United States Court of Appeals

For the First Circuit

No. 05-1811

DANIEL PAGÁN ET AL.,

Plaintiffs, Appellees,

v.

SILA MARÍA CALDERÓN, IN HER INDIVIDUAL CAPACITY,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Daniel R. Domínguez, U.S. District Judge]

Before

 Selya, Circuit Judge,

Hansen,* Senior Circuit Judge,

and Lynch, Circuit Judge.

Susana I. Peñagaricano-Brown, Assistant Solicitor General,

with whom Salvador J. Antonetti-Stutts, Solicitor General, Mariana

Negrón-Vargas and Maite D. Oronoz-Rodríguez, Deputy Solicitors

General, were on brief, for appellant.

Guillermo F. DeGuzmán, with whom DeGuzmán & Gierbolini Law

Offices, P.S.C. was on brief, for appellees.

May 16, 2006

__________

*Of the Eighth Circuit, sitting by designation.
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SELYA, Circuit Judge. This interlocutory appeal follows

the entry of an order denying, in relevant part, a public

official's motion to dismiss based on qualified immunity. See

Pagán v. Calderón, No. 04-1296, slip op. at 7 (D.P.R. Mar. 30,

2005) (D. Ct. Op.). It raises significant questions concerning the

doctrine of standing and the prosecution of claims of political

discrimination. 

The underlying action involves multiple plaintiffs and

multiple defendants (although Sila María Calderón, in her

individual capacity, is the only defendant before us). The

plaintiffs' overarching claim is that Calderón, then the governor

of Puerto Rico, improperly influenced the decision of a government

lender to reject a loan sought by the main plaintiff, ARCAM

Pharmaceutical Corporation. On the defendants' motions to dismiss,

see Fed. R. Civ. P. 12(b)(6), the district court rendered a mixed

decision. To the extent that Calderón's denied motion rested on

the ground of qualified immunity, she appealed. See Mitchell v.

Forsyth, 472 U.S. 511, 530 (1985) (allowing interlocutory appeals

of certain denials of qualified immunity). For the reasons that

follow, we conclude that no plaintiff other than ARCAM has standing

to pursue the appealed federal claims asserted against Calderón.

Moreover, we conclude that, with respect to those claims, ARCAM has

failed adequately to plead a violation of its constitutional

rights. Accordingly, we reverse the challenged rulings, direct the
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district court to grant Calderón's motion for dismissal, and remand

for further proceedings consistent with this opinion.

I. BACKGROUND

Because this is an interlocutory appeal from the denial

of a Rule 12(b)(6) motion to dismiss grounded on qualified

immunity, we — like the lower court — must accept as true the

factual averments of the plaintiffs' complaint. See Limone v.

Condon, 372 F.3d 39, 42 (1st Cir. 2004). 

ARCAM, a corporation chartered under the laws of Puerto

Rico, was formed in 2000 for the purpose of engaging in the

manufacture of pharmaceutical products. Its principal shareholder

and chief executive officer is plaintiff Ernesto Vilanova Vélez

(Vilanova). Plaintiffs Cristino Agosto Reyes, Martin Souto, and

Christopher Molina (collectively, the guarantors) are minority

shareholders. Vilanova and the guarantors have, from time to time,

personally guaranteed certain of ARCAM's corporate debts.

Shortly after its formation, ARCAM paid $4,500,000 to

acquire land and buildings in Hormigueros, Puerto Rico (the

Property) as a site for manufacturing pharmaceutical products. To

fund this transaction, finance improvements, and secure operating

capital, ARCAM obtained a $10,000,000 loan from Westernbank. In

exchange, it granted Westernbank a first mortgage on the Property.

The complaint alleges that, despite the relatively modest purchase

price, the Property actually was worth $24,000,000. 
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Early on, ARCAM retained plaintiff Daniel Pagán as a

consultant. Pagán had occupied various high-ranking positions in

the administration of Governor Pedro Rosselló. As a result, Pagán

became known as a political insider and a strong supporter of the

reigning New Progressive Party (NPP).

In the general elections of November 2000, the voters

chose Calderón, running under the banner of the Popular Democratic

Party (PDP), to succeed Rosselló. The upshot was that a PDP

administration supplanted an NPP administration. The new regime

launched a number of investigations into the performance of persons

close to Rosselló. In the wake of one such probe, the Calderón

administration filed criminal charges against Pagán, alleging bidrigging. See P.R. Laws Ann. tit. 33, § 4353a. Although a local

court eventually dismissed the charges, the plaintiffs envision

this unwarranted prosecution as emblematic of the "political witchhunt and persecution policy implemented by defendant Calderón and

her administration against individuals politically affiliated

[with] the NPP and/or . . . the administration of Governor Pedro

Rosselló."

During the year 2002, Pagán assisted ARCAM in efforts to

upgrade its plant, obtain manufacturing equipment, and secure

federal Food and Drug Administration approval for its product line.

In addition, Pagán represented ARCAM in third-party negotiations

and before various administrative agencies. Through those
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endeavors, Pagán became publicly identified with ARCAM and topechelon members of the PDP acquired knowledge of Pagán's ties to

the company.

By mid-2002, ARCAM had secured two pharmaceutical

manufacturing contracts and had developed a purified water

production line. Launching these ventures required access to new

capital. To that end, ARCAM requested a $5,000,000 commercial loan

from Banco de Desarrollo Económico para Puerto Rico (BDE), a

government-sponsored banking institution that had been created to

promote the "development of the private sector of the economy of

Puerto Rico" by making capital available to firms "whose economic

activity has the effect (directly or indirectly) of substituting

imports." P.R. Laws Ann. tit. 7, § 611a(a). To assist BDE in

fulfilling that mandate, the Puerto Rico legislature gave it the

power to "loan money, with or without collateral, to any person,

firm, corporation or other private organization when such loans are

to be used to promote the government's purpose of developing the

economy of Puerto Rico." Id. § 611b(d). The legislature tasked

BDE's board of directors with administering and exercising this

power. Id. § 611d(a). Upon receiving ARCAM's loan proposal, BDE

requested amplitudinous information about ARCAM's finances and

operations. After analyzing that data, BDE conditioned its

approval of the loan on ARCAM's ability to convince Westernbank to

subordinate the first mortgage on the Property that collateralized
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its earlier $10,000,000 loan. ARCAM was unable to secure

Westernbank's assent to this condition. BDE thereupon refused to

make the loan despite ARCAM's assurance that it had obtained

"equivalent" concessions from Westernbank. The complaint alleges

that two BDE hierarchs, Vilma Pellot and Antonio Faría (both of

whom were PDP stalwarts) played influential roles in bringing about

the demise of the anticipated loan.

