# Garcia-Rubiera v. Calderon

> Court of Appeals for the First Circuit · June 30, 2009 · 570 F.3d 443

URL: https://www.frixlaw.com/law-library/cases/203894

## Case

- **Full name:** Gladys GARCÍA-RUBIERA; Domingo A. Corporan-Suárez; Adalberto Rodríguez; Lourdes Matos; José R. Maldonado; José Pérez-Canabal; Manuel Molina-Godinez; David Castro; Adalberto Avilés; Jorge Plard; Laura Plard-Ocasio; Ginova Toro-Morales; Noemí Valentín-Marrero, Plaintiffs, Appellants, v. Sila María CALDERÓN, Governor of Puerto Rico, Sued in Her Personal Capacity and in Her Official Capacity as Governor; Juan Antonio Flores-Galarza, Secretary of the Treasury Department of the Commonwealth of Puerto Rico, Sued in His Personal Capacity and in His Official Capacity, Defendants, Appellees
- **Court:** Court of Appeals for the First Circuit
- **Decided:** June 30, 2009
- **Citations:** 570 F.3d 443; 2009 U.S. App. LEXIS 14144; 2009 WL 1855834
- **Precedential status:** Published
- **Opinion:** Opinion by Torruella
- **Judges:** Torruella, Howard, Diclerico
- **Cited by:** 105 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/203894

## How later opinions describe it (automated extraction)

- concluding that the proposed class of motor vehicle owners who paid duplicate insurance premiums met the numerosity requirement based on comparing the relatively low cost of duplicate premiums with the high reimbursement figures
- holding that counsel is adequate when they ”have diligently pursued their [class’s] rights”
- finding that the Government of Puerto Rico’s goals in passing Laws 230 and 414 constituted a rational means serving a legitimate end and therefore there was no violation of the Equal Protection clause
- finding that the Plaintiffs do not have to comply with the second prong of Williamson County because they fall within the third exception since the taking involves a direct appropriation of funds

## Opinion text

United States Court of Appeals
For the First Circuit

No. 07-2409

GLADYS GARCÍA-RUBIERA; DOMINGO A. CORPORAN-SUÁREZ;
ADALBERTO RODRÍGUEZ; LOURDES MATOS; JOSÉ R. MALDONADO;
JOSÉ PÉREZ-CANABAL; MANUEL MOLINA-GODINEZ; DAVID CASTRO;
ADALBERTO AVILÉS; JORGE PLARD; LAURA PLARD-OCASIO;
GINOVA TORO-MORALES; NOEMÍ VALENTÍN-MARRERO,

Plaintiffs, Appellants,

v.

SILA MARÍA CALDERÓN, Governor of Puerto Rico, sued
in her personal capacity and in her official capacity as
Governor; JUAN ANTONIO FLORES-GALARZA, Secretary of the
Treasury Department of the Commonwealth of Puerto Rico,
sued in his personal capacity and in his official capacity,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Gustavo A. Gelpí, U.S. District Judge]

Before
Torruella, Howard, Circuit Judges,
and DiClerico,* District Judge.

Antonio J. Amadeo-Murga, for appellants.
Irene S. Soroeta-Kodesh, Assistant Solicitor General, with
whom Salvador J. Antonetti-Stutts, Solicitor General, were on brief
for appellees.

June 30, 2009

*
Of the District of New Hampshire, sitting by designation.
TORRUELLA, Circuit Judge. This difficult appeal concerns

constitutional challenges to amendments to Puerto Rico's Compulsory

Motor Vehicle Liability Insurance Act, Act No. 253 ("Law 253").

Law 253 requires Puerto Rican motor vehicle owners to pay

an annual premium for compulsory car insurance at the time of

acquisition or renewal of vehicle registration. The premiums,

initially collected by the Secretary of the Treasury (the

"Secretary"), are transferred to the Compulsory Liability Joint

Underwriting Association of Puerto Rico ("JUA"), a Commonwealth-

created association of all private insurers in Puerto Rico. JUA

then provides the compulsory car insurance.

Motor vehicle owners can opt out of the compulsory

liability insurance scheme by privately purchasing insurance with

the same or comparable coverage. Those owners who opt out can

either avoid paying the uniform premium at vehicle registration or

seek reimbursement of the "duplicate premium" paid.

The amendments at issue in this appeal, Law 230 and Law

414, concern the duplicate premiums collected by JUA. In essence,

the amendments mandate the transfer of funds designated by JUA for

the reimbursement of duplicate premiums (plus the interest they

generate) back to the Secretary for use by the Commonwealth to

address budget shortfalls. Moreover, Law 230 promulgates a

separate procedure, Procedure No. 96, to provide reimbursement.

-2-
In 2002, the plaintiffs-appellants (the "Plaintiffs"),

all owners of motor vehicles in Puerto Rico who privately purchased

car insurance but paid duplicate premiums, filed suit against the

Secretary and the Governor of the Commonwealth (the "Governor" and,

together with the Secretary, the "Defendants") in their official

and personal capacities.1 Plaintiffs claim that Law 230 and Law

414 violate the Takings, Due Process, and Equal Protection Clauses.

They sought declaratory relief, preliminary and permanent

injunctive relief, reimbursement, compensatory damages, and

certification of a class of similarly situated vehicle owners. The

district court denied almost all relief requested, including

Plaintiffs' request for class certification. However, the district

court granted a preliminary injunction, later made permanent,

enjoining the transfer of the interest generated by the duplicate

premiums and ordering the Commonwealth to develop an adequate

scheme of reimbursement of that interest. This appeal followed.

After careful consideration, we affirm-in-part, reverse-in-part,

and remand for further proceedings.

I. Background

Our discussion of Law 253 and the amendments at issue in

this appeal draw from, and incorporate by reference, our prior

1
At the time of the filing of this action, Juan Antonio Flores-
Galarza was Secretary and Sila María Calderón was Governor,
although they no longer hold those positions. Because they were
sued in their personal capacities, they remain parties to this
action.

-3-
decisions concerning Law 253. See Asociación de Subscripción

Conjunta del Seguro de Responsibilidad Obligatorio v. Flores

Galarza, 484 F.3d 1 (1st Cir. 2007); Arroyo-Melecio v. Puerto Rican

Am. Ins. Co., 398 F.3d 56 (1st Cir. 2005).

A. Law 253

Law 253, codified at P.R. Laws Ann. tit. 26, §§ 8051-61,

requires liability insurance coverage for all registered motor

vehicles in Puerto Rico "that travel on public thoroughfares."

