Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-14-16247/USCOURTS-ca9-14-16247-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

REA MIALIZA O. PAESTE; JEFFREY F.

PAESTE; SHARON M. ZAPANTA,

GLENN ZAPANTA, individually and

on behalf of all others similarly

situated,

Plaintiffs-Appellees,

v.

GOVERNMENT OF GUAM; EDDIE

BAZA CALVO, in his official

capacity; BENITA MANGLOÑA, in her

official capacity; JOHN CAMACHO, in

his official capacity,

Defendants-Appellants.

Nos. 13-15389

13-17515

14-16247

D.C. No.

1:11-cv-00008

OPINION

Appeal from the United States District Court

for the District of Guam

Consuelo B. Marshall, Senior District Judge, Presiding

Argued and Submitted

June 9, 2015—Honolulu, Hawaii

Filed August 26, 2015

Before: Kim McLane Wardlaw, Marsha S. Berzon,

and John B. Owens, Circuit Judges.

Opinion by Judge Berzon

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2 PAESTE V. GOV’T OF GUAM

SUMMARY*

Civil Rights

The panel affirmed the district court’s summary judgment

and permanent injunction in a class-action brought by Guam

taxpayers against Guam and several of its officers in their

official capacities alleging (1) that defendants violated the tax

provisions of the Organic Act of Guam, 48 U.S.C. § 1421i, by

failing timely to refund income tax overpayments, and (2) in

a claim brought pursuant to 42 U.S.C. § 1983, that Guam’s

expedited tax refund program violated plaintiffs’ equal

protection rights. 

On appeal, Guam challenged the taxpayers’ equal

protection claim as not cognizable under 42 U.S.C. § 1983,

arguing that no defendant was a “person” within the meaning

of § 1983 and that the challenged actions were not taken

under “color of territorial law.” Guam asserted that it could

raise the definition of “person” for the first time on appeal

because it implicated subject matter jurisdiction. The panel

held that the question of whether a party is a person under

§ 1983 is not a jurisdictional question but rather a statutory

one and therefore Guam’s § 1983 arguments did not

implicate subject matter jurisdiction. The panel, however,

exercised its discretion to consider the arguments. 

Determining that it was bound by Guam Society of

Obstetricians & Gynecologists v. Ada , 962 F.2d 1366, 1371

(9th Cir. 1992), the panel held that the official-capacity

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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PAESTE V. GOV’T OF GUAM 3

defendants were “persons” within the meaning of § 1983 for

purposes of prospective relief. Addressing the merits, the

panel held that the district court did not abuse its discretion in

issuing a permanent injunction that required Guam to pay

refunds within six months once it determined that the requests

were valid and not subject to investigation or audit. The

panel held that the six-month provision was well-supported

and within the court’s broad discretion in fashioning relief. 

The panel noted that Guam raised no substantive challenge to

the district court’s holding that Guam violated equal

protection, nor to its holding that Guam violated the Organic

Act.

COUNSEL

William N. Hebert (argued), Kathleen V. Fisher, and

Genevieve P. Rapadas, Calvo Fisher & Jacob LLP, San

Francisco, California for Defendants-Appellants.

David Stein (argued), Daniel C. Girard, and Amanda M.

Steiner, Girard Gibbs LLP, San Francisco,California; Ignacio

Cruz Aguigui, Lujan Aguigui & Wolff LLP, Hagåtña, Guam,

for Plaintiffs-Appellees.

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4 PAESTE V. GOV’T OF GUAM

OPINION

BERZON, Circuit Judge:

Like many state, local, and territorial jurisdictions, Guam

has struggled for years with chronic budget deficits. Guam

settled on a unique solution to its financial problems: It

refused to refund over-withheld income taxes, using the

money to fund government spending. Confronted with

meritorious and uncontested claims for tax refunds, Guam did

not issue the refunds, often for several years at a time.

Apparently recognizing that some Guam taxpayers

desperately needed their excess tax payments — to which the

Guam government has no legal claim — Guam established an

“expedited refund” process. Purportedly, taxpayers facing,

for example, medical or funeral expenses, would move to the

front of the line and be granted refunds without waiting for

Guam to make good on the huge backlog of claims. In

practice, the expedited refund process was effectively

standardless, and it devolved into arbitrariness and favoritism.

A group of Guam taxpayers brought this class-action suit

against Guam and several of its officers in their official

capacities. The taxpayers alleged that Guam violated the tax

provisions of the Organic Act of Guam, 48 U.S.C. § 1421i, by

failing timely to refund overpayments, and, via a claim

brought under 42 U.S.C. § 1983, the taxpayers also

challenged the arbitrary expedited refund program as a

violation of equal protection.

The district court granted summary judgment to the

taxpayers on both claims, entered a permanent injunction

both ending the expedited refund program and requiring

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PAESTE V. GOV’T OF GUAM 5

Guam to pay approved refunds in a timely manner, and

awarded substantial attorney’s fees and costs. Guam

challenges the district court’s orders on a number of grounds. 

We affirm.

I.

Taxpayers Rea Mializa Paeste, Jeffrey Paeste, Sharon

Zapanta, and Glenn Zapanta, on behalf of a class of Guam

taxpayers (collectively, “the Taxpayers”), brought this suit

against Guam, along with the Governor, the Director of the

Department of Revenue and Taxation, and the Director of the

Department of Administration of Guam in their official

capacities (collectively, “Guam”), challenging systematic

delay and unfairness in Guam’s handling of income tax

refunds. The Taxpayers asserted one claim, against all the

defendants, under the Organic Act of Guam, 48 U.S.C.