The complaint further alleges that, as a result of its

failure to garner supplemental financing, ARCAM fell behind on its

manufacturing obligations and was threatened with the loss of its

pharmaceutical contracts. Out of desperation, it recast the

$5,000,000 loan proposal and, in May of 2003, resubmitted it. BDE

asked for more information, which ARCAM supplied. While Vilanova

still could not convince Westernbank to subordinate its first

mortgage, he volunteered that he would personally guarantee the new

borrowing. 

Throughout the deliberative process, ARCAM repeatedly

reminded BDE that it was in immediate danger of losing its hard-won

contracts without an infusion of new money. BDE's board of

directors initially harkened to this entreaty and recommended

approval of ARCAM's renewed application. But that was not the

final word: Pellot and Faría, doing Calderón's bidding, twisted

arms to bring about BDE's rejection of the renewed loan request.

The complaint attributes this refusal to "the discriminatory
The spouses and conjugal partnerships of each of the 1

aforementioned individuals joined as plaintiffs. Because those

claims are wholly derivative, we refer for simplicity's sake only

to the named plaintiffs. Our decision with respect to each

individual is, of course, binding on his spouse and conjugal

partnership. 

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policies, instructions and/or misguided strategies of defendant

Calderón against individuals associated [with] the former NPP

administration; in this particular case aimed against plaintiff

Pagán." 

ARCAM's failure to obtain financing rendered the

company's business moribund. It has ceased operations, remains

unsure if it can salvage its pharmaceutical contracts, and is

uncertain whether it will be able to resume operations.

Left in these dire straits, the plaintiffs — ARCAM,

Vilanova, Pagán, and the guarantors — filed suit in the United

States District Court for the District of Puerto Rico. Their 1

complaint, brought pursuant to 42 U.S.C. § 1983, alleges, inter

alia, that numerous defendants (including BDE, Pellot, Faría, and

Calderón) violated the free association guarantee of the First

Amendment, the due process guarantee of the Fourteenth Amendment,

and the equal protection guarantee of the Fourteenth Amendment in

turning down ARCAM's loan application. The complaint also alleges

that BDE took this action notwithstanding ARCAM's in-hand contracts

and the offer of a personal guarantee, while in the same time frame
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it granted a loan to Pollos Picú, an entity that was experiencing

extremely difficult financial conditions. 

Calderón filed a motion to dismiss, contending that the

complaint failed to state any cognizable federal claim against her

and that, in any event, the doctrine of qualified immunity barred

the relief sought against her (money damages). The plaintiffs

opposed the motion.

On March 30, 2005, the district court granted Calderón's

motion in part and denied it in part. See D. Ct. Op. at 8.

Specifically, the court dismissed the First Amendment claims

brought by ARCAM, Vilanova, and the guarantors — claims premised on

the plaintiffs' right to associate with Pagán (an NPP kingpin).

Id. at 3. The court also dismissed the plaintiffs' procedural due

process claims. Id. at 5. Shifting gears, the court cited the

plaintiffs' allegations that Calderón's politically discriminatory

animus toward Pagán was the root cause of BDE's refusal to

accommodate the loan request and declined to dismiss Pagán's First

Amendment claim. Id. at 3-4. For much the same reason, it allowed

the various plaintiffs' substantive due process and equal

protection claims to stand. Id. at 6. In making these latter

rulings, the court explicitly rejected Calderón's qualified

immunity defense, without prejudice, however, to its reassertion on

a better developed record. Id. at 7. This timely appeal ensued.
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II. JUSTICIABILITY

We pause at the outset to clarify certain matters related

to our jurisdiction and to the parties' standing.

A. Appellate Jurisdiction.

This is an interlocutory appeal in which Calderón assigns

error to the district court's rejection of her qualified immunity

defense vis-à-vis Pagán's First Amendment claim and the plaintiffs'

collective substantive due process and equal protection claims.

The other rulings made by the district court in its opinion of

March 30, 2005 are not before us. Accordingly, we take no view of

them.

Although our appellate jurisdiction typically is limited

to the review of final orders and judgments, see 28 U.S.C. § 1291,

that limitation sometimes is relaxed when a public official, qua

defendant, unsuccessfully asserts a qualified immunity defense in

a pretrial motion. In broad-brush terms, the denial of such a

motion is appealable without awaiting the entry of final judgment

to the extent that the immunity issue is a purely legal one, not

requiring either resolution of conflicting facts or an examination

of the district court's conclusion that a genuine issue of material

fact exists. Valdizán v. Rivera-Hernandez, ___ F.3d ___ , ___ (1st

Cir. 2006) [No. 05-2215, slip op. at 3] (citing Johnson v. Jones,

515 U.S. 304, 318 (1995)). Because Calderón's appeal fits snugly

within that integument, we have jurisdiction to entertain it. See,
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e.g., Vélez-Díaz v. Vega-Irizarry, 421 F.3d 71, 77 (1st Cir. 2005);

Limone, 372 F.3d at 43.