Flores Galarza, 484 F.3d at 6. To that end, Law 253 provides for

compulsory liability insurance, "'with $3000 of coverage for

damages caused to third parties per accident in exchange for a

uniform premium, initially set at $99 for each private passenger

vehicle and $148 for each commercial vehicle.'" Id. (quoting

Arroyo-Melecio, 398 F.3d at 60-61). The compulsory liability

insurance is provided by JUA, "an association of all private

insurers in Puerto Rico." Id. at 7. JUA must provide this

coverage to all drivers, even high risk ones, with "'the risk of

insuring these high-risk drivers . . . spread among all of the

private insurers.'" Id. (quoting Arroyo-Melecio, 398 F.3d at 62).

To fund the compulsory liability insurance, Law 253

requires motor vehicle owners to pay the uniform premium annually

to the Secretary at the time of acquisition or renewal of vehicle

registration. Id. (citing Arroyo-Melecio, 398 F.3d at 61 n.2).

-4-
The Secretary then transfers the premiums periodically to JUA. Id.

(citing P.R. Laws Ann. tit. 26, § 8055(c)).

Motor vehicle owners can "opt out of the compulsory

liability insurance scheme by privately purchasing liability

insurance with comparable or better coverage." See id. at 7

(citing Arroyo-Melecio, 398 F.3d at 61 n.2). Although, in some

circumstances, individual motor vehicle owners who opt out can

"avoid paying the compulsory insurance premium to the Secretary" at

the time of registration, see id. at 7 n.2, a number of such

vehicle owners still pay the compulsory insurance premium.2 For

those owners, Law 253 provides for reimbursement; in particular,

vehicle owners "may then seek reimbursement directly from the JUA

or from his insurer, who will, in turn, seek reimbursement from the

JUA." Id. at 7. These procedures are not at issue in this appeal.

2
Specifically, individuals who have "the requisite amount of
traditional liability insurance" can "avoid paying the compulsory
insurance premium to the Secretary" by presenting a "Certificate of
Compliance" from their insurer. Id. at 7 n.2.

As noted in Flores Galarza, it is unclear whether all
individuals who opt out by privately purchasing insurance can avoid
paying the compulsory insurance premium at vehicle registration.
That is because Puerto Rico law defines "[t]raditional liability
insurance" as "insurance protecting against both personal and
property damage 'resulting from or incident to ownership,
maintenance, or use of any . . . vehicle." Id. (citing Law 253 and
P.R. Laws Ann. tit. 26, § 407(1)). Accordingly, those who buy less
than "traditional liability insurance," but insurance sufficient to
opt out of the compulsory insurance scheme, do not appear to be
able to avoid paying the compulsory insurance premium at
registration. We so concluded in Flores Galarza, see id. at 7 n.3,
although we do not need to address the issue here.

-5-
"Because a portion of the total amount of premiums

received by JUA may be owed to third parties who seek refunds for

duplicate payments," JUA is required by law to "set aside these

premiums and accumulate them in a separate reserve account (the

"Reserve")." Id. at 8. However, since January 1, 1998, the

effective date of Law 253, JUA "has been unable to determine

exactly how many registered motor vehicles in Puerto Rico are

covered by private liability insurance." Id. As a result, JUA has

divided the Reserve account between the "duplicate premiums" it

estimates it is required to reimburse to motor vehicle owners, and

an "overstated" amount of funds, which are funds set aside by JUA

as a buffer to meet all requests for reimbursement. See id. at 8-

9.3

The general provisions of Puerto Rico insurance law with

respect to "unclaimed funds" apply to Law 253. See id. at 8 n.5

("Puerto Rico's Insurance Code makes clear that this general

provision applies to the compulsory liability insurance system

under Law 253." (citing P.R. Laws Ann. tit. 26, § 2612)). Under

Puerto Rico insurance law, vehicle owners have seven years to claim

a duplicate premium. See P.R. Laws Ann. tit. 26, § 2603; see also

3
In Flores Galarza JUA represented that from 1998 to 2001 it
estimated that 25% "of all vehicles were covered by policies from
private insurers, and, accordingly, set aside 25% of all premiums
received" in the Reserve. See id. at 8. For fiscal year 2001, it
reduced the amount reserved to approximately 17%. Id. at 8-9. But
see id. at 11 n.13 (noting discrepancy in percentages withheld).

-6-
Flores Galarza, 484 F.3d at 10 n.9. Otherwise, the duplicate

premium escheats to the Commonwealth.

B. Law 230 and Law 414

On September 11, 2002, the Puerto Rican legislature

enacted Law 230, codified at P.R. Laws Ann. tit. 26, § 8055(l).

Law 230 requires JUA to retransfer to the Secretary all funds held

in the Reserve every two years to balance the Commonwealth's

budget. The first transfer mandated under Law 230, $73 million,

occurred the same month of Law 230's enactment.4 Law 230 also

provided that the Commonwealth could spend $53 million of the funds

immediately. The $53 million, according to the Statement of

Motives of the subsequently enacted Law 414, corresponded to the

overstated funds contained in the Reserve.5

Under Law 230, the remaining $20 million, an estimate of

the actual duplicate premiums paid, remained in the custody of the

Secretary as trustee for five years, after which all unclaimed

4
In fact, the $73 million was never transferred to JUA in the
first place. As discussed in more detail in Flores Galarza,
beginning in 2002, the Secretary refused to transfer the premiums
it collected to JUA, a practice that ended when the parties reached
a settlement in November 2002. 484 F.3d at 9-10. Pursuant to the
settlement, the Secretary transferred to JUA all but $73 million,
which was the amount Law 230 required JUA to retransfer back to the
Secretary. See generally id. at 9-10.
5
This conflicts with Flores Galarza, where the overstated amount
was estimated to be between $8 million and $10 million. See id. at
8, 11 n.13. The parties provide no explanation for this
discrepancy, although Plaintiffs contend that the $8 million to $10
million amount is the correct one.

-7-
duplicate premiums became the property of the Commonwealth.

However, any income generated by the funds, such as interest,

reverted to the Commonwealth's General Fund as it accrued.

Accordingly, under Law 230, "the seven-year period

provided by the general provisions of Puerto Rico's Insurance Code

. . . [is divided] among the JUA (which holds the funds for two

years) and the Secretary (who holds the funds for five additional

years), after which time the funds lapse to the general fund."

Flores Galarza, 484 F.3d at 10 n.9.

Pursuant to Law 230, the Secretary adopted Procedure No.

96, a procedure by which motor vehicle owners can seek

reimbursement from the Secretary. To obtain reimbursement, a

vehicle owner must fill out a model form and submit, via mail or at

certain designated offices, the following:

a. Copy of the Motor Vehicle Registration
License for which such reimbursement is being
claimed;

b. Copy of the insurance policy. Said policy
shall be for each year that is being claimed;

c. In the case such that it is the insurance
firm which is making the claim, it shall
attach certified copies of those policies that
it is claiming;

d. Certification of payment of the policy for
each year being claimed. Such certification
shall be issued by the insurance firm;

e. Certification that such insurance firm has
not received any reimbursement from [JUA], nor
has reimbursed the premium for the Mandatory
Liability Insurance, to the insured party.

