]
Before
Lynch, Chief Judge,
Selya and Howard, Circuit Judges.
Celina Romany, with whom Celina Romany Law Offices was on
brief, for appellants.
Susana I. Peñagarícano-Brown, Assistant Solicitor General,
with whom Luis R. Román-Negrón, Solicitor General of Puerto Rico,
was on brief, for personal capacity appellees.
Pedro A. Delgado Hernández, Yadhira M. Rodríguez Quiñones and
O'Neill & Borges LLC on brief for appellee SIFC and for official
capacity appellees.
February 7, 2013
HOWARD, Circuit Judge. Plaintiffs-appellants are twelve
dismissed or demoted employees of the State Insurance Fund
Corporation ("Corporation"), a public corporation in Puerto Rico
that administers the Commonwealth's workers' compensation program.
They sued the Corporation and several of its officers in the United
States District Court for the District of Puerto Rico, alleging
political discrimination and due process violations stemming from
adverse employment actions. The district court dismissed the
claims based on Younger abstention. We reverse the order of
dismissal and remand to the district court with instructions to
stay further proceedings pending the resolution of a related case
awaiting decision before the Puerto Rico Supreme Court.
I.
Shortly after the 2008 Puerto Rico elections, Zoimé
Álvarez-Rubio, the newly-appointed administrator of the
Corporation, initiated an audit of personnel appointments made at
the Corporation between 2001 and 2008. The audit revealed that 232
positions had been filled through internal hiring calls rather than
through a competitive process open to the public. Álvarez
concluded that the appointments were void because the procedure
contravened personnel regulations promulgated to implement the
"merit principle" of the Public Service Human Resources
Administration Act of Puerto Pico, see P.R. Laws Ann. tit. 3, §§
1462-1462h. In January 2010, Álvarez informed the plaintiffs and
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other affected employees of her intent to nullify their
appointments, resulting in dismissals or demotions from their
career positions at the Corporation.
Before the adverse employment actions took effect, the
plaintiffs requested informal administrative hearings before the
Corporation. The Corporation affirmed Álvarez's decision, and the
dismissals and demotions became final. The plaintiffs then filed
administrative appeals before the Corporation's Board of Appeals
("Board"). The Board has yet to act on the appeals.
Meanwhile, the plaintiffs filed suit in federal court,
alleging that they were dismissed or demoted because of their
political affiliation, in violation of their rights under the First
Amendment and the Equal Protection Clause, and without due process
of law. Because the plaintiffs "voluntarily engage[d] the wheels
of an administrative procedure before filing an action in federal
court," the district court abstained under Younger v. Harris, 401
U.S. 37 (1971), and dismissed the plaintiffs' claims.
Casiano-Montañez v. State Ins. Fund Corp., 852 F. Supp. 2d 177, 182
(D.P.R. 2012).
The Corporation's decision to nullify the appointments
made pursuant to internal hiring calls has spawned numerous other
lawsuits in both Puerto Rico and federal courts. One case has
progressed far in the Commonwealth courts. After the Board
affirmed the Corporation's decision to void the appointments of
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twenty employees, that group sought judicial review before the
Puerto Rico Court of Appeals. See González Segarra v. State Ins.
Fund Corp., No. KLRA201100611, slip op. (P.R. Cir. Sept. 30, 2011)
(certified translation). Like the plaintiffs in the instant case,
the González Segarra plaintiffs argued that internal hiring calls
were legal, that their due process rights were violated, and that
political discrimination motivated their dismissals or demotions.
The Court of Appeals held that the appointments were valid but
affirmed the Board's conclusions that the petitioners failed to
establish either a due process violation or a prima facie case of
political discrimination. Id. The Puerto Rico Supreme Court
subsequently granted the Corporation's petition for writ of
certiorari. The case (No. CC-2011-01051) has been briefed and is
awaiting decision.
II.
The plaintiffs contend that the district court erred in
dismissing their federal claims based on Younger abstention. We
review de novo the district court's decision to abstain under
Younger. Rio Grande Cmty. Health Ctr., Inc. v. Rullan, 397 F.3d
56, 68 (1st Cir. 2005).