B. Standing.

A federal court must satisfy itself as to its

jurisdiction, including a plaintiff's Article III standing to sue,

before addressing his particular claims, regardless of whether the

litigants have raised the issue of standing. See Orr v. Orr, 440

U.S. 268, 271 (1979); Juidice v. Vail, 430 U.S. 327, 331 (1977);

see also Warth v. Seldin, 422 U.S. 490, 498 (1975) (explaining that

standing is a threshold issue in every federal case). The standing

inquiry is both plaintiff-specific and claim-specific. Thus, a

reviewing court must determine whether each particular plaintiff is

entitled to have a federal court adjudicate each particular claim

that he asserts. Allen v. Wright, 468 U.S. 737, 752 (1984);

Donahue v. City of Boston, 304 F.3d 110, 116 (1st Cir. 2002). Only

if a particular plaintiff has standing to pursue a particular claim

will the court proceed to assess the application of the qualified

immunity doctrine to that claim.

Standing involves a collocation of constitutional

requirements and prudential concerns. See Valley Forge Christian

Coll. v. Ams. United For Separation of Church & State, Inc., 454

U.S. 464, 471 (1982). The Constitution confines federal courts to

the adjudication of actual cases and controversies. See U.S.

Const. art. III, § 2, cl. 1; Allen, 468 U.S. at 750. An actual
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case or controversy exists when the party seeking to invoke the

court's jurisdiction (normally, the plaintiff) has a "personal

stake in the outcome" of the claim asserted. Baker v. Carr, 369

U.S. 186, 204 (1962). To satisfy the personal stake requirement,

the plaintiff must pass a tripartite test. See Lujan v. Defenders

of Wildlife, 504 U.S. 555, 560-61 (1992); Ramírez v. Ramos, 438

F.3d 92, 97 (1st Cir. 2006). 

The first of these prerequisites deals with harm. The

plaintiff must adequately allege that he "suffered or is threatened

by [an] injury in fact to a cognizable interest." Save our

Heritage, Inc. v. FAA, 269 F.3d 49, 55 (1st Cir. 2001). An injury

in fact is one that is concrete and particularized, on the one

hand, and actual or imminent (as opposed to conjectural or

hypothetical), on the other hand. Lujan, 504 U.S. at 560. In

turn, a particularized injury is one that "affect[s] the plaintiff

in a personal and individual way." Id. at 560 n.1. 

The second prerequisite deals with causation (what some

courts have called "traceability"). To meet this requirement, the

plaintiff must adequately allege that the asserted injury is

causally connected to the challenged conduct. Id. at 560. This

causal connection must be demonstrable; in other words, it "cannot

be overly attenuated." Donahue, 304 F.3d at 115. 
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The third prerequisite is redressability. The plaintiff

must adequately allege that a favorable result in the litigation is

likely to redress the asserted injury. Lujan, 504 U.S. at 561.

In addition to these Article III prerequisites,

prudential concerns ordinarily require a plaintiff to show that his

claim is premised on his own legal rights (as opposed to those of

a third party), that his claim is not merely a generalized

grievance, and that it falls within the zone of interests protected

by the law invoked. Ramírez, 438 F.3d at 98; N.H. Right to Life

Political Action Comm. v. Gardner, 99 F.3d 8, 15 (1st Cir. 1996).

These prudential considerations, though important, are not as

inexorable as their Article III counterparts. See, e.g., United

States v. AVX Corp., 962 F.2d 108, 116 (1st Cir. 1992) (recognizing

associational standing exception). 

Against this backdrop, we proceed to consider the issue

of standing plaintiff by plaintiff and claim by claim.

1. ARCAM. In the mix of claims that are before us, two

are ARCAM's: its substantive due process and equal protection claims

(its other claims against Calderón were dismissed below and are not

implicated in this appeal). As to these claims, ARCAM easily passes

through both the Article III and prudential standing screens. 

In theory at least, BDE's refusal to grant ARCAM the loan

for which it applied constitutes an injury in fact (a loss of

financing) particular to the corporation. Inasmuch as ARCAM alleges
Vilanova is also an ARCAM employee. However, he does not 2

claim to have suffered any cognizable injury in that capacity. At

any rate, the general rule is that an employee does not have

standing to sue when the alleged misconduct is directed at the

corporation for which he worked and, therefore, the employee's loss

of income or employment is merely incidental to the direct injury

inflicted upon the corporation. See, e.g., Willis v. Lipton, 947

F.2d 998, 1000-01 (1st Cir. 1991); Warren v. Mfrs. Nat'l Bank, 759

F.2d 542, 545 (6th Cir. 1985); see also SAS of P.R., Inc. v. P.R.

Tel. Co., 48 F.3d 39, 45 (1st Cir. 1995). That appears to be the

situation here.

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that this refusal stemmed from Calderón's strong-arming of the board

of directors, the injury is traceable to the challenged conduct.

The redressability element is satisfied because a favorable judicial

decision on this claim would redress the injury by compensating

ARCAM for the harm it suffered. 

Prudential considerations also counsel in favor of a

finding of standing. Here, ARCAM is seeking to protect its own

rights. Moreover, the alleged misconduct culminated in a

particularized event (the denial of the loan), and the effects of

that misconduct are sufficiently tangible.

2. Vilanova and the guarantors. Vilanova and the

guarantors are before us in regard to substantive due process and

equal protection claims (as was true of ARCAM, their other claims

against Calderón were dismissed below and are not implicated in this

appeal). These four plaintiffs premise their right to recover on

their status as shareholders and creditors of ARCAM. Pertinently, 2

the complaint alleges that ARCAM was unable to fulfill its

contractual obligations when it did not receive the requested loan,
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that it is unsure if its contracts can be salvaged, that it has shut

down its operations, and that it has no future prospects for

reopening. The stockholder claims presumably operate from the

premise that this reversal of fortune has depreciated the value of

the plaintiffs' stock. 

As a general rule, a corporation and its shareholders are

distinct juridical persons and are treated as such in contemplation

of law. See In re Dein Host, Inc., 835 F.2d 402, 405 (1st Cir.