§ 1421i;1and another, against all but Guam itself, under

42 U.S.C. § 1983, alleging a violation of the Equal Protection

Clause of the Fourteenth Amendment, extended to Guam by

48 U.S.C. § 1421b(u).2

1

“Congress organized Guam as an unincorporated possession of the

United States through the 1950 Organic Act of Guam” and “provided an

income tax scheme for Guam in 48 U.S.C. § 1421i.” Gumataotao v. Dir.

of Dep’t of Revenue & Taxation, 236 F.3d 1077, 1079 (9th Cir. 2001).

2

48 U.S.C. § 1421b(u) provides: “The following provisions of and

amendments to the Constitution of the United States are hereby extended

to Guam to the extent that they have not been previously extended to that

territory and shall have the same force and effect there as in the United

States or in any State of the United States: . . . the second sentence of

section 1 of the fourteenth amendment,” which includes the equal

protection clause. See also 48 U.S.C. § 1421b(n) (“No discrimination

shall be made in Guam against any person on account of race, language,

or religion, nor shall the equal protection of the laws be denied.”);

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6 PAESTE V. GOV’T OF GUAM

The district court granted a motion for class certification.3

After discovery, the court granted the Taxpayers’ motion for

summary judgment as to both claims. It issued findings of

fact and conclusions of law in support of its grant of summary

judgment.

The district court’s findings of fact, which Guam does not

challenge on appeal, paint a troubling picture of Guam’s taxrefund practices. Guam has, “[s]ince the early 1990s, . . .

Attorney Gen. of Territory of Guam ex rel. All U.S. Citizens Residing in

Guam Qualified to Vote Pursuant to Organic Act v. United States,

738 F.2d 1017, 1018 (9thCir. 1984). Because the Taxpayers relied on this

statutory equal protection guarantee, we express no view as to the direct

applicability of constitutional equal protection. Cf. Examining Bd. of

Eng’rs, Architects &Surveyors v. Flores de Otero, 426 U.S. 572, 599–601

(1976) (holding that a Puerto Rico statute violated equal protection);

Wabol v. Villacrusis, 958 F.2d 1450, 1460 n.19 (9thCir. 1990) (indicating

that “not every right subsumed within the [equal protection] clause can

ride the fundamental coattails of [equal protection] into the territories”). 

We do note, however, that the so-called “Insular Cases,” which

established a less-than-complete application of the Constitution in some

U.S. territories, has been the subject of extensive judicial, academic, and

popular criticism. See, e.g., Juan Torruella, The Insular Cases: The

Establishment of a Regime of Political Apartheid, 77 Rev. Jur. U.P.R. 1

(2008); Last Week Tonight with John Oliver: U.S. Territories, Youtube

(Mar. 8, 2015), https://www.youtube.com/watch?v=CesHr99ezWE.

 

3

 The class certified was defined, in relevant part, as:

All persons and entities who have filed or will file a

claim for refund of an overpayment of the Guam

Territorial Income Tax: (i) which the Government of

Guam has processed or will process and deemed valid;

(ii) who have met the procedural requirements outlined

in 26 U.S.C. §§ 7422(a) and 6532(a); and (iii) who

nonetheless have not received or will not receive their

refund six months after filing the claim for refund.

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PAESTE V. GOV’T OF GUAM 7

financed chronic budget deficits by regularly delaying the

payment of [Guam income tax] refunds to its taxpayers” such

that “many . . . refunds [were] not paid in a timely manner”

and “during [some] periods, no refunds were paid to any

one.” Guam failed timely to pay refunds even after Guam’s

Legislature enacted two separate statutes requiring that

money be set aside for that purpose.

“Traditionally, the Government of Guam has paid

[income tax] refunds in a first-in, first-out order, the same

way the Internal Revenue Service ordinarily pays federal

income tax refunds.”4 But, in light of the chronic delays, for

years Guam paid some refunds on an “expedited” basis, out

of the chronological order otherwise applicable. The

expedited refund process was not governed by any “formal

rule-making process or any regulations,” — nor, it appears,

any consistently followed set of standards. The result was

starkly unequal treatment of refund requests.

The director of the Department of Revenue and Taxation

(“DRT”) testified, for example, that the reasons taxpayers

offered for requesting expediting returns were ranked, from

medical needs as the most serious to financial hardship as the

least. In reality, however, “[w]hile taxpayers experiencing

medical emergencies [were] often unable to obtain expedited

refunds, other taxpayers with less urgent [financial] needs

receive[d] their refunds on an expedited basis.” Indeed, “the

greatest number of refunds [was] paid to DRT’s ‘catch-all’

category of ‘financial’ hardship” despite it purportedly being

“the lowest priority.”

4 The IRS generally issues the vast majority of its refunds within twentyone days, including some 90% in 2012.

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8 PAESTE V. GOV’T OF GUAM

The process was also opaque and tedious. Guam did not

“formally approve or reject requests for expedited refunds,”

so some taxpayers stood in line at DRT’s offices day after

day to check on the status of their refund requests. In

practice, to obtain an expedited refund, a taxpayer would

often need to “persuade one of a series of public officials to

include his or her name on a list,” given to DRT, resulting in

expedited refunds for those with the right political

connections. DRT employees also successfully expedited

their own refunds, and those of family and friends, often

without filling out the purportedly required form, submitting

supporting documentation, or visiting the DRT. Similarly,

the named plaintiffs’ refunds were expedited, even though

they submitted no requests for expedited treatment, in an

apparent attempt to render this case moot.

