La Liga de Ciudades de P.R. v. FOMB
U.S. Court of Appeals for the First Circuit
La Liga de Ciudades de P.R. v. FOMB
Opinion
United States Court of Appeals
For the First Circuit
No. 22-1062
IN RE: THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO
RICO, AS REPRESENTATIVE FOR THE COMMONWEALTH OF PUERTO RICO; THE
FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS
REPRESENTATIVE FOR THE PUERTO RICO SALES TAX FINANCING
CORPORATION, a/k/a Cofina; THE FINANCIAL OVERSIGHT AND
MANAGEMENT BOARD FOR PUERTO RICO, AS REPRESENTATIVE FOR THE
EMPLOYEES RETIREMENT SYSTEM OF THE GOVERNMENT OF THE
COMMONWEALTH OF PUERTO RICO; THE FINANCIAL OVERSIGHT AND
MANAGEMENT BOARD FOR PUERTO RICO, AS REPRESENTATIVE FOR THE
PUERTO RICO HIGHWAYS AND TRANSPORTATION AUTHORITY; THE FINANCIAL
OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS
REPRESENTATIVE FOR THE PUERTO RICO ELECTRIC POWER AUTHORITY
(PREPA); THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO
RICO, AS REPRESENTATIVE OF THE PUERTO RICO PUBLIC BUILDINGS
AUTHORITY,
Debtors,
LA LIGA DE CIUDADES DE PUERTO RICO,
Plaintiff, Appellant,
v.
THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO;
AUTORIDADE DE ASESORIA FINANCIERA Y AGENCIA FISCAL (AAFAF);
CENTRO DE RECAUDACION DE INGRESOS MUNICIPALES (CRIM);
ADMINISTRACION DE SEGUROS DE SALUD DE PUERTO RICO (ASES); LUIS
M. COLLAZO RODRIGUEZ, in his Official Capacity as Administrator
of the Sistemas de Retiro de los Empleados del Gobierno y la
Judicatura del Estado Libre Asociado de Puerto Rico,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Laura Taylor Swain,* U.S. District Judge]
Before
Barron, Chief Judge,
Lipez and Montecalvo, Circuit Judges.
Guillermo J. Ramos Luiña, with whom Tanaira Padilla Rodríguez
was on brief, for appellant.
Lucas Kowalczyk, with whom Timothy W. Mungovan, John E.
Roberts, Martin J. Bienenstock, Mark D. Harris, Guy Brenner, and
Proskauer Rose LLP were on brief, for the Financial Oversight and
Management Board for Puerto Rico, appellee.
Ashley M. Pavel, with whom John J. Rapisardi, Maria J.
DiConza, Peter Friedman, and O'Melveny & Myers LLP were on brief,
for AAFAF, ASES, and Luis M. Collazo Rodriguez, in his official
capacity as administrator of the Sistemas de Retiro de los
Empleados del Gobierno y la Judicatura del Estado Libre Asociado
de Puerto Rico, appellees.
Fernando Van Derdys for CRIM, appellee.
Edwin Quiñones and Quiñones, Arbona & Candelario on brief for
the Senate of the Commonwealth of Puerto Rico, amicus curiae.
Jaime L. Sanabria Montañez and ECIJA SBGB on brief for United
States Representatives Nydia M. Velázquez, Alexandria Ocasio
Cortez, and Ritchie Torres, amici curiae.
July 25, 2024
* Of the Southern District of New York, sitting by
designation.
Lipez, Circuit Judge. This case follows an unsuccessful
effort by Puerto Rico to enact legislation -- known as "Law
29" -- to eliminate the burden on Puerto Rico's municipalities of
complying with the Commonwealth's reformed public pension funding
scheme. In previous litigation, the Title III court overseeing
Puerto Rico's debt restructuring issued an Order and Opinion (the
"O&O") declaring Law 29 "a nullity" and "of no effect." The
correctness of that determination, which was never appealed, is
not directly at issue.
Instead, plaintiff-appellant La Liga de Ciudades de
Puerto Rico ("La Liga") insists that the O&O did not authorize the
Financial Oversight and Management Board for Puerto Rico ("the
Board") to recover the funds the municipalities had retained under
the auspices of Law 29 for approximately one year, before the O&O
took effect. Interpreting its own prior order to reach a contrary
conclusion, the district court1 granted defendant-appellees'
assorted motions to dismiss, some on the merits and another for
lack of standing. In the end, we affirm on the merits. Before
doing so, however, because of an issue noted at oral argument by
the panel and advanced by our colleague in a dissent, we must
1 For the sake of clarity, when referencing the court that
authored the O&O in the prior Law 29 litigation, we use the term
"Title III court," and when referencing the court that authored
the order now on appeal, we use "district court." Both terms refer
to the court overseeing Puerto Rico's debt restructuring under
PROMESA, which authored both orders.
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explain at some length why La Liga has standing to pursue the
claims now before us.
I.
To resolve this matter, we must recount the facts
underlying the proceeding directly at issue on appeal and those of
the prior Law 29 litigation. Because we are reviewing a decision
granting motions to dismiss, we "accept as true all well-pleaded
facts alleged in the complaint and draw all reasonable inferences
therefrom in the pleader's favor." Lee v. Conagra Brands, Inc.,
958 F.3d 70, 74(1st Cir. 2020) (quoting Lanza v. Fin. Indus. Regul. Auth.,953 F.3d 159
, 162 (1st Cir. 2020)).
A. The Law 29 Litigation
1. PROMESA
In 2016, Congress enacted the Puerto Rico Oversight,
Management, and Economic Stability Act ("PROMESA"), Pub. L. No.
114-187, 130Stat. 549 (2016) (codified at48 U.S.C. §§ 2101
- 2241). The law addressed an unprecedented "fiscal emergency" in the Commonwealth, caused by "[a] combination of severe economic decline, . . . accumulated operating deficits, lack of financial transparency, management inefficiencies, and excessive borrowing."48 U.S.C. § 2194
(m). These conditions left "the Government of
Puerto Rico . . . unable to provide its citizens with effective
services" and "affected the long-term economic stability of Puerto
Rico by contributing to the accelerated outmigration of residents
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and businesses." Id.In enacting PROMESA, Congress sought to "provide the Government of Puerto Rico with the resources and the tools it needs to address" this "crisis" by "provid[ing] an oversight mechanism to assist the Government of Puerto Rico in reforming its fiscal governance," with the ultimate goal of "encouraging the Government of Puerto Rico to resolve its longstanding fiscal governance issues and return to economic growth."Id.
§ 2194(n).
PROMESA created the Financial Oversight and Management
Board, an entity with "wide-ranging authority to oversee and direct
many aspects of Puerto Rico's financial recovery efforts."
Pierluisi v. Fin. Oversight & Mgmt. Bd. for P.R. (In re Fin.
Oversight & Mgmt. Bd. for P.R.), 37 F.4th 746, 750 (1st Cir. 2022). The Board exercises "primarily local power[]" to "supervis[e] aspects of Puerto Rico's fiscal and budgetary policies." Fin. Oversight & Mgmt. Bd. for P.R. v. Aurelius Inv., LLC,140 S. Ct. 1649, 1655, 1665
(2020).
PROMESA requires the governor of Puerto Rico, under the
Board's oversight, to annually promulgate "Fiscal Plans," see 48
U.S.C. § 2141, which are "roadmaps for Puerto Rico 'to achieve fiscal responsibility and access to the capital markets,'" Méndez- Núñez v. Fin. Oversight & Mgmt. Bd. for P.R. (In re Fin. Oversight & Mgmt. Bd. for P.R.),916 F.3d 98, 104-05
(1st Cir. 2019) (quoting48 U.S.C. § 2141
(b)(1)). The Fiscal Plan must "provide for
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estimates of revenues and expenditures" and "adequate funding for
public pension systems," among other things, 48 U.S.C.
§ 2141(b)(1), and must be approved by the Board before it can take effect, seeid.
§ 2141(c)(3).
PROMESA requires the Board to review "any law" enacted
by Puerto Rico "to ensure that the enactment or enforcement of the
law will not adversely affect the territorial government's
compliance with the Fiscal Plan." Id. § 2144. This "multi-step,
back-and-forth" review process begins with the governor submitting
to the Board a certification containing a formal estimate of the
law's fiscal impact and attesting to whether it complies with the
Fiscal Plan. Pierluisi, 37 F.4th at 751 (analyzing 48 U.S.C.
§ 2144(a)(1)-(5)). The Board "may take such actions as it considers necessary, consistent with [PROMESA]," to enforce Puerto Rico's compliance with the certification requirement and the Fiscal Plan, "including preventing the enforcement or application of the law."48 U.S.C. § 2144
(a)(5). PROMESA also prohibits Puerto Rico from "enact[ing], implement[ing], or enforc[ing] any statute, resolution, policy, or rule that would impair or defeat the purposes of [PROMESA], as determined by the Oversight Board,"id.
§ 2128(a)(2), and it prohibits the Commonwealth from
"reprogramming" any budgeted funds unless the Board "certifies
such reprogramming will not be inconsistent with the Fiscal Plan
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and Budget," id. § 2144(c)(1)-(2). The Board may "seek judicial
enforcement" of these requirements. Id. § 2124(k).
Title III of PROMESA creates a debt restructuring
process "akin to municipal debt restructuring under Chapter 9 of
the bankruptcy code." Fin. Oversight & Mgmt. Bd. for P.R. v. Ad
Hoc Grp. of PREPA Bondholders (In re Fin. Oversight & Mgmt. Bd.
for P.R.), 899 F.3d 13, 18 (1st Cir. 2018); see also 48 U.S.C.
§§ 2161–2177. We refer to the district court overseeing those
proceedings as the "Title III court." In 2017, the Board commenced
a Title III debt adjustment proceeding on behalf of the
Commonwealth and several of its instrumentalities, under which the
original Law 29 litigation and the present case arose as adversary
proceedings.
2. Transition to the "PayGo" System and Law 29
The Board approved a Fiscal Plan for the 2017 fiscal
year in March 2017. See Fin. Oversight & Mgmt. Bd. for P.R. v.
Vázquez Garced (In re Fin. Oversight & Mgmt. Bd. for P.R.), 616
B.R. 238, 242 (D.P.R. 2020). Among numerous reforms, the 2017
Fiscal Plan called for Puerto Rico's public employee pension system
to transition to a "Pay-as-you-Go" or "PayGo" model. Later that
year, Puerto Rico enacted legislation, known as "Act 106," that
implemented this transition. Act 106 directed the Commonwealth to
deliver all pension disbursements to Puerto Rico's retired public
employees directly from its general fund as those payments came
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due. Puerto Rico's public employers -- including
municipalities -- would finance those disbursements by reimbursing
the Commonwealth each month for benefits payments to retirees
associated with that employer. See id. at 242-43.
The PayGo system was a key component of subsequent Fiscal
Plans, including the 2019 Fiscal Plan. See id. at 242. However, shortly after that Plan's certification, lawmakers in Puerto Rico passed Law 29, formally titled the "Act for Reductions of the Administrative Burdens of the Municipalities."Id.
Law 29 expressly aimed to circumvent the PayGo system as it applied to Puerto Rico's municipalities, proclaiming that it would "eliminate[] the obligation of municipalities to contribute to the Government health plan and 'Pay as you Go system.'"Id.
Instead,
it shifted those costs to the Commonwealth.
Before Ricardo Rosselló, Puerto Rico's then-Governor,
signed Law 29, the Board warned him and Puerto Rico's legislative
leaders that Law 29 would have a significant fiscal
impact -- "approximately $311 million for FY20 and $1.7 billion
over the next five fiscal years" -- and that the law did not appear
to "compl[y] with the Certified Fiscal Plan, which includes
municipalities' full payment of their obligations to [the
Government health plan] and PayGo." Id.(second alteration in original). Despite these warnings, Governor Rosselló signed Law 29 on May 17, 2019, and the law took immediate effect.Id.
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The Governor subsequently delivered to the Board a
compliance certification as required under 48 U.S.C. § 2144(a)(2).Id. at 242-43
. The certification represented that Law 29 "[was] not significantly inconsistent with the [2019 Fiscal Plan]."Id. at 243
(second alteration in original). The Board took issue with the certification, notifying the Governor and its legislative leaders that it determined that the Commonwealth's certificate was "deficient" because it "failed to provide the formal estimate of the fiscal impact that [Law 29] will have."Id.
(alteration in
original). The Board directed the Commonwealth to submit a
corrected certificate, but the Commonwealth ignored that request.
See id.
3. Law 29 Litigation and the Order and Opinion
In July 2019, the Board commenced an adversary
proceeding claiming that Law 29 was not properly certified,
inconsistent with the 2019 Fiscal Plan, and impaired and defeated
the purposes of PROMESA, thus making it invalid. See id. at 240-
41. The complaint named Puerto Rico's governor and the Fiscal
Agency and Financial Advisory Authority ("AAFAF," for its Spanish
acronym) as defendants.2 The Board sought a declaration that Law
2The city of San Juan and two organizations representing the
mayors of multiple municipalities sought to intervene. The
district court denied those motions, finding the interests of the
municipalities adequately represented by the Governor. See Order
on Mots. to Intervene at 2, In re Fin. Oversight & Mgmt. Bd. for
P.R., Title III Case No. 17-BK-3283, Adv. Proc. No. 19-393-LTS
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29 was a nullity and of no effect. Id. at 241, 244. The Board
also sought a permanent injunction barring the enforcement of Law
29. Id. at 244.
The Title III court issued its O&O on April 15, 2020,
granting the Board summary judgment on all relevant counts.3 Id.
at 241. Specifically, the court held that the Governor had failed
to properly certify Law 29. Id. at 247-48. Accordingly, the court
"deemed [Law 29] a nullity." Id. at 248. The court further held
that Law 29 was "unenforceable and of no effect," because the Board
had determined that the law impaired or defeated the purposes of
PROMESA. Id. at 250. Based on these conclusions, the court issued
a permanent injunction against "implementing and enforcing" Law
29. Id. At the defendants' request, the court stayed the
effective date of its O&O through May 6, 2020 to allow time for
the Board and the Commonwealth to negotiate a process through which
(D.P.R. July 23, 2019), ECF No. 35; Order on Mot. to Intervene at
3, In re Fin. Oversight & Mgmt. Bd. for P.R., Title III Case No.
17-BK-3283, Adv. Proc. No. 19-393-LTS (D.P.R. Sep. 4, 2019), ECF
No. 70. These rulings were not appealed.
The Title III court denied summary judgment on three counts.