1987). In terms of standing, this separateness has led to the tenet

that "[a]ctions to enforce corporate rights or redress injuries to

[a] corporation cannot be maintained by a stockholder in his own

name . . . even though the injury to the corporation may

incidentally result in the depreciation or destruction of the value

of the stock." Id. at 406 (citation and internal quotation marks

omitted); see Bishay v. Am. Isuzu Motors, Inc., 404 F.3d 491, 495

(1st Cir. 2005) (noting the general rule that only the corporation,

a receiver, or a stockholder acting derivatively in the

corporation's name may sue to redress an injury to the corporation).

The tenet holds true even if the shareholder is the sole owner of

the corporation's stock. See Diva's Inc. v. City of Bangor, 411

F.3d 30, 42 (1st Cir. 2005); In re Dein Host, 835 F.2d at 406.

To be sure, there are exceptions to virtually every

general rule — and the rule that a shareholder cannot sue in his own

name for an injury sustained by the corporation is not ironclad.
In this regard, the complaint merely states that, as 3

shareholders, Vilanova and the guarantors have "rights and

liabilities towards" ARCAM and that they have "a tangible and

intangible property interest in the benefits and profits" of ARCAM.

Any injury based on how Calderón's conduct impacted these interests

is merely derivative of ARCAM's alleged injury.

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A shareholder, for example, may be able to bring an action if he

sustains an injury that "is peculiar to him alone, and [that] does

not fall alike upon other stockholders." Roeder v. Alpha Indus.,

Inc., 814 F.2d 22, 30 (1st Cir. 1987) (citations and internal

quotation marks omitted); accord Guides, Ltd. v. Yarmouth Group

Prop. Mgmt., Inc., 295 F.3d 1065, 1072 (10th Cir. 2002). The case

law also suggests that there may be room for an exception if it is

absolutely inconceivable that the corporation itself would pursue

a claim for the misconduct. See, e.g., Kavanaugh v. Ford Motor Co.,

353 F.2d 710, 717 (7th Cir. 1965) (allowing shareholder standing in

a case in which the alleged malefactor owned all of the

corporation's voting stock). Here, however, the complaint does not

allege that any of the individual shareholders sustained a

particularized, nonderivative injury that might deflect application

of the usual shareholder standing rule or that any other exception 3

pertains. To cinch matters, not only have Vilanova and the

guarantors, qua shareholders, sued to redress an injury to the

corporation, but the corporation itself also has sued, in the same

complaint and on the same theories, for the same harm. In such

circumstances, section 1983 affords no right of action to the
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individual shareholders. See Diva's, 411 F.3d at 42 (holding that

shareholder who failed to allege any injury separate from the injury

to the corporation lacked standing to bring a § 1983 claim);

Potthoff v. Morin, 245 F.3d 710, 717 (8th Cir. 2001) (explaining

that an individual shareholder's section 1983 claim "can survive

only if he has alleged that he personally has suffered a direct,

nonderivative injury"); Flynn v. Merrick, 881 F.2d 446, 450 (7th

Cir. 1989) ("Filing suit under 42 U.S.C. § 1983 does not diminish

the requirement that the shareholder suffer some individual, direct

injury."). 

The fact that the complaint contains a demand for

emotional distress damages (which, presumably, were incurred by the

individual plaintiffs and not by ARCAM) is insufficient to confer

individual standing on any of the stockholders. After all, the

complaint does not suggest that this injury is anything but

derivative of ARCAM's failure to receive the loan. It is,

therefore, squarely within the proscription of the shareholder

standing rule. See Bellows v. Amoco Oil Co., 118 F.3d 268, 277 n.27

(5th Cir. 1997) (holding that shareholder had no individual standing

to sue for emotional distress when that distress was simply a

consequence of the corporation's direct injury).

This brings us to the plaintiffs' status as creditors of

ARCAM (by which they apparently mean either that ARCAM owes them

money that it will now be unable to repay or that they are exposed
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to a contingent liability because the denial of the BDE loan

rendered ARCAM unable to satisfy other debts). That status does not

alter the decisional calculus. As is the case with shareholders,

creditors do not have standing to sue in their personal capacities

unless the alleged misconduct causes harm to them separate and

distinct from the injury inflicted upon the debtor corporation. See

Ashland Oil, Inc. v. Arnett, 875 F.2d 1271, 1280 (7th Cir. 1989).

In the case at hand, any injury related to either the

plaintiffs' foregone loans or their contingent liability for ARCAM's

debts is simply derivative of the direct injury to ARCAM (the loss

of incremental financing). This type of harm is insufficient to

confer creditor standing. See Guides, 295 F.3d at 1073 (rejecting

the premise that one's status as a guarantor confers standing "to

assert an individual claim against a third party where that harm is

derivative of that suffered by the corporation"); Stein v. United

Artists Corp., 691 F.2d 885, 896 (9th Cir. 1982) (concluding that

a corporation's guarantors lack standing when their alleged injuries

"reflect the injury to the corporation, which forced it to default

on the loans"); see also SAS of P.R., Inc. v. P.R. Tel. Co., 48 F.3d

39, 45 (1st Cir. 1995). 

The short of it is that where, as here, the corporation

incurs the only direct injury from the alleged misconduct, the

corporation (in the absence of special circumstances, not present

here) is the only proper party to bring suit for that injury. It
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follows inescapably that neither Vilanova nor the guarantors have

standing to proceed with their Fourteenth Amendment claims.

3. Pagán. Three of Pagán's claims against Calderón are

before us: his First Amendment, substantive due process, and equal

protection claims. We conclude that he lacks standing to pursue any

of them. 

