Court Opinion

ID: 5132176
Source: CourtListenerOpinion
Date Created: 2021-12-06 23:00:38.03745+00
Date Added: 2024-06-11T08:23:28.455839
License: Public Domain

United States Court of Appeals
                     For the First Circuit

No. 20-1509

 CHIANY CRUZ-ARCE, on her own behalf and as legal representative
                      of minor child H.V.C.,

                      Plaintiff, Appellant,

                               v.

   MANAGEMENT ADMINISTRATION SERVICES CORPORATION and LEANETTE
                              VÉLEZ,

                     Defendants, Appellees.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF PUERTO RICO

       [Hon. Silvia L. Carreño-Coll, U.S. District Judge]

                             Before

                       Howard, Chief Judge,
                Selya and Barron, Circuit Judges.

     Javier A Rivera-Vaquer and Rivera Mercado & Rivera Cordero on
brief for appellant.
     Luis N. Blanco-Matos on brief for appellees.

                        December 6, 2021
                  SELYA, Circuit Judge.         Plaintiff-appellant Chiany Cruz-

Arce, suing in her own right and on behalf of her minor child

(H.V.C.), seeks to hold private parties liable as state actors

under 42 U.S.C. § 1983.               The plaintiff's federal claims hinge on

her allegation that the defendants were performing a function

traditionally and exclusively reserved to the state.1                     Because the

amended complaint fails to allege sufficient facts to ground a

plausible conclusion that the function performed by the defendants

is, by tradition, an exclusive prerogative of the state, we affirm

the district court's order of dismissal.

I. BACKGROUND

                  Because this appeal arises out of a dismissal for failure

to state a claim upon which relief could be granted, see Fed. R.

Civ.       P.   12(b)(6),       we   accept   as    true   all    well-pleaded   facts

adumbrated in the plaintiff's amended complaint, see Haley v. City

of Boston, 657 F.3d 39, 46 (1st Cir. 2011); SEC v. Tambone, 597

F.3d       436,    438   (1st    Cir.   2010)      (en   banc).     We   rehearse   the

background of the case in that light and then trace its travel.

                  In 2015, the plaintiff was a tenant in the Manuel A.

Pérez low-income housing project (the Project) in San Juan, Puerto

       For purposes of section 1983, Puerto Rico is the functional
       1

equivalent of a state. See Santiago v. Puerto Rico, 655 F.3d 61,
69 (1st Cir. 2011); see also 42 U.S.C. § 1983 (providing for
liability for violations of federal rights "under color of any
statute, ordinance, regulation, custom, or usage, of any State or
Territory").

                                          - 2 -
Rico.    The Project is owned by the Puerto Rico Department of

Housing (the Housing Department) and is administered through the

Puerto Rico Public Housing Administration (the PRPHA). The Housing

Department or the PRPHA, in turn, contracted with a private party,

defendant-appellee Management Administration Services Corporation

(MAS), to manage the Project.2

           The plaintiff alleges that, following a change in her

employment situation, she contacted MAS and sought to modify her

monthly rent (as permitted by pertinent regulations).            These

negotiations began in the spring of 2015.       During the next two

years, the plaintiff and MAS wrangled over rent adjustments,

retroactivity issues, and ostensible rent arrearages.      On July 19,

2017, MAS initiated eviction proceedings against the plaintiff in

a local Puerto Rico court.    The plaintiff contested MAS's claims.

           The plaintiff further alleges that — while the contested

eviction proceedings were pending — MAS gratuitously placed her

apartment on a list of vacant units given to the Puerto Rico Police

Department pursuant to a "policy and agreement."      The purpose of

such a list was to help the police in identifying possible illegal

arms-    and   drug-trafficking   activities   conducted   in   vacant

     2 In the amended complaint, the plaintiff refers to the
Housing Department as the contracting party. Her brief, however,
refers to the PRPHA as the contracting party.         For present
purposes, this is a distinction without a difference. We therefore
assume — for ease in exposition — that the PRPHA engaged MAS.

                                  - 3 -
apartments.    After receiving this listing, the police raided the

plaintiff's   apartment,       forcing   the    locks     and    ransacking         the

interior.     The   plaintiff     asserts      that    the   officers'        actions

incident to the search caused her and her autistic child "severe

emotional distress," requiring medical attention.

            Based   on   the   communication      breakdowns       and       what   she

deemed to be an illegal search, the plaintiff invoked section 1983

and brought this suit against MAS and its then-administrator,

Leanette Vélez, in the federal district court.               The parties agreed

to proceed before a magistrate judge.                 See 28 U.S.C. § 636(c);

Fed. R. Civ. P. 73(b).3         In due course, the plaintiff served an

amended   complaint      containing    three    counts:         count    1    alleged

violations of the Fourth and Fourteenth Amendments related to the

search; count 2 alleged denials of due process related to the

plaintiff's travails regarding the rent-adjustment negotiations

and eviction proceedings; and count 3 alleged pendant claims for

emotional distress under Article 1802 of the Puerto Rico Civil

Code.

            As pleaded, the two counts of the amended complaint that

invoked section 1983 (counts 1 and 2) hinged on the question of

whether the defendants were "acting under color of state law" and,

     3 While the case was pending, the magistrate judge was
appointed to the district court. In that capacity, she retained
jurisdiction over the case.

                                      - 4 -
thus,    could   be   held   liable   as   state   actors.   The   operative

allegations of the amended complaint that bore on this question

were sparse.      First, the plaintiff alleged that "[b]y law, the

Government of Puerto Rico[,] through the Housing Department, is in

charge of the operations and administration of the residential

community of Manuel A Perez." Second, she alleged that the Housing

Department, "instead of administrating the residential community,

entered into a services contract with [MAS] to supply the same in

[its] stead."     The plaintiff made no other allegations concerning

the relationship between MAS and the government of Puerto Rico,

nor did her amended complaint contain any facts bearing on the

issue of whether MAS was carrying out a traditional and exclusive

state function.

