Odebrecht Construction, Inc. v. Secretary, Florida Department of Transportation , 715 F.3d 1268 ( 2013 )

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 12-13958
________________________
D.C. Docket No. 1:12-cv-22072-KMM
ODEBRECHT CONSTRUCTION, INC.,
a Florida corporation,
Plaintiff - Appellee,
versus
SECRETARY, FLORIDA DEPARTMENT
OF TRANSPORTATION,
Defendant - Appellant.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(May 6, 2013)
Before MARCUS, HILL and SILER, * Circuit Judges:
MARCUS, Circuit Judge:
*
Honorable Eugene E. Siler, Jr., United States Circuit Judge for the Sixth Circuit, sitting by
designation.
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In this interlocutory appeal, the Secretary of the Florida Department of
Transportation appeals the district court’s order granting Odebrecht Construction,
Inc. a preliminary injunction barring the Department’s enforcement of a Florida
law known as the “Cuba Amendment,” 2012 Fla. Laws 196, § 2 (amending Fla.
Stat. § 287.135). Broadly speaking, the law prevents any company that does
business in Cuba -- or that is in any way related to a company that does business in
Cuba -- from bidding on state or local public contracts in the State of Florida. See
Fla. Stat. § 287.135(2) (“A company that . . . is engaged in business operations in
Cuba . . . is ineligible for, and may not bid on, submit a proposal for, or enter into
or renew a contract with an agency or local governmental entity for goods or
services of $1 million or more.”); id. § 215.473(1)(c) (defining the term
“company” to encompass all subsidiaries, parent companies, or affiliates of the
entity).
In a thorough opinion, the district court concluded that Odebrecht had met
its burden of persuasion on all four elements of the preliminary injunction inquiry,
and issued a preliminary injunction prohibiting the Florida Department of
Transportation from implementing or enforcing the Cuba Amendment. After
careful review, we conclude that Odebrecht has demonstrated a substantial
likelihood of success on its claim that the Cuba Amendment violates the
Supremacy Clause of the Constitution under principles of conflict preemption.
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The Cuba Amendment conflicts directly with the extensive and highly calibrated
federal regime of sanctions against Cuba promulgated by the legislative and
executive branches over almost fifty years. The Supremacy Clause of the
Constitution “provides a clear rule that federal law ‘shall be the supreme Law of
the Land.’” Arizona v. United States, 132 S. Ct. 2492, 2500 (2012) (quoting U.S.
Const. art. VI, cl. 2). The Cuba Amendment differs dramatically from the federal
regime as to the entities covered, the actions triggering sanctions, and the penalties
imposed. The Amendment also overrides the nuances of the federal law and
weakens the President’s ability “to speak for the Nation with one voice in dealing”
with Cuba. Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363, 381 (2000). In
addition, Odebrecht has demonstrated the other equitable requirements that warrant
a preliminary injunction: Odebrecht would have suffered irreparable harm absent
the injunction, the balance of harms strongly favored the injunction, and the
injunction did not disserve the public interest. We affirm.
I.
Odebrecht Construction, Inc. (“Odebrecht” or “OCI”) is a Florida
construction corporation founded in 1990, with its principal place of business in
Coral Gables, Florida. Since its inception, Odebrecht has been awarded 35 public
contracts in Florida worth almost $4 billion. In 2011, 100% of OCI’s revenue,
approximately $215 million, was derived from public infrastructure and
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transportation projects. Odebrecht continues to bid successfully on high-value
public contracts in Florida. Thus, for instance, in May 2012, Broward County
awarded an Odebrecht joint venture a $226 million infrastructure contract at the
Fort Lauderdale-Hollywood International Airport.
As for the Florida Department of Transportation (“FDOT”) in particular,
Odebrecht has completed multiple contracts for the agency in the past with a
combined value of around $170 million. Indeed, in June 2012, FDOT certified
Odebrecht as qualified to bid on a number of potential FDOT contracts, with a
maximum capacity of $1.8 billion. And Odebrecht has signaled its intent to bid on
five different FDOT contracts through the first quarter of 2013. In short,
Odebrecht is not merely a speculative participant in Florida’s public contracting
market; it is a frequent and active one.
Odebrecht does not do business in Cuba, and has never done so.
Odebrecht’s Brazilian parent company, Odebrecht S.A., has a different chain of
foreign subsidiaries unrelated to Odebrecht, however, and some of those foreign
companies do business in Cuba. More specifically, Odebrecht S.A. has a Brazilian
subsidiary, Companhia de desenvolvimento e Participacoes, S.A., which has
another Brazilian subsidiary, Companhia de Obras e Infra-Estrutura, which has a
British Virgin Islands subsidiary, COI Overseas Ltd. Both Companhia de Obras e
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Infra-Estrutura and COI Overseas Ltd. are involved in the Brazilian-financed
expansion of the Port of Mariel in Cuba.
The Cuba Amendment has an effective date of July 1, 2012. On June 4,
2012, before the statute went into effect, Odebrecht filed a complaint in the U.S.
District Court for the Southern District of Florida, seeking declaratory and
injunctive relief barring the Secretary of the Florida Department of Transportation
from enforcing the Cuba Amendment. The following day, Odebrecht filed its
operative amended complaint and a motion for a preliminary injunction.
Odebrecht claimed that the Cuba Amendment violates the Supremacy Clause, U.S.
Const. art. VI, cl. 2; the Foreign Affairs Power, see, e.g., Zschernig v. Miller, 389
U.S. 429 (1968); and the Foreign Commerce Clause, U.S. Const. art. I, § 8, cl. 3.
After full briefing and after conducting a thorough hearing, the district court
granted the injunction. The court reviewed at length both the Cuba Amendment
and the federal laws relating to Cuba, and then addressed Odebrecht’s
constitutional claims, concluding that Odebrecht had demonstrated a substantial
likelihood of success on each of them. The court also found that Odebrecht had
satisfied the other equitable requirements for a preliminary injunction.
II.
We review a district court’s grant of a preliminary injunction for abuse of
discretion. SEC v. Unique Fin. Concepts, Inc., 196 F.3d 1195, 1198 (11th Cir.
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1999). “[B]ut we review de novo the legal conclusions on which [preliminary
injunctions] are based.” ACLU of Fla., Inc. v. Miami-Dade Cnty. Sch. Bd., 557
F.3d 1177, 1198 (11th Cir. 2009). We review any factual findings by the district
court for clear error. Unique Fin. Concepts, 196 F.3d at 1198.
Under the familiar four-part test, a preliminary injunction is warranted if the
movant demonstrates “(1) a substantial likelihood of success on the merits of the
underlying case, (2) the movant will suffer irreparable harm in the absence of an
injunction, (3) the harm suffered by the movant in the absence of an injunction
would exceed the harm suffered by the opposing party if the injunction is issued,
and (4) an injunction would not disserve the public interest.” Grizzle v. Kemp, 634
F.3d 1314, 1320 (11th Cir. 2011) (quoting N. Am. Med. Corp. v. Axiom
Worldwide, Inc., 522 F.3d 1211, 1217 (11th Cir. 2008)). Here, as in so many
cases, the first question is critical. We begin -- and end -- our answer to that
question with Odebrecht’s claim that the Cuba Amendment is preempted by the
long-standing and extensive federal regime limiting American companies from
doing business in Cuba.
A.