Pagán asserts injury in fact on the basis that Calderón's

meddling with ARCAM's loan request was driven by political animus

aimed squarely at him. This assertion is wide of the mark: the

standing inquiry turns on the plaintiff's injury, not the

defendant's motive. Thus, when a government actor discriminates

against a corporation based on a protected trait of a corporate

agent, it is the corporation — and only the corporation — that has

standing to seek redress. See Guides, 295 F.3d at 1072-73 (holding

that corporation alone had standing to pursue claim that lease

sought by corporation was denied because of employee-shareholder's

race); Potthoff, 245 F.3d at 717-18 (holding that employee lacked

standing to assert section 1983 claim when government agency

terminated corporation's lease because of employee's criticism of

the mayor). In other words, the fact that animus toward the agent

sparked mistreatment of the principal does not create an exception

to the rule that an agent's section 1983 claim can flourish only if
This does not mean, of course, that there are no exceptions 4

to the general rule that a plaintiff must allege a nonderivative

injury. There is, for example, an exception for associational

standing. This exception allows an association, which has not

itself suffered injury, to premise its standing to bring suit on

its members' injuries so long as the interests at stake are germane

to the association's purpose and the suit does not require member

participation. See AVX Corp., 962 F.2d at 116. That exception has

no bearing here. 

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he alleges that he personally suffered a direct, nonderivative

injury. Potthoff, 245 F.3d at 717. 4

In an effort to detour around this roadblock, Pagán

maintains that he stood to benefit from ARCAM's success and, thus,

was injured personally when the business cratered for want of

financing. Relatedly, he maintains that, as a consultant, he

depended on ARCAM's viability to earn his living. These allegations

are insufficient to cloak Pagán with standing. It is not enough for

the agent to allege an injury that is qualitatively different from

that suffered by the principal; rather, the agent must allege an

injury that does not derive from the injury to the principal. See

Bellows, 118 F.3d at 276-77. The injuries that Pagán alleges are

plainly derivative of the ascribed harm to ARCAM. 

That ends this aspect of the matter. Because the complaint

contains no allegation that Pagán suffered any nonderivative injury,

he lacks standing to assert any of the section 1983 claims that are

at issue here.
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III. QUALIFIED IMMUNITY 

Our exegesis into standing disposes of all the claims

presently on appeal save for ARCAM's substantive due process and

equal protection claims against Calderón. The lingering question,

then, is whether the district court erred in refusing to dismiss

either or both of those claims on the ground of qualified immunity.

In answering that question, we employ de novo review of the district

court's decision, assume the truth of the complaint's factual

allegations (but not its unsupported conclusions and

animadversions), and draw all reasonable inferences therefrom in

ARCAM's favor. See Limone, 372 F.3d at 42-43.

Qualified immunity is a judge-made doctrine created to

limit the exposure of public officials to damages actions, thereby

fostering the effective performance of discretionary functions in

the public sector. Harlow v. Fitzgerald, 457 U.S. 800, 807 (1982).

The reach of this doctrine is long, but not infinite. It protects

all but "the plainly incompetent [and] those who knowingly violate

the law." Malley v. Briggs, 475 U.S. 335, 341 (1986). As that

exclusion has been interpreted, the doctrine does not shield public

officials who, from an objective standpoint, should have known that

their conduct was unlawful. Davis v. Scherer, 468 U.S. 183, 193

(1984); Surprenant v. Rivas, 424 F.3d 5, 14 (1st Cir. 2005). 

Relying on Supreme Court precedent, see, e.g., Saucier v.

Katz, 533 U.S. 194, 200-02 (2001), we have developed a three-step
There is some debate about whether our approach to qualified 5

immunity issues should be collapsed from three steps into two. See

Higgins v. Penobscot County Sheriff's Dep't, ___ F.3d ___, ___ (1st

Cir. 2006) (Howard, J., concurring) [No. 05-2375, slip op. at 11].

Here, however, ARCAM's claims fail at the first step, so the number

of succeeding steps is irrelevant.

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algorithm for the determination of whether a state actor is entitled

to qualified immunity. See Limone, 372 F.3d at 44. In sequential

order, "[w]e consider (i) whether the plaintiff's allegations, if

true, establish a constitutional violation; (ii) whether the

constitutional right at issue was clearly established at the time of

the putative violation; and (iii) whether a reasonable officer,

situated similarly to the defendant, would have understood the

challenged act or omission to contravene the discerned

constitutional right." Id. Thus, a court called upon to review a 5

denied Rule 12(b)(6) motion premised on qualified immunity

ordinarily should consider, as a first step, whether the facts set

forth in the complaint, taken in the light most congenial to the

complaining party, adequately allege that the defendant violated a

federally-secured right. As we explain below, ARCAM cannot satisfy

this requirement. 

Our consideration of this issue proceeds on the premise

that there is no heightened pleading requirement in civil rights

cases. Educadores Puertorriqueños en Acción v. Hernández, 367 F.3d

61, 66-67 (1st Cir. 2004). The complaint need do no more than

satisfy the basic notice pleading requirements of the Civil Rules.
For purposes of section 1983, Puerto Rico is the functional 6

equivalent of a state. Redondo-Borges v. U.S. Dep't of Hous. &

Urban Dev., 421 F.3d 1, 7 (1st Cir. 2005). 

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Centro Medico del Turabo, Inc. v. Feliciano de Melecio, 406 F.3d 1,

5 (1st Cir. 2005). That standard, however, still requires that the

complaint "set forth minimal facts as to who did what to whom, when,

where, and why." Educadores, 367 F.3d at 68; accord Aponte-Torres

v. Univ. of P.R., ___ F.3d ___, ___ (1st Cir. 2006) [No. 05-1534,

slip op. at 6-7]. 

In this instance, the conduct of which ARCAM complains

implicates section 1983, which imposes liability on officials acting

under the color of state law who infringe the federally-secured

rights of private parties. ARCAM charges that Calderón, acting 6

under color of law as the governor of Puerto Rico, violated its

substantive due process and equal protection rights when she

improperly influenced BDE's review of ARCAM's loan application. We

conclude that ARCAM has failed to allege facts adequate to support

either charge (and that, therefore, Calderón is entitled to

qualified immunity). 

