UPDATE 2: 5:53 p.m. ET 6/16/2023: Journalist group Centro de Periodismo Investigativo Inc. filed today, Friday, June 16, a
motion “to reconsider, vacate or modify” a June 12 judgment by the U.S. Court of Appeals for the First Circuit directing the U.S. District Court for the District of Puerto Rico to dismiss “with prejudice” an action by the group seeking fiscal and other documents in light of a May 11 Supreme Court opinion, summarized below.
The motion argues that the First Circuit’s judgment is contrary to the Supreme Court’s “narrowly focused opinion” and remand instructions and requests that the First Circuit instead “remand to the District Court for further proceedings consistent with the Opinion, and to permit the lower court to consider unresolved issues.”
UPDATE 1: First Circuit Directs District Court to Dismiss Journalist Group’s Action Seeking Documents From Oversight Board ‘With Prejudice’
UPDATE 1: 4:23 p.m. ET 6/12/2023: The U.S. Court of Appeals for the First Circuit today entered a
judgment directing the U.S. District Court for the District of Puerto Rico to dismiss “with prejudice” an action by the journalist group Centro de Periodismo Investigativo Inc. against the PROMESA oversight board seeking, among other things, documents related to Puerto Rico’s fiscal situation, board member communications, meeting minutes and contracts, in which the board asserted sovereign immunity as a defense.
The judgment also reverses the First Circuit’s own May 2022
opinion holding that Congress abrogated the oversight board’s sovereign immunity through section 106 of PROMESA and vacates the district court’s underlying decision in light of the Supreme Court’s May 11 opinion, summarized below, holding that “nothing in PROMESA” does so.
Original Story 12:43 p.m. UTC on May 11, 2023
Supreme Court Rules ‘Nothing in PROMESA’ Abrogrates Oversight Board’s Sovereign Immunity, Reverses Lower Court Rulings
Relevant Document:
Opinion
The Supreme Court ruled today that “nothing in PROMESA” makes Congress’s intent to abrogate the oversight board’s sovereign immunity “‘“unmistakably clear,’” reversing the opinions of the district court and
U.S. Court of Appeals for the First Circuit in the Centro de Periodismo Investigativo Inc., or CPI, litigation, which held that PROMESA abrogated the board’s sovereign immunity.
In overturning the lower courts, Justice Elena Kagan, writing for the majority, finds that PROMESA “does not explicitly strip the Board of immunity” nor does it “expressly authorize the bringing of claims against the Board.” Justice Kagan finds that under long-settled law, Congress “must use unmistakable language to abrogate sovereign immunity” and that nothing in PROMESA creating the oversight board “meets that high bar.” The Court also observes that PROMESA’s judicial review provisions and liability protections are “compatible with the Board’s generally retaining sovereign immunity.”
Justice Kagan was joined in the opinion by Justices Roberts, Alito, Sotomayor, Gorsuch, Kavanaugh, Barrett and Jackson. Justice Clarence Thomas filed a dissenting opinion.
Argument on the appeal took place on Jan. 11.
The underlying dispute arises out of consolidated lawsuits related to requests by CPI, a Puerto Rico-based nonprofit media organization of investigative journalists, seeking information from the oversight board on the commonwealth’s financials, board member communications, contracts, meeting minutes and board member financial disclosures. CPI asserted that the oversight board violated the Puerto Rico Constitution by failing to comply with the requests on the basis that such access falls under Puerto Rico law that is similar to the federal Freedom of Information Act, or FOIA.
As a result, CPI sued the oversight board in federal court, as required under PROMESA, and the oversight board sought to block the suit by invoking a sovereign immunity defense, arguing that it could only be sued if it consented to such action. The district court rejected the oversight board’s assertion of a sovereign immunity defense and the First Circuit affirmed the lower court’s ruling.
Majority Opinion
As an initial matter, Justice Kagan reviews how the lower courts addressed the issue of the oversight board’s immunity, noting that the question presented to the Supreme Court “asks only about abrogation, while taking the Board’s underlying immunity as a given.” The Court observes that “[b]ecause Circuit precedent had settled Puerto Rico’s own immunity, the lower courts barely addressed the question,” and similarly, for the oversight board’s immunity, CPI “never argued that the Commonwealth’s immunity did not extend to the Board.” As a result, the courts below “simply assumed the Board’s immunity before turning to the abrogation issue.”
The majority opinion explains that the Court “took the case on those terms, and we resolve it on those terms,” meaning that it “assume[s] without deciding that Puerto Rico is immune from suit in federal district court, and that the Board partakes of that immunity.” As a result, the majority opinion addresses “only whether, accepting those premises, PROMESA effects an abrogation.”
In reviewing PROMESA, Justice Kagan notes that with “one exception,” which is not at issue before the Court, the statute “does not provide that the Board or Puerto Rico is subject to suit” and “says nothing explicit about abrogating sovereign immunity.” The lone exception is “for Title III cases, and comes via the Federal Bankruptcy Code,” observes the Court, which points to PROMESA’s incorporation of the Bankruptcy Code’s “express abrogation of sovereign immunity” as part of its mechanism for restructuring debt. Justice Kagain points out that “the exception implies the opposite as a general rule.”
