Justices side with Puerto Rico’s financial oversight board in public records dispute

Thursdays decision in Financial Oversight & Management Board for Puerto Rico v. Centro de Periodismo Investigativo took the straight and narrow approach to resolving the case. Ignoring the threshold questions on which the court had not granted review and applying a longstanding clear-statement rule, a near-unanimous court ruled in favor of Puerto Ricos financial oversight board. The majority found that Congress had not written anything into the boards founding statute that deprived the board of sovereign immunity.

The case involves a strange entity, the Financial Oversight and Management Board, created under a 2016 federal statute, known as PROMESA, to take control of and restructure the deeply mal-administered finances of Puerto Rico. The question in the case is whether PROMESA satisfies the rigorous clear-statement rule for abrogating the immunity that sovereigns typically have from suit in federal courts. In this case, for example, Centro de Periodismo Investigativo has been trying for several years to gain access to documents about the boards operations under a public-access provision of Puerto Ricos constitution. When the board responded to CPIs claims with a contention that it had sovereign immunity from those claims, the lower courts disagreed, holding that PROMESA clearly abrogated any sovereign immunity the board might have.

You might think the first question for the justices is to explain why the board might have sovereign immunity. After all, the Supreme Court has never held that Puerto Rico itself has sovereign immunity, and even if it does, the boards entitlement to share in that immunity certainly is up for debate. But that is not the question the justices agreed to review the lower courts assumed that the board had sovereign immunity and so did not address the question at all and Justice Elena Kagans opinion for a majority of eight declines to decide that question at this late stage of the litigation. Among other things, Kagan points out that it would be odd to address Puerto Ricos sovereign immunity for the first time in a case to which it is not a party.

Kagans treatment of the abrogation question whether PROMESAs abrogation of immunity is unmistakably clear in the language of the statute is straightforward. First, she notes that the court routinely has applied the rule in cases naming the federal government, States, and Indian tribes as defendants. In response to CPIs claim that Congresss plenary power over Territories indicates that the rule should not extend to territories (like Puerto Rico), Kagan responds that we have similarly described Congresss power over the tribes [as plenary], and still demand that Congress unequivocably express an intent to abrogate their immunity.

Applying that standard, Kagan explains that the court has found abrogation in only two situations, neither of which appears in PROMESA. One involves a statute [that] says in so many words that it is stripping immunity from a sovereign entity. The other involves a statute [that] creates a cause of action and authorizes suit against a government on that claim. On the first point, one provision of PROMESA (involving the proceedings that restructured Puerto Ricos finances) explicitly incorporates a provision of the Bankruptcy Code which states that sovereign immunity is abrogated as to a governmental unit, including a Territory. Because Congress chose not to adopt similar language to govern other kinds of litigation involving the Board cases like this one the upshot is evident: Congress has not, through a means we have recognized, made its intention to abrogate immunity unmistakably clear.

CPI looks to the second situation, contending that the court should find abrogation in PROMESAs provisions for judicial review, which plainly subject the board to jurisdiction in the U.S. District Court for the District of Puerto Rico (where this case was brought). Specifically, CPI argues that a failure to recognize jurisdiction would eviscerate the provision of PROMESA providing for jurisdiction in that court and granting the power to issue declaratory or injunctive relief against the Oversight Board.

Kagan notes, though, that those provisions implement the various statutes other than PROMESA [that] abrogate the Boards immunity from particular claims. Picking one easy-to-follow example, a Board employee fired because of race, she notes that the firing would violate Title VII of the Civil Rights Act, which quite explicitly abrogates the sovereign immunity of all governments and government agencies. Under PROMESA, the Puerto Rico court is the place for the employee to bring that claim, and the court there has explicit power to grant proper relief. Because all of PROMESAs provisions would have a ready use even if PROMESA did not abrogate the boards immunity, those provisions offer no reason to think Congress intended to abrogate the boards immunity.

Thursdays decision will not shatter anybodys expectations, but it does provide a few new tidbits of doctrine about sovereign immunity. For one thing, the opinion offers the most direct holding that the clear statement rule for abrogating sovereign immunity applies to territories. For another, the explication of the abrogation cases as falling into two specific categories is much more specific than anything in the earlier cases. That framework probably will provide a much-welcomed outline for the lower courts struggling to apply that doctrine in future cases. Finally, the case probably will be most important for what it didnt address: Puerto Ricos sovereign immunity. On that point, the dissenting opinion of Justice Clarence Thomas (the only justice who did not join Kagans opinion) pointedly lays the groundwork for future challenges to Puerto Ricos sovereign immunity, as he votes against the board on the ground that even Puerto Rico should have no immunity from suit in federal court.