A. Substantive Due Process.

The Due Process Clause of the Fourteenth Amendment

prohibits a state from depriving a person of "life, liberty, or

property, without due process of law." U.S. Const. amend. XIV, § 1.

This guarantee has both substantive and procedural components. The

substantive due process guarantee functions to protect individuals
-23-

from particularly offensive actions on the part of government

officials, even when the government employs facially neutral

procedures in carrying out those actions. Daniels v. Williams, 474

U.S. 327, 331 (1986). The substantive due process guarantee does

not, however, serve as a means of constitutionalizing tort law so as

to "impos[e] liability whenever someone cloaked with state authority

causes harm." County of Sacramento v. Lewis, 523 U.S. 833, 848

(1998).

ARCAM is in error when it posits that it can prevail on

its substantive due process claim either by showing that Calderón's

conduct was conscience-shocking or by showing that her conduct

deprived it of a protected liberty or property interest. This

disjunctive proposition is incorrect. Where, as here, a plaintiff's

substantive due process claim challenges the specific acts of a

state officer, the plaintiff must show both that the acts were so

egregious as to shock the conscience and that they deprived him of

a protected interest in life, liberty, or property. See Rivera v.

Rhode Island, 402 F.3d 27, 34 (1st Cir. 2005) (stating that "[i]t is

not enough to claim the governmental action shocked the conscience"

but that a plaintiff must also show a deprivation of a protected

interest). Consequently, "conscience-shocking conduct is an

indispensable element of a substantive due process challenge to

executive action." DePoutot v. Raffaelly, 424 F.3d 112, 118 n.4

(1st Cir. 2005).
-24-

There is no scientifically precise formula for determining

whether executive action is — or is not — sufficiently shocking to

trigger the protections of the substantive due process branch of the

Fourteenth Amendment. See Nestor Colon Medina & Sucesores, Inc. v.

Custodio, 964 F.2d 32, 45 (1st Cir. 1992) (referring to the inquiry

as "virtually standardless"). Accordingly, the analysis will vary

with the subject matter and the circumstances. See Rivera, 402 F.3d

at 36; Amsden v. Moran, 904 F.2d 748, 754 n.5 (1st Cir. 1990). It

is, therefore, unsurprising that the requisite inquiry involves "a

comprehensive analysis of the attendant circumstances before any

abuse of official power is condemned as conscience-shocking."

DePoutot, 424 F.3d at 119. 

The case law contains some helpful generalizations. We

know, for example, that in order to shock the conscience, conduct

must at the very least be "extreme and egregious," id. at 118, or,

put another way, "truly outrageous, uncivilized, and intolerable,"

Hasenfus v. LaJeunesse, 175 F.3d 68, 72 (1st Cir. 1999). We also

know that "[m]ere violations of state law, even violations resulting

from bad faith," do not invariably amount to conscience-shocking

behavior. DePoutot, 424 F.3d at 119. Rather, conscience-shocking

behavior "must be stunning." Amsden, 904 F.2d at 754 n.5. 

Here, ARCAM contends that Calderón transgressed its

substantive due process rights when, through Pellot and Farìa, she

exerted undue influence over BDE's directors so that they would deny
-25-

ARCAM's loan request. It asseverates that her discriminatory animus

against the former NPP administration in general and Pagán (a

leading NPP factotum) in particular sparked this skulduggery. This

abuse of political power, ARCAM says, was so raw as to shock the

conscience. We do not agree. 

When the Puerto Rico legislature created BDE, it granted

the board of directors the power to exercise broad discretion in

determining whether to grant or deny certain loans. P.R. Laws Ann.

tit. 7, §§ 611b(d), 611d(a). Given this framework, we think that

our analysis of ARCAM's claim logically should be informed by the

standards elucidated in the case law involving denied permits and

licenses. We look to those cases to guide our inquiry into whether

ARCAM's allegations, even if true, cross the substantive due process

threshold. In doing so, however, we remain mindful of the

admonition that we should be "reluctant to expand the concept of

substantive due process." Collins v. City of Harker Heights, 503

U.S. 115, 125 (1992). 

We have held, with a regularity bordering on the

monotonous, that the substantive due process doctrine may not, in

the ordinary course, be invoked to challenge discretionary

permitting or licensing determinations of state or local

decisionmakers, whether those decisions are right or wrong. See,

e.g., Collins v. Nuzzo, 244 F.3d 246, 251 (1st Cir. 2001); Nestor

Colon, 964 F.2d at 45; Amsden, 904 F.2d at 757-58; Creative Env'ts,
-26-

Inc. v. Estabrook, 680 F.2d 822, 829 (1st Cir. 1982). While we have

"left the door slightly ajar for . . . truly horrendous situations,"

Nestor Colon, 964 F.2d at 45, any permit or license denial, no

matter how unattractive, that falls short of being "truly

horrendous" is unlikely to qualify as conscience-shocking. 

This standard is rigorous but necessary. A lesser

standard would run the unacceptable risk of "insinuat[ing] the

oversight and discretion of federal judges into areas traditionally

reserved for state and local tribunals," id., and would dash "any

hope of maintaining a meaningful separation between federal and

state jurisdiction," Creative Env'ts, 680 F.2d at 831. 

The decided cases are instructive by negative implication.

They present illustrations of conduct which, though disquieting and

in many instances unlawful, has been held not to violate the

substantive due process guarantee. ARCAM's complaint that BDE, at

Calderón's urging, denied it a loan for which it qualified falls

well within the mine-run of these cases. We conclude, therefore,

that the mere withholding of the loan, simpliciter, cannot support

a constitutional claim. 

ARCAM attempts to distinguish this case from the mine-run

on the basis of Calderón's discriminatory or retaliatory animus.

That attempt is unavailing. Substantive due process is an

inappropriate avenue of relief when the governmental conduct at

issue is covered by a specific constitutional provision. See S.
To the extent that ARCAM's complaint might be construed as 7

alleging misconduct outside the scope of the First Amendment (say,

misconduct based on personal antipathy), it would fare no better.