-8-
According to the Statement of Motives of Law 414, the Secretary has

only reimbursed approximately $500,000 of duplicate premiums in the

first two years of the enactment of Law 230.

On September 22, 2004, the legislature passed Law 414,

also codified at P.R. Laws Ann. tit. 26, §§ 8055(1). Among other

things, Law 414 permitted the Commonwealth to use $19 million of

the remaining funds transferred in September 2002 to balance the

2004-05 fiscal year budget. Law 414 also requires the Commonwealth

to use money from the General Fund and the Budgetary Fund to

reimburse vehicle owners if the amount transferred by JUA every two

years is not sufficient to satisfy reimbursement requests.

C. Procedural History

Plaintiffs are motor vehicle owners who privately

purchased liability insurance but also paid duplicate premiums. On

February 6, 2002, in anticipation of the passage of Law 230,

Plaintiffs filed a complaint in district court seeking equitable

relief and damages under 42 U.S.C. § 1983. Plaintiffs refuse to

seek reimbursement from the Secretary through Procedure No. 96.6

6
In 2001, Plaintiffs filed a class action in the Commonwealth
Court of First Instance seeking reimbursement from JUA. The action
was dismissed for lack of primary jurisdiction, and on June 11,
2008, the Puerto Rico Court of Appeals upheld the dismissal. See
García-Rubiera v. Asociación de Subscripción Conjunta del Seguro de
Responsibilidad Obligatorio, No. KLAN200700327 (P.R. Cir. Jun. 11,
2008) (translation provided by the parties). In its decision the
Court of Appeals held that Law 230 placed exclusive primary
jurisdiction for any claims for reimbursement with the Secretary.
Thus, Plaintiffs' failure to utilize Procedure No. 96 deprived the
Court of First Instance jurisdiction to address their claims. See

-9-
In their complaint, which has been amended,7 Plaintiffs

assert a property interest in the duplicate premiums and the

interest they generate. Consequently, Plaintiffs contend that each

transfer of the funds from the Reserve account to the Secretary,

starting with the $73 million in September of 2002, constitutes a

temporary physical appropriation of their property without

compensation and without due process, in violation of the Fifth and

Fourteenth Amendments. They also contend that the Secretary

permanently, and unlawfully, appropriated the interest generated by

the funds. Finally, they contend that, as payers of the duplicate

premiums, they and others similarly situated were singled out by

the Commonwealth to address its budget concerns, in violation of

the Equal Protection Clause.

Plaintiffs sought

1. a declaratory judgment that the Governor "cannot
implement" Laws 230 and 414;

2. a preliminary and permanent injunction to prevent the
transfer of funds from the Reserve to the Secretary;

id. slip. op. at 16-19. The Court of Appeals did not address the
merits of Plaintiffs' constitutional claims. Id. slip op. at 21.
7
Plaintiffs amended the complaint on December 24, 2004 after the
district court dismissed the original complaint without prejudice
on February 9, 2004. The district court dismissed the complaint on
standing and ripeness grounds. In essence, the district court
found that Plaintiffs' claims were premature because "it was
uncertain" that Law 230, then known as Bill 2114, would pass "and
the Commonwealth will in fact appropriate the funds for the 2002-
2003 budget."

-10-
3. $70 million in damages from the Secretary and the
Governor in their personal capacities; and

4. costs and attorneys' fees.8

Plaintiffs also sought to certify a class. The Governor and the

Secretary each moved to dismiss the claims, claiming, among other

things, qualified immunity. Plaintiffs opposed, and moved

separately for a preliminary injunction and class certification.

On August 30, 2007, the district court issued an opinion

and order that addressed these various motions. García-Rubiera v.

Flores-Galarza, 516 F. Supp. 2d 180 (D.P.R. 2007). In the order,

the district court dismissed as unripe the takings claim with

respect to the duplicate premiums, since Plaintiffs had not availed

themselves of their administrative remedy under Procedure No. 96.

Id. at 188-90. The order also dismissed Plaintiffs' damages claims

against the Secretary and the Treasurer in their personal

capacities, finding that both were entitled to qualified immunity.

Id. at 194-95. The district court further denied preliminary

injunctive relief that would have prevented the Commonwealth from

taking title to those duplicate premiums transferred in September

2002, which were scheduled to escheat to the Commonwealth in

September 2007. Id. at 195-96. The district court also denied

Plaintiffs' motion for class certification. Id. at 198. However,

8
Plaintiffs also seek reimbursement, but any claim for
reimbursement against Defendants in their official capacities, to
the extent that it is a claim for damages, is barred by the
Eleventh Amendment. See Flores Galarza, 484 F.3d at 23-25 & n.27.

-11-
the district court granted a preliminary injunction, made

permanent, that enjoined Defendants from depositing into the

General Fund any interest generated by the duplicate premiums. Id.

at 196-98 & n.20.

The district court later entered a separate judgment

setting forth the terms of the permanent injunction, whereby it

retained jurisdiction until the Commonwealth instituted a

constitutionally adequate scheme "to deal with the interest

generated by the Duplicate Premiums." It further stated that

"[j]udgment is also entered dismissing all claims against [the

Secretary] and [the Governor] in their personal capacities."

Plaintiffs now appeal.

II. Discussion

Plaintiffs raise several issues on appeal. We discuss

each in turn.

A. The Takings Claim

Plaintiffs first argue that the district court erred by

dismissing their Takings Clause claim with respect to the duplicate

premiums as unripe because of Plaintiffs' refusal to pursue their

administrative remedy under Procedure No. 96. As discussed in more

detail below, we disagree with the district court and conclude that

Plaintiffs' takings claim for declaratory and injunctive relief is

ripe despite their failure to utilize Procedure No. 96.

-12-
We review de novo the dismissal of a takings claim on

ripeness grounds. Deniz v. Municipality of Guaynabo, 285 F.3d 142,

145 (1st Cir. 2002). To assert a ripe takings claim, a plaintiff

must satisfy "'two independent procedural hurdles.'" Flores

Galarza, 484 F.3d at 13 (quoting Suitum v. Tahoe Reg'l Planning

Agency, 520 U.S. 725, 733-34 (1997)). As explained by the Supreme

Court in Williamson County Reg'l Planning Commission v. Hamilton

Bank, 473 U.S. 172 (1985), a plaintiff asserting a takings claim

must demonstrate that (1) he or she "received a final decision from

the state on the use of his property," and (2) "sought compensation

through the procedures the State has provided for doing so." See

Flores Galarza, 484 F.3d at 13-14 (quoting Williamson County, 473

U.S. at 194). Plaintiffs have the burden of demonstrating

ripeness. See Pascoag Reservoir & Dam, LLC v. Rhode Island, 337

F.3d 87, 91 (1st Cir. 2003) (holding that "[a] federal suit is not

timely until a plaintiff demonstrates" ripeness (emphasis added)).

