989 F.3d 116
1st Cir.2021Background
- Indulac (state-created milk processor) is the sole producer of UHT (shelf-stable) milk in Puerto Rico; Suiza and Vaquería Tres Monjitas (VTM) produce competing fresh milk.
- Suiza and VTM litigated Puerto Rico milk-price regulation beginning in 2004, culminating in a 2013 settlement incorporated into a federal consent decree requiring a new Milk Price Order and deferring a regulatory-accrual surcharge until 2017.
- Indulac was an intervenor but not a signatory to the 2013 Agreement; the district court denied Indulac’s motion to alter the consent decree.
- ORIL issued Price Orders: Dec. 29, 2016 (reestablishing the accrual for fresh milk effective Jan. 1, 2017) and May 31, 2017 (extending the accrual to all fluid milk, including Indulac’s UHT product, effective June 1, 2017).
- Indulac sued in the Puerto Rico Court of First Instance (June 2017), alleging ORIL failed to follow Puerto Rico administrative procedures (notice, statutorily required hearings/market study/factors, and publication) and violated Puerto Rico due-process requirements.
- ORIL removed to federal court, invoking federal-question jurisdiction tied to the 2013 consent decree and the All Writs/Anti-Injunction Acts; the district court retained jurisdiction, dismissed Indulac’s complaint, and Indulac appealed. The First Circuit held no federal subject-matter jurisdiction and remanded the case to the Puerto Rico court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal courts have subject-matter jurisdiction over Indulac’s state-law challenge removed by ORIL | Indulac: claims arise under Puerto Rico law only; no federal question | ORIL: removal proper because dispute implicates enforcement of the federal consent decree and federal statutes (All Writs/Anti-Injunction Acts) | No federal jurisdiction; case must be remanded |
| Whether the prior federal consent decree and the district court’s retained jurisdiction authorize removal | Indulac: consent decree cannot convert a state-law claim into a federal cause of action | ORIL: retained jurisdiction to enforce the Agreement means federal court can hear challenges that affect compliance | Rejected; existence of a federal consent decree is a potential defense, but does not authorize removal |
| Whether the All Writs Act, Anti-Injunction Act, or ancillary/enforcement jurisdiction provide a basis for removal | Indulac: those statutes do not supply original jurisdiction required for removal | ORIL: All Writs/Anti-Injunction/ancillary jurisdiction permit federal protection of the consent decree, supporting removal | Rejected; All Writs and ancillary jurisdiction cannot confer original jurisdiction for removal (injunctive relief remains a separate possibility) |
| Whether the case satisfies embedded (federal-ingredient) federal-question jurisdiction (Grable test) | Indulac: no necessarily raised federal issue; claims are purely state-law procedural challenges | ORIL: dispute is intrinsically related to the federal Agreement and thus raises federal issues | Rejected; the case does not fall within the narrow, "special and small category" for embedded federal questions |
Key Cases Cited
- Metheny v. Becker, 352 F.3d 458 (1st Cir. 2003) (removal improper where state-law claim collaterally attacks a federal consent decree)
- Syngenta Crop Prot., Inc. v. Henson, 537 U.S. 28 (2002) (All Writs Act does not supply original jurisdiction to support removal)
- Rivet v. Regions Bank of La., 522 U.S. 470 (1998) (federal defense or attack on a federal judgment cannot justify removal)
- Caterpillar Inc. v. Williams, 482 U.S. 386 (1987) (a federal defense does not create federal-question jurisdiction)
- Grable & Sons Metal Prods. v. Darue Eng'g & Mfg., 545 U.S. 308 (2005) (test for when a state-law claim "necessarily raises" a substantial federal issue)
- Gunn v. Minton, 568 U.S. 251 (2013) (federal-ingredient jurisdiction is narrow)
- Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (1994) (limits and nature of ancillary/enforcement jurisdiction)
- Peacock v. Thomas, 516 U.S. 349 (1996) (ancillary jurisdiction may support certain enforcement proceedings)
- Hertz Corp. v. Friend, 559 U.S. 77 (2010) (federal courts must independently ensure subject-matter jurisdiction)