The Supremacy Clause of the United States Constitution provides that the
Constitution and the laws of the United States “shall be the supreme Law of the
Land.” U.S. Const. art. VI, cl. 2. “Under this principle, Congress has the power to
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preempt state law.” Arizona v. United States, 132 S. Ct. 2492, 2500 (2012) (citing
Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363, 372 (2000)). Preemption
can occur in a number of circumstances. Its most straightforward form, express
preemption occurs when Congress “enact[s] a statute containing an express
preemption provision.” Id. at 2500-01. That has not occurred in this case, nor is
there any claim that it has. The second -- field preemption -- precludes the states
“from regulating conduct in a field that Congress, acting within its proper
authority, has determined must be regulated by its exclusive governance.” Id. at
2501 (citing Gade v. Nat’l Solid Wastes Mgmt. Ass’n, 505 U.S. 88, 115 (1992)).
The Supreme Court has instructed us that we may infer congressional intent to
displace state law altogether “from a framework of regulation so pervasive that
Congress left no room for the States to supplement it or where there is a federal
interest so dominant that the federal system will be assumed to preclude
enforcement of state laws on the same subject.” Id. (internal quotation marks and
alterations omitted).
Third, and most critical for our purposes, “state laws are preempted when
they conflict with federal law.” Id. (citing Crosby, 530 U.S. at 372). Conflict
preemption covers “cases where ‘compliance with both federal and state
regulations is a physical impossibility.’” Id. (quoting Fla. Lime & Avocado
Growers, Inc. v. Paul, 373 U.S. 132, 142-43 (1963)). But conflict preemption is
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broader than that; it also covers cases “where the challenged state law ‘stands as an
obstacle to the accomplishment and execution of the full purposes and objectives
of Congress.’” Id. (quoting Hines v. Davidowitz, 312 U.S. 52, 67 (1941)). In this
broader form, the lines between conflict preemption and field preemption are
admittedly blurry, as the Supreme Court has recognized. See Crosby, 530 U.S. at372 n.6 (“[T]he categories of preemption are not rigidly distinct. Because a variety
of state laws and regulations may conflict with a federal statute, whether because a
private party cannot comply with both sets of provisions or because the objectives
of the federal statute are frustrated, field pre-emption may be understood as a
species of conflict pre-emption.” (citations and internal quotation marks omitted)).
The essential question in this case is whether the Cuba Amendment stands as an
obstacle to the carefully calibrated federal regime. “What is a sufficient obstacle is
a matter of judgment, to be informed by examining the federal statute as a whole
and identifying its purpose and intended effects.” Crosby, 530 U.S. at 373.
Because the conflict preemption analysis requires a searching inquiry into the
provisions of both the federal and state laws at issue, we begin by examining, in
some detail, the many federal statutes and regulations pertaining to Cuba.
1.
“Since the early 1960s, U.S. policy toward Cuba has consisted largely of
isolating the island nation through comprehensive economic sanctions, including
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an embargo on trade and financial transactions.” M.P. Sullivan, Cong. Research
Serv. R41617, Cuba: Issues for the 112th Congress 30 (July 20, 2012) (“Cuba
Issues”). The authority for, and contours of this federal policy come from a
complex and interlocking network of statutes, regulations, and executive orders.
Because our focus for present purposes is on the conflicts between the federal
regime and the Cuba Amendment, which targets private companies, we highlight
the provisions of the federal law that also affect private companies.
The authority for the federal Cuba embargo dates back to 1917, when
Congress empowered the President to regulate and embargo trade with foreign
nations. See Trading with the Enemy Act, ch. 106, 40 Stat. 411 (1917) (codified as
amended at 50 U.S.C. app. §§ 1-6, 7-39, 41-44). The statute affords the President
broad powers to regulate, license, and prohibit trade with foreign nations:
[T]he President may, through any agency that he may designate, and
under such rules and regulations as he may prescribe, by means of
instructions, licenses, or otherwise --
(A) investigate, regulate, or prohibit, any transactions in foreign
exchange, transfers of credit or payments between, by, through, or to
any banking institution, and the importing, exporting, hoarding,
melting, or earmarking of gold or silver coin or bullion, currency or
securities, and
(B) investigate, regulate, direct and compel, nullify, void, prevent or
prohibit, any acquisition holding, withholding, use, transfer,
withdrawal, transportation, importation or exportation of, or dealing
in, or exercising any right, power, or privilege with respect to, or
transactions involving, any property in which any foreign country or a
national thereof has any interest,
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by any person, or with respect to any property, subject to the
jurisdiction of the United States.
50 U.S.C. app. § 5(b)(1).
With respect to Cuba, the President has repeatedly exercised this power
through the comprehensive Cuban Assets Control Regulations (“CACR”). The
CACR were first promulgated by the Treasury Department in July 1963, almost
fifty years ago. 1 The CACR are currently administered and enforced by the
Treasury Department’s Office of Foreign Assets Control. See 31 C.F.R. pt. 515.
The provisions of the CACR that most directly affect private companies
relate to imports, exports, and other transactions involving Cuba or Cuban
nationals. Broadly speaking, the regulations prohibit, unless specifically
authorized, any dealing in any property in which Cuba or a Cuban national has an
1
Since the enactment of the International Emergency Economic Powers Act of 1977, the
President is only authorized to exercise the embargo powers conferred by Congress in that statute
if the President first declares a national emergency, and may only exercise the powers conferred
by the Trading with the Enemy Act during times of war. See 50 U.S.C. § 1701; id. app. § 5(b)(1)
(empowering the President “[d]uring the time of war”). However, existing embargoes, such as
the one against Cuba, were grandfathered in by Congress. As the Supreme Court has explained,
“rather than requiring the President to declare a new national emergency in order to continue
existing economic embargoes, such as that against Cuba, Congress decided to grandfather
existing exercises of the President’s ‘national emergency’ authorities.” Regan v. Wald, 468 U.S.
222, 228 (1984). “This grandfather provision also provided that ‘[t]he President may extend the
exercise of such authorities for one-year periods upon a determination for each such extension
that the exercise of such authorities with respect to such country for another year is in the
national interest of the United States.’” Id. at 229 (quoting 50 U.S.C. app. § 5 note). The CACR
promulgated in the 1960’s are still valid by virtue of these extensions as well as by Congress’
subsequent codification in 1996 of the economic embargo against Cuba, see 22 U.S.C.
§ 6032(h), though the regulations have been “alternately loosened and tightened in response to
specific circumstances,” Wald, 468 U.S. at 243.
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interest of any nature. See 31 C.F.R. § 515.201(a), (b). “Property” is expansively
defined to include not only tangible property, but also contracts, securities, and
services as well. 31 C.F.R. § 515.311(a). These provisions also apply to exports to
Cuba, whether from the U.S. or even through offshore dealing by a person or entity
subject to the CACR, because by definition a product exported to Cuba is one in
which Cuba or a Cuban national has an interest. In keeping with the regulations’
expansive definition of property, the ban on exports covers not only tangible
goods, but also “the exportation of securities, currency, checks, drafts and
promissory notes.” 31 C.F.R. § 515.405.