See, e.g., Collins, 244 F.3d at 251; Amsden, 904 F.2d at 751, 757.

-27-

County Sand & Gravel Co. v. Town of S. Kingstown, 160 F.3d 834, 835

(1st Cir. 1998) ("When a specific provision of the Constitution

protects individuals against a particular kind of [misconduct] by

government actors, individuals seeking redress . . . must assert

their claims under that particular constitutional rubric instead of

invoking the more generalized notion of substantive due process.");

accord Lewis, 523 U.S. at 843; Graham v. Connor, 490 U.S. 386, 395

(1989). Thus, to the extent that ARCAM relies on charges that

Calderón's actions were driven by political motives, it has no

substantive due process claim at all. It is the First Amendment,

not the Fourteenth Amendment, that guards individuals against statesponsored acts of political discrimination or retaliation. See,

e.g., Ruiz-Casillas v. Camacho-Morales, 415 F.3d 127, 134 (1st Cir.

2005); Nestor Colon, 964 F.2d at 46. 

That closes the book on this claim. Since ARCAM's

allegations of political discrimination and retaliation are covered

by the First Amendment, those allegations cannot serve as a basis

for a substantive due process claim. See Nestor Colon, 964 F.2d at 7

46 (holding infirm a substantive due process claim based on alleged

retaliation for plaintiff's political views); cf. Collins, 244 F.3d

at 251-52 (affirming dismissal of substantive due process claim
As stated earlier, the dismissal of ARCAM's First Amendment 8

claim is not now before us.

-28-

predicated on allegations of unconstitutional retaliation in denialof-licensure case). We add only that the application of this

prophylactic rule depends only on whether a specific constitutional

provision addresses the type of conduct at issue; it does not depend

on a prediction that the complaining party will be successful in

pursuing a claim under the applicable provision, nor does it depend

on a conclusion that the party has a valid claim thereunder. See,

e.g., Albright v. Oliver, 510 U.S. 266, 273-75 (1994).

Consequently, it does not matter that the district court dismissed

ARCAM's First Amendment claim.8

B. Equal Protection.

The equal protection guarantee of the Fourteenth Amendment

prohibits the state from "deny[ing] any person within its

jurisdiction the equal protection of the laws." U.S. Const. amend.

XIV, § 1. With reference to a governmental action, this language

has been interpreted to mean that "all persons similarly situated

should be treated alike." City of Cleburne v. Cleburne Living Ctr.,

Inc., 473 U.S. 432, 439 (1985). Its protections extend to both

legislative and executive conduct. See Sioux City Bridge Co. v.

Dakota County, 260 U.S. 441, 445 (1923).

As said, this case is most analogous to cases of denials

of benefits such as licenses or permits. That particular model of
Although a few of our earlier equal protection cases intimate 9

a less demanding standard, see, e.g., Yerardi's Moody St. Rest. &

Lounge, Inc. v. Bd. of Selectman, 878 F.2d 16, 21 (1st Cir. 1989),

our jurisprudence has evolved. In recent years, we routinely have

applied the more stringent standard articulated above. See, e.g.,

SFW Arecibo, Ltd. v. Rodríguez, 415 F.3d 135, 142 (1st Cir. 2005);

Collins, 244 F.3d at 251; Baker v. Coxe, 230 F.3d 470, 474 (1st

Cir. 2000); Nestor Colon, 964 F.2d at 44; PFZ Props., 928 F.2d at

32. While this formulation may not be appropriate in all equal

protection cases, it is the proper standard in all cases in which

a plaintiff premises an equal protection claim on a discretionary

decision denying a state or local benefit.

-29-

equal protection analysis, which we describe below, is what we apply

here. 

 Where applicable state law vests the decisionmaker with

discretionary authority to award or withhold a state benefit, a

plaintiff who grounds an equal protection claim on the denial of

that benefit faces a steep uphill climb. See PFZ Props., Inc. v.

Rodriguez, 928 F.2d 28, 32 (1st Cir. 1991) (explaining that a denied

applicant's allegations of differential treatment resulting from the

decisionmaker's illegitimate motives do not normally amount to an

equal protection violation). In benefit-denial cases, a plaintiff

can succeed only if he shows that (i) he was treated differently

than other similarly situated supplicants and (ii) the differential

treatment resulted from a gross abuse of power, invidious

discrimination, or some other fundamental procedural unfairness.9

See, e.g., id.; Creative Env'ts, 680 F.2d at 832 n.9. Even an

arbitrary, bad-faith denial of a benefit in derogation of state law,

without more, will not cross the constitutional threshold needed for
-30-

an equal protection claim. Baker v. Coxe, 230 F.3d 470, 474 (1st

Cir. 2000). 

This is a high hurdle, but its height makes eminently good

sense. Otherwise, a disappointed applicant for a state or local

benefit could manufacture a constitutional claim by the simple

expedient of alleging differential treatment. Were that the rule,

the correctness of every state or local benefit denial would become

a federal case. 

With this infrastructure in place, we turn to ARCAM's

complaint to see if its allegations suffice to state a cognizable

equal protection claim. We think not.