Based on these facts, the district court concluded that the

Taxpayers were entitled to summary judgment on both

claims. It also entered a permanent injunction prohibiting

Guam from operating its expedited refund program. The

injunction further provided that, as to any refund claim that

contained no material errors and was not subject to an audit

or other investigation, “the Government of Guam shall pay

the corresponding refund no later than six months after the

filing of the claim for refund or six months from the due date

for filing the claim for refund, whichever is later . . . .”5

5 Since the injunction was entered, Guam has apparently timely paid all

refunds.

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PAESTE V. GOV’T OF GUAM 9

Finally, the court awarded substantial attorney’s fees and

costs to the Taxpayers.6

These consolidated appeals followed.

II.

Guam challenges the Taxpayers’ equal protection claim

as not cognizable under § 1983, which provides:

Every person who, under color of any statute,

ordinance, regulation, custom, or usage, of

any State or Territory or the District of

Columbia, subjects, or causes to be subjected,

any citizen of the United States or other

person within the jurisdiction thereof to the

deprivation of any rights, privileges, or

immunities secured by the Constitution and

laws, shall be liable to the party injured in an

action at law, suit in equity, or other proper

proceeding for redress . . . .

42 U.S.C. § 1983 (emphases added). Guam contends that no

defendant is a “person” within the meaning of § 1983, and

that the challenged actions were not taken “under color of”

territorial law. Guam is wrong.

6 Guam’s challenges to the award of attorney’s fees and costs are

addressed in a memorandum disposition filed concurrently with this

opinion.

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10 PAESTE V. GOV’T OF GUAM

A.

The Taxpayers contend that both of Guam’s arguments

regarding § 1983 are waived, as they were not raised before

the district court until long after judgment was entered on the

merits.7See Dream Palace v. Cnty. of Maricopa, 384 F.3d

990, 1005 (9th Cir. 2003). Guam responds that at least the

definition of “person” may be raised for the first time on

appeal as it implicates subject matter jurisdiction, and, in the

alternative, that the court should exercise its discretion to

reach the § 1983 arguments.

Three circuits have held that “whether [a party] is a

‘person’ under § 1983 is not a jurisdictional question” but

rather “a statutory one.” Settles v. U.S. Parole Comm’n,

429 F.3d 1098, 1105 (D.C. Cir. 2005); accord Barker v.

Goodrich, 649 F.3d 428, 433 n.1 (6th Cir. 2011); Bolden v.

Se. Pa. Transp. Auth., 953 F.2d 807, 821 (3d Cir. 1991) (en

banc). We agree and so hold.

Whether the defendant is a “person” within the meaning

of the statute is “a necessary inquiry for the purposes of

7

In opposing taxation of costs, Guam eventually did argue to the district

court that the Taxpayers’ claims were under color of federal law rather

than territorial law. The territory now contends that raising this argument

before the district court in the context of taxation of costs was sufficient

to avoid waiver. We disagree. Guam filed three notices of appeal,

consolidated by this court: one as to the court’s summary judgment order

and permanent injunction, another as to attorney’s fees, and a third as to

costs. The “under color” argument was made to the district court only

after Guam filed its opening brief with this court as to the summary

judgment and permanent injunction issues, which included its § 1983

arguments. An argument made after final judgment on the merits as to a

derivative costs matter is not a timely presentation of a challenge to the

§ 1983 claim.

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PAESTE V. GOV’T OF GUAM 11

establishing the essential elements of [a] § 1983 claim.” 

Pistor v. Garcia, 791 F.3d 1104, 1114 (9th Cir. 2015). But,

as a general matter, “the absence of a valid (as opposed to

arguable) cause of action does not implicate subject-matter

jurisdiction.” Steel Co. v. Citizens for a Better Env’t,

523 U.S. 83, 89 (1998); see also Verizon Md., Inc. v. Pub.

Serv. Comm’n of Md., 535 U.S. 635, 642–43 (2002) (same). 

Here, the Taxpayers’ § 1983 claim, including their contention

that the defendants are “persons” within the meaning of the

statute, was not “made solely for the purpose of obtaining

jurisdiction or . . . wholly insubstantial and frivolous.” Steel

Co., 523 U.S. at 89 (internal quotation marks omitted). 

Indeed, that claim was not only arguable but, as the district

court held, actually meritorious. Thus, Guam’s statutory

argument does not implicate subject matter jurisdiction. 

“Recharacterizing an issue of statutory interpretation as

‘jurisdictional’ is mere wordplay.” Settles, 429 F.3d at 1105.