The CACR also specifically prohibit importation or other dealings in
merchandise that is of Cuban origin or is made from products of Cuban origin or
has been located in or transported from or through Cuba. 31 C.F.R. §§ 515.204,
515.410; see also 22 U.S.C. § 6040(a) (“The Congress notes that section 515.204
of title 31, Code of Federal Regulations, prohibits the entry of, and dealings
outside the United States in, merchandise that . . . is of Cuban origin; . . . is or has
been located in or transported from or through Cuba; or . . . is made or derived in
whole or in part of any article which is the growth, produce, or manufacture of
Cuba.”). Related to the ban on imports are restrictions placed on vessels that have
engaged in trade with Cuba. Subject to waiver for certain vessels engaging in
licensed or exempt trade, “[n]o vessel carrying goods or passengers to or from
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Cuba or carrying goods in which Cuba or a Cuban national has an interest may
enter a U.S. port with such goods or passengers on board.” 31 C.F.R. §
515.207(b). Moreover, no vessel that enters Cuba for trade may enter a U.S. port
for a period of 180 days from the date the vessel departed from Cuba. 31 C.F.R. §
515.207(a).
Notably, the CACR only place restrictions on any “[p]erson . . . subject to
the jurisdiction of the United States,” 50 U.S.C. app. § 5(b)(1), which is defined by
regulation to include U.S. corporations, their domestic and foreign subsidiaries,
and any foreign company owned or controlled by a U.S. citizen. 31 C.F.R. §
515.329. There is nothing in this record to suggest that Odebrecht has run afoul of
the CACR, because neither it nor any of its subsidiaries does any business with
Cuba. Significantly, the CACR do not sanction a U.S. company like Odebrecht for
the business activities of its foreign parent company or of a distant foreign affiliate
that shares a common parent company.
Congress has remained active in legislating with respect to Cuba, and the
current CACR reflect the additional sanctions and exceptions Congress has crafted
over many years. Thus, the Cuban Democracy Act of 1992, codified at 22 U.S.C.
§§ 6001-6010, ramped up economic sanctions against the Cuban government while
simultaneously permitting humanitarian relief to the Cuban people. See generally
22 U.S.C. §§ 6001-6002 (congressional findings and statements of policy).
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Additional comprehensive legislation came four years later, when Cuban MiG’s
shot down two U.S. civilian private planes in February 1996. See 22 U.S.C. §
6046 (Congressional findings condemning attack). Shortly thereafter, Congress
enacted the Cuban Liberty and Democratic Solidarity Act of 1996 (“Libertad Act”
or “Helms-Burton Act”), 22 U.S.C. §§ 6021-6091. One of the provisions of the
Act codifies the regulatory sanctions that were in place on March 1, 1996. See 22
U.S.C. § 6032(h) (“The economic embargo of Cuba, as in effect on March 1, 1996,
including all restrictions under part 515 of title 31, Code of Federal Regulations,
shall be in effect on March 12, 1996, and shall remain in effect, subject to section
6064 of this title.”). As a panel of this Court has previously explained, this
provision of the Helms-Burton Act “continues the embargo indefinitely and
effectively suspends the . . . requirement that the President revisit the embargo
each year.” See United States v. Plummer, 221 F.3d 1298, 1308 n.6 (11th Cir.
2000). Congress subsequently relaxed some of the Helms-Burton Act’s sanctions
in the Trade Sanctions Reform and Export Enhancement Act of 2000, codified at
22 U.S.C. §§ 7201-7209, which loosened the restrictions on exporting agricultural
and medical products to Cuba.
In short, the economic embargo against Cuba is pervasive. But the federal
regime also contains numerous exceptions, permitting certain kinds of transactions
with Cuba through licensing as well as through complete exemptions. One of the
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major exemptions is for published and informational materials, whether
commercial or otherwise, 31 C.F.R. § 515.206(a), which includes “[p]ublications,
films, posters, phonograph records, photographs, microfilms, microfiche, tapes,
compact disks, CD ROMs, artworks, news wire feeds, and other information and
informational articles,” 31 C.F.R. § 515.332. In addition, the Helms-Burton Act
authorizes the President to establish and implement an exchange of news bureaus
between the U.S. and Cuba if certain conditions are met. 22 U.S.C. § 6044.
Another substantial category of exceptions is for agricultural and medical
products. The Cuban Democracy Act provides that “[e]xports of medicines or
medical supplies, instruments, or equipment to Cuba shall not be restricted” except
under certain circumstances, such as where there is a reasonable probability that
the product will be used in human rights abuses, will be reexported, or could be
used in the production “of any biotechnological product.” 22 U.S.C. § 6004(c). In
addition, the Trade Sanctions Reform and Export Enhancement Act of 2000
prevents the President from imposing any unilateral agricultural sanction or
medical sanction against a foreign country or foreign entity unless Congress
approves it, again subject to certain exceptions. 22 U.S.C. §§ 7202, 7203. The
statute also terminated any existing unilateral agricultural or medical sanction in
effect as of October 28, 2000. Id. The statute does provide, however, that any
export of agricultural commodities, medicine or medical devices to Cuba must be
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done pursuant to 1-year licenses issued by the United States Government. Id. §
7205(a). Moreover, the exemption applies only to exports to Cuba, and does not
affect the ban on importation of goods from Cuba. Id. § 7208. The statute also
directs the Secretary of the Treasury to promulgate regulations providing for
general licenses to travel to, from, or within Cuba for the marketing and sale of
agricultural and medical goods. Id. § 7209(a); accord 31 C.F.R. §§ 515.533(e),
515.560 (provisions of CACR authorizing travel and travel-related transactions
incident to sales of agricultural commodities, medicine, or medical devices).
A final and important exception from the Cuba sanctions is for
telecommunications services. The Cuban Democracy Act permits
telecommunications services between the United States and Cuba, and authorizes
telecommunications facilities as may be necessary “to provide efficient and
adequate telecommunications services between the United States and Cuba.” 22
U.S.C. § 6004(e)(1), (2). It does not authorize, however, any investment by a
United States person in a domestic telecommunications network within Cuba. Id.§ 6004(e)(5). The CACR further authorize U.S. telecommunications providers to
engage in all transactions incident to the provision of telecommunications services
or satellite radio or television services between the United States and Cuba. 31
C.F.R. § 515.542. The regulations also authorize persons or entities covered by
the regulations to enter into and pay for contracts with non-Cuban
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telecommunications providers to provide telecommunications services to
individuals within Cuba, so long as the Cuban individuals receiving the services
are not members of the Cuban government. 31 C.F.R. § 515.542(c). As with the
agricultural and medical exceptions, the CACR also authorize travel and travel-
related expenses in connection with the marketing, sale, and provision of
telecommunications services. 31 C.F.R. § 515.533(f).
We do not labor on these points to comment on the wisdom or efficacy of
the federal Cuban sanctions regime or its exceptions, but rather simply to show that
the executive branch has considerable authority and discretion in the field of
Cuban sanctions, and has actively exercised that authority, just as Congress has
actively legislated. Federal policy towards Cuba is long-standing, it is nuanced, it
is highly calibrated, and it is constantly being fine-tuned. It is designed to sanction
strongly the Castro regime while simultaneously permitting humanitarian relief and
economic transactions that will benefit the Cuban people. When the State of
Florida promulgated the Cuba Amendment, it plainly was not operating in an area
where the federal government has been asleep at the switch.
2.