3
One count asked the court to declare Law 29 a nullity and enjoin
its enforcement under separate provisions of PROMESA. Finding
that relief duplicative, the court declined to award summary
judgment on that count. See Vázquez Garced, 616 B.R. at 256 n.11.
The remaining counts sought prospective relief related to the
Commonwealth's submission of compliance certificates for Law 29
and in general. See id. at 250, 255-56.
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the municipalities would meet their PayGo obligations. Id. at
257. The O&O was never appealed.
B. The present case
1. Factual Background
Puerto Rico applied Law 29 for nearly a year, from its
enactment in May 2019 until the O&O took effect in May of 2020
(the "challenged period"). During this time, the municipalities
did not pay the PayGo fees required under Act 106, nor did they
make contributions to their employees' health care plans. The
Board estimated that the municipalities retained $197.3 million
under the auspices of Law 29.
The Board took the position that the O&O had declared
Law 29 null and void from its inception, and it therefore concluded
that the municipalities needed to repay to the Commonwealth the
funds they owed for the challenged period. To recoup that debt,
the Board reached an agreement with Puerto Rico's government
whereby the Centro de Recaudacion de Ingresos Municipales
("CRIM"), which collects property taxes for the municipalities,
would divert to the Commonwealth certain disbursements that would
otherwise have gone to the municipalities. The recovery of the
municipalities' debts has been incorporated into each subsequent
Fiscal Plan. The complaint states that this arrangement has
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deprived the municipalities of "not less than Three Hundred Forty
Million Dollars ($340,000.00)."4
Plaintiff-appellant La Liga is a not-for-profit, non-
partisan membership organization. Its formal membership
consists of the democratically-elected mayors of Puerto Rico
municipalities. The purpose of La Liga is to advocate for the
interests of the municipalities its member-mayors were elected to
represent. La Liga concedes that the municipalities cannot rely
on Law 29 to excuse PayGo or benefit obligations arising after the
O&O's effective date. However, La Liga disputes that the O&O
nullified Law 29 retroactively to cover the challenged period. It
therefore protests the Board's efforts to recover the funds the
Commonwealth paid during that time to cover the municipal
obligations.
2. Procedural Background
Asserting organizational standing to bring this
adversary proceeding, La Liga's complaint named as defendants
(1) the Board, (2) CRIM, and (3) various Puerto Rico executive
branch entities and officials, including AAFAF, a fiscal agent and
advisor for the municipalities; the Administración de Seguros de
4 We note the significant discrepancy between the two figures
stated in the complaint. The record does not clarify the precise
value of the alleged loss, but, as mentioned, the Board estimated
that the municipalities had retained $197.3 million under Law 29,
giving some sense of the scale of the dispute. Ultimately, the
exact figure is immaterial to the issues on appeal.
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Salud de Puerto Rico ("ASES"), the public corporation that manages
Puerto Rico's public health insurance system; and the
administrator of Puerto Rico's Employee Retirement System ("ERS").5
In its complaint, La Liga alleged that the O&O nullified
Law 29 only as of the order's effective date, and thus the back
payments orchestrated by the Board were improper. La Liga argued
that nothing in the O&O expressly invalidated Law 29 retroactively
to cover the challenged period. Moreover, La Liga asserted that
the Title III court lacked the authority to enter such an order,
and thus the O&O should not be read to do so. Accordingly, La
Liga requested a declaration that the municipalities' purported
debt does not exist and that the withholdings offsetting that debt
were unlawful. In addition, La Liga sought an injunction
prohibiting appellees from diverting any more funds from the
municipalities as back payments and ordering them to return funds
wrongly diverted.
Appellees moved to dismiss. The executive branch
defendants filed a motion under Federal Rule of Civil Procedure
12(b)(1) asserting that La Liga lacked standing to bring the action
against them. The Board and CRIM each filed a motion under Rule
12(b)(6), arguing that La Liga had failed to state a claim for
5 We call these defendants the "executive branch defendants."
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relief because the O&O by its terms applied to the challenged
period.6
The district court granted all three motions to dismiss.
Citing Supreme Court precedent, it held that La Liga lacked
constitutional standing to sue the executive branch defendants, as
the municipalities' injury was neither traceable to their conduct
nor redressable by them. See Lujan v. Defs. of Wildlife, 504 U.S.
555, 560-61 (1992). The district court granted the Board and
CRIM's motions to dismiss on the merits. It held that the O&O -
- which the district court had itself authored -- did apply to the
challenged period when it declared Law 29 a "nullity" and "of no
effect."
La Liga timely appealed, arguing that the district court
erred both in finding that La Liga lacked standing to sue the
executive branch defendants and in granting the motion to dismiss
on the merits as to CRIM and the Board.
II.
We begin by addressing La Liga's standing. The arguments
against La Liga's constitutional standing have accumulated over
time. In the district court, only the executive branch defendants
6 Although the Board also moved to dismiss for lack of standing
on statutory grounds, the district court concluded that there was
"a clearer basis" for dismissing the action against the Board on
the merits. The district court therefore did not opine on La
Liga's standing with respect to the Board, and the Board has not
renewed this statutory standing argument on appeal.
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challenged La Liga's constitutional standing, and only as to its
ability to sue them. In its appellate briefing, CRIM newly argued
that La Liga lacked standing to sue it as well. At oral argument,
the panel questioned for the first time whether La Liga had
standing to sue at all. Our dissenting colleague argues that La
Liga does not. Because we have an independent obligation to assure
ourselves of our jurisdiction, see Ryan v. U.S. Immigr. & Customs
Enf't, 974 F.3d 9, 17 n.4 (1st Cir. 2020), these belated and never-
pressed standing arguments are properly before us.
A. Standard of Review
Our analysis of La Liga's standing is de novo. See Me.
People's All. & Nat. Res. Def. Council v. Mallinckrodt, Inc., 471
F.3d 277, 284(1st Cir. 2006). At the pleading stage, we "apply [to questions of standing] the same plausibility standard used to evaluate a motion under Rule 12(b)(6)." Gustavsen v. Alcon Lab'ys, Inc.,903 F.3d 1, 7
(1st Cir. 2018). Thus, to assess La Liga's standing, we must "accept as true all well-pleaded factual averments in [its] . . . complaint and indulge all reasonable inferences therefrom" (quoting Katz v. Pershing, LLC,672 F.3d 64, 70
(1st Cir. 2012)). Accordingly, La Liga "need not definitively prove [its] injury or disprove [appellees'] defenses" but need only "plausibly plead on the face of [its] complaint" facts supporting standing. Tyler v. Hennepin Cnty.,598 U.S. 631, 637
(2023) (citing Lujan,504 U.S. at 561
).
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B. Organizational Standing
Article III of the U.S. Constitution authorizes federal
courts to adjudicate only "Cases" and "Controversies," and
"standing is an essential and unchanging part of the case-or-
controversy requirement." Lujan, 504 U.S. at 560. To establish standing, a complaint must demonstrate three elements: (1) the plaintiff suffered an "injury in fact"; (2) the defendant caused the injury, meaning it is "fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third party"; and (3) it is "likely . . . that the injury will be 'redressed by a favorable decision.'"Id.
at 560- 61 (cleaned up) (quoting Simon v. E. Ky. Welfare Rts. Org.,426 U.S. 26, 38
, 41–42, 43 (1976)).
1. La Liga's Assertion of Organizational Standing
La Liga claims to have organizational standing,7 which
allows an organization that has not suffered an injury in fact to
sue on behalf of its members when "(a) its members would otherwise
have standing to sue in their own right; (b) the interests it seeks
to protect are germane to the organization's purpose; and
(c) neither the claim asserted nor the relief requested requires
7 Courts often refer to this concept of standing as
"associational standing." See generally, e.g., United Food & Com.
Workers Union Loc. 751 v. Brown Grp., Inc., 517 U.S. 544 (1996).
Following La Liga's lead, we use the phrase "organizational
standing" in this opinion.
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the participation of individual members in the lawsuit."8 Hunt v.
Wash. State Apple Advert. Comm'n, 432 U.S. 333, 343 (1977).
La Liga alleges that Puerto Rico's municipalities have
been deprived of significant revenue to which they were entitled.
Such an "out-of-pocket loss" is "a quintessential injury in fact."
Wiener v. MIB Grp., Inc., 86 F.4th 76, 86 (1st Cir. 2023). While
La Liga has thus clearly alleged that the municipalities have
suffered an Article III injury, it must also show that it is a
proper party to sue on their behalf, according to organizational
standing principles.
In support of its effort to sue on the municipalities'
behalf, La Liga alleges that it is a "not-for-profit and
nonpartisan corporation . . . whose members are Mayors of
Municipalities of Puerto Rico from diverse ideological
persuasions." It further alleges that
La Liga's vision is "to unite local
governments in a nonpartisan effort to improve
the quality of life of the Puerto Rican
people." Its mission is to "strengthen the
capacity of local governments and communities
in order to better face . . . various social,
structural, fiscal and governance
challenges." Consistent with that vision and
mission, La Liga develops and implements
various initiatives, tempered to the needs and
realities of municipal governments and their
communities. The most recent initiative
developed and adopted by La Liga is to defend
the decimated municipal finances from the
8 Only the first requirement is in dispute.
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onslaught of austere measures imposed by the
Oversight Board.
Thus, La Liga explains that it "has organizational standing to
bring this action since the strengthening of municipal finances is
germane to La Liga's mission and purpose, the Municipalities that
are headed by La Liga's members have suffered substantial economic
loses . . . and the participation of the individual La Liga
members is not necessary." See Hunt 432 U.S. at 343.
As the dissent sees it, La Liga has a standing problem
because its formal members are not the municipalities but their
democratically-elected mayors. And because La Liga has not alleged
that its member-mayors are legally authorized to represent the
municipalities in court, the argument goes, "the record does not
suggest that any member-mayor's standing to bring this suit could
rest on an injury to that mayor's municipality." See, e.g., City
of Bos. Delegation v. FERC, 897 F.3d 241, 248-50(D.C. Cir. 2018) (holding that a mayor lacked standing to litigate based on injury to his city because he lacked legal authority to do so). Thus, the complaint does not meet the first Hunt requirement that La Liga's members "have standing to sue in their own right."432 U.S. at 343
.
Our dissenting colleague's doubt about La Liga's
standing to sue on behalf of non-member municipalities is
unfounded. Indeed, whether La Liga's member-mayors possess
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standing in their own right, via the legal authority to sue on
their municipalities' behalf, is simply not relevant to our
standing inquiry. That is because, as we will explain in more
detail below, the municipalities represented by La Liga's member-
mayors have sufficient "indicia of membership" in La Liga to make
them functionally akin to members in the organization themselves.
See id. at 344. Since it is beyond dispute that the municipalities
would themselves have Article III standing to bring the present
lawsuit, and the remaining requirements of organizational standing
are also satisfied, La Liga has organizational standing to sue on
behalf of municipalities that are, "for all practical purposes,"
the equivalent of its formal members. Id.
2. The "Indicia of Membership" Test
In Hunt, the Supreme Court introduced the so-called
"indicia of membership" test to explain why the plaintiff in that
case had organizational standing to sue on behalf of non-members,
just as La Liga seeks to do here. See id. at 343-45. The plaintiff
in Hunt was a state commission composed of commissioners who were
elected by, drawn from, and represented the interests of apple
growers and sellers in Washington state who were injured by a North
Carolina statute that would have burdened the Washington apple
industry in its efforts to ship apples into North Carolina. The
Washington State Apple Advertising Commission brought suit to
enjoin this law on behalf of its constituency of apple growers and
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dealers, even though they were not "members" of the organization
in any formal sense (indeed, it had no members).
The Court explained that the Commission "for all
practical purposes" "represent[ed] the Washington apple industry"
because "its purpose [was] the protection and promotion of the
Washington apple industry," which was the "primary beneficiary of
its activities, including the prosecution of this kind of
litigation." Hunt, 432 U.S. at 344. "Moreover, while the apple growers and dealers [were] not 'members' of the Commission," formally speaking, "they possess[ed] all of the indicia of membership."Id.
(emphasis added). For instance, "they alone elect[ed] the members of the Commission; they alone [could] serve on the Commission;" and they financed the Commission.Id.
"In a very real sense, therefore, the Commission represent[ed] the State's growers and dealers and provide[d] the means by which they express[ed] their collective views and protect[ed] their collective interests."Id. at 345
. Cautioning against "exalt[ing] form over substance," the Court found standing easily proven in support of the Commission's effort to sue on behalf of non-members.Id.
In Students for Fair Admissions, Inc. v. President &
Fellows of Harvard College ("SFA"), though we ultimately did not
apply the "indicia of membership test, we recognized that an
organization may sometimes sue on behalf of non-members, and we
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repeated from Hunt five features to consider in applying the
"indicia of membership" test, including: "whether the
organization's purpose is to protect and promote the interests of
its non-members, whether these non-members are 'the primary
beneficiar[ies] of its activities,' and whether non-members elect
its members, are the only people who may be members, or finance
the organizations' activities." 980 F.3d 157, 183(1st Cir. 2020) (alteration in original) (quoting Hunt,432 U.S. at 344-45
), rev'd on other grounds,600 U.S. 181
(2023). Moreover, we note here that courts applying the "indicia of membership" test have been clear that the criteria discussed in Hunt are illustrative, not exhaustive. See, e.g., Flyers Rts. Educ. Fund, Inc. v. U.S. Dep't of Transp.,957 F.3d 1359, 1362
(D.C. Cir. 2020); Or. Advoc. Ctr. v. Mink,322 F.3d 1101
, 1111 (9th Cir. 2003); Doe v. Stincer,175 F.3d 879, 886
(11th Cir. 1999).
In Mink, for example, the constituents of the plaintiff
organization lacked many of the "indicia of membership" discussed
in Hunt.9 See 322 F.3d at 1111. Indeed, the constituents did not
9The organization in Mink was a nonprofit legal advocacy
organization that represented the rights of people with
disabilities, including people with mental illness. 322 F.3d at
1105. It sought to sue on behalf of one of its constituents, a
mentally incapacitated criminal defendant who was detained in
county jail while awaiting transfer to a hospital. Id.
Established pursuant to the Protection and Advocacy for Mentally
Ill Individuals Act of 1986, 42 U.S.C. §§ 10801–1085, the
organization was federally funded and, as required by statute, had
a governing board and advisory counsel that included members of
- 21 -
fund the organization or solely elect its leaders, who were not
limited to that constituency. Id. Nonetheless, the court found
that the "indicia of membership" test had been satisfied,
concluding that what "undergird[s]" the analysis is whether "the
organization is sufficiently identified with and subject to the
influence of those it seeks to represent as to have a 'personal
stake in the outcome of the controversy'" and noting that its
constituency had means to direct and influence the organization's
activity. Id. (quoting Vill. of Arlington Heights v. Metro. Hous.
