RAFAEL LÓPEZ-SANTOS and ERASMO DOMENA-RÍOS, Plaintiffs, Appellants, v. METROPOLITAN SECURITY SERVICES, Defendant, Appellee.
No. 18-1694
United States Court of Appeals For the First Circuit
July 23, 2020
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO [Hon. Francisco A. Besosa, U.S. District Judge]
Before Thompson, Lipez, and Barron, Circuit Judges.
Judith Berkan, with whom Mary Jo Mendez and Berkan/Mendez were on brief, for appellants.
Luis R. Pérez-Giusti, with whom Liana M. Gutiérrez-Irizarry, Adsuar Muñiz Goyco, and Seda & Pérez-Ochoa, P.S.C., were on brief, for
LIPEZ, Circuit Judge. Appellants Rafael López-Santos (“López“) and Erasmo Domena-Ríos (“Domena“) served as court security officers for the District of Puerto Rico for thirty-two years. Their tenures ended in 2015 when appellee Metropolitan Security Services d/b/a Walden Security (“Walden“) assumed the federal contract to provide courthouse security services and refused to hire them because they lacked certification from a law enforcement training academy. After López and Domena brought suit for statutory separation pay pursuant to Puerto Rico Law 80, the district court granted summary judgment for Walden.
On appeal, López and Domena argue that the district court conducted the wrong legal analysis and that Walden should be held liable pursuant to Puerto Rico‘s common law successor employer doctrine. We agree that the district court misconstrued López and Domena‘s theory of liability, leading it to conduct a largely irrelevant analysis of their claims, but we nevertheless affirm. Although we recognize the unfortunate loss of livelihood experienced by López and Domena, the successor employer doctrine is simply inapplicable to their case, leaving them with no remedy pursuant to Law 80.
I.
The following facts are undisputed by the parties. López and Domena both began work as court security officers (“CSOs“) in 1983. They were among the original thirteen CSOs serving the District of Puerto Rico and received multiple accolades for their excellent work.
The United States Marshals Service (“USMS“) drafts and manages the federal contract governing court security services for the District of Puerto Rico. The USMS awards the contract to private security companies, and those companies in turn hire CSOs to provide the District of Puerto Rico courthouses with armed security guard services. During the thirty-two years that López and Domena worked as CSOs, a number of different private security companies held the USMS contract at various times, and López and Domena worked for all of those companies.
In September 2015, the USMS awarded the contract to Walden, effective December 1, 2015. The contract set forth the minimum qualifications for CSOs employed by the contractor. Specifically, it stated:
[E]ach individual designated to perform as a CSO [shall] ha[ve] successfully completed or graduated from a certified Federal, state, county, local or military law enforcement training academy or program that provided instruction on the use of police powers in an armed capacity while dealing with the public. The certificate shall be recognized by a Federal, state, county, local or military authority, and provide evidence that an individual is eligible for employment as a law enforcement officer.
The record demonstrates that this same language had appeared in the USMS‘s contract with Akal Security, Inc. (“Akal“), the contractor immediately preceding Walden, as well as the contract with MVM Security (“MVM“), the contractor immediately preceding Akal.
In October 2015, Walden convened two meetings for all of the CSOs who were then employed by Akal. During the meetings, Walden provided information about its company policies and benefits and invited all of Akal‘s CSOs to submit employment applications to Walden. López and Domena attended Walden‘s meetings and submitted applications. However, neither of them had completed or graduated from a certified law enforcement training academy, as required by the USMS contract
On November 30, 2015, the Vice President of Walden‘s Federal Services Division notified López and Domena that they were ineligible for Walden‘s CSO positions because they failed to satisfy the certificate requirement. They were the only two Akal CSOs not hired by Walden. As of December 1, 2015, they were out of a job.1
Thereafter, López and Domena, along with other members of the courthouse community, tried to dissuade Walden from enforcing the certification requirement against them. Roberto Santiago, the site supervisor under both Akal and Walden, spoke with Walden representatives about López and Domena‘s extensive experience and stellar employment records, demonstrating that they had “the sufficient skills and knowledge to be CSOs.” Then-Chief Judge Aida M. Delgado-Colón and Judge Carmen Consuelo Cerezo asked the USMS to waive the certificate requirement for López and Domena in light of their long history of impeccable service.2
After all of those efforts failed, López and Domena filed the instant lawsuit for statutory separation pay pursuant to Puerto Rico Law 80, invoking the federal district court‘s diversity jurisdiction. See
II.
A. Legal Framework
We review a grant of summary judgment de novo, construing the record in the light most favorable to the non-moving party. See Lapointe v. Silko Motor Sales, Inc., 926 F.3d 52, 54 (1st Cir. 2019). As a federal court sitting in diversity jurisdiction, we must apply state substantive law to assess whether summary judgment is appropriate. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78-79 (1938). Accordingly, Puerto Rico law governs the substantive issues in this appeal. See
Puerto Rico Law 80 imposes a monetary penalty, commonly known as the “mesada,” on employers who discharge employees without “just cause.” See
Because Law 80 provides compensation for “discharge without just cause,” a plaintiff invoking Law 80‘s protection must, as a general rule, demonstrate as a threshold matter that he or she had an employment relationship with the defendant entity and that the defendant entity terminated that relationship through a “discharge.” See
First, pursuant to Article 6 of Law 80, after the sale of a business, “[i]n the event that the new acquirer chooses not to continue with the services of all or any of the employees and hence does not become their employer, the former employer shall be liable for the [mesada].” See
Under the second exception, known as the “successor employer doctrine” and developed through Puerto Rico common law, the acquirer rather than the seller is liable for the mesada. See Rodríguez Oquendo v. Petrie Retail Inc. D.I.P., 167 P.R. Dec. 509, ___ P.R. Offic. Trans. ___ (2006). Pursuant to this doctrine, if an employer unjustly terminates one of its employees and then transfers the business to a new entity through a sale of assets or a merger, the previously discharged employee may hold the acquirer liable for the mesada, even though it was the predecessor entity that was actually responsible for the unjust discharge. See id. Thus, the successor employer doctrine permits a plaintiff to seek the mesada from an entity with which the plaintiff never had any employment relationship at all.