It is against this substantial backdrop of federal law that Governor Rick
Scott, on May 1, 2012, signed into law the Committee Substitute for Committee
Substitute for House Bill 959, which is codified at Chapter 2012-196, § 2, Laws of
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Florida. More commonly known as the “Cuba Amendment,” this law provides in
relevant part that a company “engaged in business operations in Cuba or Syria, is
ineligible for, and may not bid on, submit a proposal for, or enter into or renew a
contract with an agency or local governmental entity for goods or services of $1
million or more.” Fla. Stat. § 287.135(2). 2 In other words, the law cuts off access
to Florida’s substantial public contracting market, which is worth some $8 billion a
year at the state level alone, not including local government contracts. The Cuba
Amendment’s effective date was July 1, 2012, although the district court’s
preliminary injunction was entered before that date and has prevented the law from
being enforced.
Each crucial term in the state statute is defined broadly. “Business
operations” means “engaging in commerce in any form in Cuba . . ., including, but
not limited to, acquiring, developing, maintaining, owning, selling, possessing,
leasing, or operating equipment, facilities, personnel, products, services, personal
property, real property, military equipment, or any other apparatus of business or
commerce.” Id. § 287.135(1)(b). And most notably for our purposes, a
“company” is defined as any “entity or business association, including all wholly
owned subsidiaries, majority-owned subsidiaries, parent companies, or affiliates of
such entities or business associations, that exists for the purpose of making profit.”
2
The Cuba Amendment’s application to companies doing business in Syria has not been
challenged in this case, and is not before us on appeal.
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Fla. Stat. § 215.473(c) (emphases added). In other words, as the district court aptly
summarized, “the Cuba Amendment effectively encompasses domestic companies
with no connection to Cuba other than by proxy.” Although neither Odebrecht nor
any subsidiary of Odebrecht does business in Cuba, the Cuba Amendment applies
to Odebrecht, because Odebrecht has distant foreign affiliates -- COI Overseas Ltd.
and Companhia de Obras e Infra-Estrutura -- that share a common parent company
with Odebrecht and that are involved in a project to expand the Port of Mariel in
Cuba.
The broad reach of the Cuba Amendment and its applicability to Odebrecht
are not in dispute. The Florida State Board of Administration’s own preliminary
list estimates that the Cuba Amendment applies to 238 companies that the State
invests in, including “major airlines, banks, pharmaceuticals and oil companies.”
Nor is it seriously in dispute that the purpose of the Cuba Amendment is to
use the lever of access to Florida’s $8 billion-a-year public contracting market to
exert additional economic pressure on the Cuban government and to influence
American foreign policy. Governor Scott acknowledged as much when he signed
the Cuba Amendment into law, stating in a letter to Florida Secretary of State Ken
Detzner that the Cuba Amendment “demonstrates Florida’s commitment to
spreading political and economic freedom in Cuba” and that “[i]t is imperative that
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Florida and the United States continue to place economic pressure” on the Cuban
government.
The Cuba Amendment is enforced through the public bidding process. “At
the time a company submits a bid or proposal for a contract or before the company
enters into or renews a contract with an agency or governmental entity for goods or
services of $1 million or more, the company must certify . . . that it does not have
business operations in Cuba . . . .” Fla. Stat. § 287.135(5). If a company files a
false certification, it is subject to a “civil penalty equal to the greater of $2 million
or twice the amount of the contract” and it becomes “ineligible to bid on any
contract with an agency or local governmental entity for 3 years.” Id. §
287.135(5)(a)(1)-(2). The civil penalty is enforced by the agency or local
governmental entity that is a party to the contract; there is no private right of
enforcement by unsuccessful bidders or by “any other person other than the agency
or local governmental entity.” Id. § 287.135(6).
Finally, we note that foreign governments have complained to the United
States about the Cuba Amendment, both prior to and following its enactment.
Most notably, Canada and Brazil, Florida’s two largest foreign trading partners,
both have protested the Cuba Amendment. For instance, the office of the Canadian
ambassador to the United States placed a phone call to the Florida Chamber of
Commerce, expressing concern that the law would affect a slew of Canadian
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companies that work in both Florida and Cuba. The Brazilian Minister of
Development, Industry, and Trade lodged a similar note with the United States
Commerce Secretary, John Bryson, conveying Brazil’s “deep concern” with the
adverse effects of the Cuba Amendment, in particular its effects on the “growing
bilateral trade” between the United States and Brazil.
Several parties to the World Trade Organization (“WTO”), including the
European Union, Canada, Norway, Switzerland, and Singapore, also expressed
concern that the Cuba Amendment conflicts with the United States’ commitments
under the Agreement on Government Procurement. WTO, Committee on
Government Procurement, Minutes of the Formal Meeting of 18 July 2012 ¶¶ 25-
37. The WTO Meeting took place after the district court entered its preliminary
injunction, but the EU “sought general information from the United States on the
Florida law, including relevant references and information on the on-going court
proceedings regarding the validity of the law, in particular in regard to the potential
expiry of the injunction” and reiterated that it “wished to be informed and updated
about any changes regarding the situation, on a regular basis.” Id. ¶¶ 27, 34. Other
parties expressed similar sentiments. E.g. id. ¶¶ 29-30 (statements of Canada and
Norway).
B.
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The briefest summary of both the federal and state laws now before us
reveals the obvious, direct and apparent conflict between them. Our analysis is
guided in no small measure by the unanimous judgment of the Supreme Court in
Crosby v. National Foreign Trade Council, 530 U.S. 363 (2000). At issue in
Crosby was the constitutionality of a Massachusetts law that, like the State of
Florida, prohibited state agencies from purchasing goods or services from any
person or entity doing business with Burma, with a few exceptions for companies
that are in Burma solely to report the news or to provide international
telecommunications goods or services or medical supplies. 530 U.S. at 367.3
Three months after the Massachusetts law was passed, Congress passed a statute
imposing a set of mandatory and conditional sanctions on Burma. Id. at 368. The
federal statute banned “all aid to the Burmese Government except for humanitarian
assistance, counternarcotics efforts, and promotion of human rights and
democracy.” Id. It also required U.S. representatives to international financial
institutions to vote against loans or other assistance to or for Burma, and it cut off
entry visas to Burmese government officials unless required by treaty or to staff the
Burmese mission to the United Nations. Id. The statute delegated to the President
3
The Cuba Amendment does not contain these limited exceptions. Indeed, the United States
Telecom Association has filed an amicus brief in support of Odebrecht, which points out that the
federal sanctions regimes for state sponsors of terrorism -- Iran, Syria, Sudan, and Cuba -- all
include exemptions for the provision of international telecommunications services and that the
Cuba Amendment therefore punishes what the federal law expressly permits. See Br. for United
States Telecom Association as Amicus Curiae at 18-25.
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the authority to end the sanctions once he “determines and certifies to Congress
that Burma has made measurable and substantial progress in improving human
rights practices and implementing democratic government.” Id. The statute also
empowered the President to impose further sanctions under certain conditions and
directed the President to develop a comprehensive, multilateral strategy to bring
democracy to, and improve quality of life and human rights practices in Burma.
Id. at 369. President Clinton exercised the authority granted him by the statute and
issued an executive order imposing further sanctions on Burma, prohibiting “new
investment” in Burma by U.S. persons or entities and “generally incorporat[ing]
the exceptions and exemptions addressed in the statute.” Id. at 370.