Younger abstention is appropriate only "when the
requested relief would interfere (1) with an ongoing state judicial
proceeding; (2) that implicates an important state interest; and
(3) that provides an adequate opportunity for the federal plaintiff
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to advance his federal constitutional challenge." Rossi v. Gemma,
489 F.3d 26, 34-35 (1st Cir. 2007). To satisfy the first prong in
the context of a state administrative proceeding, the proceeding
"must be coercive, and in most-cases, state-initiated, in order to
warrant abstention." Guillemard-Ginorio v. Contreras-Gómez, 585
F.3d 508, 522 (1st Cir. 2009); see Kercado-Melendez v.
Aponte-Roque, 829 F.2d 255, 259-61 (1st Cir. 1987). The plaintiffs
voluntarily initiated the administrative proceedings before the
Board to challenge the legality of a personnel decision. Plainly,
those proceedings are remedial in nature and "not of the type to
which deference under Younger applies." Guillemard-Ginorio, 585
F.3d at 522; see Mass. Delivery Ass'n v. Coakley, 671 F.3d 33, 41
(1st Cir. 2012) (delineating the types of proceedings that warrant
Younger abstention). Accordingly, the district court erred in
abstaining based on Younger, and dismissal was not the remedy in
any event. See Rossi, 489 F.3d at 38 ("When a court orders
abstention on a damages claim, it ordinarily may only stay the
action, rather than dismiss the action in its entirety.").
That, alas, is the easy part of the case. At oral
argument, the defendants asked us to stay further proceedings in
the district court pending the Puerto Rico Supreme Court's decision
in the González Segarra case. The exceptional circumstances of
this case convince us to grant that request.
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To begin, it is well settled that the pendency of an
action in state court is not a per se bar to related federal court
proceedings. Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544
U.S. 280, 292 (2005). Indeed, federal courts have a "virtually
unflagging obligation . . . to exercise the jurisdiction given
them." Colo. River Water Conservation Dist. v. United States, 424
U.S. 800, 817 (1976). This duty, however, is not absolute, and it
yields in certain "exceptional circumstances, where denying a
federal forum would clearly serve an important countervailing
interest." Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 716
(1996) (citation omitted) (internal quotation marks omitted).
The Supreme Court has delineated several abstention
doctrines, see id. at 716-17, which "reflect a complex of
considerations designed to soften the tensions inherent in a system
that contemplates parallel judicial processes." Pennzoil Co. v.
Texaco, Inc., 481 U.S. 1, 11 n.9 (1987). Although "the categories
do matter," Rio Grande Cmty. Health Ctr., Inc., 397 F.3d at 68,
"[t]he various types of abstention are not rigid pigeonholes into
which federal courts must try to fit cases." Pennzoil Co., 481
U.S. at 11 n.9. Here, both the Pullman abstention doctrine and the
principles of federalism, comity, and sound judicial administration
that ground the various abstention doctrines counsel a stay of the
federal court proceedings pending the Puerto Rico Supreme Court's
decision in the related Commonwealth court litigation.
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Pullman abstention serves to "avoid federal-court error
in deciding state-law questions antecedent to federal
constitutional issues." Arizonans for Official English v. Arizona,
520 U.S. 43, 76 (1997); see R.R. Comm'n of Tex. v. Pullman Co., 312
U.S. 496, 501 (1941). Under Pullman, federal courts should abstain
when "(1) substantial uncertainty exists over the meaning of the
state law in question, and (2) settling the question of state law
will or may well obviate the need to resolve a significant federal
constitutional question." Batterman v. Leahy, 544 F.3d 370, 373
(1st Cir. 2008). "[T]he fact that a state proceeding is actually
pending strengthens the case for [Pullman] abstention." Rivera-
Feliciano v. Acevedo-Vilá, 438 F.3d 50, 61 (1st Cir. 2006); see
Harris Cnty. Comm'rs Court v. Moore, 420 U.S. 77, 83 (1975) ("Where
there is an action pending in state court that will likely resolve
the state-law questions underlying the federal claim, [the Supreme
court has] regularly ordered abstention.").
