Opinion ID: 196780
Heading Depth: 2
Heading Rank: 2

Heading: Indirect State Action

Text: 16 We therefore turn to the question of whether the conduct at issue, while not that of the government of Puerto Rico directly, may be nonetheless fairly attributed to the state. A private entity's conduct is not actionable under section 1983 if the challenged action results from the exercise of private choice and not from state influence or coercion. See id. at ----, 115 S.Ct. at 980 (O'Connor, J., dissenting) (concluding that Lebron did not involve direct state action, and therefore, unlike the majority, inquiring as to indirect state action); San Francisco Arts & Athletics, Inc. v. United States Olympic Comm., 483 U.S. 522, 547, 107 S.Ct. 2971, 2986, 97 L.Ed.2d 427 (1987) (stating that [t]here is no evidence that the Federal Government coerced or encouraged the USOC in the exercise of its right [to deny use of its copyright]); Rendell-Baker, 457 U.S. at 841, 102 S.Ct. at 2771 (holding that discharge decisions of largely publicly-funded private school for troubled students were not subject to constitutional challenge because those actions were not compelled or even influenced by any state regulation). 17 As a result, this court must determine whether the conduct of Defendants, as private parties, rises to the level of state action. As this court has previously spelled out, the relevant inquiries consist of whether there was(1) ... an elaborate financial or regulatory nexus between [Defendants] and the government of Puerto Rico which compelled [Defendants] to act as they did, (2) an assumption by [Defendants] of a traditional public function, or (3) a symbiotic relationship involving the sharing of profits. 18 Rodriguez-Garcia, 904 F.2d at 96; see Ponce, 760 F.2d at 377. We examine each test in turn, as satisfaction of any one of the three tests requires that we find indirect state action.
19 As both parties acknowledge, the challenged action of the regulated entity ... may be fairly treated as that of the State itself ... only when it can be said that the State is responsible for the specific conduct of which the plaintiff complains. Blum v. Yaretsky, 457 U.S. 991, 1004, 102 S.Ct. 2777, 2786, 73 L.Ed.2d 534 (1982), cited in Rodriguez-Garcia, 904 F.2d at 97. The test is whether the government exercised coercive power or provided such significant encouragement that the complained-of misconduct surrounding the Assembly and the Board elections must be deemed to be the conduct of the government. Id., 904 F.2d at 90. 20 We emphasize that our examination focuses on the government's connection to the complained-of action, not the government's connection to the AEELA itself. See Blum, 457 U.S. at 1004, 102 S.Ct. at 2785-86. As a result, we find extraneous Plaintiffs' arguments highlighting the facts that the AEELA was created by law, that its members and Directors are public employees, and that the elective process is regulated by law, except to the degree that these facts demonstrate government coercion or encouragement of the complained-of conduct. 21 Plaintiffs contend that Defendants derived their authority to schedule the Assembly and election from a Puerto Rico law, 3 L.P.R.A. § 862(d), and that Defendants were government employees who performed their duties during working time and using government equipment and materials. However, Plaintiffs have hung their claim on the proposition that state-granted authority suffices to find state action, since they have failed to allege that the government coerced or encouraged the specific election rigging that gives rise to their complaint. We believe that the state's grant of authority alone cannot justify a conclusion of state action in this case. 22 We draw this conclusion by comparing two of our previous cases. First, like the district court, we are persuaded by our holding in Rockwell, 26 F.3d at 258, that state-granted authority making possible a private party's actions does not, without more, sufficiently show that the specific action taken under that authority constitutes state action. Id. In Rockwell, we concluded that the fact that a Massachusetts statute authorized public health professionals to hospitalize persons believed to present a likelihood of serious harm by reason of mental illness, did not suffice to create a sufficient link between the state and the plaintiff's own detention to classify the hospital as a state actor. Id. By contrast, in Rodriques v. Furtado, 950 F.2d 805, 814 (1st Cir.1991), we held that a physician functioned as a state actor where he performed a body cavity search of the plaintiff pursuant to a search warrant. We justified our conclusion on the ground that the scope and motivation for the specific conduct occasioning the complaint were established solely by the state's investigatory goals and justified solely by the search warrant. Id. at 814. 23 We conclude that to the extent that state-granted authority can justify a finding of state action, that authority must be connected to the aim of encouraging or compelling the specific complained-of conduct. Because we conclude that the district court correctly found that no state-linked financial or regulatory nexus compelled Defendants to act as they did, we find no state action under the nexus test.
24 [F]or a private actor to be deemed to have acted under color of state law, it is not enough to show that the private actor performed a public function. Rockwell, 26 F.3d at 258. Rather, [t]he plaintiff must show that the private entity assumed powers 'traditionally exclusively reserved to the State.'  Id. (quoting Rodriques, 950 F.2d at 813). The exclusive function test screens for situations where a state tries to escape its responsibilities by delegating them to private parties. Id. at 258; see Johnson v. Pinkerton Academy, 861 F.2d 335, 338 (1st Cir.1988). If the convening of the AEELA's assembly or the election of its board are traditional, exclusively sovereign functions which have merely been delegated to private actors, then the state cannot escape responsibility for constitutional deprivations caused by private parties acting pursuant to the delegation. Rockwell, 26 F.3d at 258. 25 In Rendell-Baker, 457 U.S. at 852, 102 S.Ct. at 2777, the Supreme Court discussed the public function analysis of state action. The Court concluded that although the education of maladjusted high school students is a public function for which the state intends to provide services at public expense, that legislative policy choice in no way makes these services the exclusive province of the State.... That a private entity performs a function which serves the public does not makes its acts state action. Id.; see also Ponce, 760 F.2d at 381. 26 Plaintiffs contend that for public interest purposes, the government of Puerto Rico has delegated to the AEELA the traditional activity of promoting savings among government employees, and providing them benefits such as loans, insurance and medical services. We agree with Plaintiffs that providing such benefits to public employees probably does promote the public interest. However, these services cannot reasonably be characterized as the exclusive province of the State, since banks, credit unions, savings and loans associations, brokerage firms, mutual funds, and insurance companies traditionally have existed to promote savings, loans and health and other insurance. As a result, we conclude that Defendants cannot be found to have engaged in state action under the traditional public function test.