Nor, as Guam contends, is there a circuit split on this

question. Both Seventh Circuit cases on which Guam relies

as holding to the contrary grounded their jurisdictional

holdings on Eleventh Amendment sovereign immunity. See

Sherman v. Cmty. Consol. Sch. Dist. 21, 980 F.2d 437, 441

(7th Cir. 1992) (concluding that a suit against a state official

was “an effort to obtain a judgment binding the State of

Illinois as an entity” and therefore barred by the Eleventh

Amendment); Toledo, Peoria & W. R. Co. v. State of Ill.,

Dep’t of Transp., 744 F.2d 1296, 1298-99 (7th Cir. 1984)

(relying on state sovereign immunity in concluding that

“[t]his section 1983 action against . . . a state agency[] fails

for lack of federal court jurisdiction”). While the statutory

definition of “person” is “[s]imilar to and often conflated with

Eleventh Amendment immunity,” the concepts are distinct. 

Barker, 649 F.3d at 433 n.1. There is no circuit split as to the

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12 PAESTE V. GOV’T OF GUAM

non-jurisdictional nature of the statutory question “when

stripped of its Eleventh Amendment component.” Bolden,

953 F.2d at 821.

Guam does not contend that it is entitled to Eleventh

Amendment immunity, but does assert federal sovereign

immunity, arguing that it is entitled to immunity to the same

extent accorded the federal government. This argument is

also unavailing.

Even if Guam enjoys sovereign immunity, of whatever

sort, from the Taxpayers’ § 1983 claim, that claim was not

brought against Guam itself, but only against its officers in

their official capacities, and only for declaratory and

injunctive relief.8 Under the principle of Ex parte Young, 209

U.S. 123 (1908), “official-capacity actions for prospective

relief are not treated as actions against” Guam itself. Guam

 

8 We express no view as to Guam’s entitlement to sovereign immunity

from the § 1983 claim in this case. Compare Marx v. Gov’t of Guam,

866 F.2d 294, 297–98 (9th Cir. 1989) (holding that Guam enjoys

common-law sovereign immunity) with Fleming v. Dep’t of Pub. Safety,

837 F.2d 401, 408 (9th Cir. 1988) (holding that the Commonwealth of the

Northern Mariana Islands “lacks eleventh amendment immunity and . . .

in the Covenant [establishing the Commonwealth] it waived any common

law sovereign immunity from federal suit it might otherwise have

possessed”), abrogated on other grounds as recognized in DeNieva v.

Reyes, 966 F.2d 480, 483 (9th Cir. 1992); see also Ngiraingas v. Sanchez,

495 U.S. 182, 192 n.12 (1990) (“Ngiraingas II”) (declining to address

whether Guam was entitled to Eleventh Amendment immunity from a

§ 1983 suit); id. at 202–06 (Brennan, J., dissenting) (concluding that the

Eleventh Amendment does not apply to Guam, and that whatever

common-law immunity Guam enjoys grants it no immunity from suit

under federal law in federal court); see generally Adam D. Chandler,

Comment, Puerto Rico’s Eleventh Amendment Status Anxiety, 120 Yale

L.J. 2183 (2011) (surveying the caselaw regarding territorial sovereign

immunity).

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PAESTE V. GOV’T OF GUAM 13

Soc. of Obstetricians &Gynecologists v. Ada, 962 F.2d 1366,

1371 (9th Cir. 1992) (internal quotation marks omitted).

In sum, Guam’s § 1983 arguments do not implicate

subject-matter jurisdiction. Thus, our ordinary practice

applies, under which we typically “decline to consider

arguments raised for the first time on appeal.” Dream

Palace, 384 F.3d at 1005. “We have, however, laid out

several narrow exceptions to the rule — among them, the

case in which the issue is purely one of law, does not affect

or rely upon the factual record developed by the parties, and

will not prejudice the party against whom it is raised.” Id.

(internal quotation marks omitted). Under this exception, we

exercise our discretion to consider Guam’s § 1983

arguments.9

B.

Guam Society of Obstetricians & Gynecologists v. Ada

held that a Guam officer sued in his official capacity is a

“person” within the meaning of § 1983. 962 F.2d at 1370–71. 

Guam’s arguments to the contrary are meritless.

Two years before we decided Ada, Ngiraingas II held that

“neither the Territory of Guam nor its officers acting in their

official capacities are ‘persons’ under § 1983.” 495 U.S. at

192. Nearly all of the Supreme Court’s analysis addressed

whether Guam itself was a “person,” concluding, based

principally on § 1983 legislative history, that it was not. See

id. at 187–92. But the plaintiffs in that case had also sued

9 Because we find Guam’s contentions meritless, the Taxpayers will

suffer no prejudice as a result of Guam’s failure to raise these matters

before the district court.

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14 PAESTE V. GOV’T OF GUAM

several Guam officials in their official capacities for

damages. Id. at 184. The Supreme Court noted the

conclusions of the district court and this court that “because

a judgment against those defendants in their official

capacities would affect the public treasury, the real party in

interest was the Government of Guam.” Id. at 184–85. The

Court’s own analysis as to the officials was limited to the

following: “Petitioners concede, and we agree, that if Guam

is not a person, neither are its officers acting in their official

capacity.” Id. at 192 (citation omitted).

Two years later, Ada held that a Guam official “is a

‘person’ when sued in his official capacity for prospective

relief.” 962 F.2d at 1370. Ada binds us, and Ngiraingas II,

an earlier-decided Supreme Court decision, offers no basis for

us, as a three-judge panel, to reconsider Ada. See Miller v.

Gammie, 335 F.3d 889, 900 (9th Cir. 2003) (en banc).