Dev. Corp., 429 U.S. 252, 261(1977)). Other courts have described the substance-over-form purpose of this "functional analysis" in similar terms. See Friends of the Earth, Inc. v. Chevron Chem. Co.,129 F.3d 826, 828
(5th Cir. 1997) (holding that the purpose of the "indicia of membership" test is to determine whether the "nature of the relationship between the [organization] and the relevant interests of [its non-members] satisfie[s] the goals of the constitutional standing requirement"); Doe,175 F.3d 886
(holding that the "indicia of membership" test is satisfied when an organization's constituents "possess the means to influence the priorities and activities the [organization] undertakes"); Flyers Rts. Educ. Fund,957 F.3d at 1362
(holding that the "indicia of
the constituency or their family members, as well as a grievance
procedure through which it was accountable to its constituents.
Id. at 1111-12.
- 22 -
membership test" is satisfied where non-member constituents have
"a sufficient amount of interaction" with the organization "to
influence [its] activities").
3. Applicability of the "Indicia of Membership" Test
Before we explain why La Liga's allegations plausibly
satisfy the "indicia of membership" test, we must address the
dissent's argument that this test is not applicable in the present
case. The dissent bases that assertion on the fact that La Liga
takes the form of a voluntary membership association. To defend
that claim, the dissent relies on an out-of-context reading of our
discussion of the "indicia of membership" test in SFA, 980 F.3d at
183-84. There, we observed that the test applies to "organizations that are not voluntary membership organizations."Id. at 183
. SFA involved a voluntary membership association suing on behalf of its official members: students who had been denied admission to Harvard. Even though the organization was thus clearly suing on behalf of members who would have had standing in their own right, see Hunt432 U.S. at 434
, Harvard argued that, nonetheless, the association needed to further show that those members also bore the "indicia of membership," see SFA,980 F.3d at 183
; see also Students for Fair Admissions, Inc. v. President & Fellows of Harvard Coll.,261 F. Supp. 3d 99, 106-09
(D. Mass. 2017) (further
elucidating Harvard's standing argument, which would have required
the application of the "indicia of membership test" whenever
- 23 -
membership organizations sue on behalf of their members to probe
"whether [their] 'members' are 'genuine' members or not, with the
organization's view of its own members being only one factor in
the analysis"), aff'd, 980 F.3d 157, rev'd,600 U.S. 181
.
With the language quoted by the dissent, we rejected
Harvard's assertion that the "indicia of membership" test "must be
met" in cases where a traditional membership organization is
seeking "on [its] face" to litigate on behalf of its own members.
SFA, 980 F.3d at 184. Rather, we agreed that the analysis is only relevant in "situations in which an organization is attempting to bring suit on behalf of individuals who are not members."Id.
at 184 n.21 (quoting Cal. Sportfishing Prot. All. v. Diablo Grande, Inc.,209 F. Supp. 2d 1059, 1066
(E.D. Cal. 2002)).
In other words, we held in SFA only that the "indicia of
membership" test is not relevant when a voluntary membership
organization aims to sue on behalf of its members. We did not
consider the present question of whether a voluntary membership
organization can sue on behalf of non-members who nonetheless have
the requisite "indicia of membership." Our common sense holding
in SFA aligns with the purpose of the "indicia of membership" test,
which is to determine whether, practically speaking, an
organization has the appropriate relationship with non-members to
sue on their behalf. See Friends of the Earth, 129 F.3d at 828.
No such inquiry is necessary when an organization represents its
- 24 -
formal members in court. It obviously can. Here, however, La
Liga seeks to sue on behalf of non-members. Thus, taken in
context, the language from SFA upon which the dissent relies says
nothing about the applicability of the "indicia of membership"
test in the present circumstance.
The dissent's argument that the "indicia of membership"
test is unavailable to La Liga, purely because it takes the form
of a voluntary membership organization, is incompatible with
Hunt's admonition not to "exalt form over substance." 432 U.S. at
345. While the dissent argues that this "pithy phrase" means
nothing more than that we should not "treat entities that are
functionally traditional trade associations differently for
purposes of standing from entities that formally are," the text of
the decision speaks of no such limitation.10 To the contrary,
The dissent also points to a subsequent case in which the
10
Supreme Court resoundingly reaffirmed the standing principles
announced in Hunt, clarifying that even though associations may
"not always be able to represent adequately the interests of all
their injured members," that possibility did not "persuad[e] [the
Court] to abandon settled principles of associational standing."
Int'l Union, United Auto., Aerospace & Agr. Implement Workers of
Am. v. Brock, 477 U.S. 274, 290(1986). The opinion -- which does not discuss the "indicia of membership" test in particular -- does not suggest that the possibility of inadequate representation presents an Article III concern, but merely explains that, under due process principles, individual members of an association may not, in some cases, be precluded from separately raising their individual claims.Id.
Nothing in Brock's explanation of why an
association's members "band together," drawing upon shared
expertise and resources to collectively vindicate their interests,
applies with any less force to an organization's ability to
adequately represent those who are, under the "indicia of
- 25 -
courts have rejected the dissent's rigid formalism. In Friends of
the Earth, for example, over a dissent arguing that Hunt should
not be extended from its original context of a state agency to
cover nonprofit organizations, the Fifth Circuit stated that there
is "no cogent reason to limit [the 'indicia of membership'] test
to the facts of Hunt," adding that such "formalistic argument[s]"
"lack[] merit" in the context of applying the "indicia of
membership" test. 129 F.3d at 828-29 (quoting Pub. Int. Rsch. Grp. of N.J., Inc. v. Magnesium Elektron, Inc.,123 F.3d 111
, 119
(3d Cir. 1997)).
Moreover, contrary to the suggestion of the dissent,
there is nothing novel about applying the "indicia of membership"
test to voluntary membership organizations suing on behalf of non-
members. Indeed, it appears to be the universal practice of
federal courts to apply the "indicia of membership" test in this
circumstance.11 In Nestle Ice Cream Co. v. N.L.R.B., 46 F.3d 578,
membership test," the functional equivalent of its members, even
if not included in its formal membership rolls.
11The dissent's only citation to the contrary is a concurring
opinion in an out-of-circuit case that never mentions the "indicia
of membership" test but merely observes that a nonprofit
organization may not premise its assertion of standing on "the
interests of nonmembers for whose interests [the organization]
advocates." Ne. Ohio Coal. for the Homeless v. Blackwell, 467
F.3d 999, 1013(6th Cir. 2006) (McKeague, J., concurring) (emphasis omitted); see alsoid.
at 1010 n.4 (the majority agreeing with
this assertion). We agree that La Liga could not premise its
standing on only the fact that it advocates for municipalities.
Rather, the "indicia of membership" test considers the ability of
those municipalities to influence the organization in order to
- 26 -
586 (6th Cir. 1995), for instance, the Sixth Circuit applied the
"indicia of membership" test to assess whether a union had standing
to sue on behalf of nonunion employees. Likewise, the Seventh
Circuit applied the "indicia of membership" test in Hope, Inc. v.
DuPage County, 738 F.2d 797, 814-15 (7th Cir. 1984), to determine
whether a nonprofit organization had standing to sue on behalf of
non-member constituents, as distinct from its "members and
directors."12 Similarly, in numerous cases, district courts have
applied the "indicia of membership" test to determine whether a
voluntary membership organization had standing to sue on behalf of
non-members, in several instances finding the test satisfied.13
assure ourselves that the municipalities are the functional
equivalents of members in the organization. See Section II.B.4,
infra.
12 Another example from the circuit courts is Interfaith
Community Organization v. Honeywell International, Inc., 399 F.3d
248(3d Cir. 2005). In that case, the Third Circuit agreed with the district court that an interfaith organization had organizational standing and expressly upheld the district court's findings regarding membership.Id. at 258
. The district court, in turn, had found that the organization had standing to sue on behalf of both "members of [the organization] or individuals with sufficient indicia of membership to be treated as members." Interfaith Cmty. Org. v. Honeywell Int'l, Inc.,188 F. Supp. 2d 486, 499
(D.N.J. 2002). Thus, while the Third Circuit did not expressly apply the "indicia of membership" test, its embrace of the district court's standing analysis, along with its acknowledged "obligation to examine our own jurisdiction and that of the district courts," Interfaith Cmty. Org.,399 F.3d at 254
,
strongly suggests that the circuit court approved of the
application of the "indicia of membership" test in that context.
13See, e.g., Sec. Indus. & Fin. Mkts. Ass'n v. U.S. Commodity
Futures Trading Comm'n, 67 F. Supp. 3d 373, 409-11 (D.D.C. 2014)
(holding that association had standing to sue on behalf of
- 27 -
On the other hand, we are aware of no case holding the
"indicia of membership" inapplicable because the plaintiff was a
voluntary membership organization. The only federal court to opine
on the argument that the "indicia of membership" test should be
inapplicable to membership organizations suing on behalf of non-
members found that contention, as we do, meritless. See Sec.
Indus. & Fin. Mkts. Ass'n v. United States Commodity Futures
Trading Comm'n, 67 F. Supp. 3d 373, 410(D.D.C. 2014) (stating that it could "divine no reason why the ['indicia of membership'] test should not also apply to traditional trade associations that purport to represent, in addition to their formal members, the interests of informal members as well"). Stressing that such an "functional member" not included in "formal membership rolls"); Interfaith Cmty. Org.,188 F. Supp. 2d at 499
(finding voluntary membership organization had standing to sue on behalf of both "members of [the organization] or [non-member] individuals with sufficient indicia of membership to be treated as members" (emphasis added)); City of Philadelphia v. Beretta U.S.A., Corp.,126 F. Supp. 2d 882
, 896 n.10 (E.D. Pa. 2000) (concluding that "[n]on-members" "served by the [plaintiff membership organizations] [possessed] sufficient indicia of membership," but that the organizations lacked standing on other grounds), aff'd,277 F.3d 415
(3d Cir. 2002). See also Am.'s Frontline Drs. v. Wilcox, No. 21-1243,2022 WL 1514038
, at *7 (C.D. Cal. May 5, 2022); Waskul v. Washtenaw Cnty. Cmty. Mental Health,221 F. Supp. 3d 913, 918
(E.D. Mich. 2016), aff'd,900 F.3d 250
(6th Cir. 2018); Conservative Baptist Ass'n of Am., Inc. v. Shinseki,42 F. Supp. 3d 125, 133
(D.D.C. 2014); United States v. City of New York, No. 07-2067,2011 WL 2259640
, at *9 (E.D.N.Y. June 6, 2011); Int'l Bhd. of Elec. Workers AFL-CIO v. Citizens Telecomms. Co. of Cal., No. 06-0677,2006 WL 1377102
, at *3 (E.D. Cal. May 18, 2006), aff'd,549 F.3d 781
(9th Cir. 2008); NAACP v. Harris,567 F. Supp. 637, 640
(D. Mass. 1983).
- 28 -
approach would "formalistically" "deny plaintiffs the advantages
of the 'indicia of membership' test," the court there held that an
entity that did not appear on a trade association's "limited,
formal membership rolls" nonetheless was "a functional member of
[the trade association] for purposes of the associational standing
analysis." Id. at 410-11.
Finding a voluntary membership organization to have
standing to sue on behalf of non-members is not even novel in our
court. In Railway Labor Executives' Association ("RLEA") v. Boston
& Maine Corp., we expressly held just that, citing Hunt as support.
See 808 F.2d 150, 153 n.8 (1st Cir. 1986). The plaintiff in that case was, as the district court put it, "a voluntary, unincorporated association of the Chief Executive Officers of nineteen standard labor organizations," who brought suit to "protect[] the rights of the membership of the unions," not the rights of the executives.639 F. Supp. 1092, 1095-96
(D. Me. 1986) (emphasis added); see also RLEA,808 F.2d at 153
(explaining that
the association aimed "to prevent [the defendants] from taking
discriminatory action against the striking employees" or
"retaliating against the employees who refused to
cross . . . picket lines"). We were thus aware that the plaintiff
in that case did not premise its standing on an injury suffered by
its formal membership. Instead, as here, the injury was suffered
- 29 -
by a separate constituency of non-members. Nonetheless, the
organization had standing to sue on behalf of the non-members.
We do not agree with the dissent that RLEA has nothing
to teach us about the applicability of the "indicia of membership"
test in this case. True, when a court simply exercises
jurisdiction in a prior similar case, with no explanation, it does
not create precedent regarding jurisdiction. See Lewis v. Casey,
518 U.S. 343, 352 n.2 (1996); Fed. Election Comm'n v. NRA Pol. Victory Fund,513 U.S. 88, 97
(1994). In RLEA, however, we made
an express finding about standing, which we explained by citing
generally to Hunt. We can properly glean, at least, that Hunt
explained why the membership organization in that case had standing
to sue on behalf of non-members, a conclusion that only the
"indicia of membership" test discussed in Hunt could support.
Mindful of the substance-over-form underpinnings of the
"indicia of membership" test, and in accordance with the universal
practice of federal courts in similar circumstances, the "indicia
of membership" test is clearly applicable to determine whether La
Liga has standing to sue on behalf of the non-member
municipalities.
As for the dissent's argument that La Liga never invoked
the "indicia of membership" test, that complaint rings hollow. As
we have detailed, there were no questions about La Liga's
organizational standing throughout this litigation until the panel
- 30 -
raised them briefly at oral argument. While we have an independent
obligation to confirm our jurisdiction, we must, by the same token,
test for ourselves the allegations in La Liga's complaint against
well-settled standing principles. See, e.g., Hartig Drug Co. v.
Senju Pharm. Co., 836 F.3d 261, 267(3d Cir. 2016) (explaining that while "[a] court's non-waivable obligation to inquire into its own jurisdiction is most frequently exercised in the negative," courts "have no more right to decline the exercise of jurisdiction which is given, than to usurp that which is not," and thus it was appropriate to consider arguments favoring standing not presented by the appellant (quoting Quackenbush v. Allstate Ins. Co.,517 U.S. 706, 716
(1996))).14 More importantly, contrary to the
dissent's assertion that La Liga has waived standing arguments it
never had an occasion to fully flesh out, we are taking no great
leap from what La Liga has asserted all along: that it possesses
organizational standing to sue on behalf of non-member
14Contrary to the dissent's description, in Hartig, the Third
Circuit concluded that it had jurisdiction on a basis that the
appellant had not argued. See 836 F.3d at 267. Indeed, whereas the court concluded that it had jurisdiction because the standing question at issue was not an Article III issue, the appellant had conceded that it was.Id.