It was against this federal backdrop that the Supreme Court scrutinized the
Massachusetts law. Justice Souter’s opinion for seven of the justices 4 concluded
that “[b]ecause the state Act’s provisions conflict with Congress’s specific
delegation to the President of flexible discretion, with limitation of sanctions to a
limited scope of actions and actors, and with direction to develop a comprehensive,
multilateral strategy under the federal Act, it is preempted, and its application is
unconstitutional, under the Supremacy Clause.” Id. at 388. The Court found that
the state law undermined the purpose and natural effect of at least three provisions
of the federal law: “its delegation of effective discretion to the President to control
4
Justice Scalia, joined by Justice Thomas, concurred in the judgment only. See 530 U.S. at 388-
391 (Scalia, J., concurring).
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economic sanctions against Burma, its limitation of sanctions solely to United
States persons and new investment, and its directive to the President to proceed
diplomatically in developing a comprehensive, multilateral strategy toward
Burma.” Id. at 373-74. In other words, the state law weakened the President’s
discretion to calibrate economic sanctions against Burma using the authority
conferred by Congress, and also displaced the President’s exercise of that
discretion by punishing conduct that the federal law permits and exceeding the
“specific range” of pressure Congress intended to impose against the Burmese
Government. Id. at 377.
All of the concerns animating the Supreme Court’s decision in Crosby are
present here -- and to a far greater degree. Undeniably, the Cuba Amendment
conflicts with federal law in (at least) three ways: (1) the Cuba Amendment sweeps
more broadly than the federal regime does, punishing companies like Odebrecht
that do not run afoul of the federal Cuban sanctions and penalizing economic
conduct that the federal law expressly permits; (2) the Cuba Amendment has its
own substantial penalties that go beyond the federal sanctions; and (3) the Cuba
Amendment undermines the substantial discretion Congress has afforded the
President both to fine-tune economic sanctions and to pursue multilateral strategies
with Cuba. We discuss each in turn.
1.
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The Trading with the Enemy Act, which provides the statutory basis for the
Cuban Assets Control Regulations, only applies to a “[p]erson . . . subject to the
jurisdiction of the United States,” 50 U.S.C. app. § 5(b)(1). The CACR further
define that term as follows:
The term “person subject to the jurisdiction of the United States”
includes:
(a) Any individual, wherever located, who is a citizen or resident of
the United States;
(b) Any person within the United States as defined in § 515.330
[which, in relevant part, means a “person actually within the United
States,” 31 C.F.R. § 515.330(b)];
(c) Any corporation, partnership, association, or other organization
organized under the laws of the United States or of any State,
territory, possession, or district of the United States; and
(d) Any corporation, partnership, association, or other organization,
wherever organized or doing business, that is owned or controlled by
persons specified in paragraphs (a) or (c) of this section.
31 C.F.R. § 515.329. The CACR thus apply to the following groups: U.S. citizens
or residents, wherever located; any person located in the United States; any U.S.
corporation; any corporation, wherever located, that is owned or controlled by a
U.S. citizen or resident; and any corporation, wherever located, owned or
controlled by a U.S. corporation (i.e. a foreign subsidiary of a U.S. corporation).5
5
The statutes relating to Cuba do not have a materially different scope in terms of the entities
covered. The Cuban Democracy Act’s prohibition on licensing import or export transactions
between U.S.-owned or controlled foreign firms and Cuba, 22 U.S.C. § 6005(a)(1), explicitly
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None of the federal sanctions reach as far as the Cuba Amendment. The
Amendment applies to any “company” that is “engaged in business operations in
Cuba.” Fla. Stat. § 287.135(2). Critically, a “company” for purposes of the Cuba
Amendment is actually an entire corporate network, because it covers any “entity
or business association, including all wholly owned subsidiaries, majority-owned
subsidiaries, parent companies, or affiliates of such entities or business
associations, that exists for the purpose of making profit.” Fla. Stat. § 215.473(c)
(emphases added).
The Cuba Amendment plainly sweeps further than the federal regime
because it imposes a penalty on a U.S. corporation like Odebrecht that does not
itself do business with Cuba, but has a foreign parent company that does business
with Cuba through an unrelated foreign subsidiary. Or, in simpler terms, the Cuba
Amendment penalizes U.S. companies for the business activities of their foreign
parents or their foreign affiliates, no matter how remote the connection. This
squarely conflicts with the federal regime, which only sanctions U.S. companies
for their own actions or the actions of their own subsidiaries.
cross-references the CACR provision on the subject, which applies to “U.S.-owned or controlled
firms in third countries,” 31 C.F.R. § 515.559. Similarly, in the Libertad Act there are various
provisions that apply to a “United States national,” which is defined by the statute as “any United
States citizen” or “any other legal entity which is organized under the laws of the United States,
or of any State, the District of Columbia, or any commonwealth, territory, or possession of the
United States, and which has its principal place of business in the United States.” 22 U.S.C. §
6023(15). In other words, U.S. citizens and U.S. corporations.
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The Cuba Amendment sweeps more broadly than the federal regime not
only in the entities covered, but also in the conduct penalized. As we’ve noted, the
federal regime, through licenses and exemptions, carves out from the Cuban
sanctions certain categories of transactions with Cuba that are designed to support
the Cuban people. These exceptions include the export to Cuba of published and
informational material, agricultural commodities, drugs and medical devices, and
telecommunications services. The Cuba Amendment plainly conflicts with federal
law because it does not countenance any of the federal regime’s exceptions. Any
private company that engages in “business operations” in Cuba, or has a foreign
parent company or affiliate that does so, is subject to the Cuba Amendment’s
restrictions. And “business operations,” as defined in the Florida statute, means
“engaging in commerce in any form in Cuba.” Fla. Stat. § 287.135(1)(b)
(emphasis added). No exceptions, no carve-outs for certain goods, services or
transactions, no calibrated licensing system. The Cuba Amendment, in stark
contrast to the federal regime, penalizes any commerce with Cuba -- no ifs, ands,
or buts. Indeed, counsel for FDOT conceded in the district court that the Cuba
Amendment has “no such exceptions where we say that certain types of contractual
arrangements with Cuba would be accepted.”
Thus the Cuba Amendment again squarely conflicts with the more nuanced
federal regime. “Sanctions are drawn not only to bar what they prohibit but to
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allow what they permit, and the inconsistency of sanctions here undermines the
congressional calibration of force.” Crosby, 530 U.S. at 380. Simply put, the
Cuba Amendment conflicts with federal law “by penalizing individuals and
conduct that Congress has explicitly exempted or excluded from sanctions.” Id. at
378. This it may not do.
2.
The Cuba Amendment also conflicts with federal law because it imposes
additional penalties on those companies that are subject to the federal sanctions.
“Conflict is imminent when two separate remedies are brought to bear on the same
activity.” Crosby, 530 U.S. at 376 (internal quotation marks and alteration
omitted). The Trading with the Enemy Act establishes the penalties for violating
any of the federal Cuban sanctions. The statute provides for criminal penalties of
up to 20 years’ imprisonment and a $1,000,000 fine for a willful violation, and a
civil penalty of up to $50,000 for a violation. 50 U.S.C. app. § 16(a), (b)(1). Any
property that is the subject of a violation is subject to forfeiture in both the civil
and criminal contexts. Id. app. § 16(b)(2), (c). In addition, any transfer of property
in violation of the CACR is deemed null and void and cannot form the basis of an
interest in the subject property. 31 C.F.R. § 515.203.
The administrative enforcement process is detailed more fully in the CACR.