Even if we could revisit Ada, we would decide the issue

in accord with that case. Ada acknowledged the general

statement as to Guam officers in Ngiraingas II, but pointed

out the established “distinction between suits against

governmental officials for damages, such as Ngiraingas, and

those for injunctive relief.” Id. at 1371. As Ada noted, “state

officers, when sued for damages in their official capacities,

are,” like states, “not ‘persons’ within the meaning of [§]

1983,” because “a judgment against a state official in his or

her official capacity runs against the state and its treasury.” 

Id. (citing Will v. Mich. Dep’t of State Police, 491 U.S. 58,

63–65 (1989); Kentucky v. Graham, 473 U.S. 159, 166

(1985)). But, as Ada explained, the “rule is entirely different”

with regard to prospective relief, which does not run directly

against the state’s treasury; suits for such relief “are not

treated as actions against the State.” Id. (internal quotation

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PAESTE V. GOV’T OF GUAM 15

marks omitted). The court concluded: “We can see no reason

why the same distinction between injunctive and damages

actions against officials should not apply to a territory.” Id.

10

There is, indeed, no reason why these established

principles, applicable to states, should not apply to territories

as well. Accord McCauley v. Univ. of Virgin Islands,

618 F.3d 232, 240–41 (3d Cir. 2010) (citing Will, 491 U.S. at

71 n.10; Brow v. Farrelly, 994 F.2d 1027, 1037 n.12 (3d Cir.

1993), as amended (May 26, 1993)); see also Playboy Enter.,

Inc. v. Pub. Serv. Comm’n of Puerto Rico, 906 F.2d 25, 31

n.8 (1st Cir. 1990) (concluding that Ngiraingas II did not

foreclose § 1983 liability, in part because the plaintiffs sought

only injunctive relief); cf. Pistor, 791 F.3d at 1112 (noting

that Graham’s “same principles fully apply” in the context of

Indian tribes). Ngiraingas II did not, it is true, expressly state

that the prospective-relief exception applies to officialcapacity suits against territorial officers. But that silence

indicates little; the Court did not address prospective relief at

all, because the plaintiffs sought none. See 495 U.S. at 184. 

Particularly given the cursory treatment of the officialcapacity defendants in that case, and the plaintiffs’

concession there that the same rule would apply to both

Guam and the official-capacity defendants, we do not read

Ngiraingas II to establish markedly different treatment of

official-capacity suits as between states and territories.

 

10 Guam’s suggestion that Ada was wrong because the Ex Parte Young

principle applies only to suits against state officers is baseless. See

Armstrong v. Exceptional Child Ctr., Inc., 135 S. Ct. 1378, 1384 (2015)

(noting that “federal courts may in some circumstances grant injunctive

relief” under the Ex parte Young principle “not only with respect to

violations of federal law by state officials, but also with respect to

violations of federal law by federal officials”).

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16 PAESTE V. GOV’T OF GUAM

Guam puts forward another theory as to why Ada is not

binding — that it is inconsistent with Ngiraingas v. Sanchez,

858 F.2d 1368 (9th Cir. 1988) (“Ngiraingas I”), the case

reviewed by the Supreme Court in Ngiraingas II. Ngiraingas

I concluded that Guam “‘is in essence an instrumentality of

the federal government,’ much like a federal department or

administrative agency,” and so “Guam, like the federal

government, should not be held liable on the same terms as

other entities.” Id. at 1370–71 (citation omitted) (quoting

Sakamoto v. Duty Free Shoppers, Ltd., 764 F.2d 1285, 1286

(9th Cir. 1985)).11 Thus, we held, Guam itself was not a

“person” within the meaning of § 1983. Id. at 1372 (internal

quotation marks omitted).

In reliance on Ngiraingas I, Guam now argues that its

officers should be treated in the same way as federal officers

for the purposes of § 1983. Section 1983 “provides no cause

of action against federal agents acting under color of federal

law.” Billings v. United States, 57 F.3d 797, 801 (9th Cir.

1995). But Ngiraingas I is unhelpful to Guam for several

reasons.

First, if there really were an irreconcilable conflict in our

caselaw, “we could not simply pick one [case] to follow —

we would be required to call this case en banc.” United

States v. Torre-Jimenez, 771 F.3d 1163, 1167 (9th Cir. 2014)

(citing Atonio v. Wards Cove Packing Co., 810 F.2d 1477,

1478–79 (9th Cir. 1987) (en banc)); see also United States v.

11 Guam also relies on Sakamoto. But the relevant portion of Sakamoto

held only that Guam was entitled to immunity from antitrust law, did not

involve § 1983 or the meaning of “person,” and is not pertinent here

outside of Ngiraingas I’s reliance upon it. 764 F.2d at 1286, 1288–89.

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Washington, 593 F.3d 790, 798 n.9 (9th Cir. 2010) (en

banc).12

Second, the portion of Ngiraingas I on which Guam relies

is almost surely no longer binding precedent. Although

Ngiraingas II affirmed Ngiraingas I’s holding that Guam is

not a “person” under § 1983, it did so on an entirely different

rationale. See Ngiraingas II, 495 U.S. at 185, 187–92. The

dissent in Ngiraingas II understood the majority opinion in

Ngiraingas II as rejecting our “conclusion that Guam is

outside the coverage of § 1983 because it is an

instrumentality of the Federal Government,” observing that

our interpretation was “flatly inconsistent” with the statute’s

manifest intent that at least natural persons could be held

liable for acts under color of territorial law. 495 U.S. at 204

n.10 (Brennan, J., dissenting); see also Ada, 962 F.2d at 1371.