Here, by contrast, La Liga has consistently argued that it has organizational standing. As we explain below, we agree that its complaint plausibly supports exactly that contention. Accordingly, Guaranty National Title Co. v. J.E.G. Associates,101 F.3d 57
(7th Cir. 1996), in which the court simply found that the plaintiff's complaint and supplemental filings were "shockingly" sparse on the relevant jurisdictional question,id. at 58
, does not counsel a different result.
- 31 -
municipalities represented by its member-mayors. We need only
apply a seminal case on organizational standing to understand why
that approach is sound. See Hunt, 432 U.S. at 343-45. For these reasons, our analysis does not run afoul of the general principle that we should "rely on the parties to frame the issues for decision." Greenlaw v. United States,554 U.S. 237, 243
(2008).
4. Applying the "Indicia of Membership" test
Satisfied that the "indicia of membership" test is
appropriate to apply in the present case, we must now determine
whether La Liga is "sufficiently identified with and subject to
the influence of [the municipalities] it seeks to represent," Mink,
322 F.3d at 1111, so as to provide "the means by which they express
their collective views and protect their collective interests,"
Hunt, 432 U.S. at 345.
To begin, we note that La Liga's allegations, quoted
above in full, describe it to be such a spokesperson for the
municipalities "headed by" its member-mayors. It alleges that its
purpose is to "unite local governments" and thereby "strengthen
the[ir] capacity" to meet "governance challenges," including, as
most relevant here, by "defend[ing] the decimated municipal
finances from the onslaught of austere measures imposed by the
Oversight Board." Moreover, its initiatives are "tempered to the
needs and realities of municipal governments," suggesting that the
municipalities influence the organization's activity, including
- 32 -
the present effort. To be sure, its formal membership consists of
the mayors of those municipalities, not the municipalities
themselves. Our task, therefore, is to determine whether it is
plausible that an association of mayors could be functioning as a
representative of those mayors' municipalities.
Starting with the "indicia of membership" discussed in
Hunt, La Liga's purpose is plainly to advocate for the interests
of the municipalities its member-mayors represent, making these
municipalities the "primary [and sole] beneficiar[ies] of its
activities," including this litigation. 432 U.S. at 344. Moreover, La Liga's membership is elected exclusively by these municipalities. Indeed, it is reasonably clear that these municipalities are La Liga's only constituents, as it appears that only the currently elected mayors of Puerto Rico's municipalities may be members, and there is no suggestion that La Liga serves the interests of anyone other than the municipalities, not even those of its member-mayors. While La Liga's complaint does not clarify the source of its funding, the absence of this one indicum is not outcome-determinative. See, e.g., Flyers Rts. Educ. Fund,957 F.3d at 1362
; Mink, 322 F.3d at 1111; Doe,175 F.3d at 886
.
It is also evident from the "nature of the relationship
between [La Liga] and the relevant interests of [the
municipalities]," Friends of the Earth, 129 F.3d at 828, that La
Liga "is sufficiently identified with and subject to the influence
- 33 -
of" the municipalities such that the municipalities are the
"functional equivalent" of members, Mink, 322 F.3d at 1111-12. On
this score, we find it highly relevant that La Liga's formal
membership appears to consist solely of democratically-elected
mayors who (we can reasonably infer) participate in the
organization in that capacity, and expressly on their
municipalities' behalf. Considering the institutional, political,
and legal mechanisms of accountability inherent in the
relationship between a mayor and municipality, and aided by our
"judicial experience and common sense," Ashcroft v. Iqbal, 556
U.S. 662, 679 (2009), we think that La Liga's complaint plausibly
establishes that the municipalities have considerable influence
over La Liga's member-mayors, and, thus, La Liga itself.
We also note that finding the "indicia of membership"
test satisfied here aligns with our holding in RLEA. See 808 F.2d
at 153 n.8. While we do not know the RLEA court's exact reasoning,
the facts known to the panel in that case -- in which an
association of elected labor executives had standing to sue on
behalf of the non-member union workers they represented -- are
closely analogous to those known to the court in the present
case -- in which an association of elected mayors seeks to sue on
behalf of the municipalities they represent. RLEA thus provides
- 34 -
additional support for La Liga's standing under comparable
circumstances.15
In short, La Liga has adequately alleged that the
municipalities are "for all practical purposes" represented by La
Liga as if they were themselves its members. Hunt, 432 U.S. at
344. After all, La Liga exists to represent the interests of these municipalities, its formal members are elected by the municipalities, and the municipalities -- its sole constituents -- are well-positioned to direct and influence the organization. "In a very real sense, therefore, [La Liga] represents the [municipalities] and provides the means by which they express their collective views and protect their collective interests." Hunt432 U.S. at 345
.
The dissent's effort to distinguish the facts of RLEA is
15
unpersuasive. Indeed, the only authority referenced by the dissent
to distinguish RLEA is briefing by the same association in a
different case years later, which, of course, reveals nothing about
our thinking in RLEA. See Brief of Movant-Intervenor RLEA at 1-
6, Am. Train Dispatchers Ass'n v. I.C.C., 26 F.3d 1157(D.C. Cir. 1994) (No. 92-1397),1993 WL 13650707
, at *1–6. And the
conclusions the dissent draws from that briefing are no more
convincing. The dissent argues that the briefing shows that the
organization's "board was at least controlled by [its members],"
which is reason to think that the "injured parties there . . . were
positioned to exercise control . . . over the members of the
organization who themselves controlled its decisions." But the
cited briefing says nothing about the organization's board.
Moreover, as explained, La Liga is plausibly subject to the control
of the municipalities in much the same way as the dissent posits
the organization in RLEA was subject to the control of the non-
member union employees on whose behalf it sued.
- 35 -
The dissent raises several additional objections, all of
which, at their root, take issue with our common sense conclusion
that La Liga is plausibly subject to the influence of the
municipalities sufficiently to satisfy the "indicia of membership"
test. In the dissent's view, La Liga's effort to sue on the
municipalities' behalf "risks undermining the ability of
governments at all levels of our democratic system to determine
who will represent them in federal court." For the reasons
described above, these concerns for the preservation of democratic
control are simply not credible.16 Nor are they supported by any
of the discrete arguments the dissent raises.
In City of Chicago v. Sessions, 2017 WL 5499167, at *5
16
(N.D. Ill. Nov. 16, 2017), the district court rejected a similar
argument that the United States Conference of Mayors lacked
standing to sue on behalf of its member cities, noting that there
is "no authority for the proposition that litigation must be
specifically authorized by members" to establish standing.
Moreover, we note that this case is just one of many cases in which
federal courts have found that municipal associations have
standing to sue on behalf of municipalities or have exercised
jurisdiction over such cases. See Iowa League of Cities v. E.P.A.,
711 F.3d 844(8th Cir. 2013); Tex. Coal. of Cities for Util. Issues v. F.C.C.,324 F.3d 802
(5th Cir. 2003); City of Evanston v. Barr,412 F. Supp. 3d 873
(N.D. Ill. 2019); cf. Nat'l League of Cities v. Usery,426 U.S. 833
(1976); City of Portland v. United States,969 F.3d 1020
(9th Cir. 2020); N.C. Comm'n of Indian Affs. v. U.S. Dep't of Lab.,725 F.2d 238
(4th Cir. 1984). While not all of
these cases bear directly on La Liga's standing, they further show
that La Liga's effort to litigate on behalf of municipalities -- as
similar organizations have done many times previously -- is
nothing out of the ordinary, nor, certainly, the threat to
democratic control that the dissent suggests.
- 36 -
First, the dissent argues that the election of La Liga's
member-mayors is not a compelling "indicum of membership" because
"La Liga's members were elected to their mayoral offices. They
were not elected to La Liga." In a similar vein, the dissent
argues that other factors considered in Hunt are absent here. This
argument fails because the precise "indicia of membership"
discussed in Hunt need not be present exactly as they were in that
case to find the test satisfied. In neither Mink, 322 F.3d at
1111, nor Doe, 175 F.3d at 88, did the organization's non-member
constituents fund the organization, exert exclusive control over
the organization, nor solely select the organization's leaders.
Nonetheless, these constituents had enough "indicia of membership"
to confer standing because they had other adequate means to
influence their respective organizations. The same is true here.
Moreover, the municipalities do solely elect La Liga's membership.
True, the municipalities do not elect their mayors specifically to
be members of La Liga, but they do elect them to represent the
municipalities and to work in the municipalities' best interests,
which is the mayors' express purpose for joining the organization.
The dissent next argues that there is no basis to
conclude that "La Liga's mayors have been entrusted to unilaterally
make the fraught decision to sue." But, as the dissent
acknowledges, Puerto Rico law states that a core function of mayors
is to "[r]epresent the municipality in juridical or extra-
- 37 -
juridical actions brought by or against the municipality, appear
before any Court of Justice, forum or public agency of the
Government of the Commonwealth of Puerto Rico and the Government
of the United States of America, and support all kinds of rights,
actions and procedures." P.R. Laws Ann. tit. 21, § 4109(e).17
This statute provides strong support for the proposition that La
Liga's member mayors are entrusted to carry out precisely the sort
of litigation now before us.18 In so reasoning, we do not
"conclude," as the dissent accuses, that "mayors are the definitive
decisionmakers as to all matters of consequence for their
municipalities." Indeed, to the contrary, our observation here
17 The remainder of this subsection provides:
The mayor may not acquiesce to, or fail to
answer any suit in any procedure or action in
which the municipality is a party, without the
prior consent of the absolute majority of the
members of the municipal legislature. The
mayor shall submit to the consideration of the
municipal legislature any transaction offer
that entails any type of financial
disbursement over twenty five thousand dollars
($25,000), prior to submitting said
transaction offer to the consideration of the
juridical forum.
18The dissent asserts that this statute does not "obviously
settle the question of mayoral authority to sue." This argument
is simply a recycled version of the dissent's underlying theory
for why La Liga lacks standing. As we explained at the outset, we
do not need to "settle" whether and under what circumstances the
mayors have authority to initiate litigation on their
municipalities' behalf because -- if the "indicia of membership"
test is satisfied -- it is the standing of the municipalities, and
not the mayors, that ultimately matters.
- 38 -
that Puerto Rico law expressly tasks mayors with representing
municipalities in court is simply meant to demonstrate that La
Liga's effort in this case is consistent with the duties of its
democratically accountable member-mayors and thus provides
additional reason to think that La Liga is "sufficiently identified
with and subject to the influence of [the municipalities] it seeks
to represent." Mink, 322 F.3d at 1111.
Finally, the dissent complains that La Liga has not
described "the role that any of its member-mayors plays in deciding
the course of action that the organization itself may take." The
dissent's concern appears to rest on an unsupported notion that La
Liga's member-mayors themselves lack the means to control the
organization, and thus the municipalities' obvious influence over
its mayors is not enough to conclude that the municipalities
influence the organization by extension. We see no basis in the
record to draw the adverse inference against La Liga that its
member-mayors are unable to control the organization. For one
thing, the mayors appear to be La Liga's only formal members, and
we can reasonably infer from this fact that they direct the
organization. Moreover, La Liga's allegation that the
organization's initiatives are "tempered to the needs and
realities of municipal governments" supports the plausible
inference that the member-mayors -- those positioned to represent
their municipalities' needs and realities -- shape the
- 39 -
organization's agenda. Simply put, there is no suggestion that
anyone other than La Liga's member-mayors, acting as
representatives of their municipalities, direct the organization's
activity (subject, in turn, to the direction of their
municipalities).
The dissent's demand that La Liga allege all of its inner
workings is thus irreconcilable with the pleading standard. See
Tyler, 598 U.S. at 637(reminding that a plaintiff "need not definitively prove" standing at the pleading stage).19 Our reasonable inference, explained above, that the municipalities have considerable means to influence La Liga's member-mayors, and, thus, La Liga itself, is sufficient to satisfy the requirements of organizational standing on a motion to dismiss, without knowing all the ins and outs of La Liga's organizational structure. See Lujan,504 U.S. at 561
("At the pleading stage, general factual
allegations" supporting standing "may suffice, for on a motion to
dismiss we 'presum[e] that general allegations embrace those
specific facts that are necessary to support the claim.'"
(alteration in original) (quoting Lujan v. Nat'l Wildlife Fed'n,
19 The dissent's citation to McBreairty v. Miller, 93 F.4th
513, 517-21(1st Cir. 2024), does not support the contrary proposition. In that case, which involved the denial of a preliminary injunction and thus had the benefit of an evidentiary hearing to illuminate the standing inquiry, seeid. at 516
, 518
n.2, we simply held that the plaintiff had not alleged or adduced
sufficient facts from which to infer standing. Here, however, La
Liga has done so.
- 40 -
497 U.S. 871, 889(1990))); see also Inst. of Cetacean Rsch. v. Sea Shepherd Conservation Soc'y,153 F. Supp. 3d 1291, 1313
(W.D. Wash. 2015) (denying motion to dismiss where the organization made only "minimal allegations about its financial contributions or managerial structure" but had "plead[ed] sufficient facts to allow the court to reasonably infer that 'the organization is sufficiently identified with and subject to the influence of those it seeks to represent'" (quoting Mink, 322 F.3d at 1111)); U.S. Student Ass'n Found. v. Land, No. 08-14019,2010 WL 1131493
, at *6 (E.D. Mich. Mar. 23, 2010) (similar); cf. Bldg. & Const. Trades Council of Buffalo, N.Y. & Vicinity v. Downtown Dev., Inc.,448 F.3d 138, 144-45
(2d Cir. 2006) (denying challenge to
organizational standing that "might have some validity if this
litigation were at the summary judgment stage," where "[d]iscovery
on this issue would therefore be substantially complete, and the
evidentiary adequacy of the [plaintiff's] standing allegations
could be tested").20
As we explain, infra, we affirm the district court's
20
dismissal of the complaint on the merits. But the fact that this
case will not proceed to a more mature stage of litigation is no
reason to depart from the pleading standard governing La Liga's
standing allegations. See, e.g., Clementine Co., LLC v. Adams, 74
F.4th 77, 83-84 & 83 n.1 (2d Cir. 2023) (reversing district court's
dismissal of complaint for lack of standing for failure to apply
the proper pleading standard but ordering dismissal on the merits).
- 41 -
* * *
In sum, we hold that the injured municipalities have
sufficient "indicia of membership" in La Liga to satisfy the
requirements of organizational standing.
