958 F.3d 38
1st Cir.2020Background:
- Puerto Rico enacted Act No. 12 (2008) prompting PRPA to implement a cargo-scanning program; PRPA contracted Rapiscan (later assigned to S2) to scan inbound containerized cargo at the Port of San Juan.
- PRPA adopted Regulation 8067, created an Enhanced Security Fee (ESF) assessed to ocean freight carriers to offset scanning costs; Dantzler alleges carriers passed ESFs onto shippers.
- Regulation 8067 expired June 30, 2014; Puerto Rico Court of Appeals ordered PRPA to cease the program in October 2016, but plaintiffs allege ESFs continued to be assessed and collected.
- Dantzler (putative class of shippers) sued PRPA, Rapiscan, and S2 seeking disgorgement, §1983 relief (Fifth/Fourteenth Amendments, Commerce Clause), and Puerto Rico law restitution/unjust enrichment; district court dismissed some claims but allowed Commerce Clause and PR-law claims to proceed and rejected standing and immunity defenses in part.
- Defendants appealed the partial denial; the First Circuit reviewed Article III standing de novo and concluded Dantzler lacked constitutional standing because its alleged injury was indirectly caused by ocean carriers (third parties) and not redressable by relief against PRPA, Rapiscan, or S2.
- Court vacated the district court’s order and remanded for dismissal on jurisdictional grounds; it also noted (as an alternative point) that sovereign immunity likely shields PRPA for governmental inspection functions.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Article III standing (causation/redressability) against PRPA | Dantzler alleges it paid ESF-related costs (≈$150M) because carriers collected ESFs from shippers, so PRPA caused economic injury | ESFs were assessed to ocean carriers, not Dantzler; any pass-through to shippers depended on independent carrier decisions breaking causation; injunction/declaration may not redress injury | No standing: injury was indirect (dependent on third-party carriers), causation and redressability requirements not met; claims dismissed for lack of jurisdiction |
| Article III standing against Rapiscan and S2 | Dantzler contends Rapiscan/S2 participated in and benefited from the scanning scheme, so they are liable | Rapiscan/S2 only provided scanning services; they did not assess or collect ESFs, so harm is not fairly traceable to them | No standing: causal chain more attenuated; relief against Rapiscan/S2 would not redress Dantzler’s injury |
| Sovereign immunity for PRPA | Dantzler: PRPA is not an arm of the state and is not immune | PRPA: functions here (inspection/security/tax enforcement cooperation) are governmental and an arm-of-state should be immune | District court denied immunity; appellate court observed Grajales and related authority make immunity likely for governmental inspection functions and flagged this as an alternative basis supporting dismissal (but the decision rests on standing) |
Key Cases Cited
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (standing requires injury, causation, redressability)
- Simon v. Eastern Kentucky Welfare Rights Org., 426 U.S. 26 (1976) (injury and redressability cannot rest on speculative third-party decisions)
- Katz v. Pershing, LLC, 672 F.3d 64 (1st Cir. 2012) (economic loss can satisfy injury-in-fact but causation must be pleaded)
- Trailer Bridge v. Industria y Distribución de Alimentos, 797 F.3d 141 (1st Cir. 2015) (upholding scanning program as applied to carriers with access to facilities)
- Hochendoner v. Genzyme Corp., 823 F.3d 724 (1st Cir. 2016) (standing is a jurisdictional question reviewed de novo)
- Pérez-Kudzma v. United States, 940 F.3d 142 (1st Cir. 2019) (causation and redressability hinge on regulated third-party responses)
- Donahue v. City of Boston, 304 F.3d 110 (1st Cir. 2002) (examination of redressability per form of relief)
- Allen v. Wright, 468 U.S. 737 (1984) (attenuated chains of causation to third parties defeat standing)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standards: conclusions unsupported by factual allegations insufficient)
- Ammex, Inc. v. United States, 367 F.3d 530 (6th Cir. 2004) (no standing to challenge tax paid by supplier when injury depends on supplier’s pricing decisions)
- Grajales v. P.R. Ports Auth., 831 F.3d 11 (1st Cir. 2016) (analysis of when PRPA functions are governmental for sovereign immunity purposes)