Financial Oversight and Management Board for Puerto Rico v. Centro de Periodismo Investigativo, Inc.

SOVEREIGN IMMUNITY OF PUERTO RICO AND THE BOARD

The Board argues that the court should assume that the government of Puerto Rico, and by extension the Board itself, enjoys sovereign immunity as a U.S. territory. Reply Brief for Petitioner, Financial Oversight and Management Board for Puerto Rico at 2.The Board asserts that the Supreme Court need not decide whether Puerto Rico possesses sovereign immunity before addressing whether it has abrogated sovereign immunity. Id. Instead, the Board maintains, the Court can assume arguendo that Puerto Rico enjoys sovereign immunity and proceed to the question of whether it has abrogated sovereign immunity. Id. In particular, the Board contends that the Supreme Court should assume that Puerto Rico has sovereign immunity in the present case because the federal judiciary has repeatedly recognized that Puerto Court Rico has sovereign immunity in prior cases. Id. at 3. The Board points to Supreme Court precedent that has held that Puerto Rico “enjoys sovereignty akin to that of the States.” Id. The Board argues that it is an “arm of Puerto Rico” because it acts on Puerto Rico’s behalf, issuing debt, representing Puerto Rico in restructuring matters, and undertaking investigations pursuant to Puerto Rican law. Id. at 5. Additionally, the Board notes, Puerto Rico pays for the Board’s liabilities. Id. Accordingly, the Board argues that it, “as an entity through which the [government of Puerto Rico] acts,” also enjoys sovereign immunity as an “arm of Puerto Rico” pursuant to PROMESA § 101(c) (codified as 48 U.S.C. § 2121(c)). Id. at 5; 48 U.S.C. § 2121(c).

The CPI disputes Puerto Rico’s sovereign immunity by insisting that the Supreme Court has never extended the Eleventh Amendment immunity, which is granted to the states, to territories such as Puerto Rico. Brief for Respondent, Centro de Periodismo Investigativo, Inc. at 17–18. Moreover, the CPI contends that Puerto Rico lacks state sovereign immunity since it is a territory and not a state. Id. at 20. An entity does not attain state sovereign immunity, the CPI asserts, simply because the entity practices self-governance. Id. at 18. According to the CPI, the Territory Clause of the Constitution, which vests Congress with plenary power over territories “to dispose of and make all needful Rules and Regulations,” precludes territories such as Puerto Rico from having the residual sovereignty that states possess. Id. at 20; U.S. Const. art. IV, § 3, cl. 2. The CPI posits that territorial governments are created by Congress and are thus subject to Congress’s supervision and control. Id. at 21. The CPI observes that Congress, for example, can control territorial courts and veto provisions of territorial constitutions. Id. at 22. Consequently, the CPI maintains that territories are “not sovereigns distinct from the United States.” Id. In the alternative, the CPI argues that even if Puerto Rico has sovereign immunity, its sovereign immunity does not extend to the Board, since the Board has not provided the requisite evidence to demonstrate that it is an arm of the state. Brief of Respondent in Opposition of Certiorari, Centro de Periodismo Investigativo, Inc. at 14.

CONGRESSIONAL INTENT AND STATUTORY CONSTRUCTION

Assuming that the Board has sovereign immunity, the Board contends that the Supreme Court should use the clear-statement rule to determine whether Congress intended to abrogate the Board’s sovereign immunity. Brief for Petitioner at 18–23. The Board argues that the clear-statement rule must be applied to determine congressional intent whenever the legislation in question potentially abrogates another entity’s sovereign immunity. Id. at 18. According to the clear-statement rule, the Board explains, a court may not find an abrogation of sovereign immunity unless Congress expresses an “unmistakably clear” intent to abrogate. Id. The Board elaborates that, to intentionally abrogate sovereign immunity, Congress must “specifically consider[]” and “intentionally legislate[]” on the matter. Id. In other words, the Board asserts, the clear-statement rule requires there to be specific language within the statutory text to confirm that Congress intended to abrogate an entity’s sovereign immunity. Id. The Board notes that the Supreme Court has acknowledged that there are two ways for Congress to “express a clear and unmistakable intent to abrogate”: 1) by expressly mentioning sovereign immunity or abrogation, or 2) by explicitly naming a government entity as a potential defendant of a statutorily created claim. Id. at 22–23.

Applying the clear-statement rule, the Board asserts that Congress did not intend to abrogate the Board’s sovereignty when it passed PROMESA. Id. at 18. The Board maintains that Congress did not include language within PROMESA that evinced an intent to abrogate the Board’s sovereign immunity. Id. Specifically, the Board argues that Congress did not employ either of the two ways it can express a clear and unmistakable intent to abrogate. Id. at 22–23. In addition, the Board argues that PROMESA does not abrogate its sovereign immunity, since the statutory language of PROMESA does not explicitly waive its sovereign immunity. Id. at 18. Instead, the Board contends that the disputed statutory language of PROMESA—“any action against the . . . Board . . . shall be brought [in federal court]”—only establishes “exclusive federal jurisdiction over claims against the Board.” Id. at 23. The Board claims that granting this jurisdiction does not imply abrogation, pointing to previous cases in which Congress granted exclusive jurisdiction without abrogating sovereign immunity. Id. at 23–24.

Assuming that the Board has sovereign immunity, the CPI counters that the clear-statement rule does not apply to PROMESA, since PROMESA was passed under the Territory Clause. Brief for Respondent at 25. According to the CPI, the Supreme Court has never imposed the clear-statement rule on legislation passed under the Territory Clause. Id. at 25–26. As such, the CPI asserts that the Supreme Court should follow prior precedent and not apply the clear-statement rule in this matter. Id.

In the alternative, the CPI argues that even if PROMESA was subject to the clear-statement rule, PROMESA still expresses Congress’s intent to abrogate. Id. at 33. Disagreeing with the Board, the CPI contends that Congress can express its intentions under the clear-statement rule in more than two ways. Id. at 34. While the CPI agrees with the Board that Congress can express its intentions by “expressly mention[ing] sovereign immunity, abrogation, or related concepts,” the CPI asserts that Congress can also express its intentions through “inferences from the statutory text . . . [that] generate[] . . . ‘unmistakably clear’ expression[s] of Congress’[s] intent.” Id. The CPI argues that statutory language provides an “unmistakably clear” expression of Congress’s intent to abrogate when it 1) specifies which courts have jurisdiction over causes of action involving an entity, 2) sets forth the remedies that parties can seek in relation to those causes of action, and 3) lays out the procedures for cases involving the entity. Id. at 34–36.

Accordingly, the CPI asserts that Congress intended to abrogate the Board’s sovereign immunity through PROMESA, since inferences from PROMESA’s statutory language “generate[] an ‘unmistakably clear’ expression of Congress’[s] intent to abrogate.” Id. In particular, the CPI notes that PROMESA’s statutory language satisfies the clear-statement rule, since the section in dispute, 48 U.S.C. § 2126(a), specifies which courts have jurisdiction over causes of action involving the Board, 48 U.S.C. § 2126(c) sets forth the remedies that parties can seek in relation to those causes of action, and 48 U.S.C. § 2128(b) lays out procedures for cases involving the Board by identifying “which lawyers the Board could retain” in defense of such causes of action. Id. at 36.