27 State action can be found by way of a symbiotic relationship. Under this test, a private party's acts are attributable to the state only if the government 'has so far insinuated itself into a position of interdependence with [the private entity] that it must be recognized as a joint participant in the challenged activity....'  Ponce, 760 F.2d at 381 (quoting Burton v. Wilmington Parking Auth., 365 U.S. 715, 725, 81 S.Ct. 856, 861-62, 6 L.Ed.2d 45 (1961)). While one of the key factors in determining whether a symbiotic relationship exists is certainly whether the state shared in any profits made, the lack of a financial partnership is not necessarily dispositive. Rodriguez-Garcia, 904 F.2d at 98-99 (listing several factors relevant to finding symbiotic relationship). 28 In Burton, the Court found state action where the state leased public property to a private restaurant owner, who maintained a racially discriminatory policy, acknowledged to be indispensable to the success of the venture. Burton, 365 U.S. at 723-24, 81 S.Ct. at 860-61. In contrast, there is no evidence that the government of Puerto Rico somehow profited from the allegedly discriminatory actions of Defendants. Even though the AEELA receives legally mandated funds from public employees, no contention has been made that this money becomes the property of the AEELA or the government. In fact, Plaintiffs have not disputed that, upon termination of employment, public employees receive back their funds. While the Puerto Rico Secretary of the Treasury does approve the investments made by the AEELA with these funds, Plaintiffs have not contended that these funds are somehow used to the benefit of the government of Puerto Rico, rather than invested at a market rate of return. Also, Plaintiffs have not even attempted to link the alleged election rigging to some financial gain to the government of Puerto Rico, in the way that the discrimination in Burton was linked to the state's returns from the venture. Thus, whatever financial success the AEELA may achieve is not shared with the government of Puerto Rico. 29 Similarly, while the lack of financial enrichment is not dispositive, and [t]he test is one of interdependence and joint participation, we agree with the district court that Plaintiffs have failed to contest the proposition that the AEELA is essentially independent in the conduct of its daily affairs. And no attempt has been made to link the government of Puerto Rico to the decisions of when to hold the Assembly and how to conduct Board elections. As a result, we conclude that no symbiotic relationship exists between the government of Puerto Rico and the AEELA. 30 In passing, we observe that in the instant case, Plaintiffs have not premised their claim on a private party's specific act, directed by the government of Puerto Rico, which somehow benefits the government via a symbiotic relationship with the private actor. This point can be illustrated by comparison with the symbiotic relationship that led to a finding of state action in Schneider v. Colegio de Abogados de Puerto Rico, 565 F.Supp. 963, 974, stay denied, 572 F.Supp. 957 (D.P.R.1983), vacated on other grounds Romany v. Colegio de Abogados de Puerto Rico, 742 F.2d 32 (1st Cir.1984) (holding that the district court should have abstained from reaching the merits of the First Amendment claims until the Puerto Rico Supreme Court decided a pending controversy). In Schneider, the plaintiffs charged that Puerto Rico laws forcing them to be members of Puerto Rico's integrated bar association violated their rights to free speech and free association, since those laws forced them to belong to, and financially support, an organization (the Colegio) which promoted ideological and political causes contrary to their personal beliefs. Id. at 965-66. The court found state action, noting not only that Puerto Rico law required attorneys to maintain membership in the Colegio, but also emphasizing that required membership aided the Colegio's public function of regulating lawyers, from which the government was found to benefit. Id. at 973-74. Essentially, the government of Puerto Rico was found to be advantaged by the specific act on which the complaint was grounded, namely, forced membership in the Colegio. 31 By contrast, plaintiffs in the instant case do not mount a facial challenge to the laws that create the AEELA or require that it hold elections. Instead, they argue that the AEELA's leadership committed discretionary acts of discrimination, and did so while exercising authority granted by the government of Puerto Rico. But plaintiffs fall short of Schneider in at least two ways. First, the conduct they complain of--discrimination--is not specifically mandated by Puerto Rico law, as forced membership in the Colegio was for lawyers in Schneider. Unlike the plaintiffs in Schneider, Plaintiffs do not challenge conduct specifically directed by Puerto Rico law; for example, their forced membership in the AEELA or the requirement that the AEELA hold assemblies and elections. Instead, Plaintiffs complain of the manner in which the assembly and the elections were held--this manner is not directed by statute. Second, Plaintiffs have failed to link these specific acts of discrimination in the holding of AEELA's assembly and elections to any symbiotic relationship by which the government profits from these specific discriminatory acts. No allegation has been made that the government of Puerto Rico is somehow advantaged by the alleged misconduct in AEELA's assembly or elections. By contrast, in Schneider, bar membership required by Puerto Rico law constituted the conduct complained of, and also was alleged to benefit the government of Puerto Rico, since compulsory membership made possible the Colegio's regulatory functions. As a result of these distinctions, we conclude that Schneider does not avail Plaintiffs.