C. Causation and Redressability
Having determined that La Liga has alleged a sufficient
injury and possesses organizational standing to sue regarding that
injury, we turn now to the remaining two elements of standing:
causation and redressability. To establish causation, "the
plaintiff [must] show a sufficiently direct causal connection
between the challenged action and the identified harm." Katz, 672
F.3d at 71. That connection may not be "overly attenuated," however,id.
at 71 (quoting Donahue v. City of Bos.,304 F.3d 110, 115
(1st Cir. 2002)), nor may it stand on "conclusory assertions []or unfounded speculation," Hochendoner v. Genzyme Corp.,823 F.3d 724, 731
(1st Cir. 2016).
To satisfy the redressability requirement, "the
plaintiff [must] allege 'that a favorable resolution of [its] claim
would likely redress the professed injury.'" Dantzler, Inc. v.
Empresas Berríos Inventory & Operations, Inc., 958 F.3d 38, 47(1st Cir. 2020) (second alteration in original) (quoting Katz,672 F.3d at 72
). Though redress need not be certain, "it cannot be merely speculative."Id.
Likewise, the plaintiff "need not
demonstrate that its entire injury will be redressed by a favorable
- 42 -
judgment, [but] it must show that the court can fashion a remedy
that will at least lessen its injury." Id. at 49.
Because La Liga must show that both elements are
satisfied as to each defendant, we will analyze causation and
redressability separately for all three sets of defendants.
1. Standing as to the Executive Branch Defendants
The district court concluded that La Liga lacked
standing to sue the executive branch defendants, citing both lack
of causation and redressability. We agree.
La Liga has not shown that its injury is fairly traceable
to the executive branch defendants. As La Liga frames the issue,
the executive branch defendants benefitted from the disputed funds
only after they "caved-in to the pressure of the Oversight
Board['s]" "demand[s]." Nonetheless, La Liga insists that the
executive branch defendants bear some responsibility for the
municipalities' losses, as nothing "force[s] [them] . . . to
comply with the illegality" of the Board's efforts. Rather, La
Liga contends, these defendants have a "duty to act according to
the law" and also have "fiduciary duties" to the municipalities.
These vague assertions in La Liga's appellate briefing do not
overcome the fact that it has not plausibly pled how the executive
branch defendants breached any such duties in this case, nor even
that they possess fiduciary duties to the municipalities. See
A.G. ex rel. Maddox v. Elsevier, Inc., 732 F.3d 77, 83 (1st Cir.
- 43 -
2013) (explaining that causation is lacking when based on
"conclusory statement[s] . . . wholly unsupported by factual
allegations sufficient to make the plaintiff's claim plausible").
Moreover, as the district court pointed out, La Liga
does not explain how the executive branch defendants have "legal
authority to direct the application of funds in a manner contrary
to the governing budgets and fiscal plans approved by the Oversight
Board." [Add. 007] La Liga has not adequately alleged that "in fact, the asserted injury was the consequence of the defendants' actions" or omissions, Warth v. Seldin,422 U.S. 490, 505
(1975),
when it fails to show that the executive branch defendants had any
authority to directly refuse or return the funds diverted to them.
For similar reasons, La Liga has not established that a
judgment against the executive branch defendants would likely
redress the municipalities' injury. As our causation discussion
illuminates, La Liga has not provided any basis in its complaint
from which to conclude that these defendants have the authority to
directly return the disputed funds to the municipalities. La Liga
has thus not satisfied the redressability requirement.
In reaching this conclusion, we reject La Liga's
contention that it has standing with respect to the executive
branch defendants because they are indispensable parties under
Federal Rule of Civil Procedure 19(a)(1). Whether a party is
indispensable to an action has no bearing on whether the court has
- 44 -
subject matter jurisdiction over that party. Indeed, where a court
lacks subject matter jurisdiction over a party, that party may not
be joined. See, e.g., Picciotto v. Cont'l Cas. Co., 512 F.3d 9,
22, 22 n.19 (1st Cir. 2008) (stating that joinder that "destroy[s]
diversity" will "eliminat[e] any basis for original
jurisdiction"). Thus, putting the executive branch defendants'
purported indispensability aside, whether they are indispensable
is irrelevant to whether La Liga has standing to sue them.
We thus affirm the district court's order dismissing the
complaint as to the executive branch defendants for lack of
standing.
2. Standing as to CRIM
CRIM did not challenge La Liga's standing in its motion
to dismiss but appears to do so now.21 CRIM's failure to timely
raise its standing arguments is of no consequence, however, because
we must confirm our jurisdiction. See Ryan, 974 F.3d at 17 n.4.
La Liga's complaint asserts that CRIM directly caused
the municipalities' injury, alleging that "CRIM illegally withheld
all disbursements to which the Municipalities were entitled and
21 In its appellate brief, CRIM incorrectly claims that the
district court dismissed La Liga's complaint against it for lack
of standing. The district court's standing analysis addressed
only the "government parties," by which it meant AAFAF, ASES, and
the ERS administrator. CRIM's briefing largely regurgitates the
district court's standing analysis for those parties, suggesting
that the analysis also applies to CRIM.
- 45 -
diverted the monies to the Retirement System and to ASES." To be
sure, the complaint also blames that action on the Board's
"unilateral decision" and the Board's pressuring CRIM to comply.
Nonetheless, CRIM's role in shepherding the disputed funding away
from the municipalities -- even begrudgingly -- is enough to
establish CRIM's place in the "chain of causation" resulting in
the municipalities' injury. Weaver's Cove Energy, LLC v. R.I.
Coastal Res. Mgmt. Council, 589 F.3d 458, 467(1st Cir. 2009) (quoting Bennett v. Spear,520 U.S. 154, 169
(1997)).
Relief against CRIM could also conceivably redress the
municipalities' injury. Just as CRIM diverted the disputed funding
in the first place, La Liga has asked the "court [to] fashion a
remedy that will at least lessen [that] injury" by ordering CRIM
to cease that activity and redirect future funds to make up for
the revenue wrongfully withheld. Dantzler, 958 F.3d at 49.
Accordingly, the complaint against CRIM survives as a
matter of standing.
3. Standing as to the Board
Lastly, we consider La Liga's standing to sue the Board.
La Liga has alleged that the Board caused the municipalities'
alleged injury by orchestrating the repayment of the disputed
funds. In addition, a court could likely redress that injury by
declaring the Board's interpretation of the O&O incorrect and
- 46 -
enjoining its actions. The three elements of standing are thus
easily satisfied.
III.
Having confirmed La Liga's standing to sue the Board and
CRIM, we proceed to their assertion that the O&O did not void Law
29 ab initio and thus did not apply to the challenged period. La
Liga presses two lines of attack against the Board's efforts to
recover the funds retained by the municipalities during the
challenged period: (1) that the O&O was not intended to nullify
Law 29 from the time of its enactment and (2) even if the Title
III court did intend as much, it lacked that authority and, hence,
its order should not be construed to do so.
A. The Intended Effect of the Order and Opinion
The court whose judgment is now on appeal is the same
court that authored the O&O. A court asked to construe the scope
and meaning of its own order is no doubt a persuasive authority.
See, e.g., Lampkin v. UAW, 154 F.3d 1136, 1147 (10th Cir. 1998)
(rejecting appellants' argument contesting the district court's
interpretation of its pre-trial order because "[t]he district
judge's interpretation of his own order is, of course, the most
authoritative"). Here, the district court stated that La Liga had
"misread[] the O&O, in a manner fatal to the Complaint," that
"[t]he intended effect of the O&O could not be clearer," and that
La Liga's arguments to the contrary were "unfounded and illogical."
- 47 -
The district court's emphatic rejection of La Liga's reading of
the order is telling.
Moreover, the district court's interpretation of the O&O
is supported by the order's text. The O&O repeatedly refers to
Law 29 as a "nullity." See Vázquez Garced, 616 B.R. at 247-48,
256 n.11. That word choice indicates that the Title III court
determined that Law 29 was legally invalid and never operative.
See, e.g., Nullity, Black's Law Dictionary (11th ed. 2019)
("Something that is legally void."). The court reinforced that
notion by repeatedly stating that Law 29 was "of no effect." See
Vázquez Garced, 616 B.R. at 250, 251, 254, 256. On this score, we
find instructive "the general rule . . . 'that a void act cannot
operate to repeal a valid existing statute,' meaning that the
existing statute 'remains in full force and operation as if the
repeal had never been attempted.'" LaRoque v. Holder, 650 F.3d
777, 791(D.C. Cir. 2011) (quoting Conlon v. Adamski,77 F.2d 397, 399
(D.C. Cir. 1935)). In such circumstances, "[t]he prior statute is 'revived' to avoid a chaotic hiatus in the law." Aroostook Band of Micmacs v. Ryan,484 F.3d 41
, 62 n.27 (1st Cir. 2007) (quoting White Motor Corp. v. Citibank, N.A.,704 F.2d 254, 261
(6th Cir. 1983)). By declaring Law 29 a "nullity" and "of no
effect," the O&O necessarily meant that the municipalities'
preexisting pension and healthcare funding obligations "remain[ed]
- 48 -
in full force and operation," including during the challenged
period. Conlon, 77 F.2d at 399.22
An additional textual clue comes from the O&O's
discussion of several Joint Resolutions enacted in 2018, which the
Board had also challenged as unauthorized reprogramming. See
Vázquez Garced, 616 B.R. at 248-50. The defendants argued that
this challenge was moot because the Joint Resolutions were one-
off spending bills that had already been implemented. The Title
III court, however, concluded that PROMESA's prohibition on
unauthorized reprogramming "incorporates no temporal limitations;
it prohibits both the adoption and the carrying out of unapproved
reprogramming legislation." Id. at 249 (emphasis added). Finding
both Law 29 and the Joint Resolutions to be unauthorized
reprogramming, the court declared them both "unenforceable and of
no effect." Id. at 250. This declaration as to the Joint
Resolutions could only have been backward-looking. Likewise, the
O&O invalidated the adoption of Law 29, not merely its ongoing
enforcement.
Indeed, even the defendants in the prior Law 29
litigation made clear that they understood the O&O to wipe out Law
As previously noted, those preexisting obligations required
22
the municipalities to complete a monthly "PayGo" fee to reimburse
the Commonwealth for pension disbursements to retired municipal
employees under Act 106, as well as to contribute to their
employees' health insurance plans as required by Puerto Rico law.
- 49 -
29 from inception. They stated in a motion following the O&O that
they were negotiating with the Board "regarding feasible
alternatives to unwind the effects of Act 29" and to
"cover . . . the shortfall created by Act 29's invalidation." See
Defs.'s Informative Mot. Re. Act 29 at 2, In Re Fin. Oversight &
Mgmt. Bd. for P.R., Title III Case No. 17-BK-3283, Adv. Proc. No.
19-393-LTS (D.P.R. May 6, 2020), ECF No. 109. If the meaning of
the O&O was clear to the parties immediately upon its issuance, we
see no reason to credit La Liga's contrary interpretation now.
La Liga offers several arguments in support of its
alternative reading, but none is persuasive. First, La Liga points
out that the Title III court never expressly stated that Law 29
was void ab initio. But, as we have detailed, the language used
in the O&O -- referring to the law's invalidity -- made clear that
it covered the challenged period. The court did not have to use
La Liga's preferred magic words. Cf. Brown v. Davenport, 596 U.S.
118, 141 (2022) ("[T]his Court has long stressed that 'the language
of an opinion is not always to be parsed as though we were dealing
with [the] language of a statute.'" (alteration in original)
(quoting Reiter v. Sonotone Corp., 442 U.S. 330, 341 (1979))).
La Liga also invokes Federal Rule of Civil Procedure
65(d), which sets forth specific requirements for injunction
orders, as further support for its argument that the O&O failed to
clearly void Law 29 ab initio. But that rule applies only to
- 50 -
injunctions and restraining orders, not to declaratory relief.
Although the O&O provided injunctive relief, it invalidated Law 29
by means of a declaration. La Liga's reliance on Gunn v.
University Committee to End War in Viet Nam, 399 U.S. 383(1970), is thus unavailing. Seeid. at 388-89
(noting the requirements
for specificity for "any order granting an injunction").
La Liga next argues that the Title III court's entry of
injunctive relief is inconsistent with construing the O&O to
nullify Law 29 retroactively for the challenged period. To be
sure, "[o]rdinarily, grants of equitable relief apply
prospectively rather than retroactively. That is why, for example,
plaintiffs must show a need for prospective relief in order to
obtain an injunction." Khalil v. Ashcroft, 370 F.3d 176, 179 (1st
Cir. 2004). But La Liga's argument largely elides the declaratory
relief in the O&O, which declared that Law 29 was a "nullity" and
"of no effect." See, e.g., Vázquez Garced, 616 B.R. at 256 ("Law
29 and the Joint Resolutions are hereby declared unenforceable and
of no effect. Defendants are, furthermore, permanently enjoined
from implementing and enforcing Law 29.").
Putting "[f]uture relief aside," we have acknowledged
the "current utility" of "a declaration as to the lawfulness
of . . . particular acts described in [the] complaint" to
determine the parties' rights and obligations going forward.
Verizon New England, Inc. v. Int'l Bhd. of Elec. Workers, Local
- 51 -
No. 2322, 651 F.3d 176, 189-90 (1st Cir. 2011); see also
Restatement (Second) of Judgments § 33 cmt. a (Am. L. Inst. 1982)
("[W]hile the declaratory action is perhaps most important as a
kind of preventive device, its use is not so restricted; it is
also sometimes permitted after the wrong has been committed.").
The O&O declared Law 29 invalid from its inception, meaning the
Commonwealth lacked a legal basis to divert funds to the
municipalities during the challenged period.23
Finally, La Liga insists that the Title III court could
only have intended to nullify Law 29 prospectively because it
23Given our recognition that declarations may address the
lawfulness of past actions, La Liga's invocation of out-of-circuit
cases noting the generally prospective nature of declaratory
relief do not advance its argument to the contrary. See McGee v.
Solic. Gen. of Richmond Cnty., 727 F.3d 1322, 1325(11th Cir. 2013); CMR D.N. Corp. v. City of Philadelphia,703 F.3d 612, 628
(3d Cir. 2013); AmSouth Bank v. Dale,386 F.3d 763, 786
(6th Cir. 2004). For instance, the observation in CMR D.N. Corp. that "declar[ing] the rights of litigants" is "by definition prospective in nature" does not conflict with the notion that those rights can be informed by a statute's prior validity (or lack thereof).703 F.3d at 628
(quoting Wilton v. Seven Falls Co.,515 U.S. 277, 286
(1995)).