See 31 C.F.R. §§ 501.703 - 501.747. In addition, Appendix A to the CACR,
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entitled “Economic Sanctions Enforcement Guidelines,” “provides a general
framework for the enforcement of all economic sanctions programs administered
by the Office of Foreign Assets Control.” The guidelines detail a number of
possible administrative responses to an apparent violation, ranging from No Action
to Criminal Referral. 31 C.F.R. pt. 501 app. A, Part II (A)-(G). 6 Part III of the
guidelines sets forth general factors affecting the choice of which administrative
action to pursue, including willfulness, concealment, pattern of conduct, prior
notice, involvement of management, awareness of the violation, harm to the
sanctions program’s objectives, size of economic or other benefit conferred on the
violator, commercial sophistication of the violator, and so on. Id. app. A, Part III.
The Cuba Amendment plainly imposes additional penalties above and
beyond the federal regime. Prohibiting a company from bidding on state or local
contracts in Florida is a substantial punishment, especially when applied to
companies that may not even be in violation of the federal regime. And the
enforcement mechanism for this prohibition -- a “civil penalty equal to the greater
of $2 million or twice the amount of the contract” and a three year ban on public
contracting if a company files a false certification about its business relations with
Cuba, Fla. Stat. § 287.135(5)(a) -- is considerably greater than the federal regime’s
6
The possible actions listed in the guidelines are No Action, Request Additional Information,
Cautionary Letter, Finding of Violation, Civil Monetary Penalty, Criminal Referral, and Other
Administrative Actions (which include License Denial, Suspension, Modification, or
Revocation, or a Cease and Desist Order).
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civil penalty of up to $50,000. Indeed, the penalty is, at a minimum, twice as large
as the criminal fine for willful violations of the federal sanctions. The Cuba
Amendment thus stands in sharp contrast to the federal calibration of appropriate
penalties as well.
The Florida Department of Transportation concedes that the penalties
imposed by the Cuba Amendment are different, but claims they penalize different
conduct. FDOT argues that companies are not being punished for doing business
in Cuba, but rather for lying about it when they submit a false certification. This
purported distinction -- punishing the lie, not the trade conduct itself -- is
unpersuasive. It also fails to take into account that prohibiting companies like
Odebrecht from bidding on Florida public contracts in the first place is itself a
substantial punishment that exceeds the federal sanctions regime in both penalty
and reach. That punishment does not depend on any false certifications, only on
business relations with Cuba by a company or by its foreign parent or affiliate.
FDOT’s observation that the federal government also denounces the Castro regime
and designates Cuba as a state sponsor of terrorism, while undeniably true, is of
little help to the agency, because “[t]he fact of a common end hardly neutralizes
conflicting means.” Crosby, 530 U.S. at 379-80 (citing Gade, 505 U.S. at 103).
Choosing “the right degree of pressure to employ” against the Castro regime is a
“federal decision,” id. at 380, not a decision for the State of Florida.
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3.
The federal government has employed an extensive array of economic
sanctions against Cuba for almost 50 years. By any measure, the Cuban sanctions
embodied in federal law are far more extensive than the federal sanctions leveled
against Burma, which did not even exist at the time Massachusetts passed the
selective procurement law before the Supreme Court in Crosby. As we’ve noted,
Congress has passed numerous statutes, the executive branch has promulgated the
Cuban Assets Control Regulations, which are enforced by the Department of the
Treasury, and the President has enormous discretion to calibrate the sanctions
therein. Significantly, the federal statutes also afford the President, in consultation
with Congress, the discretion to waive sanctions and even terminate the embargo
as Cuba transitions to a democratic government. See 22 U.S.C. §§ 6007, 6064.
The considerable discretion afforded the President has been amply
evidenced by the periodic tightening and loosening of sanctions related to travel,
enforcement levels, agricultural and medical supplies, remittances, and
humanitarian aid. In January 1999, President Clinton loosened some sanctions,
announcing measures to support the Cuban people such as broadening cash
remittances to Cuba to all U.S. residents, not just those with close relatives in
Cuba; expanding direct flights to Cuba beyond just Miami; and loosening
restrictions on travel to Cuba for certain travelers, such as professional researchers
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and those involved in certain educational, religious, and sports activities. See Cuba
Issues at 31. President Bush, on the other hand, emphasized stronger enforcement
of economic sanctions and tightened the restrictions on travel, remittances, and
humanitarian gift parcels to Cuba. See id. at 31-32. President Obama has, in turn,
relaxed the restrictions on travel and remittances, allowing, for example, religious
organizations to sponsor religious travel to Cuba and accredited institutions of
higher education to sponsor travel to Cuba as well. President Obama has also
allowed any U.S. person to send remittances to non-family members in Cuba to
support private economic activity. See id. at 33-36. In other words, President
Obama has largely restored President Clinton’s policies, which had been tightened
in the interim by President Bush. See id. at 36 (“In most respects, [President
Obama’s] new measures appear to be similar to policies that were undertaken by
the Clinton Administration in 1999, but were subsequently curtailed by the Bush
Administration in 2003 and 2004.”). Plainly, Congress has reposed considerable
power in the President to adjust our Nation’s sanctions against the Cuban
Government.
It is hard to dispute that the Cuba Amendment undermines the President’s
capacity to fine-tune these sanctions and to direct diplomatic relations with Cuba.
“It is not merely that the differences between the state and federal Acts in scope
and type of sanctions threaten to complicate discussions; they compromise the very
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capacity of the President to speak for the Nation with one voice in dealing with
other governments.” Crosby, 530 U.S. at 381. The President’s “maximum power
to persuade rests on his capacity to bargain for the benefits of access to the entire
national economy without exception for enclaves fenced off willy-nilly by
inconsistent political tactics.” Id. (emphasis added). The Cuba Amendment
creates a large “enclave[]” that the President can no longer offer in bargaining with
Cuba: access to Florida’s public contracting market, worth $8 billion a year at the
state level alone, not counting local government contracts. Moreover, just like in
Crosby, “the record is replete with evidence to answer any skeptics” about the
undermining of national policy. Id. at 382. The negative foreign response to the
Cuba Amendment has been similar to the negative foreign response to
Massachusetts’s Burma law. In Crosby, the Supreme Court noted that the EU and
Japan diplomatically protested the Massachusetts law and lodged formal
complaints in the WTO. Id. at 382-83. Here, as we’ve noted, numerous foreign
powers, including Canada, Brazil, the European Union, and Norway have all
lodged protests against the Cuba Amendment through various diplomatic channels
and through the WTO.
The conflict between state and federal law is all the more apparent because
the President is acting at the zenith of his power when he exercises the discretion
afforded him by Congress to direct our Nation’s economic policy towards Cuba.
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As Justice Jackson observed over sixty years ago, “[w]hen the President acts
pursuant to an express or implied authorization of Congress, his authority is at its
maximum, for it includes all that he possesses in his own right plus all that
Congress can delegate.” Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579,
635 (1952) (Jackson, J., concurring). Moreover, the President’s power in the area
of foreign relations is already among his most substantial, because in the “vast
external realm” of foreign affairs, “with its important, complicated, delicate and
manifold problems, the President alone has the power to speak or listen as a
representative of the nation.” United States v. Curtiss-Wright Exp. Corp., 299 U.S.
304, 319 (1936). Thus, we are especially mindful of state laws that might
undermine the exercise of the President’s large discretion in this area.
