Opinion ID: 798922
Heading Depth: 2
Heading Rank: 2

Heading: Equitable Conduct

Text: Coors argues that even so, the Secretary's conduct as described above, combined with what Coors alleges to be a strategy of keep away, played by the Commonwealth these last thirty-five years to forestall federal adjudication of the dormant Commerce Clause question, justify setting aside comity in this instance. It is far from clear that Levin permits us to retain jurisdiction over this case on Coors's argument that it would be more equitable to do so given the Commonwealth's conduct. We need not decide this abstract issue, however, because the argument fails on its own terms. We have already addressed and rejected most of the substantive arguments advanced by Coors in support of our retaining jurisdiction. These equitable conduct arguments are the same arguments raised under Coors's voluntary consent theory, and merely relabeling the arguments does nothing to advance them. Coors's remaining arguments do not support our retaining jurisdiction even if we had the power to do so. Coors argues that once the Secretary had finally agreed[] to the resolution of the summary judgment motion, and after Coors had fully performed its obligations under [that] agreement and acted in reliance upon it, the Secretary sought to -26- renege on the agreement by requesting additional discovery on immaterial and irrelevant matters and by reopening the comity question. At this late stage of the litigation, Coors argues that forcing it to file a new suit in the courts of Puerto Rico would impose an 'unusual hardship' on it and require 'an unnecessary expenditure of time or energy.' (quoting Rosewell v. LaSalle Nat'l Bank, 450 U.S. 503, 518 (1981)). Coors notes that it first filed this case in federal district court five years ago and has expended significant time and costs in its prosecution. Since comity is an equitable doctrine, Fair Assessment in Real Estate Ass'n, 454 U.S. at 116 n.8, Coors argues that the balance of equitable considerations in this case justifies providing it with a federal forum for resolution of its constitutional claims. Even if the equitable discretion described by Coors existed in these types of cases, this would not be an instance where we would retain jurisdiction. The Secretary's conduct in this case, including as to discovery and the stipulations, was not inequitable and in any event carries little weight when compared to the institutional rationales for comity here. Comity is a doctrine of equitable restraint, id. at 108 (emphasis added), and operates to stay [the] hand of the federal courts when state-law remedies are plain, adequate, and complete, id. The balance in favor of restraint arises here in the state taxation context: comity . . . counsel[s] that [federal] courts should adopt a hands-off approach -27- with respect to state tax administration. Nat'l Private Truck Council, Inc. v. Okla. Tax Comm'n, 515 U.S. 582, 586 (1995); see also Fair Assessment in Real Estate Ass'n, 454 U.S. at 108 (The reason for this guiding principle [of equitable restraint] is of peculiar force in cases where the suit, like the present one, is brought to enjoin the collection of a state tax in courts of a different, though paramount sovereignty. (alteration in original) (quoting Matthews v. Rodgers, 284 U.S. 521, 525 (1932))). Whether or not inequitable conduct by a party could ever overcome these concerns, the equities in this case weigh more heavily on the side of aversion to federal interference with state tax administration. Nat'l Private Truck Council, 515 U.S. at 586. C. Whether the Puerto Rico Courts Meet the Adequate State-Court Forum Test Coors's final argument is that dismissal on comity grounds would be improper because the Puerto Rico court system will not provide an adequate state-court forum to hear and decide the merits of the federal constitutional claims. In Fair Assessment in Real Estate Ass'n, the Court explained that under the doctrine of comity, federal courts must refrain from deciding state tax matters when remedies at law are plain, adequate, and complete, 454 U.S. at 108, and where [federal rights] could otherwise be preserved unimpaired, id. at 109 (quoting Boise Artesian Hot & Cold Water Co. v. Boise City, 213 U.S. 276, 282 (1909)) (internal quotation marks omitted). -28- Coors argues the Puerto Rico forum is stacked against it: the courts all but certainly will woodenly reject its constitutional challenge to the tax. Moreover, in the past, Coors alleges, Puerto Rico's courts have exempted Puerto Rico from the reach of the dormant Commerce Clause entirely and will continue to do so here. Finally, Coors contends that the Puerto Rico courts impermissibly refuse to consider legislative history in determining whether a law has a constitutionally discriminatory purpose and in doing so here, will hinder Coors's ability to present its claims. See, e.g., Family Winemakers of Cal. v. Jenkins, 592 F.3d 1, 13 (1st Cir. 2010) ([W]hen a state statute is allegedly motivated by an intent to discriminate against interstate commerce, to determine legislative purpose, we look to 'the statute as a whole,' including statutory text, context, and legislative history, . . . [as well as] whether the statute was 'closely tailored to achieve the legislative purpose' the state asserted (quoting Alliance of Auto. Mfrs. v. Gwadosky, 430 F.3d 30, 37-38 (1st Cir. 2005))); see also id. at 13 n.15 (describing