1. The Finality Prong

Plaintiffs satisfy the first, finality prong. First,

Plaintiffs have a sufficient property interest in the duplicate

premiums to support their takings claim. For purposes of the

Takings Clause, "the existence of a property interest is determined

by reference to 'existing rules or understandings that stem from an

independent source such as state law.'" See Phillips v. Wash.

Legal Found., 524 U.S. 156, 164 (1998) (quoting Bd. of Regents of

-13-
State Colls. v. Roth, 408 U.S. 564, 577 (1972)). Here, Puerto Rico

law plainly establishes that Plaintiffs have a sufficient property

interest in the duplicate premiums. By regulation, JUA must

segregate those premiums collected that are thought to be duplicate

premiums, and Puerto Rico's insurance law concerning "unclaimed

funds" apply to the duplicate premiums collected. See Flores

Galarza, 484 F.3d at 8 & n.5. Furthermore, upon transfer to the

Secretary, Law 230 requires the Secretary to hold the duplicate

premiums in a fiduciary capacity. See P.R. Laws Ann. tit. 26, §§

8055(1) ("The Secretary of the Treasury shall retain these funds as

trustee . . . .") (emphasis added). Finally, Law 253, Law 230, and

Law 414 all provide for reimbursement of the duplicate premiums.

Thus, like funds held in trust in an IOLTA account or an

interpleader account, the funds held by JUA or the Secretary are

clearly the "private property" of Plaintiffs for purposes of the

Takings Clause. See Phillips, 524 U.S. at 164 ("All agree that

under Texas law the principal held in IOLTA trust accounts is the

'private property' of the client."); see also Webb's Fabulous

Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 161 (1980) (holding

that funds deposited in interpleader fund for benefit of creditors

are the property of creditors); cf. Flores Galarza, 484 F.3d at 30

(finding that the duplicate premiums "'constitute a double payment

for the same insurance,' and, therefore, do not belong to JUA, but

-14-
rather belong to private insured motorists.") (quotations omitted

and emphasis added).9

Second, the Secretary's appropriation of the duplicate

premiums constitutes a "final decision" for purposes of the

finality prong. "[T]he finality requirement is concerned with

whether the initial decisionmaker has arrived at a definitive

position on the issue that inflicts an actual, concrete injury."

Id. at 15 n.18 (quoting Williamson County, 473 U.S. at 193)

(emphasis added). As we stated in Flores Galarza,

The case law addressing the first "hurdle"
focuses on whether the administrative body
responsible for applying the challenged
regulations has completed discretionary review
of the plaintiff's particular situation.
Here, there is no pending administrative
process that could, through a variance, waiver
or other discretionary decision, modify the
statute's impact on the JUA.

Id. at 15. The same is true here, as there is no pending process

that would "modify the statute's impact" on Plaintiffs.

2. The Just Compensation Prong

Consequently, at issue is whether Plaintiffs have

satisfied the second, "just compensation" prong. The just

9
We further note that Defendants do not appeal the injunction
entered by the district court with respect to the interest
generated by the duplicate premiums. Since the basis of
Plaintiffs' property interest in the interest is based on the maxim
that "'interest follows principal,'" see Flores Galarza, 484 F.3d
at 32 (quoting Phillips, 524 U.S. at 165-72), it would be anomalous
if Plaintiffs have a property interest in the interest generated by
the duplicate premiums but not the premiums themselves.

-15-
compensation prong presents some difficulty for Plaintiffs, since

Procedure No. 96 provides a procedure to reimburse the duplicate

premiums, and Plaintiffs refuse to avail themselves of it. By

their own admission, Plaintiffs have not "sought compensation

through the procedures the State has provided for doing so." Id.

at 14 (citations omitted); see also Williamson County, 473 U.S. at

197 (holding that the takings claim in that case was unripe "until

[the plaintiff] has utilized th[e] procedure" for just compensation

provided by the state). For that reason, the district court

dismissed Plaintiffs' claim as unripe. See García-Rubiera, 516 F.

Supp. 2d at 190.

However, we have recognized exceptions to the just

compensation prong. We have noted that facial challenges to a

regulation "are generally ripe the moment the challenged regulation

or ordinance is passed." Flores Galarza, 484 F.3d at 14 (quoting

Suitum, 520 U.S. at 736 n.10). Moreover, we have held that a

plaintiff is relieved of the second prong if the procedure is

"unavailable," "inadequate," or "futile." See id. (noting that

second prong does not apply when a procedure is "unavailable or

inadequate" (quoting Williamson County, 473 U.S. at 197)); see also

Pascoag, 337 F.3d at 92-93 (noting that futility is an exception to

this prong). Finally, we noted in Flores Galarza that the just

compensation prong may not apply in certain circumstances to a

-16-
"taking that involves the direct appropriation of funds." See 484

F.3d at 19.

On appeal, Plaintiffs argue that all three categories of

exceptions apply.10 We agree as to the third category, and conclude

that Plaintiffs' claim for declaratory and injunctive relief is

ripe because their claim "involves the direct appropriation of

funds."

In Flores Galarza, we noted that the Supreme Court

expressed doubt that a federal takings claim seeking declaratory

and injunctive relief would require individuals to first seek

compensation under the Tucker Act, which is "usually . . . a

preliminary step in a takings action against the federal

government." Id. (citing the plurality opinion in Eastern Enters.

v. Apfel, 524 U.S. 498 (1998)). Apfel concerned a challenge to the

Coal Act, "which established a mechanism for funding health care

benefits for coal industry retirees," and which required private

coal operators "to contribute to the payment of premiums to fund

such benefits." Id. (citing Apfel, 524 U.S. at 504). Eastern, one

such private coal operator, brought both facial and as-applied

10
It is unclear whether Plaintiffs limit their takings challenge
to solely a facial challenge. Plaintiffs' takings claim is not
well-presented, and at times in their brief suggest such a
limitation while, at the same time, they state that they are
entitled to "go to trial and present evidence that the procedure's
net effect would have been to deprive the substantial majority of
the owners of their reimbursement." Given this lack of clarity, we
construe Plaintiffs' argument as presenting both facial and as-
applied takings challenges.

-17-
takings challenges, and sought a declaratory judgment and an

injunction against enforcement of the act by the Commissioner of

Social Security. Apfel, 524 U.S. at 520. Eastern did not seek

compensation. Id.