Finally, there is a third reason that the argument based on

Ngiraingas I does not avail Guam. Ngiraingas I’s analysis of

official-capacity suits is not inconsistent with Ada. The

portion of Ngiraingas I on which Guam relies is its analysis

as to whether Guam was a “person,” not as to whether its

officials were. As to the officials sued in that case, we relied,

12 Guam suggests that, if there were an irreconcilable conflict, the proper

course would be to follow the earlier-decided case, relying on United

States v. Rodriguez-Lara, 421 F.3d 932, 943 (9thCir. 2005), overruled on

other grounds by United States v. Hernandez-Estrada, 749 F.3d 1154 (9th

Cir. 2014). Not so. Rodriguez-Lara did approvingly cite H & D Tire &

Automotive-Hardware, Inc. v. Pitney Bowes Inc., 227 F.3d 326, 330 (5th

Cir. 2000), which noted that “[w]hen panel opinions appear to conflict,”

panels of the Fifth Circuit follow “the earlier opinion.” But we do not

follow the Fifth Circuit’s rule, and we do not understand Rodriguez-Lara

to have jettisoned the rule established by our en banc court in Wards Cove

with a “see also” citation.

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as the Supreme Court noted, Ngiraingas II, 495 U.S. at 185,

on the established doctrine that “a suit where the relief sought

would affect the public treasury and public administration[]

is deemed to be a suit against the government itself” in

holding that “the individual defendants acting in their official

capacities [were] not amenable to suit under section 1983,”

Ngiraingas I, 858 F.2d at 1372. In other words, Ngiraingas

I’s holding as to the official-capacity defendants was

explicitly predicated on the fact that the suit was one seeking

damages. Ada recognized the rule precluding suits for

damages against officials in their official capacities, but also

recognized the established, contrary principle applicable to

suits seeking prospective relief. 962 F.2d at 1371.

In sum, the official-capacity defendants in this case are

“persons” within the meaning of § 1983 for purposes of

prospective relief.

C.

Guam next argues that none of the conduct at issue in this

case was undertaken under color of territorial law. The

Organic Act, which established Guam’s territorial income

tax, is, indeed, a federal statute passed by Congress and

signed by the President. See 48 U.S.C. § 1421i. Section

1421i establishes, with some exceptions not important in this

case, a Guam tax code “mirroring the provisions of the

federal” Internal Revenue Code, another federal statute, and

delegates enforcement and collection authority to Guam

officials. Bank of Am., Nat. Trust & Sav. Ass’n v. Chaco,

539 F.2d 1226, 1227-28 (9th Cir. 1976) (per curiam); see also

Gumataotao, 236 F.3d at 1079–81; Sayre & Co. v. Riddell,

395 F.2d 407, 410 (9th Cir. 1968) (en banc). How, Guam

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PAESTE V. GOV’T OF GUAM 19

asks, could the implementation of two federal statutes

constitute action under color of territorial law?

At the outset, we note some confusion regarding the

extent to which the Taxpayers rely on § 1983. In its briefing,

Guam asserted that both the claims in this case were brought

under § 1983; the oral argument suggested confusion on this

score. The complaint is quite clear, however, that only the

equal protection claim is asserted under § 1983, and the

district court was even clearer: “Plaintiffs’ first cause of

action . . . is for violation of the Organic Act of Guam,

48 U.S.C. § 1421i,” while “Plaintiffs’ second cause of action

. . . is under 42 U.S.C. § 1983 for violation of the Equal

Protection Clause.” The district court was right — only the

equal protection claim was asserted under § 1983.

This clarification goes a long way towards answering

Guam’s argument. The equal protection claim brought under

§ 1983 is that Guam officials established an expedited refund

process that was so standardless and arbitrary that it violated

principles of equal protection. That process was not

established by Congress and signed by the President; it is not

mentioned in the Organic Act or the Internal Revenue Code. 

It was created and administered entirely by Guam officials. 

Those officials used the power vested in them by virtue of

their position as territorial officers to authorize or refuse

refunds of tax overpayments collected by Guam, held by

Guam, and obliged to be refunded by Guam. No officer or

agency of the federal government was involved at any point.

Moreover, even if implementation of a federal law (other

than the Constitution) did in some sense underlay the § 1983

claim, that circumstance would not alter our conclusion that

the defendants acted under color of territorial law. “The

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20 PAESTE V. GOV’T OF GUAM

traditional definition of acting under color of state law

requires that the defendant in a § 1983 action have exercised

power ‘possessed by virtue of state law and made possible

only because the wrongdoer is clothed with the authority of

state law.’” West v. Atkins, 487 U.S. 42, 49 (1988) (quoting

United States v. Classic, 313 U.S. 299, 326 (1941)). “Thus,

generally, a public employee acts under color of state law

while acting in his official capacity or while exercising his

responsibilities pursuant to state law.” Id. at 50; see also

Naffe v. Frey, 789 F.3d 1030, 1036 (9th Cir. 2015).

We recognize that suits against territorial officers are

importantly different from those against state officers. 

Because territories are organized under federal law, see U.S.

