United States Court of Appeals

For the First Circuit

No. 05-2859

OVERSEAS MILITARY SALES CORPORATION, LTD.,

Plaintiff, Appellant,

v.

NOEMA GIRALT-ARMADA, in her capacity as

Secretary of the Department of Consumer Affairs of the 

Commonwealth of Puerto Rico; ERNESTO NIEVES-NIEVES,

Defendants, Appellees.

ON APPEAL FROM THE UNITED STATES 

DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

[Hon. Carmen Consuelo Cerezo, U.S. District Judge]

[Hon. Camille L. Vélez-Rivé, U.S. Magistrate Judge]

Before

 Torruella and Lipez, Circuit Judges,

and DiClerico, Jr.* District Judge.

 Jesús E. Cuza Abdala, with whom Linda M. Reck and Greenberg

Traurig, PA, were on brief for appellant. 

September 14, 2007

* Of the District of New Hampshire, sitting by designation.
 As defined by the United States Department of Defense, an 1

authorized purchaser must be: (1) validly authorized by the

military to purchase through AAFES; and (2) assigned overseas for

thirty days or more on active or reserve duty, or be a retired

service member.

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LIPEZ, Circuit Judge. Appellant Overseas Military Sales

Corporation, Ltd. ("OMSC"), a government contractor operating at

Fort Buchanan, Puerto Rico, seeks reversal of the district court's

order dismissing its complaint for declaratory and injunctive

relief to prevent the Department of Consumer Affairs of the

Commonwealth of Puerto Rico ("DACO") from enforcing Puerto Rico's

consumer protection law against it. This appeal is unopposed. In

fact, the Commonwealth of Puerto Rico concedes that the position

taken by OMSC is correct. Nevertheless, OMSC urges us to decide

this case and to issue a fully reasoned opinion reaching the merits

of its claim. We decline to do so. In light of the Commonwealth's

concession, this case has become moot. We therefore dismiss this

appeal and vacate the district court's judgment.

I.

Appellant OMSC serves as an intermediary through which

authorized customers working on U.S. military bases may purchase

automobiles from manufacturers that have contracted with the United

States Army and Air Force Exchange Service ("AAFES"). Under this 1

arrangement, OMSC administers the AAFES vehicle program, accepting

orders from authorized customers and relaying them to the

manufacturers. This case arises from a dispute between OMSC and
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Ernesto Nieves-Nieves, who purchased an automobile from OMSC at

Fort Buchanan in Puerto Rico. All relevant parties stipulated

before the district court that Fort Buchanan is a federal enclave

under the exclusive legislative jurisdiction of the United States

government.

On March 18, 2004, Nieves filed an administrative

complaint against OMSC with DACO, alleging that the vehicle he had

purchased from OMSC was defective. DACO has the authority to

adjudicate consumer disputes under Puerto Rico law and may refer

complaints to other Puerto Rico agencies or to the federal

government. P.R. Laws Ann. tit. 3, §§ 341i-1, 341n. 

Before DACO took action on Nieves's complaint, OMSC filed

a suit in federal district court in August 2004 seeking declaratory

and injunctive relief against Nieves and Noema Giralt-Armada, in

her capacity as Secretary of DACO. OMSC argued that the federal

enclave doctrine barred DACO from adjudicating Nieves's complaint

and that Giralt-Armada had violated that doctrine by allowing

Nieves's complaint (and others like it) to be brought before DACO.

The federal enclave doctrine provides that "[t]he

Congress shall have Power . . . [t]o exercise exclusive Legislation

in all Cases whatsoever, over . . . all Places purchased by the

Consent of the Legislature of the State in which the Same shall be,

for the Erection of Forts, Magazines, Arsenals, dock-Yards, and

other needful Buildings." U.S. Const. art. I, § 8, cl. 17. In
 The Rooker-Feldman doctrine bars a plaintiff who lost in 2

state court proceedings from "implicitly or explicitly . . .

seeking an opposite result . . . [in] the lower federal courts."

Federacion de Maestros de P.R. v. Junta de Relaciones del Trabajo

de P.R., 410 F.3d 17, 24 (1st Cir. 2005). 

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addition, a provision in Article IV states in relevant part: "The

Congress shall have Power to dispose of and make all needful Rules

and Regulations respecting the Territory or other Property

belonging to the United States." Id., art. IV, § 3, cl. 2.

Accordingly, OMSC argued that neither Puerto Rico's consumer

protection laws nor DACO's authority to resolve disputes under that

law applied to consumer complaints arising from activities at Fort

Buchanan – including any complaints against OMSC. OMSC filed an

emergency request for a preliminary injunction to prevent Nieves

from proceeding with his particular claim and to bar DACO from

exercising jurisdiction over OMSC in any further complaints against

it. 

The district court referred the matter to a magistrate

judge. After an evidentiary hearing, the magistrate judge

recommended denying the preliminary injunction for three reasons.