A plurality concluded that the availability of Tucker Act

compensation did not prevent Eastern from asserting its takings

claim. It did so because to require Eastern to assert its claim

would result in an "utterly pointless set of exercises," since

"Congress could not have contemplated that the Treasury would

compensate coal operators for their liability under the Act, for

'[e]very dollar paid pursuant to a statute would be presumed to

generate a dollar of Tucker Act compensation.'" Id. at 521

(quoting In re Chateaugay Corp., 53 F.3d 478, 493 (2d Cir. 1995)).

Instead, "the Declaratory Judgment Act allows individuals

threatened with a taking to seek a declaration of the

constitutionality of the disputed governmental action before

potentially uncompensable damages are sustained." Id. (quotation

marks omitted).

In Flores Galarza, we analogized the takings claim raised

by JUA to the claim raised in Apfel. Although we recognized

differences between the two contexts, we stated that "the nature of

[JUA's] claim -- that Puerto Rico's Secretary of the Treasury

improperly withheld money belonging to the JUA so that it may be

used for public purposes -- strikes us as equivalent to the

-18-
complaints against the 'direct transfer of funds' at issue in Apfel

and the decisions its cites." See Flores Galarza, 484 F.3d at 20.

Here, even before the passage of Law 230, Plaintiffs have

sought to enjoin the transfer of the duplicate premiums to the

Secretary and a declaratory judgment that such a transfer was

unlawful. In other words, Plaintiffs have consistently sought "a

declaration of the constitutionality of the disputed governmental

action before potentially uncompensable damages are sustained."

Apfel, 524 U.S. at 521. Thus, to require Plaintiffs to seek

compensation for property taken when it has continually sought to

enjoin such takings in the first place "would entail an utterly

pointless set of activities." Flores Galarza, 484 F.3d at 20

(citations and quotation marks omitted). Since Plaintiffs' takings

claim for declaratory and injunctive relief mirrors the claims in

Flores Galarza and Apfel in this crucial respect, we hold that they

are ripe.

For the above reasons, we reverse the district court and

hold that Plaintiffs' takings claim is ripe with respect to their

requests for declaratory and injunctive relief.

B. The Due Process Claim

Plaintiffs also contend that Law 230 violates the Due

Process Clause because it is a "spurious escheat statute" that

transfers the duplicate premiums to the Commonwealth without

providing notice of the transfers. Specifically, Plaintiffs

-19-
challenge the transfer of the Reserve account from JUA every two

years to balance the budget, which they contend effects an

"escheat" of the premiums to the Commonwealth in violation of

Puerto Rico law, which requires seven years of abandonment before

the Commonwealth can take over the funds. See P.R. Laws Ann. tit.

26, § 2603; id. § 2612 ("The [general provision governing unclaimed

funds] shall prevail over the provisions of any other chapter

present or future which may be in conflict herewith."). Plaintiffs

argue that because Law 230 "did not provide any notice to the

persons who might have an interest in" the transferred duplicate

premiums, it violates their due process rights.11

As discussed in more detail below, although we agree with

Plaintiffs that they have a sufficient property interest in the

duplicate premiums for purposes of due process, we remand for

further proceedings to determine whether the transfers to the

11
We note that Plaintiffs' due process claim only goes to the lack
of notice of the transfer of the duplicate premiums to the
Secretary pursuant to Law 230. Plaintiffs do not challenge the
sufficiency of the notice post-transfer but prior to escheat.

We further note that Puerto Rico's insurance code requires
"[e]very insurer and every general agent, manager, or producer" to
produce a report of all unclaimed premiums, see P.R. Laws Ann. tit.
26, § 2604(1), and "cause notices to be published based on the
information contained in the reports." Id. § 2605(1). Moreover,
"[s]uch notice must be published once a week for two (2)
consecutive weeks in a newspaper of general circulation in Puerto
Rico." Id. Presumably, "general agent, manager, or producer"
includes the Secretary, but we do not need to address the matter
here. See id. § 2612 ("The provisions of this chapter shall
prevail over the provisions of any other chapter present or future
which may be in conflict herewith.").

-20-
Secretary constitutes a sufficient deprivation of that property

interest to require notice under the Due Process Clause.

1. Relevant Procedural Background

The district court did not directly address this specific

due process challenge with respect to Plaintiffs' claim for

equitable relief.12 As background, the district court denied

Plaintiffs' motion for preliminary injunctive relief based on their

due process claims because Plaintiffs failed to assert a likelihood

of success on the merits. García-Rubiera, 516 F. Supp. 2d at 196.

The district court found that Plaintiffs "have not shown that

available remedies under the Commonwealth law are inadequate to

redress any deprivation resulting from the transfer of the

Duplicate Premiums to the Secretary;" specifically, Plaintiffs

failed to "make [an] evidentiary proffer to support their

allegations that Procedure No. 96 is onerous and 'difficult if not

impossible.'" Id. (citing Rumford Pharmacy, Inc. v. E. Providence,

970 F.2d 996, 999 (1st Cir. 1992)). The district court further

noted that since "Plaintiffs appear to have an adequate remedy at

law which they have elected not to pursue," they "will not . . .

suffer irreparable injury if denied equitable relief." Id. The

district court proceeded to enter a preliminary injunction, which

it later made permanent, only as to Plaintiffs' claims with respect

12
The district court dismissed Plaintiffs' due process claims for
compensatory damages on qualified immunity grounds, and we address
the dismissal of those claims separately below.

-21-
to the interest earned by the duplicate premiums. Id. at 197.

Left unaddressed was Plaintiffs' due process claim with respect to

notice. The district court instead focused on Plaintiffs' claim

that Procedure No. 96 was "onerous."13 Id. at 196.

In fact, although the district court denied preliminary

injunctive relief with respect to the duplicate premiums, the court

never explicitly disposed of Plaintiffs' due process claim. After

denying preliminary injunctive relief, the district court proceeded

to enter a final judgment setting forth the terms of the permanent

injunction as to the interest generated by the duplicate premiums,

and further stated that "[j]udgment is also entered dismissing all

claims against [Defendants] in their personal capacities."

2. Analysis

Since Plaintiffs challenge the district court's denial of

preliminary injunctive relief, "'we scrutinize abstract legal

matters de novo, findings of fact for clear error, and judgment

calls with considerable deference to the trier.'" See

Waterproofing Sys., Inc. v. Hydro-Stop, Inc., 440 F.3d 24, 28 (1st

Cir. 2006) (quoting Re-Ace, Inc. v. Wheeled Coach Indus., Inc., 363

F.3d 51, 55 (1st Cir. 2004)). Moreover, based on the above, we

construe the district court's actions as denying Plaintiffs' due

13
We speculate that one reason why the district court did not
address this particular due process claim may be because Plaintiffs
did not adequately present the claim below. However, Defendants do
not assert waiver as a defense, and as both parties briefed the
issue, we address it.