Const. art. IV, § 3, cl. 2, the actions of territorial officers are

always, in some sense, under color of federal law. But that

cannot be, and is not, the sense in which that term is used in

§ 1983. Section 1983 does not generally authorize challenges

to actions taken under color of federal law, but it does,

expressly, contemplate suits for violations of federal rights

under color of territorial law. See District of Columbia v.

Carter, 409 U.S. 418, 424-25 (1973) (noting that, “with the

exception of the Territories, actions of the Federal

Government and its officers are at least facially exempt from

[§ 1983’s] proscriptions” (emphasis added)) (footnote

omitted); Ada, 962 F.2d at 1371. So the same general

principles apply to the interpretation of “under color” in cases

involving territorial officers as apply in cases involving state

officers. Otherwise, the inclusion of “Territory” in § 1983

would be rendered largely nugatory.

All of the § 1983 defendants in this case were territorial

officers, accused of administering the expedited refund

program while acting in their official capacities, or, in other

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PAESTE V. GOV’T OF GUAM 21

words, using “power possessed by virtue of [territorial] law

and made possible only because [they were] clothed with the

authority of [territorial] law.” West, 487 U.S. at 49 (internal

quotation marks omitted).13 For that reason, Williams v.

United States, 396 F.3d 412 (D.C. Cir. 2005), on which Guam

relies, undercuts its argument. Williams held that the

defendant’s conduct was not undertaken under color of

District of Columbia law, even though he had arrested the

plaintiff for a violation of District of Columbia law, because

he was “a federal official, not a D.C. official” and “the

District of Columbia had no authority over him and thus did

not exercise coercive power through him.” Id. at 415

(internal quotation marks and alteration omitted). In other

words, while the officer applied and effectuated District of

Columbia law, he was still, as a federal official, acting under

color of federal law. Here, the opposite is the case. The

defendants are, and acted as, Guam officers, not officers of

the federal government, and so, even if theywere effectuating

federal law, they were acting under color of territorial law.

Guam argues otherwise, maintaining that the particular

contours of Congress’s delegation to Guam officials of

authority to administer Guam’s income tax, see Chaco,

539 F.2d at 1227, indicates that the defendants were in reality

acting under color of federal law. We see no basis for

establishing a special carve-out limited to the relationship

between Congress and Guam officials established by the tax

provisions at issue here. Our caselaw indicates that these

 

13 While this case, unlike Ada, does not challenge the enforcement of a

territorial statute, see 962 F.2d at 1368, § 1983 refers as well to an

“ordinance, regulation, custom, or usage,” thereby expressing a

conception of action under color of territorial (or state) law broader than

one limited only to statutes. 42 U.S.C. § 1983.

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defendants would be properly sued under § 1983 even if the

actions they took as territorial officers were required by

federal law.

In Tongol v. Usery, 601 F.2d 1091 (9th Cir. 1979), a class

of plaintiffs sued the federal Secretary of Labor and three

California state defendants, seeking to invalidate a regulation

promulgated by the Secretary that required state officials to

recover overpayments of unemployment benefits despite state

laws permitting waiver of such recoupment. Id. at 1094. The

district court invalidated the regulation, and we affirmed. Id.

at 1095–96. The district court held, however, that attorney’s

fees were not available under 42 U.S.C. § 1988 for the

plaintiffs’ claim under § 1983, because the suit attacked a

federal regulation, and the state, through the official-capacity

defendants,was “simplyimplementing the federal regulations

as it was obliged to do.” Id. at 1096–97 (internal quotation

marks omitted). We disagreed.

The “under color” requirement of § 1983, we held in

Tongol, was satisfied even though the regulation implemented

was federal. “[T]he relevant inquiry focuses not on whose

law is being implemented, but rather on whether the authority

of the state was exerted in enforcing the law.” Id. at 1097. 

“The state officials who sought to recover these . . .

overpayments were empowered to act only by virtue of their

authority under state law,” and so “were acting ‘under color

of state law’ within the meaning of section 1983.” Id.

Similarly here, even if the territorial officials had been

obliged by federal law to institute the arbitrary expedited

refund process — which they most certainly were not — they

were empowered to act only in their capacities as territorial

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PAESTE V. GOV’T OF GUAM 23

officers. Thus, they were acting under territorial law within

the meaning of § 1983.14

III.

We arrive, finally, at Guam’s only challenge to the district

court’s merits decisions.15 Guam challenges one particular

provision of the district court’s permanent injunction, the

requirement that Guam pay refunds within six months once

Guam determines that the requests are valid and not subject

to investigation or audit. According to Guam, that

requirement is grounded in a legal error. We review the

district court’s legal conclusions underlying the injunction de

novo and the scope of the injunction for abuse of discretion. 

Armstrong v. Brown, 768 F.3d 975, 979 (9th Cir. 2014).

The district court stated in its conclusions of law that “the

provisions of the Internal Revenue Code applicable on Guam

generally require Defendants to pay refunds to taxpayers no

later than six months after the filing date of the corresponding

claims for refund,” a legal conclusion Guam contends is

14 Nor do we think, as Guam suggests, that our decision today undercuts

our cases interpreting and applying the tax provisions of the Organic Act. 

We are not interpreting those provisions, but simply applying the settled

meaning of § 1983. Furthermore, to the extent that, as Guam contends,

territorial residents may have greater access to attorney’s fees under

§ 1988 than those who challenge similar tax practices by the federal

government, that is a product of Congress’s choice to include those acting

under color of territorial law, but not those otherwise acting under color

of federal law, within the scope of § 1983.