First, she found that the court lacked subject matter jurisdiction

over the claim under the Rooker-Feldman doctrine. Second, she 2

found OMSC's claim barred by principles of claim and issue

preclusion. Finally, she found that, even if the court could

consider OMSC's petition, OMSC was unlikely to succeed on the

merits of its claim. See Esso Std. Oil Co. v. Monroig-Zayas, 445
 The magistrate judge had also recommended that the court 3

enter a final default judgment against Nieves, who had failed to

submit an answer or to take part in any of the proceedings; the

district court declined to do so.

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F.3d 13, 17-18 (1st Cir. 2006). The magistrate judge based this

assessment on her view that the federal enclave doctrine permitted

the application of state law to activities on federal enclaves

except where federal and state law conflict. The magistrate judge

found no conflict between federal and state law in this instance.

The district court subsequently issued a decision

adopting the magistrate judge's report and recommendation in its

entirety and denying OMSC's motion for a preliminary injunction.3

Less than a month later, the district court sua sponte entered an

order dismissing the entire case "for the reasons stated in [its

prior] Opinion and Order." OMSC timely filed this appeal,

challenging the order dismissing the case. 

Two months after OMSC filed its brief in this court, the

parties filed a joint motion informing the court that they had

settled the case. The settlement agreement explained that the

parties had agreed to "abide by the Agreed Opinion and Order

attached to this Settlement Agreement . . . as though it were

properly and duly issued by the United States Court of Appeals for

the First Circuit." It also explained that:

The Parties agree that the Agreed Opinion and

Order . . . shall have preclusive effect under

the doctrines of res judicata, collateral

estoppel, issue preclusion, and/or the Rooker-
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Feldman doctrine as to all issues described

therein. The Parties agree that any and all

decisions, opinions, or judgments entered in

the [district court's opinion and order] shall

not have any preclusive effect under the

doctrines of res judicata, collateral

estoppel, and/or issue preclusion, and the

Parties have agreed to voluntarily set aside

all decisions, opinions and judgments entered

in the [district court's opinion and order].

The settlement agreement also made it clear that settlement was

conditional on this court's approval:

The Parties will jointly request that this

Settlement Agreement be approved by the United

States Court of Appeals for the First Circuit.

To ensure the enforcement of this Settlement

Agreement, the Parties will further request

the United States Court of Appeals for the

First Circuit to issue the injunction order

attached as Exhibit 'B'. The parties agree

and understand that an injunction order by the

United States Court of Appeals for the First

Circuit shall have preclusive effect under the

doctrines of res judicata, collateral

estoppel, and/or issue preclusion. Should the

United States Court of Appeals for the First

Circuit decide not to approve this Settlement

Agreement or deny the Parties' request that it

enter the order attached to this Settlement

Agreement as Exhibit 'B,' the Parties will

continue with the Appeal until the United

States Court of Appeals for the First Circuit

rules on the merits of the Appeal.

(Emphasis added). An eleven-page proposed order discussing and

confirming the merits of OMSC's claims was attached as "Exhibit A"

and a one-page injunction order permanently enjoining DACO from

exercising jurisdiction over OMSC's operations within Fort Buchanan

was attached as "Exhibit B." 
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We did not approve the settlement agreement or the

attached orders. Our order denying the joint motion explained: 

[T]heir settlement agreement, if approved by

this Court, would effectively reverse the

judgment of the district court. Generally, we

are not at liberty to vacate the judgment of

the district court on the basis of a

settlement, let alone to reverse it. See U.S.

Bancorp Mortgage Co. v. Bonner Mall

Partnership, 115 S. Ct. 386, 393-94 (1994)

(vacatur is generally not justified when "the

party seeking relief from the judgment below

caused the mootness by voluntary action" in

settling the case).

 

The order went on to state: "Our denial is without prejudice to the

parties' requesting vacatur of the district court judgment by

filing in the district court a joint motion pursuant to Fed. R.

Civ. P. 60(b) in an effort to preserve settlement." Instead of

pursuing this suggested course of action in the district court,

OMSC chose to continue with its appeal in the hope of obtaining

from us a decision on the merits that mirrored the decision that it

had asked us to adopt on the basis of its settlement with the

Secretary.

Shortly thereafter – and in response to an order alerting

appellees that they would not be heard at oral argument because

they had failed to timely file a brief – Giralt-Armada submitted an

informative motion explaining this failure: "[G]iven that appellee

has attempted to settle this case and, indeed, concedes that

appellant's arguments are correct as a matter of law, it is

unnecessary to file our brief in the instant case." Three days
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before we heard oral argument in this case, the new Secretary of

the Department of Consumer Affairs, Alejandro García Padilla, filed

an urgent informative motion reiterating appellees' position that

"appellant's arguments on appeal [are] correct as a matter of law"

and noting that, while appellees would not take part in oral

argument, they would attend in order to answer any questions we

might pose. Indeed, Puerto Rico's Solicitor General appeared at

oral argument to confirm his agreement with OMSC's arguments. 

II.

A. Mootness

In continuing with this appeal after we rejected their

proposed settlement agreement, the parties overlooked the doctrine

of mootness. However, even though neither party raised this issue,

we must inquire sua sponte whether an appeal has been rendered moot

by subsequent events. See North Carolina v. Rice, 404 U.S. 244, 246

(1971).