-22-
process claim for equitable relief. Thus, we review the denial of

declaratory relief "for something akin to abuse of discretion."

See Rossi v. Gemma, 489 F.3d 26, 38 & n.21 (1st Cir. 2007).

Similarly, we review the denial of a permanent injunction for abuse

of discretion, with any legal conclusions reviewed de novo and any

factual findings reviewed for clear error. See Aponte v. Calderón,

284 F.3d 184, 191 (1st Cir. 2002) ("Generally, we review a grant of

a permanent injunction for abuse of discretion, but we always

review questions of law de novo [and] factual findings for clear

error." (citations omitted)).

To the extent that Plaintiffs are entitled to notice,

they clearly lack it here. Due process requires "'notice

reasonably calculated, under all the circumstances, to apprise

interested parties of the pendency of the action and afford them an

opportunity to present their objections.'" Jones v. Flowers, 547

U.S. 220, 226 (2006) (quoting Mullane v. Central Hanover Bank &

Trust Co., 339 U.S. 306, 314 (1950)); see also Taylor v. Westly,

488 F.3d 1197, 1201 (9th Cir. 2007) (same). In other words, "when

notice is a person's due . . . [t]he means employed must be such as

one desirous of actually informing the absentee might reasonably

adopt to accomplish it." Jones, 547 U.S. at 229 (quoting Mullane,

339 U.S. at 315).

Here, Plaintiffs do not challenge the adequacy of the

notice provided by Law 230. Plaintiffs instead claim that, on its

-23-
face, Law 230 provides no notice of the transfer of the duplicate

premiums from JUA to the Secretary every two years. Based upon our

own review of Law 230 and Procedure No. 96, we agree. Law 230

makes no mention of notice. Instead, Law 230 only directs that the

funds in the Reserve account be transferred to the Secretary.

Procedure No. 96 also fails to provide notice. It provides that a

reimbursement claim can be made "through the Public Insurance Area

through Form SC-4601, Request for Reimbursement of Mandatory

Insurance," and that "[s]ame shall be available in the Internet or

at Collector's Offices." Procedure No. 96 also sets forth the

proof necessary to file a successful reimbursement claim. Despite

all of these provisions, no mention of notice is made. The closest

Procedure No. 96 comes to indicating notice is a direction that,

upon transfer, JUA "shall forward an electronic file . . . which

shall contain the information which is indicated in Attachment 1,

bearing those insureds that are entitled to such reimbursement."

Procedure No. 96, however, does not further direct that those named

insureds receive notice of the transfer.

In response, Defendants argue, without citing any

supporting authority, that Plaintiffs had "plenty of notice"

because they filed this action prior to the enactment of Law 230.

However, Plaintiffs' actual notice has no bearing in this case

because Plaintiffs assert a facial challenge to Law 230.

Plaintiffs argue that Law 230 is unconstitutional on its face

-24-
because it fails to include a process whereby motor vehicle owners

who paid duplicate premiums are provided notice that their premiums

are going to be transferred to, and held by, the Secretary.

Defendants do not dispute the absence of such a provision. Thus,

actual notice cannot defeat Plaintiffs' due process claim.

Defendants also argue, again without citing supporting

authority, that the mere passage and publication of Law 230

provided notice of the transfers of the duplicate premiums and the

mechanism by which the payers of duplicate premiums could seek

reimbursement. However, Plaintiffs' argument is not that due

process required them to receive notice of the available procedure

for obtaining reimbursement. See City of West Covina v. Perkins,

525 U.S. 234, 241 (1999) ("Once the property owner is informed that

his property has been seized, he can turn to [the state statute or

case law] to learn about the remedial procedures available to

him."). Rather, their claim is that they are entitled to notice

that the Commonwealth is about to assert a contrary property

interest in their duplicate premiums. In such circumstances, mere

publication of the law effectuating a seizure of a property

interest does not constitute constitutionally adequate notice. See

Mullane, 339 U.S. at 314 ("Th[e] right to be heard has little

reality or worth unless one is informed that the matter [affecting

one's property rights] is pending and can choose for himself

-25-
whether to appear or default, acquiesce or contest"); see also

Covina, 525 U.S. at 240 (same, quoting Mullane).

But Plaintiffs must first establish at least two

threshold requirements before it is entitled to notice under the

Due Process Clause. First, "[a] threshold requirement for a

successful procedural due process claim is to demonstrate the

implication of a constitutionally protected interest in life,

liberty, or property." Aponte, 284 F.3d at 191 (citing

Romero-Barceló v. Hernández-Agosto, 75 F.3d 23, 32 (1st Cir.

1996)). Plaintiffs have demonstrated such an interest. In

general, we perform the same analysis in determining whether a

property interest is sufficient under both the Takings Clause and

the Due Process Clause. See Picard v. Members of Employee Ret. Bd.

of Providence, 275 F.3d 139, 144 (1st Cir. 2001) (noting that "[i]n

evaluating whether a purported contract or property right is

entitled to constitutional protection under the Takings Clause,

Contract Clause, or Due Process Clause, this Court generally looks

to state law as interpreted by the state's highest court" (citing

cases)); cf. Nat'l Educ. Ass'n-R.I. v. Ret. Bd. of the R.I.

Employees' Ret. Sys., 172 F.3d 22, 30 (1st Cir. 1999) ("An

expectation that is not 'property' for purposes of the Takings

Clause may yet sometimes entitle the citizen to procedural

protection . . . before the expectation is cut off by government

action."). Since we hold that Plaintiffs have a sufficient

-26-
interest in the duplicate premiums for Takings Clause purposes, we

also hold that Plaintiffs have a sufficient interest in the

duplicate premiums for Due Process Clause purposes.

Once a property interest is established, Plaintiffs must

then show that "the defendants, acting under color of state law,

deprived [them] of that property interest without constitutionally

adequate process." See SFW Arecibo, Ltd. v. Rodríguez, 415 F.3d

135, 139 (1st Cir. 2005) (quoting PFZ Props., Inc. v. Rodríguez,

928 F.2d 28, 30 (1st Cir. 1991)) (emphasis added). In this case,

the alleged deprivation caused by Law 230 -- the transfer of the

duplicate premiums to the Secretary -- does not cause a permanent

escheat. Instead, the funds are to be held in trust by the

Secretary until the escheat period set forth under Puerto Rico

insurance law passes.