15 Guam has raised no substantive challenge to the district court’s

holding that Guam violated equal protection, nor to its holding that Guam

violated the Organic Act by failing to “set[] aside revenues as needed to

refund overpayments and pay[] the refunds owed to Guam taxpayers.”

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wrong. In support of the six-month deadline in the

injunction, the district court provided the following analysis:

“Under the Internal Revenue Code, a taxpayer can sue to

recover his or her refund six months after its filing date,

26 U.S.C. § 6532(a)(1), signifying that a taxpayer’s right to

a refund vests at that time, unless there is an offset, audit, or

some other administrative reason that justifies continued

withholding of the payment.”

Section 6532(a)(1) provides, in relevant part:

No suit or proceeding under [26 U.S.C. §]

7422(a) for the recovery of any internal

revenue tax, penalty, or other sum, shall be

begun before the expiration of 6 months from

the date of filing the claim required under

such section unless the Secretary renders a

decision thereon within that time . . . .

26 U.S.C. § 6532(a)(1). As Guam points out, § 6532(a)(1) is,

on its face, a limitation, prohibiting suits until six months

have elapsed; it does not state directly when the IRS must

provide refunds within that period. The district court

recognized as much. Guam challenges the six-month

provision of the injunction as impermissibly based on an

interpretation of § 6532(a)(1) as something more than a

requirement that a request for a refund pend for the requisite

period before a suit seeking a tax refund can be filed in court.

We need not decide whether the district court’s

statements, if so understood, would constitute legal error. 

Our question here is solely whether the district court’s

inclusion in the injunction of a six-month deadline for paying

refunds was an abuse of its discretion. To decide that

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PAESTE V. GOV’T OF GUAM 25

question, we consider that provision in the context of the

totality of the district court’s articulated concerns, as

expressed during the summary judgment hearing.

In discussing the Organic Act claim at the hearing, the

Taxpayers suggested that an injunction should require Guam

to pay refunds “in a timely manner” and “in an ordinary

course.” The court expressed concern that an injunction

including a vague limitation “to the effect [of] ‘a reasonable

time period’ or ‘in due course,’” would “just bring another

lawsuit because there’s no guidance being given as to a time

frame for” disbursing refunds. The Taxpayers agreed that

was a “fair point” and suggested that “it’s fairly evident from

the Internal Revenue Code[,] which allows a taxpayer to file

a lawsuit to [sic] their refund after six months, that the

corollary to that is that once six months has passed, they have

a right to their refunds” and “[s]o if the Court is interested in

setting a time period, that would certainly be one which

makes sense to us.”

This colloquy indicates that the district court included the

six-month pendency period of § 6532(a)(1) only as a

benchmark for a reasonable time limitation, and included that

time period in the injunction to give sufficient specificity for

enforcement purposes. Understood in this light, the sixmonth provision of the district court’s injunction was wellsupported. Section 6532(a)(1) is certainly indicative of

Congress’s expectation that six months is a sufficient period

for administrative processing of a valid claim for a tax refund. 

And a reasonable time limitation was amply justified by

Guam’s chronic failure to pay refunds, sometimes for years,

and the court’s concern that an indefinite injunction would

only spark new litigation. Such a limitation was well within

the court’s broad discretion in fashioning relief. See State of

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26 PAESTE V. GOV’T OF GUAM

Cal. Dep’t of Soc. Servs. v. Thompson, 321 F.3d 835, 857 (9th

Cir. 2003).

Guam contends that, even apart from the purported legal

error, the six-month period was simply too short, and

unjustifiably tied Guam’s hands in administering its budget. 

More broadly, Guam suggests that, under the Internal

Revenue Code and the Organic Act, it has the power to defer

refund payments for its own budgetary purposes for as long

as it pleases, so long as it eventually pays the overpayment

back with interest. See 26 U.S.C. § 6611.

We thoroughly disagree. These tax overpayments were

never Guam’s to begin with, and it has no legal claim to

them. See Weber v. C.I.R., 138 T.C. 348, 356 (2012) (“[T]he

IRS ‘shall’ refund any overpayment not otherwise credited

. . . .”) (quoting 26 U.S.C. § 6402(a)); Estate of Michael ex

rel. Michael v. Lullo, 173 F.3d 503, 509 (4th Cir. 1999) (“If

a tax payment is an ‘overpayment,’ the IRS must refund it.”)

(quoting 26 U.S.C. § 6402(a)).16If anything, allowing Guam

six months to honor refund requests it has determined to be

valid and not subject to audit or investigation is more

solicitous than necessaryto Guam’s concerns. We discern no

abuse of discretion in the district court’s six-month limitation,

and affirm the district court’s injunction in full.

IV.

We acknowledge that many governments struggle to

balance their budgets, particularly in times of economic

uncertainty and increasing fiscal demands. But, as the district

16 We express no view as to extraordinary circumstances, such as war or

natural disaster, that might justify delay in refunding tax overpayments.

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court correctlyconcluded, Guam’s solution — refusing to pay

concededly valid requests for income tax refunds for years on

end — was illegal. Guam’s policy also fell most heavily on

taxpayers of limited means, while expedited refunds were

available to those with personal or political connections. As

the district court held and its injunction assures, Guam must

find another way to deal with its fiscal difficulties.

AFFIRMED.

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