Article III of the Constitution restricts federal courts

to the resolution of actual cases and controversies. See U.S.

Const. art. III, § 2, cl. 1; see also Shelby v. Superperformance

Int'l, Inc., 435 F.3d 42, 45 (1st Cir. 2006). The case or

controversy requirement ensures that courts do not render advisory

opinions. Put another way, "those words limit the business of

federal courts to questions presented in an adversary context."

See Flast v. Cohen, 392 U.S. 83, 95 (1968). We have previously
 Nieves's continued status as a defendant in this case and 4

his failure to join in the Commonwealth of Puerto Rico's concession

that OMSC is correct as a matter of law is irrelevant to our

mootness analysis. Although he initiated the original claim

against OMSC before DACO from which this case arises, Nieves took

no further action before either the district court or this court.

His non-participation cannot provide the "concrete dispute between

adversaries" upon which our jurisdiction depends. Neely v.

Benefits Review Bd., 139 F.3d 276, 279 (1st Cir. 1998).

 Mootness is one of several grounds rendering a case 5

nonjusticiable. See, e.g., Renne v. Geary, 501 U.S. 312, 320-21

(1991) (explaining that "[j]usticiability concerns not only the

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held that a "case is moot . . . when the issues presented are no

longer live or when the parties lack a legally cognizable interest

in the outcome." Cruz v. Farquharson, 252 F.3d 530, 533 (1st Cir.

2001). See also Black's Law Dictionary 1025 (7th ed. 1999)

(defining "mootness doctrine" as "[t]he principle that American

courts will not decide moot cases – that is, cases in which there

is no longer any actual controversy"). In these circumstances, a

"case or controversy ceases to exist, and dismissal of the action

is compulsory." Cruz, 252 F.3d at 533. The controversy between

OMSC and appellees expired when OMSC conceded that "appellant's

arguments on appeal were correct as a matter of law." Given that

the issues presented in the initial appeal are "no longer live," we

conclude that OMSC's appeal is moot.4

B. Vacating the Judgment Below

A series of Supreme Court cases describes the conditions

under which vacatur is appropriate when a case has become moot –

and therefore nonjusticiable – after an appeal has been filed. A 5
standing of litigants to assert particular claims, but also the

appropriate timing of judicial intervention," requiring an inquiry

into both mootness and ripeness).

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"pivotal" consideration in determining whether to "disturb prior

judgments in a case rendered nonjusticiable" is whether the party

seeking such relief caused the nonjusticiability through its

voluntary action. Anderson v. Green, 513 U.S. 557, 560 (1995) (per

curiam). Where a settlement occurs, see U.S. Bancorp, 513 U.S. at

21, or the losing party declines to pursue an appeal, Karcher v.

May, 484 U.S. 72, 83 (1987), no vacatur is appropriate. This is so

because, "[w]here mootness results from settlement, . . . the

losing party has voluntarily forfeited his legal remedy by the

ordinary processes of appeal or certiorari, thereby surrendering

his claim to the equitable remedy of vacatur." U.S. Bancorp, 513

U.S. at 25. In such cases, the "judgment is not unreviewable, but

simply unreviewed by [the losing party's] own choice." Id.; see

also Karcher, 484 U.S. at 83. Although OMSC entered into a

settlement agreement with the Commonwealth of Puerto Rico, that

agreement was conditioned upon our approval. When we rejected that

settlement, OMSC continued with its appeal. Hence, OMSC is not

before us as a party who has settled and seeks reversal of a

judgment below on that basis.
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Vacatur is an appropriate remedy for parties in OMSC's

position. As the Supreme Court has explained, "[a] party who seeks

review of the merits of an adverse ruling, but is frustrated by the

vagaries of circumstance, ought not in fairness be forced to

acquiesce in the judgment. The same is true when mootness results

from unilateral action of the party who prevailed below." U.S.

Bancorp, 513 U.S. at 25 (citations and footnote omitted). Here,

that unilateral action takes the form of the decision by the

Commonwealth – the prevailing party below – to reject its victory

in the trial court and acquiesce in the position taken by OMSC on

appeal. 

Although OMSC is entitled to vacatur of the judgment

below, we refuse to go further and reverse the lower court's

judgment on the merits. Such a request "invites us to reach the

merits of the order in question and adopt the [appellant's]

unopposed view of them." Shelby, 435 F.3d at 46. As we have

previously explained, such an "invitation seriously distorts the

U.S. Bancorp standard, and we decline to accept it." Id. 

We understand that the vacatur of the district court's

judgment represents only a partial victory for OMSC, which wanted

not only vacatur of the district court's judgment but also a

decision from us on the merits that would have preclusive effect.

However, as described above, we can only render such decisions in
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the context of a live controversy. We do not have such a

controversy here.

Accordingly, we dismiss the appeal, vacate the judgment

of the district court and remand to the district court for

dismissal of the complaint. See United States v. HamburgAmerikanische Packetfahrt-Actien Gesellschaft, 239 U.S. 466, 478

(1916) ("[T]he ends of justice exact that the judgment below should

not be permitted to stand when without any fault of the Government

there is no power to review it upon the merits."). No costs are awarded.

So Ordered.