The Supreme Court has held that "even the temporary or

partial impairments to property rights that attachments, liens, and

similar encumbrances entail are sufficient to merit due process

protection." See Connecticut v. Doehr, 501 U.S. 1, 12 (1991). In

Doehr, for example, a Connecticut statute permitted plaintiffs in

civil suits to obtain ex parte attachments against defendants with

a showing so minimal -- an averment by the plaintiff that the

defendant is liable -- that it resulted in a "significant risk of

erroneous deprivation." Id. at 21. Following Doehr, in Reardon v.

United States, 947 F.2d 1509 (1st Cir. 1991) (en banc), we held

-27-
that filing a CERCLA lien without notice or a pre-deprivation

proceeding constituted a sufficient deprivation of property since

"[t]he EPA's lien has substantially the same effect . . . as the

attachment had on the [property owner] in Doehr -- clouding title,

limiting alienability, [and] affecting current and potential

mortgages." Id. at 1518.

The alleged deprivation caused by Law 230 has some

similarities to the "temporary or partial" deprivations in Doehr

and Reardon. Like a lien or attachment, the alleged deprivation in

this case is "temporary or partial," because Law 230 allows payers

of the duplicate premiums to receive reimbursement. The

deprivation here, like in Doehr and Reardon, only results in a

"risk of erroneous deprivation." Doehr, 501 U.S. at 21.

Moreover, like a lien or attachment, the Secretary, through

operation of Puerto Rico's general escheat statute, has a

contingent interest in the duplicate premiums, one that poses a

risk of complete deprivation should Plaintiffs fail to obtain

reimbursement during the escheat period.

But the alleged deprivation in this case differs from the

deprivations in Doehr and Reardon in two important respects.

First, unlike in Doehr or Reardon, Plaintiffs do not have use of

the duplicate premiums prior to the transfer, as they are already

held in trust by JUA. The transfers only result in a change of

trustees. Second, the laws at issue in Doehr and Reardon created

-28-
the liens or attachments at issue without adequate due process. In

this case, however, the Secretary already has a contingent interest

prior to the transfer, insofar as the escheat period had already

begun to run prior to the transfer. The only change effected by

the transfer, apart from the change in trustee, is the change in

procedure to obtain reimbursement. In sum, the alleged deprivation

here is not the creation of a lien or attachment without due

process, as was the case in Doehr and Reardon, but the transfer of

property held by one party to a different party and the imposition

of a different (and allegedly more onerous) reimbursement

procedure.

In their takings claim, Plaintiffs claim that the

procedure to obtain reimbursement, Procedure No. 96, is so onerous

that the change in procedure is, in effect, a "spurious escheat."

Here, they also claim that the transfer constitutes a "spurious

escheat," but provide no briefing on whether the alleged

deprivation (change in trustee plus a change in procedure)

constitutes a sufficient deprivation for purposes of the Due

Process Clause. Defendants also provide no briefing on whether the

transfers here result in a deprivation of constitutional

significance. They only argue that any notice here was adequate.

Finally, as noted above, the district court did not reach the

issue.

-29-
Given the lack of briefing and the district court's

silence on this issue, we conclude that the more prudent course is

to remand to the district court for further proceedings to

determine whether the transfers of the duplicate premiums mandated

by Law 230 constitute a sufficient deprivation for purposes of the

Due Process Clause.

C. The Equal Protection Claim

In addition to their due process challenge, Plaintiffs

contend that the district court erred with respect to their equal

protection claim. The district court dismissed the claim in a

footnote, stating that it "finds without merit Plaintiffs'

undeveloped arguments that the Secretary's action . . . violates

their rights to equal protection." García-Rubiera, 516 F. Supp. 2d

at 188 n.10.

Plaintiffs fare no better here. Plaintiffs claim that

they were "singled out" as payers of the duplicate premiums to

address the shortfalls in the Commonwealth's budget. "When social

or economic legislation is at issue, the Equal Protection Clause

allows the States wide latitude . . . and the Constitution presumes

that even improvident decisions will eventually be rectified by the

democratic processes." City of Cleburne v. Cleburne Living Ctr.,

473 U.S. 432, 440 (1985) (internal citations omitted).

Accordingly, in cases that do not involve a protected class, "the

Equal Protection Clause requires only a rational means to serve a

-30-
legitimate end." Id. at 442. Neither Law 230 nor Law 414 is

directed to a protected class, and the Commonwealth's actions in

transferring and using the funds, whatever their merit, is

certainly rational, serving the legitimate end of balancing the

budget. Thus, no equal protection violation occurred.

D. Qualified Immunity

Plaintiffs additionally claim that the district court

erred in finding that Defendants were entitled to qualified

immunity as to Plaintiffs' claims for compensatory damages against

the Defendants in their personal capacities under 42 U.S.C. § 1983.

We review the district court's allowance of qualified immunity de

novo. Jennings v. Jones, 499 F.3d 2, 10 (1st Cir. 2007).

To determine qualified immunity, we have "typically

applied . . . a three part test in which we inquire:"

(1) whether the claimant has alleged the
deprivation of an actual constitutional right;
(2) whether the right was clearly established
at the time of the alleged action or inaction;
and
(3) if both of these questions are answered in
the affirmative, whether an objectively
reasonable official would have believed that
the action taken violated that clearly
established constitutional right.

Id. (quoting Starlight Sugar, Inc. v. Soto, 253 F.3d 137, 141 (1st

Cir. 2001)).

In its order the district court ultimately found that

Defendants were entitled to qualified immunity. As to the first

prong, the district court found that Plaintiffs' amended complaint

-31-
sufficiently alleged a due process claim and a takings claim with

respect to the interest earned by the duplicate premiums, finding

earlier that Plaintiffs' takings claim with respect to the

duplicate premiums was not ripe. García-Rubiera, 516 F. Supp. 2d

at 192-93. However, as to the second prong, the district court

relied upon our finding in Flores Galarza that "after enactment of

[Law 230], which specifically required the JUA to transfer to the

Secretary all funds held in the Reserve as of December 31, 2001,

the law did not clearly establish . . . that withholding any of the

designated Reserve . . . [and the interest it generates] was an

unconstitutional taking." Id. at 193 (quoting Flores Galarza, 484

F.3d at 35) (emphasis in original). Moreover, the district court

held that, "[r]egarding Plaintiffs' procedural due process claim,

the law was not clearly established that to the effect that the

custodial transfer of funds pursuant to a Commonwealth statute and

the provision of a compensation procedure did not comport with due

process requirements." Id. at 193-94. As to the third prong, the

district court relied upon our finding in Flores Galarza that "a

reasonable officer in [the Secretary's] circumstances would have

believed that he had a law mandate, stemming from [Law 230], to

retain for use by the Department of Treasury the Reserve Fund

recognized by JUA as of December 31, 2001. Any officer in his

shoes would have acted as he did in immediately retaining the full

Reserve Fund [and interest] without any compensation to the JUA [or

-32-
Plaintiffs]." Id. at 194 (quoting Flores Galarza, 484 F.3d at 36)

(alterations in the original). Accordingly, the district court

concluded that "[t]he same rationale applies to the takings and

procedural due process claims asserted in this case." Id.