The other cases La Liga cites are even less apt. The
statement in Nextel Partners Inc. v. Kingston Township, 286 F.3d
687, 693(3d Cir. 2002), that "a request for a declaratory judgment that a statutory provision is invalid is moot if the provision has been substantially amended or repealed" is irrelevant since Law 29 had not been repealed or modified. Indeed, that statement only confirms that a declaration of a statute's invalidity is sometimes available. And Steffel v. Thompson,415 U.S. 452
(1974), which generally describes the purpose of the Declaratory Judgment Act, does not suggest that declaratory relief may have only prospective impact. Seeid. at 466-67
.
- 52 -
stayed the effect of its order. La Liga argues that, if Law 29
was a nullity from its inception, such a stay would have been
impossible. But the Title III court's postponement of the O&O's
effective date says nothing about the validity of Law 29 during
the challenged period. The court allowed that delay at the
defendants' request. See Vázquez Garced, 616 B.R. at 257. At the
summary judgment hearing, the defendants explained that it would
take time for "the municipalities, the Oversight Board, and the
government [to] work together to try to come up with another
solution" because the nullification of Law 29 would "immediately
[impose] a huge gap in [the municipalities'] budgets that they
won't be able to bridge." Transcript of Omnibus Hearing at 36:11-
19, In re Fin. Oversight & Mgmt. Bd. for P.R., Title III Case No.
17-BK-3283, Adv. Proc. No. 19-393-LTS (D.P.R. Mar. 10, 2020), ECF
No. 105. The Board consented to the delay, emphasizing that "what
we're ultimately asking for is the law to be nullified so that the
past infractions can be corrected." Id. at 39:20-23. Thus, the
court granted the delay specifically because of the perceived
fiscal impact on the municipalities of voiding Law 29 ab initio.
B. The Title III Court's Authority to Nullify Law 29
La Liga also argues that, regardless of the Title III
court's intent, the court lacked the power to nullify Law 29 from
- 53 -
inception, and thus its order should not be construed to do so.24
La Liga argues that PROMESA does not authorize the Title III court
to void a duly enacted law ab initio. La Liga also appears to
argue that federal courts, as a general matter, lack such
authority. Accordingly, the only permissible reading of the O&O
is that it does not nullify Law 29 for the challenged period.
1. The Title III Court's Authority Under PROMESA
PROMESA expresses one limitation on the Title III
court's powers that is potentially relevant to its authority to
invalidate a Puerto Rico law from its inception. Section 305 of
the Act states:
Subject to the limitations set forth in
subchapters I and II of this chapter,
notwithstanding any power of the court, unless
the Oversight Board consents or the plan so
provides, the court may not, by any stay,
order, or decree, in the case or otherwise,
24 As we understand La Liga's argument about the Title III
court's authority, it is focused on how to interpret the O&O and
is not a challenge to the validity of the order. In other words,
La Liga accepts for the purposes of this appeal that the O&O
correctly declared Law 29 invalid but argues that, if the Title
III court lacks the authority to void a law ab initio, the O&O
should not be interpreted to have done so. We thus reject the
Board's characterization of La Liga's challenge as an improper
collateral attack on the O&O. Moreover, the Board did not raise
this argument below. See United States v. Parrilla Bonilla, 648
F.2d 1373, 1386 (1st Cir. 1981) ("[A]ppellate courts will not
ordinarily consider theories presented for the first time on
appeal."). For similar reasons, we decline to consider the Board's
alternative argument -- likewise raised first on appeal -- that La
Liga is collaterally estopped from making these arguments.
- 54 -
interfere with— (1) any of the political or
governmental powers of the debtor . . . .
48 U.S.C. § 2165. Hence, when the Board asks the Title III court
for relief -- necessarily consenting to that action -- PROMESA
does not limit the Title III court's authority to grant the
request, so long as it accords with Title I and Title II of the
Act, which lay out the Board's organization and responsibilities.
La Liga has not pointed to any limitation expressed within Title
I or Title II of PROMESA preventing the Board from asking the Title
III court to void a Puerto Rico law ab initio, nor have we
identified any. To the contrary, multiple provisions of the Act
underscore the Board's ability to make that request, and the Title
III court's authority to grant it.
PROMESA grants the Board far-ranging "authority to
object to, and block the implementation of, local laws that are
inconsistent with efforts to return the Commonwealth to fiscal
solvency." Pierluisi, 37 F.4th at 750; see also 48 U.S.C.
§ 2124(h) ("[T]he Oversight Board shall ensure the purposes of
this [Act] are met."). PROMESA authorizes the Board to vindicate
that broad mandate in court by "seek[ing] judicial enforcement of
its authority to carry out its responsibilities under [the Act]."
Id. § 2124(k). The Board points to several wellsprings of
authority within PROMESA that justify invalidating Law 29 from the
time of enactment.
- 55 -
First, there is the "multi-step, back-and-forth process
by which the Oversight Board reviews Commonwealth legislation for
consistency with the statute's goals." Pierluisi, 37 F.4th at
751. As relevant here, section 204(a) of PROMESA requires the
governor to certify any new law's compliance with the Fiscal Plan
and authorizes the Board to reject that certification and "direct
the Governor to provide the missing estimate or certification."
48 U.S.C. § 2144(a)(4)(A). The governor's failure to comply authorizes the Board to "take such actions as it considers necessary, consistent with this [Act], to ensure that the enactment or enforcement of the law will not adversely affect the territorial government's compliance with the Fiscal Plan, including preventing the enforcement or application of the law."Id.
§ 2144(a)(5)
(emphasis added).
Section 204(a)'s certification procedure begins after
Puerto Rico has "duly enact[ed]" a law -- the deadline for the
governor's certification is seven business days later.25 Id.
La Liga seizes upon PROMESA's reference to "duly enact[ed]"
25
statutes because in the opinion now on appeal, the district court
stated that Law 29 "was not duly enacted" to explain the O&O's
conclusion that Law 29 was invalid. PROMESA's certification
requirement only applies once a statute has been "duly enact[ed],"
and thus Law 29 was necessarily "duly enacted" within the meaning
of PROMESA. La Liga argues, therefore, that the district court's
remark betrays its misunderstanding of the statutory scheme, which
does not, in La Liga's telling, allow the Title III court to
invalidate a Puerto Rico law based on a finding that it was not
duly enacted. La Liga's objection misses the district court's
point. Law 29 was "duly enacted" as the term is used in section
- 56 -
§ 2144(a)(1). By authorizing the Board to "prevent[]" the
"application" of that law, section 204(a)(5) plainly empowers the
Board to oversee Puerto Rico's legislative enactments and ensure
their compliance with the Fiscal Plan from the moment of their
enactment. If it were otherwise, Puerto Rico could simply
circumvent PROMESA by enacting laws with only brief effect,
regardless of their consistency with the Act or the Fiscal Plan.26
PROMESA also expressly authorizes the Board to seek judicial
enforcement of its power to prevent the application of Puerto Rico
laws. See 48 U.S.C. § 2124(k).
204(a), having undergone the necessary steps to enact legislation
under Puerto Rico's constitution. However, in saying that Law 29
was not "duly enacted," the district court was simply referring to
the incomplete certification process required by PROMESA. Having
failed to meet that requirement, Law 29 was invalid.
Nor does La Liga's argument gain any traction from its
citation to Financial Oversight & Management Board for Puerto Rico
v. Pierluisi (In re Financial Oversight & Management Board for
Puerto Rico), 634 B.R. 187, 194 (D.P.R. 2021). Although the court there noted that Puerto Rico retains legislative power under PROMESA, it recognized that "PROMESA gives the Oversight Board authority to seek judicial relief thwarting actions that the Oversight Board has determined frustrate or impair the purposes of PROMESA, and provides that the statute preempts inconsistent local laws and regulations."Id.
at 194 n.7.
26 We find it relevant, moreover, that Puerto Rico has
occasionally delayed or ignored its certification obligation.
See, e.g., Pierluisi, 37 F.4th at 753-54 (noting delays of one and
three months). If the Title III court could not declare laws null
from the time of their enactment, such delay tactics might be
rewarded by helping Puerto Rico further extend the shelf life of
patently improper laws.
- 57 -
Second, the Board finds additional textual support for
the Title III court's authority to nullify Law 29 in
section 108(a)(2) of PROMESA. That section prohibits Puerto Rico
from "enact[ing], implement[ing], or enforc[ing] any
statute . . . that would impair or defeat the purposes of this
[Act], as determined by the Oversight Board." 48 U.S.C.
§ 2128(a)(2). The section affords the Board discretion to determine that a Commonwealth statute "impair[s] or defeat[s]" the purposes of PROMESA, "trigger[ing] a statutory prohibition on action by the Government to go forward with the targeted statute." Pierluisi, 37 F.4th at 758 n.9 (quoting Vázquez Garced v. Fin. Oversight & Mgmt. Bd. for P.R. (In re Fin. Oversight & Mgmt. Bd. for P.R.),511 F. Supp. 3d 90
, 134 (D.P.R. 2020)). Having made that determination, section 104(k) empowers the Board to ask the Title III court to declare that such a law was improperly "enact[ed]," making it a nullity.48 U.S.C. § 2128
(a)(2).
Third, the Board points out that the Title III court
also relied upon section 204(c) to find Law 29 a "nullity" and "of
no effect." See Vázquez Garced, 616 B.R. at 249-50. That section
prohibits Puerto Rico's government from "adopt[ing]" or
"carry[ing] out any reprogramming [of budgeted funds], until the
Oversight Board has provided the Legislature with an analysis that
certifies such reprogramming will not be inconsistent with the
Fiscal Plan and Budget." 48 U.S.C. § 2144(c)(2). Again, the
- 58 -
statute's language makes it clear that the Commonwealth cannot
simply ignore PROMESA and expect its actions to have lasting legal
effect that the Title III court is powerless to invalidate. Under
section 204(c), the Board's approval is a prerequisite to any
reprogramming of budgeted funds. Necessarily, the remedy for an
unauthorized reprogramming would, in certain cases, be its
nullification ab initio. Otherwise, the Title III court could not
remedy the Commonwealth's adoption of an unauthorized
reprogramming, leading to an instant, on-off expenditure of
unbudgeted funds.
We find persuasive these multiple sources of statutory
authority confirming the Board's power to prevent laws
inconsistent with PROMESA from taking effect, as well as the Title
III court's concomitant authority to enforce the Board's mandates
by nullifying such a law from its inception. Unable to locate any
support in PROMESA for its competing assertion that the Title III
court could not declare Law 29 a nullity, La Liga claims that we
implied as much in Pierluisi. La Liga misreads our decision. We
simply noted there that the Title III court had "dismissed all
claims for 'nullification' because the Board 'ha[d] not
demonstrated that such drastic relief [was] warranted under the
particular circumstances.'" 37 F.4th at 758 n.9 (alteration in
original) (quoting Vázquez Garced, 511 F. Supp. 3d at 128, 131,
133, 138). Nothing in that statement, or in the district court's
- 59 -
underlying opinion, suggests that nullification is never
available. To the contrary, we recently affirmed the Title III
court's "nullif[ication]" of another Puerto Rico law "and any
actions taken to implement it." Fin. Oversight & Mgmt. Bd. for
P.R. v. Pierluisi-Urrutia (In re Fin. Oversight & Mgmt. Bd. for
P.R.), 77 F.4th 49, 59 (1st Cir. 2023), aff'g650 B.R. 334
(D.P.R.
2023).
Lastly, La Liga insists that if the Board wanted to block
enforcement of the statute from the time of its enactment, it
should have sought a preliminary injunction or a temporary
restraining order. While this step may have been wise litigation
strategy, the Board's failure to seek such relief sheds no light
on what PROMESA empowers the Board or the Title III court to do.
Indeed, without speculating about whether a request for
preliminary relief would have been granted,27 if the Title III
court had denied temporary relief, that denial would not "preclude
an examination of whether [the Board] should nonetheless be granted
a declaratory judgment" of Law 29's invalidity with the benefit of
full briefing on the ultimate merits of the law. Verizon New
England, 651 F.3d at 189 (first citing Powell v. McCormack, 395
27The Board suggests that it may have been unable to obtain
temporary relief because its harms would be purely financial, and
thus not irreparable. See, e.g., CMM Cable Rep., Inc. v. Ocean
Coast Props., Inc., 48 F.3d 618, 622 (1st Cir. 1995) (explaining
that economic harm, "without more, rarely constitutes an adequate
basis for injunctive relief").
- 60 -
U.S. 486, 499 (1969); and then citing Zwickler v. Koota, 389 U.S.
241, 254(1967)). Rather, "declaratory relief is alternative or cumulative" to interim relief. 28Id.
We thus conclude that PROMESA authorized the Title III
court to invalidate Law 29 from the time of its enactment, and
thus the O&O can be read to do so.
2. The Title III Court's Fundamental Authority to
Declare Law 29 a Nullity
La Liga's final argument relies on a novel and somewhat
perplexing theory of judicial power. La Liga insists that the
Title III court "lacked any authority to preclude Law 29 from
coming into effect" but "could only enjoin its enforcement," and
thus the O&O cannot be read to invalidate Law 29 from its
inception.29 We disagree. A federal court's authority to declare
We recognize the potential unfairness to the municipalities
28
of the Board's failure to attempt to block Law 29's application
from the outset, which would have prevented the municipalities
from accruing a large debt to the Commonwealth in reliance on Law
29. However, La Liga has made no such equitable argument, either
before the district court or on appeal. Moreover, we find it
relevant to note that the Board warned Puerto Rico's government,
before Law 29's enactment, that the law was likely invalid. See
Vázquez Garced, 616 B.R. at 242, and thus the municipalities were
on notice of the risk that the law would be voided and the
municipalities obligated to repay the funds wrongfully withheld.
Virtually the sole authority upon which La Liga relies to
29
support this assertion is a law review article. See Jonathan F.
Mitchell, The Writ-of-Erasure Fallacy, 104 Va. L. Rev. 933, 987
(2018) ("[N]either the courts nor the executive has the power to
prevent a duly enacted statute from taking effect. All that a
court can do is decline to enforce the statute and enjoin the
executive from enforcing it."). The basis for Mitchell's
contention is his observation that "[t]he federal courts have no
- 61 -
a law void ab initio is well settled. See, e.g., Mass. Ass'n of
Health Maint. Orgs. v. Ruthardt, 194 F.3d 176, 178 (1st Cir. 1999)
("By virtue of [the Supremacy Clause], state law that conflicts
with federal law is a nullity."); Antilles Cement Corp. v. Fortuño,
670 F.3d 310, 323 (1st Cir. 2012) ("Consequently, state laws that
'interfere with, or are contrary to the laws of Congress' are void
ab initio." (quoting Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 211
(1824))).