B. The District Court Decision
Both before the district court and on appeal, López and Domena have consistently invoked the successor employer doctrine as their theory of liability. They concede that they were never “discharged” by Walden, given that Walden never hired them in the first place, and thus Walden cannot be liable under the traditional Law 80 analysis. They also explicitly disclaim reliance on Article 6 of Law 80, acknowledging that the plain text of Article 6 requires a sale of a business. There was no such sale from Akal to Walden.
We elect the latter approach. Because there are no material factual disputes, our analysis is purely legal and requires no further factfinding by the district court. Moreover, the successor employer doctrine is so clearly inapplicable to López and Domena‘s case that any remand to the district court would be futile, resulting in a waste of the parties’ resources.
C. Application of Successor Employer Doctrine
López and Domena‘s theory of liability based on the successor employer doctrine fails for two distinct reasons. First, the successor employer doctrine is applicable only where a plaintiff seeks to hold the successor entity liable for a Law 80 violation by the predecessor entity. See Rodríguez Oquendo, 167 P.R. Dec. 509 (citing Piñeiro v. Int‘l Air Serv. of P.R., Inc., 140 P.R. Dec. 343, 40 P.R. Offic. Trans. ___ (1996), which held a successor employer liable pursuant to Law 80 for dismissals that took place five months prior to the transfer of the business); see also id. (explaining that the successor employer doctrine allows a plaintiff “to hold an entity liable for the unfair practices committed by another” (quoting L.R.B. v. Club Náutico, 97 P.R. 376, 390 (1969))). But here López and Domena do not take issue with any action by Akal, the prior entity. Rather, they cite Walden‘s failure to hire them as the triggering event for their Law 80 claim. Thus, the successor employer doctrine simply does not apply to the situation at bar.
If that were not enough, the successor employer doctrine is also applicable only where “an employer . . . replaces another through a transfer of assets or a corporate merger.” Id.; see also id. (holding that the successorship doctrine applies to the transfer of assets in a federal bankruptcy proceeding, even if free of liens). In this case, López and Domena concede that Akal did not sell a business to Walden -- indeed, Akal and Walden had no relationship with one another other than the fact that they happened to win the USMS contract in consecutive terms. For
López and Domena‘s arguments to the contrary are unavailing. First, they invoke the multifactor test used to determine whether the successor business “replaced” the former business, a requirement for the imposition of successor liability under the successor employer doctrine. See id. (holding that the successor business has “replaced” the former business when there is “a substantial similarity . . . ‘in the operation and continuity of the identity of the enterprise before and after the change‘” (quoting L.R.B. v. Cooperativa Azucarera, 98 P.R. 307, 316 (1970))). The factors examined by Puerto Rico courts include:
- [T]he existence of a substantial continuation in the same business activity;
- the utilization of the same operating plant;
- the employment of the same or substantially the same labor force;
- to maintain the same supervisory personnel;
- to use the same equipment and machinery and to employ the same methods of production;
- the production of the same products and the rendering of the same services;
- continuity of identity; and
- the operation of the business during the transfer period.
Id. (quoting Cooperativa Azucarera, 98 P.R. at 317-18) (alteration in original). López and Domena argue that because the record indisputably demonstrates that nearly all of these factors are satisfied in their situation, we must hold Walden liable as Akal‘s “replacement.”
We generally agree with López and Domena‘s characterization of the record, but that does not win the day for them. Specifically, the fact that Walden may have “replaced” Akal within the meaning of this multifactor test does not overcome the threshold limitations of the successor employer doctrine that we have already noted. Rather, those formal limitations prevent us from even applying the multifactor test. To the extent that López and Domena suggest that their case demonstrates the need to revisit those formal limitations, that argument also fails. “A litigant who chooses federal court over state court ‘cannot expect this court to . . . blaze new and unprecedented jurisprudential trails’ as to state law.” Doe v. Trs. of Bos. Coll., 942 F.3d 527, 535 (1st Cir. 2019) (quoting A. Johnson & Co. v. Aetna Cas. & Sur. Co., 933 F.2d 66, 73 n.10 (1st Cir. 1991)) (omission in original). Instead, we “must take state law as [we] find[] it: not as it might conceivably be, some day; nor even as it should be.” Kassel v. Gannett Co., 875 F.2d 935, 950 (1st Cir. 1989) (internal quotation marks omitted).
López and Domena also gain no benefit from the former5 executive order that they invoke. Executive Order 13,495 mandated that new federal contractors offer a right of first refusal to all qualified employees of the previous contractor. See Exec. Order No. 13,495, Nondisplacement of Qualified Workers Under Service Contracts, 74 Fed. Reg. 6103 (Jan. 30, 2009). Although the cited executive order does reflect a federal interest in “a carryover work force,” see id., which arguably might be relevant to the question of whether López and Domena‘s discharge was “without just cause” under Commonwealth law,
Accordingly, we must affirm the district court‘s grant of summary judgment.
So ordered.