992 F. Supp. 2d 39
D.P.R.2013Background
- After nine years of litigation over milk-industry regulation, parties (VTM, Suiza, Puerto Rico Dept. of Agriculture/ORIL, Secretary of Justice on behalf of the Commonwealth) executed a Settlement Agreement on Oct. 29, 2013, which the District Court approved in an Amended Order and Judgment on Nov. 7, 2013.
- The Settlement Agreement obligated the Commonwealth (through creation of a Special Fund and direct payments) to make multi-year monetary contributions to a regulatory-accrual payout to compensate milk producers/processors and included an express clause that signatories "waive any defense they may have to the enforcement of this Agreement."
- Puerto Rico Dairy Farmers Association (PRDFA) and intervenor INDULAC objected and sought stays and appeals; the PRDFA's appeal to the First Circuit was pending and its request for a stay was denied.
- Defendants (Secretary of Agriculture and ORIL officials) and INDULAC moved under Rule 59(e) to alter or amend the Amended Order and Judgment and defendants also filed a notice of appeal, arguing the settlement could not waive Eleventh Amendment immunity and other legal defects.
- The Court examined the Settlement language, the Oct. 29 hearing transcript, subsequent executive action by the Governor (agreeing to fund farmer compensation via the Special Fund), and concluded the Commonwealth voluntarily agreed to expend public funds to implement the settlement.
- The Court denied the motions to alter/amend judgment, holding the Commonwealth waived Eleventh Amendment immunity by litigation conduct and by the clear language and signatories of the Settlement Agreement; it also noted INDULAC lacked standing to move to amend the judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Commonwealth waived Eleventh Amendment immunity by signing the Settlement Agreement | Settlement and its express waiver clause and implementation by executive actors create a waiver; plaintiffs rely on agreement language and performance | Defendants contend officials lacked intent/authority to waive sovereign immunity and settlement cannot be construed as such | Court: Waiver found — Commonwealth voluntarily agreed to expend public funds and signed express waiver; officials authorized to bind the Commonwealth (motion denied) |
| Whether the Secretary of Justice and other signatories had authority to waive the Commonwealth’s immunity | Plaintiffs: Secretary of Justice has statutory authority to represent and settle for the Commonwealth and expressly signed the Agreement | Defendants: Lack of intent or authority to waive Eleventh Amendment immunity | Court: Secretary of Justice has authority; his signature and statutory powers support waiver (waiver upheld) |
| Whether the Settlement is nonappealable or the government is judicially estopped from challenging its own agreement | Plaintiffs: Settlement terms declared to be incorporated into a final, unappealable judgment; doctrine of judicial estoppel/doctrine of one’s own acts bars reversal | Defendants: Seek to appeal various adverse orders and the Amended Judgment | Court: Emphasizes nonappealable provision and estoppel; government cannot undo what it agreed (appeal noted but waiver ruling stands) |
| Whether INDULAC had standing to move to alter the judgment | Plaintiffs: INDULAC is not a party and so lacks standing; its objections mirror PRDFA’s issues to be addressed separately | INDULAC: Argued Settlement violated Eleventh Amendment and would prejudice industry participants | Court: INDULAC lacks standing to seek amendment; its substantive Eleventh Amendment arguments addressed but motion denied |
Key Cases Cited
- Consejo de Salud de la Comunidad de la Playa de Ponce, Inc. v. González-Feliciano, 695 F.3d 83 (1st Cir. 2012) (discusses state waiver of Eleventh Amendment and waiver doctrines)
- New Hampshire v. Ramsey, 366 F.3d 1 (1st Cir. 2004) (litigation conduct can effect waiver of Eleventh Amendment; relation to judicial estoppel)
- Frew v. Hawkins, 540 U.S. 431 (2004) (consent decrees enforceable under Ex parte Young; consent decrees combine contract and judicial-decree characteristics)
- Lapides v. Board of Regents, 535 U.S. 613 (2002) (state attorney general may waive Eleventh Amendment by voluntarily invoking federal court jurisdiction)
- Firefighters v. Cleveland, 478 U.S. 501 (1986) (consent decrees embody party agreements and are enforceable as judicial decrees)
- Gunter v. Atlantic Coast Line R.R. Co., 200 U.S. 273 (1906) (state waiver principles via attorney-general conduct)
- Rufo v. Inmates of Suffolk County Jail, 502 U.S. 367 (1992) (rules on modifying consent decrees)
- Arecibo Community Health Care, Inc. v. Commonwealth of Puerto Rico, 270 F.3d 17 (1st Cir. 2001) (state official’s authority to waive sovereign immunity limited to statutory/constitutional authorization)
- Tenoco Oil Co. v. Consumer Affairs, 876 F.2d 1013 (1st Cir. 1989) (use of surrogate companies for financial metrics must fit the local context)