Plainly, the Cuba Amendment is such a law. It exceeds the scope of the
federal Cuban sanctions in numerous ways, as we have explained. Moreover, the
federal laws related to Cuba demonstrate a “plentitude of Executive authority” to
“exercise economic leverage” against the Castro regime. Crosby, 530 U.S. at 375-
76. It was precisely this “plentitude of Executive authority” that the Supreme
Court found “controls the issue of preemption,” because “[t]he President has been
given this authority not merely to make a political statement but to achieve a
political result, and the fullness of his authority shows the importance of the
congressional mind of reaching that result.” Id. at 376. The federal laws empower
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the President to engage in a multilateral approach to Cuba, with economic
sanctions designed to weaken the Castro regime but with notable exceptions to
support the Cuban people. The enforcement of the Cuba Amendment overrides the
nuanced federal policy and creates a large enclave that the President can no longer
access. As the Supreme Court explained, “[i]t is simply implausible that Congress
would have gone to such lengths to empower the President if it had been willing to
compromise his effectiveness by deference to every provision of state statute or
local ordinance that might, if enforced, blunt the consequences of discretionary
Presidential action.” Id. As we see it, the Cuba Amendment “stands as an obstacle
to the accomplishment and execution of the full purposes and objectives of
Congress” in its delegation of discretionary authority to the President, as well as its
own legislation on Cuban sanctions, including the Cuban Democracy Act and the
Helms-Burton Act. Id. at 373 (quoting Hines, 312 U.S. at 67).
C.
The State tries to get around the Supreme Court’s controlling precedent and
the clear conflict between state and federal law in a few ways. First, the
Department argues that the State’s choice of how to allocate and spend public
funds is a basic aspect of its sovereignty that should be immune or nearly immune
from judicial review and not amenable to preemption analysis. But the preempted
state law before the Supreme Court in Crosby was also a spending law involving
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the use of state funds in public contracting. Indeed, this exact argument was
briskly rejected by the Court:
We add that we have already rejected the argument that a State’s
“statutory scheme . . . escapes pre-emption because it is an exercise of
the State’s spending power rather than its regulatory power.”
Wisconsin Dept. of Industry v. Gould, Inc., 475 U.S. 282, 287, 106
S.Ct. 1057, 89 L.Ed.2d 223 (1986). In Gould, we found that a
Wisconsin statute debarring repeat violators of the National Labor
Relations Act, 29 U.S.C. § 151 et seq., from contracting with the State
was preempted because the state statute’s additional enforcement
mechanism conflicted with the federal Act. 475 U.S., at 288–289, 106
S.Ct. 1057. The fact that the State “ha[d] chosen to use its spending
power rather than its police power” did not reduce the potential for
conflict with the federal statute. Ibid.530 U.S. at 373 n.7 (alterations in original).
The Department also says that our own post-Crosby decision in Faculty
Senate of Florida International University v. Winn, 616 F.3d 1206 (11th Cir.
2010), is controlling. In Faculty Senate, a panel of this Court upheld portions of
Florida’s Travel Act, Fla. Stat. §§ 112.061(3)(e), 1011.90(6), which restricted state
universities from spending funds given to them by the State on travel to a country
designated by the United States Department of State as a state sponsor of terrorism,
which includes Cuba. The panel “presume[d] that the State can validly legislate on
spending and on education matters,” but recognized that “these traditional state
concerns could be overridden” in the event of a clear conflict with federal law or
policy. 616 F.3d at 1208. However, the Florida statute’s “brush with federal law
and the foreign affairs of the United States [was] too indirect, minor, incidental,
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and peripheral to trigger the Supremacy Clause’s-undoubted-overriding power.”
Id. Given “the lack of the conflict’s clarity and severity,” the strength of Florida’s
interest in managing its own education spending and funding of its employees’
travel was sufficient to overcome any nebulous conflict with federal policy. Id. at
1211.
We distinguished Crosby because Florida, in passing its Travel Act, did not
“unilaterally select[] by name a foreign country on which it ha[d] declared, in
effect, some kind of economic war.” Id. at 1210. In addition, Florida’s law neither
prohibited nor penalized anyone for traveling anywhere. See id. Importantly,
Florida’s law also did “not attempt to prohibit, or even to obstruct, trading broadly
by anyone with anyone.” Id. Although not willing to hold it relevant, the panel
also noted that the economic impact was likely minimal. See id. & n.10 (observing
that, from 2001-2006, the Cuban Research Institute at Florida International
University spent $125,511 on direct travel expensed to and from Cuba, and
remarking that such sums likely “are not big enough to be of serious concern on
the world stage”).
Faculty Senate is readily distinguishable, for all of the same reasons the
panel in that case distinguished it from Crosby. The Cuba Amendment creates
more than a minor or incidental brush with federal law. Unlike in Faculty Senate,
the Cuba Amendment absolutely involves Florida “select[ing] by name a foreign
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country” -- Cuba -- and imposing an economic sanction on companies that do
business there and even on companies that are only distantly affiliated with
companies that do business there. Id. at 1210. The Cuba Amendment absolutely is
intended to “prohibit” or “obstruct” domestic and foreign companies’ trade with
Cuba. Id.; see also id. at 1209 (noting that “[t]he obvious idea” of the state law at
issue in Crosby “was to reduce trade across-the-board with Burma”). And
Florida’s $8 billion-a-year public contracting market absolutely is “big enough to
be of serious concern on the world stage.” Id. at 1210 n.10. Indeed, it is four times
the size of the public contracting market at issue in Crosby, and several foreign
powers have already expressed serious concerns, even though the Amendment has
never gone into operation.
In short, Odebrecht has demonstrated a substantial likelihood of success on
its claim that the Cuba Amendment is preempted by federal law. The Cuba
Amendment conflicts with federal law in several ways, and undermines the full
purposes and objectives of the extensive and nuanced federal Cuban sanctions
regime. It therefore runs afoul of the Supremacy Clause, U.S. Const. art. VI, cl. 2,
and must yield to federal law. 7
7
Because we hold that the Cuba Amendment is unconstitutional on grounds of conflict
preemption, we have no occasion to separately address Odebrecht’s claims that the statute
violates principles of field preemption, violates the Foreign Affairs Power, and violates the
Foreign Commerce Clause. Cf. Crosby, 530 U.S. at 374 n.8 (“Because our conclusion that the
state Act conflicts with federal law is sufficient to affirm the judgment below, we decline to
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III.
In addition to showing a substantial likelihood of success on the merits,
Odebrecht was also required to demonstrate that it would suffer irreparable harm
absent an injunction, that the harm would exceed the harm suffered by the State if
the injunction is issued, and that an injunction would not disserve the public
interest. See Grizzle, 634 F.3d at 1320; N. Am. Med., 522 F.3d at 1217.
The Department says that Odebrecht failed on each count. It claims that
Odebrecht has not successfully bid on a contract with FDOT in fifteen years and
thus is not a serious contender in the bidding process, that Odebrecht has failed to
identify with particularity how the Cuba Amendment has affected its ability to
form partnerships and retain employees, that the people of Florida have a strong
interest in the enforcement of the Cuba Amendment that outweighs any harm to
Odebrecht, and that enforcement of the Cuba Amendment is in the public interest
because it does not impose upon the federal government’s foreign policy towards
Cuba. These arguments miss the mark.
For starters, Odebrecht would suffer irreparable harm absent an injunction.
“The basis of injunctive relief in the federal courts has always been irreparable
harm and inadequacy of legal remedies.” Ne. Fla. Chapter of Ass’n of Gen.