Finally, the district court held that all of these findings applied

equally to the Governor. Id. at 195.

We identify no error in the district court's analysis,

and see no reason to revisit anything we previously determined in

Flores Galarza. We only add that the conclusions we reached in

Flores Galarza apply equally to Plaintiffs' takings claims with

respect to the duplicate premiums. See Pearson v. Callahan, 129 S.

Ct. 808, 818 (2009) (establishment of constitutional violation

unnecessary when other prongs are established in order to find

qualified immunity). Accordingly, we affirm the district court

with respect to its grant of qualified immunity to Defendants.

E. Class Certification

Plaintiffs finally challenge the denial of their motion

to certify a class. We generally review the denial of class

certification for abuse of discretion. See McKenna v. First

Horizon Home Loan Corp., 475 F.3d 418, 422 (1st Cir. 2007). Any

legal rulings are reviewed de novo. Tardiff v. Knox County, 365

F.3d 1, 4 (1st Cir. 2004).

Below, Plaintiffs moved to certify a class of "all motor

vehicle owners [sic] residents of the Commonwealth of Puerto Rico

-33-
who during the years 1997 to 2007 have paid the compulsory motor

vehicle insurance premiums and have also acquired traditional

insurance and have not been reimbursed with the compulsory

insurance premiums." García-Rubiera, 516 F. Supp. 2d at 198. The

district court denied class certification because, having dismissed

Plaintiffs' damage claims, the remaining claims for injunctive

relief, if granted, would "affect all commonwealth motor vehicle

owners equally." Id. Accordingly, the district court concluded

that "[t]he class action device . . . is not the superior method of

adjudicating Plaintiffs' claims," since "[c]lass certification in

this case would serve no useful purpose." Id.

As an initial matter, although the district court did not

directly address whether Plaintiffs satisfied the prerequisites of

Rule 23(a), we note that they are easily satisfied here. As to

numerosity, Plaintiffs estimate the class to be around 500,000,

which they calculate based on the fact that JUA reserved amounts to

reimburse on an estimate that 17% to 25% of all registered motor

vehicle owners paid duplicate premiums, see Flores Galarza, 484

F.3d at 8-9, and that, according to Plaintiffs, there are three

million registered motor vehicle owners. Although Plaintiffs do

not provide a basis for their estimate of the total number of

registered motor vehicle owners, we independently conclude that

numerosity is satisfied. The money withheld by JUA for

reimbursement ($20 million) as compared to the amount of the

-34-
duplicate premiums ($99 or $148) paid by motor vehicle owners shows

that the total number of individuals in the class far exceeds the

low threshold for numerosity. See Stewart v. Abraham, 275 F.3d

220, 226-27 (3d Cir. 2001) ("No minimum number of plaintiffs is

required to maintain a suit as a class action, but generally if the

named plaintiff demonstrates that the potential number of

plaintiffs exceeds 40, the first prong of Rule 23(a) has been

met.") (citations omitted). Commonality and typicality are easily

met as well, since there are "questions of law or fact common to

the class," see Fed. R. Civ. P. 23(a)(2), and Plaintiffs' claims

"arise[] from the same event or practice or course of conduct that

gives rise to the claims of other class members, and . . . are

based on the same legal theory." See In re Am. Med. Sys., Inc., 75

F.3d 1069, 1082 (6th Cir. 1996) (discussing typicality under Rule

23(a)(3), quoting 1 Herbert B. Newberg & Alba Conte, Newberg on

Class Actions § 3.13 (3d ed. 1992)). And there is no reason to

question the adequacy of representation in this case, see Fed. R.

Civ. P. 23(a)(4) & 23(g), as Plaintiffs and counsel have diligently

pursued their rights since enactment of Law 230.

That said, the district court committed legal error in

denying class certification. To obtain certification of a class,

Plaintiffs must establish the prerequisites of Rule 23(a) and fall

within one of the categories of Rule 23(b). See Fed. R. Civ. P.

23(a)(1)-(4) & 23(b)(1)-(3); see also Smilow v. Southwestern Bell

-35-
Mobile Sys., Inc., 323 F.3d 32, 38 (1st Cir. 2003). In addressing

Plaintiffs' motion to certify a class, the district court applied

Rule 23(b)(3), which requires Plaintiffs to show, among other

things, that "a class action is superior to other available methods

for fairly and efficiently adjudicating the controversy." Fed. R.

Civ. P. 23(b)(3). However, Rule 23(b)(3) applies to class actions

solely asserting damage claims that do not otherwise fit within the

other Rule 23(b) categories, see Amchem Prods., Inc. v. Windsor,

521 U.S. 591, 614-15 (1997), and all damages claims in this case

were dismissed. Instead, class actions asserting injunctive

relief, as the one here, fit under Rule 23(b)(2), which applies

when "the party opposing the class has acted or refused to act on

grounds that apply generally to the class, so that final injunctive

relief . . . is appropriate respecting the class as a whole." Fed.

R. Civ. P. 23(b)(2); see also Robinson v. Metro-North Commuter R.R.

Co., 267 F.3d 147, 162 (2d Cir. 2001) (Rule 23(b)(2) "is intended

for cases where broad, class-wide injunctive or declaratory relief

is necessary to redress a group-wide injury."). Unlike Rule

23(b)(3), Rule 23(b)(2) has no superiority requirement. Because

the district court denied Plaintiffs' motion for class

certification based on a requirement that did not apply, it

committed reversible legal error.

Accordingly, we reverse the district court's denial of

Plaintiffs' motion for class certification and, having found that

-36-
Plaintiffs have satisfied all of the requirements necessary to

certify a class, we direct the district court to certify one

consistent with this opinion.

III. Conclusion

In sum, we reverse the district court and hold that

Plaintiffs' takings claim for declaratory and injunctive relief is

ripe. With respect to Plaintiffs' due process claim, we remand for

further proceedings consistent with this opinion. We affirm the

denial of Plaintiffs' equal protection claim. We affirm the

district court's dismissal of Plaintiffs' compensatory damages

claims on qualified immunity grounds. Finally, we reverse the

district court's denial of class certification and remand directing

the district court to certify a class consistent with this opinion.

Affirmed-in-part, reversed-in-part, and remanded for

further proceedings consistent with this opinion. Each side shall

bear their own costs.

-37-

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/203894. Public record. Not legal advice.