However, as to “all other matters PROMESA addresses, Congress did not mention sovereign immunity” nor did it adopt “similar language to govern other kinds of litigation involving the Board,” writes Justice Kagan. She emphasizes that “no provision [of PROMESA] states that it is abrogating any immunity the Board possesses from legal claims.”
The majority then reviews the provisions of PROMESA that contemplate legal claims against the oversight board, including those outside of the Title III context, such as matters related to jurisdiction and when orders entered in any such litigation may take effect. However, as the opinion points out, PROMESA “sets certain limits on litigation targeting the Board,” including by prohibiting any money judgments against the board or its employees for actions to carry out the statute and eliminating any jurisdiction of the district court over the board’s certification determinations such as those related to the approval of fiscal plans and budgets.
Justice Kagan rejects CPI’s assertion that such provisions “express[] Congress’s ‘clear intent to subject the Board to suit in federal court.’” CPI suggested that specific provisions insulating the board from liability and barring suits related to budgeted decisions would have had no purpose if the board was already generally immune from suit. However, Justice Kagan finds that all of those provisions “serve a function without our reading an abrogation of immunity into PROMESA,” acknowledging that Congress contemplated the possibility of suits against the oversight board and “wisely so - because litigation against the Board can arise even though the Board enjoys sovereign immunity generally.” The majority points to statutes other than PROMESA, such as the Civil Rights Act, that “abrogate the Board’s immunity from particular claims.” The Court also notes that the oversight board could waive its sovereign immunity.
“So PROMESA’s judicial review scheme - absent a categorical abrogation of immunity - still has plenty of work to do,” writes Justice Kagan, who ultimately concludes that PROMESA’s litigation protections do not “fill the gap.” The court notes that “[a]t the most basic level, it would be peculiar to read shields from lawsuits as unmistakably subjecting the Board to lawsuits (by abrogating immunity).”
Dissenting Opinion
Justice Thomas disagrees with the majority, stating that “[a]t every stage of these proceedings, respondent has argued that petitioner lacks state sovereign immunity.” Petitioner has consistently replied that it has that immunity and that nothing abrogates it, he observes. Justice Thomas says that the courts below, which are bound by precedent in the First Circuit, held that petitioner does have state sovereign immunity - but they also held that the immunity has been abrogated.
The majority disagrees with only that latter conclusion, Justice Thomas says, by ruling that “nothing abrogates petitioner’s immunity, but it ‘assume[s] without deciding’ the logically antecedent question whether petitioner enjoys that immunity in the first place.” In doing so, the majority effectively decides the outcome of this case, according to the dissent. In contrast, Justice Thomas writes, “[b]ecause I would reach the antecedent question and hold that petitioner lacks the only immunity it has ever asserted, I respectfully dissent.”
The dissent states that when the oversight board asked the Supreme Court to review the lower courts’ holding that Puerto Rico enjoys state sovereign immunity, but the oversight board’s immunity was abrogated, CPI once again raised its lead argument, pointing out that the Court logically could not reverse the First Circuit’s judgment without first addressing whether the oversight board “actually has the immunity that the Board claims has not been abrogated.” Justice Thomas states that CPI could not have done anything more to preserve its antecedent, dispositive argument.
Justice Thomas argues that the majority nevertheless “skips [the argument] entirely” by “‘assum[ing] without deciding that Puerto Rico is immune from suit in federal district court’ - while also deciding that PROMESA does not abrogate that assumed immunity.” He insists that the majority “effectively consign[ed] CPI’s case to the dustbin” by remanding the proceeding back to the First Circuit, where precedent will dictate the outcome. “CPI might be forgiven for wondering whether we granted
certiorari only insofar as our review would favor the Board,” Justice Thomas remarks.
The dissent explains that the majority “‘agreed to tackle only the abrogation question.’” Justice Thomas counters that it makes no sense to analyze whether PROMESA abrogates state sovereign immunity without first determining if that immunity is implicated at all. “Because I think the Court has a duty to pass upon issues that are fairly presented, preserved by the parties, and necessary to support its judgment, I would consider whether the Board has the immunity it asserts,” Justice Thomas writes.
The dissent begins its analysis with the assumption that the oversight board’s asserted sovereign immunity is the immunity inherent in the 50 states, rather than the Eleventh Amendment of the U.S. Constitution. Contrary to the First Circuit, Justice Thomas does not assume the Eleventh Amendment sovereign immunity applies because the plain text of the amendment applies only to lawsuits brought against a state by citizens of another state. Because CPI is a resident of Puerto Rico, Justice Thomas says that he can “only assume that the Board and the First Circuit meant to refer to the sovereign immunity that is inherent in the 50 States.”
The dissent notes that here, “all sides agree” that Puerto Rico is a territory, not a state, and therefore “it is difficult to see how the same inherent sovereign immunity that the States enjoy in federal court would apply to Puerto Rico.” Although the United States has urged the Court to hold that Puerto Rico holds a form of “common-law immunity” that could be invoked in federal court, Justice Thomas finds that the oversight board has, “at every stage, argued only that it possesses the same immunity as States.” “That argument appears untenable,” the dissent finds.
Justice Thomas concludes that as the party asserting an immunity, the oversight board should have the burden of establishing its immunity. “Because the Board has failed to do so, I would rule in CPI’s favor and affirm the judgment below.”