Contractors of Am. v. City of Jacksonville, 896 F.2d 1283, 1285 (11th Cir. 1990)
speak to field preemption as a separate issue, or to pass on the First Circuit’s rulings addressing
the foreign affairs power or the dormant Foreign Commerce Clause.” (citation omitted)).
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(quoting Sampson v. Murray, 415 U.S. 61, 88 (1974)). The injury must be actual
and imminent, not remote or speculative. Id. Odebrecht has met this standard. It
alleges three harms that are both actual and imminent: (1) the loss of its right to bid
on public contracts, including the FDOT contracts that it has been prequalified to
bid on, up to the sizable amount of $1.8 billion; (2) the loss of revenues and profits
from contracts it can no longer bid for; and (3) interference with its ability to
partner with other firms and retain employees. The substantial nature of the first
harm cannot be overstated. Around 80% of Odebrecht’s revenues over the years
have come from public contracts in the State of Florida, and 100% of its revenues
in 2011 did so.
FDOT’s only response is to say that Odebrecht has not successfully bid on a
FDOT contract in fifteen years. The argument is flawed. First of all, FDOT does
not explain why we should look only at FDOT contracts, as opposed to public
contracts more broadly. The Cuba Amendment applies to all state agencies as well
as all county and municipal governments in the State of Florida. See Fla. Stat. §
287.135(1)(c), (2). And the record demonstrates that Odebrecht is doing
substantial business in the State of Florida. As we’ve noted, in 2011, 100% of
Odebrecht’s revenues, amounting to over $200 million, were derived from state
and local public contracts in Florida. Indeed, in the last ten years, Odebrecht and
its joint venture partners have completed or are still in the process of completing
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nine major contracts, worth a total of $3.3 billion, with Florida state agencies and
local governments. One of those major contracts came as recently as May 2012,
when Broward County awarded an Odebrecht joint venture a $226 million runway
expansion project at the Fort Lauderdale Airport. There is no dispute that if the
Cuba Amendment were in effect, Odebrecht would not have been able to bid on
any of these contracts. In other words, if the Cuba Amendment were enforced
against Odebrecht, almost its entire revenue stream would simply evaporate,
causing Odebrecht substantial economic harm.
Moreover, even if we limited our analysis to the Florida Department of
Transportation alone, the record shows that Odebrecht intended to bid on or pursue
several high-value FDOT contracts, and that FDOT had prequalified it to do so, up
to $1.8 billion. The contracts Odebrecht intended to bid on include an estimated-
$265 million project on the Palmetto Expressway and an estimated-$870 million
project on Interstate 75. Odebrecht’s loss of an opportunity to bid on contracts like
these is itself an injury, although Odebrecht is not assured of actually winning any
given contract. As the Supreme Court has recognized in the context of standing to
bring an equal protection challenge, “the ‘injury in fact’ is the inability to compete
on an equal footing in the bidding process, not the loss of a contract.” Ne. Fla.
Chapter of Associated Gen. Contractors of Am. v. City of Jacksonville, 508 U.S.
656, 666 (1993); accord id. (“To establish standing, therefore, a party . . . need
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only demonstrate that it is able and ready to bid on contracts and that a
discriminatory policy prevents it from doing so on an equal basis.”). Although it
arose in a slightly different context, we find the Supreme Court’s reasoning
instructive. Odebrecht’s intent and ability to bid on FDOT and other public
contracts are neither speculative nor remote, Odebrecht would be harmed by the
loss of an opportunity to bid on these contracts, and thus, even if we artificially
limited our focus to the Florida Department of Transportation alone, Odebrecht
still would be actually injured if the Cuba Amendment were to go into effect.
These harms to Odebrecht absent an injunction are not only actual and
imminent, they are also irreparable. Odebrecht has no monetary recourse against a
state agency like FDOT because of the Eleventh Amendment. “[A]bsent waiver by
the State or valid congressional override, the Eleventh Amendment bars a damages
action against a State in federal court.” Kentucky v. Graham, 473 U.S. 159, 169
(1985). This includes damages claims against State officials in their official
capacity. Id. It is also clear that there has been no waiver or congressional
override; indeed, the Supreme Court “has held that § 1983 was not intended to
abrogate a State’s Eleventh Amendment immunity.” Id. at 169 n.17 (citing Quern
v. Jordan, 440 U.S. 332 (1979); Edelman v. Jordan, 415 U.S. 651 (1974)). Ex
Parte Young suits like the one brought here have never been held to permit
retrospective monetary damages. See Fla. Ass’n of Rehabilitation Facilities, Inc.
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v. Fla. Dep’t of Health & Rehabilitative Servs., 225 F.3d 1208, 1220 (11th Cir.
2000) (“[T]he Eleventh Amendment does not generally prohibit suits against state
officials in federal court seeking only prospective injunctive or declaratory relief,
but bars suits seeking retrospective relief such as restitution or damages.”). In the
context of preliminary injunctions, numerous courts have held that the inability to
recover monetary damages because of sovereign immunity renders the harm
suffered irreparable. See, e.g., Chamber of Commerce v. Edmondson, 594 F.3d
742, 770-71 (10th Cir. 2010) (“Imposition of monetary damages that cannot later
be recovered for reasons such as sovereign immunity constitutes irreparable
injury.”); Iowa Utils. Bd. v. FCC, 109 F.3d 418, 426 (8th Cir. 1996) (“The threat of
unrecoverable economic loss . . . qualif[ies] as irreparable harm.”); ABC Charters,
Inc. v. Bronson, 591 F. Supp. 2d 1272, 1310 (S.D. Fla. 2008) (“In the case at bar,
Plaintiffs face serious economic harm as a result of the Travel Act Amendments
and cannot sue the state of Florida for damages. Therefore, this harm is irreparable
as a matter of law.”).
The other equitable requirements are easily satisfied. Odebrecht would
suffer substantial injury in the loss of its ability to bid on state and local public
contracts throughout Florida if the Cuba Amendment were to go into effect. On
the flip side, the State is not harmed much, if at all, by the injunction. Indeed, an
injunction against enforcement of the Cuba Amendment allows for greater
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competition in bidding, which decreases the State’s overall costs. The only harm
to the State is the more nebulous, not easily quantified harm of being prevented
from enforcing one of its laws. That harm is present every time the validity of a
state law is challenged, and it is far outweighed by the economic harm to
Odebrecht and other companies that would be prevented from bidding on public
contracts in Florida were the Cuba Amendment to go into effect.
Finally, and relatedly, the State’s alleged harm is all the more ephemeral
because the public has no interest in the enforcement of what is very likely an
unconstitutional statute. As a panel of this Court recently explained, “[f]rustration
of federal statutes and prerogatives are not in the public interest, and we discern no
harm from the state’s nonenforcement of invalid legislation.” United States v.
Alabama, 691 F.3d 1269, 1301 (11th Cir. 2012). In short, the injunction did not
disserve the public interest.
We have little difficulty concluding that Odebrecht has demonstrated a
substantial likelihood of success on its claim that the Cuba Amendment is
preempted by the extensive federal Cuban sanctions regime. The Amendment
reaches far beyond the federal law in numerous ways and undermines the
President’s exercise of the discretion afforded him by Congress to direct our
Nation’s economic policy towards Cuba. In addition, the equities strongly favor a
preliminary injunction prohibiting the enforcement of the Cuba Amendment.
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AFFIRMED.
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