Indeed, as mentioned already, we have affirmed a
declaration by the Title III court "nullifying" a Puerto Rico law
"and any actions taken to implement it." Pierluisi-Urrutia, 77
F.4th at 59, 66. That order, much like the O&O under consideration
authority to erase a duly enacted law from the statute books, and
they have no power to veto or suspend a statute." Id. at 936.
Thus, while in popular parlance a court "strikes down" an invalid
law, "the statute continues to exist . . . and it remains a law
until it is repealed by the legislature that enacted it." Id. A
"future court" remains free to "reviv[e] and enforc[e] the formerly
disapproved statute." Id. at 942.
Without opining on the ideas the author expresses, it is clear
to us that the article does not lend La Liga any support. Indeed,
the article agrees that "retroactivity is ubiquitous in the law,"
that this is "especially true of judicial decisionmaking," and
that judicial decisions often have "retroactive effect beyond the
parties to the lawsuit." Id. at 996. It is impossible to square
these elementary principles with La Liga's apparent contention
that the Title III court could not have declared Law 29 ineffective
from its inception. Nor in doing so did the Title III court
exercise an unwarranted judicial veto over Puerto Rico's
legislative enactments, as La Liga's misplaced reliance on
Mitchell's article seems to suggest. It simply adjudicated the
law's validity in light of PROMESA.
- 62 -
here, declared the contested law void ab initio due to Puerto
Rico's failure to submit a proper formal estimate of the law's
fiscal impact and upon the Board's determination that the law
"impair[s] or defeat[s] the purposes of [PROMESA]." Id. at 58
(alterations in original). As the Title III court aptly put it,
"[t]he only way to prevent the enforcement and application of the
law . . . [was] to nullify it ab initio." Pierluisi-Urrutia, 650
B.R. at 358 (citing 48 U.S.C § 2144(a)(5)).
Here, acting similarly, the Title III court simply
exercised its authority to award "an immediate and definitive
determination of the legal rights of the parties," Aetna Life Ins.
Co. v. Haworth, 300 U.S. 227, 241 (1937), when it declared that
Law 29 was invalid because it flouted the requirements of PROMESA
and that, as a result, Puerto Rico's municipalities were never
validly relieved of their obligation to fund their employees'
pensions and health care plans.30
The Title III court unquestionably had the authority to
make that declaration. Accordingly, we find no fault in the
30 La Liga stresses throughout its brief that the
municipalities were not parties to the litigation and thus should
not be bound by the O&O. But the Board never sought to enforce
the O&O against the municipalities. Rather, it negotiated with
Puerto Rico's central government to recover the funds unlawfully
withheld under Law 29. Moreover, as political subdivisions of the
Commonwealth, the municipalities were likely in privity with the
defendants in the Law 29 litigation, as reflected by the district
court's orders finding the municipalities' interests adequately
represented. See supra note 2.
- 63 -
Board's interpretation of the O&O to cover the challenged period
and its efforts to retrieve the funds withheld by the
municipalities under Law 29.
IV.
The O&O declared Law 29 "a nullity" and "of no effect."
We agree with the district court that this judgment retroactively
applied to Law 29 from its inception. Accordingly, we affirm the
dismissal of La Liga's complaint.
So ordered.
-Dissenting Opinion Follows-
- 64 -
BARRON, Chief Judge, dissenting. Suppose a voluntary
membership organization wants to sue to redress an injury to a
non-member. Does the organization have Article III standing to do
so if none of its members do? One might think that the answer
must be no, given that neither the organization nor any of its
members has been injured. But the majority concludes that "well-
settled standing principles," reveal that the answer is clearly
yes. For that reason, the majority holds that Liga de Ciudades de
Puerto Rico ("La Liga") -- whose members are mayors of Puerto Rican
municipalities -- has Article III standing to sue here to redress
injuries that only the member-mayors' municipalities have
suffered. Moreover, according to the majority, La Liga has such
standing even though the organization has not so much as mentioned
the theory of standing on which the majority relies.
In my view, there are no "well-settled principles" that
justify our overlooking La Liga's appellate waiver. Accordingly,
I respectfully dissent, especially because, in sua sponte finding
organizational standing here, the majority is setting a novel
precedent that risks undermining the ability of governments at all
levels of our democratic system to determine who will represent
them in federal court.
I.
There is no doubt that La Liga bears the burden of
establishing that it has standing. Nor is there any doubt that we
- 65 -
must look to La Liga's complaint to determine whether that burden
has been met. See Lujan v. Defs. of Wildlife, 504 U.S. 555, 562
(1992). The complaint makes the following pertinent allegations.
"La Liga is a not-for-profit and nonpartisan corporation
organized and existing pursuant to the Laws of the Commonwealth of
Puerto Rico, whose members are Mayors of Municipalities of Puerto
Rico." La Liga's "mission is 'to strengthen the capacity of local
governments and communities in order to better face the various
social, structural, fiscal and governance challenges.'"
In service of that mission, "La Liga develops and
implements various initiatives, tempered to the needs and
realities of municipal governments and their communities." The
most recent of those "initiatives" is the one in which the
organization seeks "to defend the decimated municipal finances
from the onslaught of austere measures imposed by the [Financial
Oversight and Management Board for Puerto Rico]."
The complaint then concludes as to standing as follows:
La Liga has organizational standing to bring
this action since the strengthening of the
municipal finances is germane to La Liga’s
mission and purpose, the Municipalities that
are headed by La Liga's members have suffered
substantial economic losses as a result of the
illegal withholding and diversion of municipal
funds by Defendant Centro de Recaudación de
Ingresos Municipales . . . to off-set
inexistent debts, and the participation of the
individual La Liga members is not necessary
for the issuance of the remedies herein
requested.
- 66 -
To the majority, these limited allegations so clearly
show that La Liga has standing that La Ligan need not make any
further argument that it does. The majority explains that is so
because of the "well-settled standing principles," that were set
forth by the Supreme Court of the United States in Hunt v.
Washington State Apple Advertising Commission, 432 U.S. 333
(1977), and are reflected in our Court's decision in Railway Labor
Executives' Ass'n v. Boston & Maine Corp. ("RLEA"), 808 F.2d 150
(1st Cir. 1986). But I cannot see how those "principles" show as
much.
II.
In Hunt the Supreme Court made clear that a "traditional
voluntary membership organization" may have standing to sue even
if it has not been injured. 432 U.S. at 342-43. Such an organization, the Court explained, may base its standing on an injury to one of its members. But, to do so, the organization must show that: (a) the member "would otherwise have standing to sue in their own right [based on the injury in question]; (b) the interests [the organization's claim] seeks to protect are germane to the organization's purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit."Id. at 343
. But cf. Int'l Union, United Auto., Aerospace & Agr. Implement Workers of Am. v. Brock,477 U.S. 274, 289, 290
(1986) ("We are not prepared to dismiss out of
- 67 -
hand the . . . concern that associations allowed to proceed under
Hunt will not always be able to represent adequately the interest
of all of their injured members" because such an association "might
lack resources or experience or might bring lawsuits without
authorization from its membership," or because "the litigation
strategy selected by the association might reflect the views of
only a bare majority -- or even an influential minority -- of the
full membership.").
The complaint reveals that La Liga sought to rest its
standing in this case on this three-part test. The majority
rightly recognizes, however, that La Liga cannot do so. The only
members that La Liga claims to have are the mayors, while the only
injuries that it alleges were to the non-member municipalities.
To be sure, the Supreme Court did later refine Hunt's
three-part test. It held that a traditional voluntary membership
organization sometimes can base its standing on the standing of
one its members to redress an injury to a third party. See N.Y.
State Club Ass'n, Inc. v. City of New York, 487 U.S. 1, 9(1988). But this refinement also does not help La Liga, as the record does not suggest that any member-mayor's standing to bring this suit could rest on an injury to that mayor's municipality. See City of Bos. Delegation v. FERC,897 F.3d 241, 248-50
(D.C. Cir. 2018)
(holding that the Mayor of the City of Boston lacked standing to
represent the City where the only identified support for that
- 68 -
authority was the fact that "the Mayor regularly initiated
litigation on behalf of the City," and the specified process by
which the City's Code permitted the City to initiate litigation
did not give the mayor unilateral authority to bring suit). In
fact, the majority does not disagree, as it asserts that a member-
mayor's authority to bring suit to redress an injury to that
mayor's municipality is simply "not relevant to" La Liga's standing
in this case. Maj Op. at 19.31
Why, then, does the majority think that Hunt clearly
supports La Liga's standing here? The majority's answer depends
on the additional organizational standing test -- often referred
to as the "indicia of membership" test -- that Hunt also sets
forth. And that is so, according to the majority, even though La
Liga has not mentioned the test at any point in this litigation,
including after a question was specifically raised at oral argument
about how the organization could have standing if none of the
member-mayors did. The majority thus appears to be of the view
31 A Puerto Rico statute does provide that a mayor may
"[r]epresent the municipality in juridical or extra-juridical
actions brought by or against the municipality" but that a "mayor
may not acquiesce to . . . any suit in any procedure or action in
which the municipality is a party, without the prior consent of
the absolute majority of the members of the municipal legislature."
21 L.P.R. § 4109(e). Needless to say, we have no briefing from La
Liga about the possible relevance of this measure to its standing,
and, in the absence of La Liga's having addressed it, I do not
read this measure to so obviously settle the question of mayoral
authority to sue that it is dispositive of that question.
- 69 -
that it is so clear that La Liga has standing under this test that
the organization need not make any argument that it does. But,
insofar as that is the majority's view, I cannot agree.
III.
By way of background, Hunt developed the "indicia of
membership" test to address a peculiar issue that arose in that
case. A state-created entity, the Washington State Apple
Advertising Commission ("Commission"), had claimed that it had
standing to sue based solely on injuries to apple growers and
dealers in that state. See Hunt, 432 U.S. at 336, 342.
Hunt explained that it was clear that, under the three-
part test described above, a traditional trade association of apple
growers and dealers could sue based on injuries that only its
grower- and dealer-members had suffered. See id. at 342-43. Hunt acknowledged, though, that the Commission was not itself such an association, "for it ha[d] no members at all."Id. at 342
.
So, Hunt moved on to address the separate contention
that the Commission nonetheless could rest its standing on the
injuries to the state's apple growers and dealers. See id. at
344. The Court then held that the Commission could because, in function rather than form, the Commission's relationship to those growers and dealers was no different from a traditional trade association's relationship to its members. Seeid. at 344-46
.
The "indicia of membership" test was born, therefore, to test
- 70 -
whether the Commission, despite not being a traditional trade
association, functioned in the way that one did.
The majority does not dispute this account of the
"indicia of membership" test's origins. The majority nonetheless
concludes that the test is relevant here, even though La Liga
is -- unlike the Commission -- itself a traditional voluntary
membership organization in all the ways that a traditional trade
association is.
I do not see why the majority is so confident of this
conclusion. It is one thing to conclude -- as Hunt did -- that an
unusual entity, which a state created to promote a certain trade,
has standing to sue based on injuries to participants in that trade
just as a trade association would have standing to sue based on
injuries to its members. It is quite another to conclude -- as
the majority now does -- that such an association itself may claim
"members" for standing purposes that it has voluntarily chosen to
exclude from its ranks.
To that very point, after Hunt, the Court acknowledged
concerns with allowing a traditional voluntary membership
organization to rest its standing on injuries that only its members
had suffered. See Brock, 477 U.S. at 289. Doing so, the Court explained, could raise questions in some circumstances about the representativeness of the organization with respect to the injured parties. Seeid. at 289-90
. The Court then concluded that those
- 71 -
concerns were mitigated by the fact that "[t]he very forces that
cause individuals to band together in an association will thus
provide some guarantee that the association will work to promote
their interests." Id. at 290.
Injured parties that an organization has chosen to keep
off its membership rolls, however, cannot be said to have "band[ed]
together" in that organization. Id. Thus, Brock's rationale for
allowing traditional voluntary membership organizations to sue
based on injuries to their members has no application here.
Not surprisingly, then, nothing in Hunt clearly shows
that the "indicia of membership" test applies to a traditional
voluntary membership organization like La Liga. And (setting RLEA
aside for now) nothing in any of our own precedents does either.
Indeed, our most recent account of the test described it as
applying to "organizations that are not voluntary membership
organizations." Students for Fair Admissions, Inc. v. President
& Fellows of Harvard Coll. ("SFA"), 980 F.3d 157, 183(1st Cir. 2020), rev'd on other grounds,600 U.S. 181
(2023) (emphasis
added).
Nor is there a body of out-of-circuit precedent that
suggests that it is "well-settled" that the "indicia of membership"
test applies to an organization that already has members of its
own. To the contrary, some circuit-level authority goes the other
way. See Ne. Ohio Coal. for the Homeless v. Blackwell, 467 F.3d
- 72 -
999, 1013 (6th Cir. 2006) (McKeague, J., concurring) ("Insofar as
plaintiffs' standing implicitly rests on assertion of the
interests of nonmembers for whose interests plaintiff Northeast
Ohio Coalition for the Homeless advocates, e.g., homeless persons,
plaintiffs are operating outside the bounds of traditional
associational standing. They rely on a form of representational
or third-party standing for which they have cited no controlling
or even persuasive precedent."); see also id. at 1010 n.4 ("Judge
McKeague's concurring opinion correctly notes that the Northeast
Ohio Coalition for the Homeless apparently seeks to assert a form
of representational standing never recognized by any
court -- standing on behalf of the group served by the
organization.").
The majority does enlist various out-of-circuit
precedents to support the assertion that a voluntary membership
organization may claim "members" under the "indicia of membership"
test that the organization will not let become actual members.
But a review of those cases turns up but two district-court
decisions that, in applying the test, found that a voluntary
membership organization could claim members for standing purposes
that it had excluded from membership for all others. See Sec.
Indus. & Fin. Mkts. Ass'n v. U.S. Commodity Futures Trading Comm'n,
- 73 -
67 F. Supp. 3d 373, 410(D.D.C. 2014); Interfaith Cmty. Org. v. Honeywell Int'l, Inc.,188 F. Supp. 2d 486, 498-99
(D.N.J. 2002).32
In other words, there plainly is a novel question for us
to resolve about whether the "indicia of membership" test has any
application to La Liga. I therefore do not see why we should
excuse La Liga from having to address the question.
IV.
Let us posit, though, that (as the majority concludes)
it would be "no great leap," to apply the "indicia of membership"
test to a traditional voluntary membership organization like La
Liga. The question still would remain as to whether it is "well[
]settled" that the test is met in a case like this one. Here,
too, the majority answers the question in La Liga's favor even
though La Liga has not weighed in on it. But, again setting RLEA
aside for the moment, I cannot agree with the majority's decision
to give that answer.