Applying these principles to the plaintiffs' Fourteenth
Amendment due process claim, we conclude that a stay of the federal
proceedings is appropriate. The Constitution affords procedural
due process protections to government employees who possess a
property interest in continued public employment. See Cleveland
Bd. of Educ. v. Loudermill, 470 U.S. 532, 541 (1985). Property
interests are creatures of state law, and under the laws of Puerto
Rico, public employees who lawfully hold career positions have a
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protected property interest in continued employment in those
positions. Costa-Urena v. Segarra, 590 F.3d 18, 27 (1st Cir.
2009). Employees whose hiring contravened Commonwealth laws and
regulations, however, are not vested with a property interest in
their career positions. Id.; González-de-Blasini v. Family Dep't,
377 F.3d 81, 86 (1st Cir. 2004); Kauffman v. P.R. Tel. Co., 841
F.2d 1169, 1173-74 (1st Cir. 1988). "[T]heir career appointments
are null and void ab initio" and no due process protections attach.
Kauffman, 841 F.2d at 1173.
Hence, whether the plaintiffs have a property interest in
their career positions at the Corporation hinges on the legality of
their appointments, the very issue that the Commonwealth's highest
court is poised to decide in González Segarra. As is evident from
the divergent legal interpretations of the agency and the
intermediate appellate court in that case, substantial uncertainty
surrounds the issue. Determining whether internal hiring calls
violated the merit principle incorporated into public personnel
laws of Puerto Rico involves complex questions of statutory and
regulatory interpretation. The questions concern the requirements
of the merit principle, the power of the Corporation's
administrator to limit competition for certain positions, the
ability of a subsequent administrator to countermand the decisions
of the predecessor, and the role of Commonwealth-wide fiscal
measures aimed at reducing public payroll costs. See González
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Segarra, No. KLRA201100611, slip op. at 29-53. Resolution of these
unsettled issues of Puerto Rico administrative and statutory law
may obviate the need to decide whether the plaintiffs received
constitutionally adequate process prior to losing their positions.
At the very least, once the Puerto Rico Supreme Court "has spoken,
adjudication of any remaining constitutional questions may indeed
become greatly simplified." Arizonans for Official English, 520
U.S. at 80. The circumstances of this case suggest that it might
well fit within the Pullman rubric.
Considerations of federalism, comity, and sound judicial
administration also sway us to direct a stay of the federal court
proceedings. See Cruz v. Melecio, 204 F.3d 14, 22-25 (1st Cir.
2000) (considering the same in ordering a stay of federal
proceedings pending the outcome of a related state court
litigation). The Commonwealth case is pending before the highest
court of the jurisdiction. "From the standpoint of federalism and
comity, there is something particularly offensive about hijacking
a case that is pending on the docket of a state's highest
tribunal." Id. at 24. Yet another concern is that, absent a stay,
the district court could be forced to decide the complex state law
issue intertwined with the due process claim before the Puerto Rico
Supreme Court issues its decision. A contrary ruling from the
Commonwealth court would render the federal court's opinion "merely
advisory -- an outcome we seek to avoid in any case." Currie v.
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Grp. Ins. Comm'n, 290 F.3d 1, 11 (1st Cir. 2002); accord Rivera-
Feliciano, 438 F.3d at 62; see Pennzoil Co., 481 U.S. at 11 n.9
("In some cases, the probability that any federal adjudication
would be effectively advisory is so great that this concern alone
is sufficient to justify abstention[.]"). It is therefore
preferable to allow the Commonwealth court to resolve the
controlling issue of Puerto Rico law first.
We recognize, of course, that the plaintiffs' political
discrimination claim is not synonymous with their due process claim
and, thus, will not necessarily be resolved by answering the
unsettled state law question. If that claim is not rendered moot
by the Puerto Rico Supreme Court's decision, the parties will have
their chance to argue it in federal court at a later date. We are
not surrendering federal court jurisdiction over either federal
claim, but simply staying the proceedings until the related
Commonwealth proceedings have run their course.
III.
For the foregoing reasons, we reverse the order
dismissing the plaintiffs' action and remand the case to the
district court with instructions to stay proceedings pending the
Puerto Rico Supreme Court's decision in the González Segarra case.
So ordered.
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