ARCAM attempts to show differential treatment through its

allegation that BDE granted the loan application of another entity,

Pollos Picú. Although this allegation arguably suffices, for

pleading purposes, to establish that BDE treated another loan

applicant differently, ARCAM has pleaded no facts to indicate that

Pollos Picú was a similarly situated borrower. See Redondo-Borges

v. U.S. Dep't of Hous. & Urban Dev., 421 F.3d 1, 9 (1st Cir. 2005)

(holding unsupported conclusory allegations insufficient to

withstand Rule 12(b)(6) motion to dismiss). Indeed, the only

comparator contained in the complaint indicates a dissimilarity;

ARCAM avers that Pollos Picú "was undergoing extremely difficult

financial conditions," which it concedes was "quite opposite to the

positive projections and financial securities presented by ARCAM."
-31-

In a context in which the directors' discretionary decision to grant

or deny a loan depends on a myriad of imbricated factors (e.g., the

applicant's balance sheet, financial history, past performance,

business plan, prospects, management, and available collateral), it

is difficult to imagine how an equal protection plaintiff could

prove that two loan applicants at opposite ends of the spectrum were

similarly situated. This is especially true when the lender is

obligated, by statute, to speculate about such imprecise factors as

the applicant's potential for bolstering the local economy and the

likelihood that subsidization will result in a diminished need for

imports. See Nordlinger v. Hahn, 505 U.S. 1, 10 (1992) (suggesting

that to state a viable equal protection claim, a plaintiff must show

that it sustained disparate treatment compared to a person that is

alike in "all relevant respects"). When, as in this case, the

complaint contains not so much as an inkling of the basis for a

claim of similarity, the plaintiff will have fallen short of

carrying its modest burden under Rule 12(b)(6).

In all events, there is a more basic reason why ARCAM's

equal protection claim does not pass constitutional muster: its

allegations fail to satisfy the second half of the relevant equal

protection test. Its complaint offers no allegations indicating

that the disparate treatment which it bemoans resulted from a gross

abuse of power, invidious discrimination, or fundamentally unfair

procedures. We explain briefly.
We add, moreover, that Calderón — the sole defendant before 10

us — had no direct responsibility for BDE's procedures.

-32-

The second and third categories are easily set aside.

ARCAM's allegations do not implicate "invidious discrimination" as

that phrase is used in our equal protection lexicon. Invidious

discrimination means discrimination based on suspect or quasisuspect classifications (such as race or gender). See Nestor Colon,

964 F.2d at 44; PFZ Props., 928 F.2d at 32. Such classifications

trigger heightened scrutiny for equal protection purposes. City of

Cleburne, 473 U.S. at 440-41. The universe of suspect or quasisuspect classifications does not encompass legislative

classifications, such as classifications premised on political

affiliation. See Vieth v. Jubelirer, 541 U.S. 267, 293 (2004).

Consequently, ARCAM's allegations of political discrimination and

retaliation are not allegations of invidious discrimination. See

Nestor Colon, 964 F.2d at 44; PFZ Props., 928 F.2d at 32.

By like token, ARCAM does not base its equal protection

claim on procedural irregularities or some associated unfairness.

Any such claim is, therefore, waived. See United States v. Zannino,

895 F.2d 1, 17 (1st Cir. 1990). At any rate, there is nothing in

the facts alleged to indicate the sort of fundamentally unfair

procedural rigamarole that might support an equal protection claim.10

Of course, the complaint makes crystal clear ARCAM's

frustration with both the amount of information that BDE requested
-33-

in order to process the loan application and the subordination

condition. There is nothing fundamentally unfair, however, about

these demands. It is hard to believe that any responsible financial

institution would loan $5,000,000 to an unproven borrower without

requiring the submission of detailed background information. To

this, we add the obvious: there is nothing unconscionable (or even

untoward) about a bank demanding that a borrower post significant

collateral as a condition to obtaining a multi-million-dollar loan.

Cf. P.R. Laws Ann. tit. 7, § 611b(d) (authorizing BDE's board of

directors to require the pledging of collateral as a precondition to

granting loans). 

This leaves the first category: gross abuse of power. We

have equated this concept with the "shocks the conscience" concept

used in substantive due process cases. See Baker, 230 F.3d at 474.

The record makes manifest that ARCAM cannot succeed on this theory.

According to ARCAM, the alleged abuse of power is

Calderón's supposed intervention to ensure that BDE would deny the

loan (purportedly as a reprisal for Pagán's political views and

activities). To the extent that a plaintiff challenging a

discretionary decision to deny a benefit claims to be entitled to

redress based on allegations of unconstitutional political

discrimination or retaliation, he cannot rely on the Equal

Protection Clause but, rather, must bring his claim under the

specific provisions of the First Amendment. See Rosenfeld v. Egy,
-34-

346 F.3d 11, 15 (1st Cir. 2003) (rejecting equal protection claim

premised on allegations of retaliatory refusal to grant a license

because the claim substantially overlapped with the plaintiff's

First Amendment claim); Nestor Colon, 964 F.2d at 45 (finding

"little basis or justification for applying equal protection

analysis" in such a situation because the First Amendment already

protects individuals against unconstitutional political

discrimination and retaliation). 

This principle is dispositive here. In point of fact,

ARCAM brought a First Amendment claim bottomed on the same

allegations. That is telling — and the fact that the lower court

dismissed that claim is neither material to our analysis nor before

us on this appeal. As is true in the substantive due process

context, this rule does not depend on the likely success of the

plaintiff's First Amendment claim; so long as his allegations of

political discrimination fit within the contours of the First

Amendment, they are, a fortiori, insufficient to ground a claim that

the politically-inspired misconduct violated equal protection

guarantees. See Ruiz-Casillas, 415 F.3d at 134 (holding that an

appellant's equal protection claim, which was premised on

allegations of political discrimination, "flounders, as it is a mere

restatement of [her] failed First Amendment claim").
-35-

The bottom line is that ARCAM's allegations about

Calderón's untoward influence over BDE's decisionmaking do not

suffice to state a viable equal protection claim. 

IV. CONCLUSION

We need go no further. To summarize, ARCAM is the only

plaintiff that asserts any direct injury resulting from Calderón's

alleged misconduct. The claims of Pagán, Vilanova, and the

guarantors that are before us on appeal must, therefore, fail for

lack of standing. And while ARCAM enjoys standing to pursue its

allegations of substantive due process and equal protection

violations, those allegations do not state viable constitutional

claims (and, thus, do not survive scrutiny under the first part of

the tripartite qualified immunity test). Consequently, we reverse

the district court's denial of Calderón's motion to dismiss on the

basis of qualified immunity and remand the case to the district

court for further proceedings consistent with this opinion.

Reversed and remanded.