methodologies employed by other courts of appeal). -29- As to legislative history,9 Coors attempts to rely on the case of Chévere v. Levis, 150 P.R. Dec. 525 (2000). The Puerto Rico Supreme Court there, however, expressly reviewed the legislative history of the law in question to determine legislative intent and stated: [I]n the process of inquiry into the legislature's intent, it is necessary to examine the legislative history. If the law has a statement of purpose, it generally summarizes the purpose that inspired its creation. In cases in which the law lacks a statement of purpose or, even though it has one, the statement does not contain the legislative intent, it is useful to consult other documents such as the reports from the committees that studied the bill and the debates held when the measure was discussed on the floor of the legislative chamber, as appears in the Record of Proceedings. Likewise, the preliminary drafts and reports surrounding them, which are prepared outside the Legislative Assembly, may be used, when the Assembly had the same before it and substantially adopted the preliminary drafts. Id. at 540-41 (translation available on Ct. App. Dkt. No. 11-1559). We reject Coors's contention that the Puerto Rico courts will impermissibly refuse to consider legislative history in 9 The Secretary argues that this is really a dispute about which portions of the legislative history are to be given weight. He cites to F. Vázquez, Inc. v. Sec'y of the Treasury, 103 P.R. Dec. 388, 3 P.R. Offic. Trans. 539 (1975), in which the Puerto Rico Supreme Court stated that, statements of a lawmaker, on the floor of the legislative body to which he belongs do not represent the collective intent of the body enacting the statute. Id. at 390. The Secretary argues that the Puerto Rico courts do review legislative history and are capable of conducting a comprehensive, pithy and in-depth review of the applicability of the dormant Commerce Clause. (quoting Coors Brewing Co. v. Mendez-Torres, 787 F. Supp. 2d 149, 197 (D.P.R. 2011)). -30- considering Coors's claims. Nothing in Chévere suggests that the courts, as a rule, will refuse to consider the legislative history in ascertaining the purpose of the excise tax. Coors also argues that the Puerto Rico courts have refused to hold that the dormant Commerce Clause applies to the Commonwealth, pointing to the concurring opinion of a single justice in a 2007 case. See Puerto Rican Ass'n of Beer Imps. v. Puerto Rico, 171 P.R. Dec. 140 (2007) (Fuster, J., concurring in the judgment) (stating that the dormant aspect of the Commerce Clause of the U.S. Constitution does not apply to Puerto Rico) (translation available on Ct. App. Dkt. No. 11-1559). However, in a more recent opinion the Puerto Rico Supreme Court clearly held that the limitations inherent in the interstate Commerce Clause in its dormant state apply to Puerto Rico ex proprio vigore. Estado Libre Asociado de P.R. v. Nw. Selecta, Inc., 2012 WL 1109131, 2012 TSPR 56, at  (P.R. Mar. 27, 2012). This opinion also reinforces the rule articulated in Chévere as to when resort to legislative history is appropriate. Finally, the fact that the Puerto Rico courts ruled against large brewers in earlier cases simply does not meet the test for inadequacy. This court recently rejected a similar inadequacy challenge brought by cigar manufacturers against a Puerto Rico excise tax which allegedly discriminated against mainland cigar manufacturers. Pleasures of San Patricio, 596 F.3d -31- 1. We held that the cigar manufacturers could not demonstrate the inadequacy of the Puerto Rico courts merely by predicting that they would lose their case. Id. at 9. We reject Coors's inadequacy argument. Should Coors receive an unfavorable merits ruling from the Puerto Rico courts, it may seek further review of [a]ny substantial federal question in the U.S. Supreme Court. Levin, 130 S. Ct. at 2334 n.8 (citing McNeese v. Bd. of Educ. for Cmty. Unit Sch. Dist. 187, 373 U.S. 668, 673 (1963)). In addition, should the Puerto Rico courts, as Coors fears, fail to follow federal constitutional precedent or unconstitutionally constrain their analyses, that, in and of itself, may constitute grounds for a petition for certiorari in the U.S. Supreme Court.10 10 The Supreme Court has addressed similar challenges under what is known as the fair support rule. Where a state court engages in an obvious subterfuge to evade consideration of a federal issue, Radio Station WOW, Inc. v. Johnson, 326 U.S. 120, 129 (1945), the Supreme Court may look beyond an asserted state law rationale to inquire whether the state court decision rests upon a fair or substantial basis, Broad River Power Co. v. South Carolina ex rel. Daniel, 281 U.S. 537, 540 (1930); see, e.g., Howlett v. Rose, 496 U.S. 356, 366 (1990); Staub v. City of Baxley, 355 U.S. 313, 318-319 (1958). The Court has deployed this rule in the context of dormant Commerce Clause challenges to state taxation schemes, see, e.g., Union Pac. R.R. Co. v. Pub. Serv. Comm'n, 248 U.S. 67, 69-70 (1918); Gaar, Scott & Co. v. Shannon, 223 U.S. 468, 470 (1912), and where other state laws have been found to unconstitutionally restrain interstate commerce, see, e.g., Davis v. Wechsler, 263 U.S. 22, 24 (1923); Am. Ry. Express Co. v. Levee, 263 U.S. 19, 21 (1923); Sioux Remedy Co. v. Cope, 235 U.S. 197, 203-04 (1914); Vandalia R.R. Co. v. Indiana ex rel. City of South Bend, 207 U.S. 359, 367 (1907). -32-