Opinion ID: 201338
Heading Depth: 2
Heading Rank: 5

Heading: Esso's lawsuit in the district court

Text: 14 In March 2004, Esso filed a lawsuit and companion motion in federal district court to preliminarily enjoin the EQB penalty proceedings against it. These pleadings, which do not challenge the EQB's authority to order remedial measures at the station, argued that the penalty proceedings violate the Due Process Clause because the officials who decide whether this massive fine is assessed have severe and irremediable conflicts of interest. Esso asserted a number of specific examples of such conflicts and procedural irregularities, including that (1) EQB officials have a direct pecuniary interest in collecting a large fine, (2) the Puerto Rico Senate has exerted undue influence biasing the proceedings, (3) high-ranking EQB officials, including a member of the board, were not consulted in issuing the show cause order on the proposed fine despite being directly involved in the case, (4) the HEs lack independence to administer the hearings fairly, 2 (5) attorney Velazquez engaged in grossly unethical behavior before resigning from the case earlier this year, and (6) Belgodere has exerted undue influence throughout the proceedings. 15 In its written decision on the request for a preliminary injunction, the district court acknowledged that [t]he undisputed evidence presented by Esso regarding the EQB's handling of the case is sufficient to make any court sitting in equity pause. For example, the court acknowledged multiple difficulties with the HE's handling of the hearings to date, including her failure to respond in a timely manner to Esso's motions and her refusal to allow Esso to cross-examine the UST program's director regarding how the $76 million fine was calculated. The court found that Esso's participation in the hearings has been hampered by EQB officials' misrepresentations during the discovery process. Specifically, Velazquez initially produced only six boxes of documents in response to Esso's discovery requests. Through discovery in a related CERCLA 3 case, Esso obtained more than 1,000 boxes of additional documents that Velazquez and EQB officials had claimed did not exist. These boxes included, inter alia, internal memoranda and technical reports judging Esso's compliance with the EQB orders. 16 Additionally, the district court found that Belgodere has been allowed to influence the EQB's case throughout the proceedings, despite evidence which brings his motives into question. Belgodere, who consulted for Esso in the 1980s before being dismissed for incompetence, has declared himself the representative of La Vega, the community surrounding the service station. He has threatened Esso executives with physical violence and suggested his ability to control the case through extortion. 4 Yet he was permitted to assist in drafting the show cause order and has been seen sitting at the Public Interest counsel table during the hearings and otherwise consulting with the EQB's lawyers. 17 Despite these findings, the district court denied Esso's motion for a preliminary injunction. Reviewing a line of cases beginning with Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971), the court noted the general rule that federal courts should not interject themselves into ongoing state adjudications, including administrative proceedings. See id.; Ohio Civil Rights Comm'n v. Dayton Christian Sch., Inc., 477 U.S. 619, 623-27, 106 S.Ct. 2718, 91 L.Ed.2d 512 (1986) (extending Younger to some state administrative proceedings). This rule applies as long as the state forum provides an adequate opportunity to raise the petitioner's federal claims. Middlesex County Ethics Comm. v. Garden State Bar Ass'n, 457 U.S. 423, 432, 102 S.Ct. 2515, 73 L.Ed.2d 116 (1982); Maymo-Melendez v. Alvarez-Ramirez, 364 F.3d 27, 35 (1st Cir.2004), cert. denied, ___ U.S. ___, 125 S.Ct. 110, ___ L.Ed.2d ___ (2004). Here, the district court found that Esso had not exhausted its state remedies because no fine had yet been imposed and if a fine were imposed, Esso could raise its constitutional objections upon appeal to the Puerto Rico Court of Appeals and the Puerto Rico Supreme Court. It thus concluded that Younger dictated abstention. 18 The court dismissed Esso's contention that the evidence of the EQB's bias justified an exception to Younger under Gibson v. Berryhill, 411 U.S. 564, 93 S.Ct. 1689, 36 L.Ed.2d 488 (1973). It explained that the Gibson exception allows a federal court to intervene where the state adjudicator is so biased as to be incompetent to adjudicate the matter and where the petitioner shows that abstention would result in irreparable harm. The district court suggested that a recent decision of this court, Maymo-Melendez, 364 F.3d at 37, downplayed the relevance of Gibson and any bias argument.... Instead, the district court found that abstention would not irreparably harm Esso because the EQB may yet adjudicate the case fairly. 5 19 On appeal, Esso asserts that being subjected to biased proceedings is a due process violation independent of any fine that may be imposed, and thus it is suffering an ongoing irreparable harm necessitating federal intervention. The EQB responds that the Gibson exception is inapplicable and that Younger requires abstention because Esso has an opportunity to litigate its constitutional claims in the Puerto Rico courts.