32 The majority asserts that the Third Circuit affirmed the
standing ruling in Interfaith Community Organization v. Honeywell
International, Inc., but it is not apparent that the Third Circuit
did so based on the district court's "indicia of membership"
ruling, as the Third Circuit simply said that "the individual
plaintiffs," some of whom were formal members of the organization,
"have standing, and [the defendant] does not challenge the District
Court's membership findings." 399 F.3d 248, 258 (3d Cir. 2005).
Thus, the Third Circuit may have held no more than that the
plaintiff-organization had standing solely based on the injuries
to its formal members.
- 74 -
Consider the factors that we most recently described as
relevant to the "indicia of membership" test: whether the
"organization's purpose is to protect and promote the interests of
its non-members"; "whether these non-members are 'the primary
beneficiar[ies] of [the organization's] activities,'"; "and
whether [the] non-members elect its members, are the only people
who may be members, or finance the organizations' activities,
including litigation costs, through assessments levied upon them."
SFA, 980 F.3d at 183(quoting Hunt,432 U.S. at 344-45
) (first
alteration in original). The majority concludes (albeit without
the benefit of La Liga having so argued) that the first two of
these indicia are present.
The majority recognizes that this conclusion does not
suffice to show that the "indicia of membership" test is met. So,
if we are going by the factors that we most recently said matter
in applying the test, the dispositive questions would seem to be
these: do "[the municipalities] elect [La Liga's] members"?; "are
[the municipalities] the only [ones] who may be [La Liga's]
members"?; and do the municipalities "finance the organizations'
activities, including litigation costs, through assessments levied
upon them"? Id.(citing Hunt,432 U.S. at 344-45
).
This is not a case, however, in which only the injured
parties can be members of the organization that is seeking
standing. It also is not one in which -- as far as the record
- 75 -
reveals -- the injured parties finance that organization. Thus,
insofar as our most recent account of what matters under the
"indicia of membership" test is our guide, everything would appear
to hinge on whether there is evidence of the "elect" factor.
SFA took the "elect" factor from Hunt. It did so based
on Hunt's reliance on the growers and dealers involved in that
case having elected each of the commissioners onto the Commission.
See Hunt, 432 U.S. at 344. There is no similarly clear evidence
here, however, that the "elect" factor is present.
La Liga's members were elected to their mayoral offices.
They were not elected to La Liga. It was only after each mayor
had been elected to the office of mayor that -- from all the
complaint reveals -- each mayor then either chose to join La Liga
or not, seemingly as that individual mayor wished.
I do not see how it is evident that this factual
distinction between our case and Hunt is immaterial. The "indicia
of membership" test exists to ensure that the organization that
asserts standing based on an injury to a non-member in a "real
sense . . . represents the [non-members] and provides the means by
which they express their collective views and protect their
collective interests." Id. at 345. It thus would seem quite
material that the municipalities did not elect the mayors to La
Liga and that the mayors instead merely chose to join the
organization through the exercise of their own discretion.
- 76 -
I should add that there are other factual distinctions
between our case and Hunt that also appear to be material. Hunt
did not indicate that even direct election to the
organization -- when combined with the organization's purpose
being to benefit the injured parties and its activities primarily
benefiting them -- showed the test was satisfied. The Court there
also emphasized (1) the direct control that the commissioners
exercised over the Commission, (2) that only growers and dealers
could be commissioners, (3) the role that assessments levied on
the dealers and growers played in funding the Commission, and
(4) the fact that the conduct challenged in the Commission's
suit -- North Carolina's prohibition on the sale of apples labeled
as belonging to a particular state -- "could reduce the amount of
the assessments due the Commission and used to support i[t]s
activities." Id.
Indeed, the Court gave special weight to the fourth
factor. It noted that, because of the "financial nexus" between
the Commission and the relief sought in the litigation, "the
interests of the Commission itself may be adversely affected by
the outcome of this litigation." Id. The Court ultimately
concluded that "[t]his financial nexus between the interests of
the Commission and its constituents coalesce[d] with the other
factors noted above to 'assure that concrete adverseness which
sharpens the presentation of issues upon which the court so largely
- 77 -
depends for illumination of difficult constitutional questions.'"
Id.(emphasis added) (quoting Baker v. Carr,369 U.S. 186, 204
(1962)).
We have no basis for concluding that any of the four
ties enumerated above are present in this case. And we certainly
have no basis for concluding that there is a "financial nexus"
between La Liga's funding and the remedy that it seeks in this
litigation.
The majority nonetheless concludes that these
distinctions between this case and Hunt are trivial. It reasons
that Hunt makes clear that the "indicia of membership" test is met
so long as "the organization is sufficiently identified with and
subject to the influence of those it seeks to represent as to have
a 'personal stake in the outcome of the controversy.'" Or. Advoc.
Ctr. v. Mink, 322 F.3d 1101, 1111 (9th Cir. 2003) (quoting Vill. of Arlington Heights v. Metro. Hous. Dev. Corp.,429 U.S. 252, 261
(1977)). "[A]ided by . . . judicial experience and common sense,"
the majority then goes on to conclude that La Liga clearly is such
an organization "[c]onsidering the institutional, political, and
legal mechanisms of accountability inherent in the relationship
between a mayor and municipality" (quotation omitted) (emphases
added). Accordingly, the majority concludes that it is so clear
that La Liga satisfies the "indicia of membership" test that we
- 78 -
may overlook the fact that La Liga has failed to make any argument
that it does.
Common sense does indicate that mayors play important
roles within their local governments. But city councils also wield
power, while state and local laws distribute all kinds of powers
among all kinds of city officials. In fact, I know of no local
jurisdiction that concentrates all its powers in a single
executive. I thus do not see how we can rely on common sense to
conclude that mayors are the definitive decisionmakers as to all
matters of consequence for their municipalities, let alone that La
Liga's mayors have been entrusted to unilaterally make the fraught
decision to sue a higher level of government that La Liga has made
here. See City of Bos. Delegation, 897 F.3d at 248-50; cf. Va. House of Delegates v. Bethune-Hill,587 U.S. 658, 663
(2019) ("[I]f
the State had designated the House to represent its interests, and
if the House had in fact carried out that mission, we would agree
that the House could stand in for the State."). And so it is hard
for me to see how it is at all clear that, even though La Liga has
an interest in the well-being of Puerto Rico's municipalities, see
Mink, 322 F.3d at 1111, La Liga "in a very real sense . . . provides
the means by which [the municipalities] express their collective
views and protect their collective interests" in relation to the
litigation at hand. Hunt, 432 U.S. at 345; see also Brock,477 U.S. at 290
(focusing on this same concern).
- 79 -
V.
There does remain to address our post-Hunt decision in
RLEA. The majority appears to be of the view that this precedent
clarifies whatever Hunt on its own does not when it comes to La
Liga's standing. Here too, however, the majority relies on a
highly debatable reading of precedent -- and a reading that, like
the underlying precedent itself, La Liga has not even mentioned.
In RLEA, the Railway Labor Executives' Association
("RLEA") -- which, as its name implies, was comprised of members
who were executives of unions representing railway
employees -- sought to base its standing solely on injuries that
had been suffered by union-member railway employees, none of whom
was a member of the RLEA itself. See 808 F.2d at 153, 153 n.8. In a one-sentence footnote, we held that the RLEA had standing under Hunt. Seeid.
at 153 n.8. We did not refer, however, either to the "indicia of membership" test or to the portion of Hunt that discussed it. Seeid.
Instead, we merely cited to the first page of Hunt.Id.
We thus left unclear whether our standing ruling rested
on the part of Hunt that addressed when a traditional voluntary
membership organization has standing based on a member's standing,
see 432 U.S. at 343; see also N.Y. State Club Ass'n,487 U.S. at 9
(articulating this application of Hunt), or the part of Hunt
that applied the "indicia of membership" test, see 432 U.S. at
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344-45. That makes it a stretch, in my view, to treat our never-
since-cited, one-sentence footnote in RLEA as if it were our last
word on the significant jurisdictional question of whether the
"indicia of membership" test applies to a voluntary membership
organization. See United States v. Vaello-Madero, 956 F.3d 12, 17
(1st Cir. 2020) ("[W]e would be remiss in complying with our own
duty were we to blindly accept the applicability of [prior cases]
without engaging in a scrupulous inquiry into their relevance,
application, and precedential value."), rev'd on other grounds,
596 U.S. 159(2022); see also Lewis v. Casey,518 U.S. 343
, 352 n.2 (1996) (stating that a prior case reaching the merits did not bind the Court to conclude there was jurisdiction because "standing was neither challenged nor discussed" in the prior case and because "[the Court] ha[s] repeatedly held that the existence of unaddressed jurisdictional defects has no precedential effect" (emphasis added) (citing Fed. Election Comm'n v. NRA Pol. Victory Fund,513 U.S. 88, 97
(1994))).
Even assuming, though, that RLEA did hold that the
"indicia of membership" test applies to such an organization, there
still would be the question of whether RLEA establishes that the
test is satisfied in a case like this one. I cannot see how it is
so clear that RLEA does that La Liga need not make any argument to
that effect.
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RLEA's members were union executives and so, like La
Liga's mayors, were not themselves directly elected to the
organization. But, as best I can tell, the RLEA's board was at
least controlled by the labor executives. See Brief of Movant-
Intervenor RLEA at 1-6, Am. Train Dispatchers Ass'n v. ICC, 26
F.3d 1157(D.C. Cir. 1994) (No. 92-1397),1993 WL 13650707
, at *1–
6 (describing the structure of RLEA). In other words, the injured
parties there -- railway employees -- were positioned to exercise
control (albeit indirectly through the executives' unions) over
the members of the organization who themselves controlled its
decisions much as the apple growers and dealers in Hunt were
positioned to exercise control over the commissioners who in turn
controlled the Commission. La Liga's complaint says not a word,
however, about the role that any of its member-mayors plays in
deciding the course of action that the organization may take,
including with respect to important decisions such as bringing a
suit like this one.
Nor did RLEA, like Hunt, have any occasion to consider
the special questions concerning democratic control over
government executives that a case such as this one implicates.
That case at most implicated private organizational bylaws, not
democratically chosen structures of government control. For this
reason, too, I cannot see how RLEA so clearly supports La Liga's
standing here that it can save the day.
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VI.
The majority emphasizes that Hunt premised its "indicia
of membership" test on the notion that we should not "exalt form
over substance." 432 U.S. at 345. The majority also points out that on a motion to dismiss we must construe the complaint generously, see Tyler v. Hennepin County,598 U.S. 631, 637
(2023) (citing Lujan,504 U.S. at 561
). Neither observation persuades me
that we may hold that La Liga has standing under the "indicia of
membership" test when La Liga has not itself argued that it does.
In admonishing us not to "exalt form over substance,"
Hunt was using a pithy phrase to warn us not to treat entities
that are functionally traditional trade associations differently
for purposes of standing from entities that formally are. See 432
U.S. at 345. It was not encouraging courts to permit traditional
voluntary membership organizations to claim members that they do
not have. I thus do not see how we may treat that admonition as
an invitation to permit voluntary membership associations of
government officials to sue based on injuries to the member-
officials' governments if those officials are not themselves
authorized to decide when those governments may sue to redress
those injuries.
Likewise, although we must construe complaints
generously, see Gustavsen v. Alcon Lab'ys, Inc., 903 F.3d 1, 7
(1st Cir. 2018), parties still must allege the facts and make the
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arguments necessary to establish that we have jurisdiction over
their cases, see McBreairty v. Miller, 93 F.4th 513, 518 (1st Cir.
2024). Yet La Liga's complaint fails to allege many of the facts
that Hunt and SFA suggest matter or that would appear to matter
even under the more general understanding of the "indicia of
membership" test that the majority distills from Hunt.
In any event, our obligation to make reasonable
inferences in construing a complaint does not permit us to overlook
the party-presentation rule. See Greenlaw v. United States, 554
U.S. 237, 243 (2008) ("In our adversary system . . . we follow the
principle of party presentation. That is, we rely on the parties
to frame the issues for decision and assign to courts the role of
neutral arbiter of matters the parties present."). Indeed, that
rule serves aims like those that Article III itself serves in
requiring courts to resolve concrete disputes between parties
rather than "questions in the abstract" that no party has chosen
to litigate. N.Y. State Rifle & Pistol Ass'n v. Bruen, 597 U.S.
1, 25 n.6 (2022). I thus find it ironic that the majority chooses
to premise its Article III jurisdiction here on arguments that no
party to this supposed case or controversy has even made.
The majority does point to out-of-circuit authority that
it contends permits us to resolve issues relating to standing that
were not made below. See Hartig Drug Co. v. Senju Pharm. Co., 836
F.3d 261, 267-73 (3d Cir. 2016). But the plaintiff-appellant in
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that case had argued on appeal that its complaint's allegations of
antitrust injury did suffice to establish Article III standing
despite the defendant-appellee's arguments to the contrary. Id. at
271. The reviewing court then agreed with the plaintiff- appellant's contention that those allegations did so.Id. at 272
. That the panel went on to consider whether, although the district court had wrongly dismissed the complaint for lack of Article III jurisdiction, dismissal on the merits was still proper based on a ground -- failure to state an antitrust claim -- that the defendant-appellee had not raised on appeal is of no moment here. The problem in our case concerns waiver by the appellant not the appellee. Compare Carrozza v. CVS Pharmacy, Inc.,992 F.3d 44, 59
(1st Cir. 2021) ("[A]ppellants cannot raise an argument on appeal
that was not squarely and timely raised in the trial court."
(cleaned up)), with United States v. George, 886 F.3d 31, 39 (1st
Cir. 2018) ("We are at liberty to affirm a district court's
judgment on any ground made manifest by the record, whether or not
that particular ground was raised below.").
Indeed, La Liga has not merely failed in its appellate
briefing to advance the only theory for our having jurisdiction
that the majority embraces. La Liga also has stayed mum about the
seeming defect in its standing even though it was asked about that
defect at oral argument. See Guar. Nat. Title Co. v. J.E.G.
Assocs., 101 F.3d 57, 59 (7th Cir. 1996) ("[I]t is not the court's
- 85 -
obligation to lead counsel through a jurisdictional paint-by-
numbers scheme. Litigants who call on the resources of a federal
court must establish that the tribunal has jurisdiction, and when
after multiple opportunities they do not demonstrate that
jurisdiction is present, the appropriate response is clear.").
VII.
For all these reasons, I would dismiss this complaint on
the ground that La Liga has failed to meet its burden to show that
it has standing. I therefore respectfully dissent.
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Reference
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