            The defendants moved to dismiss the amended complaint

for failure to state a claim upon which relief could be granted.

See Fed. R. Civ. P. 12(b)(6).          The plaintiff opposed the motion.

She contended, in conclusory fashion, that MAS was exercising an

exclusive public function and could therefore be considered a state

actor.    Surveying the plaintiff's allegations and contentions, the

district court found her federal claims wanting and granted the

defendants' motion to dismiss.             The court determined that the

amended complaint failed to state any actionable federal claims

because it did not contain sufficient facts to ground a conclusion

that MAS was performing an exclusive public function.              See, e.g.,

                                      - 5 -
Santiago v. Puerto Rico, 655 F.3d 61, 68-69 (1st Cir. 2011).                  It

then dismissed the remaining state-law claims without prejudice.

This timely appeal followed.

II. ANALYSIS

            We review a dismissal for failure to state a claim de

novo.     See Haley, 657 F.3d at 46; Tambone, 597 F.3d at 441.                In

conducting      this   tamisage,   we    accept   all    well-pleaded,      non-

conclusory facts set forth in the complaint as true and draw all

reasonable inferences therefrom to the pleader's behoof.                     See

Ashcroft v. Iqbal, 556 U.S. 662, 681 (2009); Haley, 657 F.3d at

46.     As relevant here, we may augment those facts and inferences

with    facts   that   are   matters    of   public     record   or    otherwise

susceptible to judicial notice.          See Haley, 657 F.3d at 46.

            It is by now common ground that a complaint must contain

only a "short and plain statement of the claim showing that the

pleader is entitled to relief."         Fed. R. Civ. P. 8(a)(2).        Although

this is a low bar, it still requires more than a cascade of

conclusory allegations:       at a minimum, the complaint must "contain

sufficient factual matter . . . to 'state a claim to relief that

is plausible on its face.'"        Iqbal, 556 U.S. at 678 (quoting Bell

Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).                     As we have

explained, "[i]f the factual allegations in the complaint are too

meager, vague, or conclusory to remove the possibility of relief

from the realm of mere conjecture, the complaint is open to

                                    - 6 -
dismissal."   Tambone, 597 F.3d at 442 (citing Twombly, 550 U.S. at

555).    It   is   against   this   backdrop   that   we   scrutinize   the

plaintiff's amended complaint.

          We begin with bedrock.       Section 1983 furnishes a private

right of action against any person who, while acting under color

of state law, deprives another (or causes another to be deprived)

of rights secured either by the Constitution or by federal law.

See 42 U.S.C. § 1983; see also Santiago, 655 F.3d at 68.          To make

out a section 1983 claim, a plaintiff must allege facts sufficient

to show that the defendants acted under color of state law and

caused the deprivation of federal rights.        See Santiago, 655 F.3d

at 68.   This "under color of state law" requirement lies at the

epicenter of the appeal that is before us.

          Section 1983's "under color of state law" requirement

has long been regarded as functionally equivalent to the "state

action" requirement of the Fourteenth Amendment. See United States

v. Price, 383 U.S. 787, 794 n.7 (1966); Perkins v. Londonderry

Basketball Club, 196 F.3d 13, 17 n.1 (1st Cir. 1999).              If the

challenged conduct cannot be classified as state action, a section

1983 claim necessarily fails.       See Santiago, 655 F.3d at 68.

          In the mine-run of cases, state action will derive from

the conduct of government actors, that is, government officials or

employees.    See, e.g., Lugar v. Edmondson Oil Co., 457 U.S. 922,

936-39 (1982).     Even so, when the conduct of a private party can

                                    - 7 -
be "fairly attributable to the State," that conduct may constitute

state action and, as such, engage the gears of section 1983.               Id.

at 937.    Determining whether a private party's conduct amounts to

state     action    demands   a   fact-intensive     and   context-specific

inquiry.     See Burton v. Wilmington Parking Auth., 365 U.S. 715,

722 (1961) (observing that "[o]nly by sifting facts and weighing

circumstances can the nonobvious involvement of the State in

private conduct be attributed its true significance").

            Because some constitutionally assured rights (such as

the right to due process) may be manifested in a nearly infinite

variety of applications, courts have resisted attempts to define

with granular precision the universe of circumstances in which a

private party may be considered to be acting under color of state

law.      See id.      Notwithstanding this need for individualized

consideration, we have noted three general ways in which a private

party may become a state actor within the purview of section 1983.

See Santiago, 655 F.3d at 68.           First, a private party may be

considered a state actor if it assumes a public function which, by

tradition,    is    exclusively   reserved   to    the   state   (the   public

function test).      See id. Second, a private party may be considered

a state actor if its conduct is coerced or significantly encouraged

by the state (the state compulsion test).                See id.    Third, a

private party may be considered a state actor if it and the state

have entered into so symbiotic a relationship that they have become

                                    - 8 -
joint participants in the challenged conduct (the nexus/joint

action test).      See id.

           To defeat a motion to dismiss predicated on the "under

color of state law" requirement, a plaintiff need not specifically

allege which of these three tests applies in her particular case.

Cf.   Bennett   v.   Schmidt,   153    F.3d    516,    518   (7th   Cir.   1998)

(explaining that "[c]omplaints need not plead law or match facts

to every element of a legal theory").                 Nor must the plaintiff

intone some catechism of magic words to describe the relationship

between the private party and the state.               In the last analysis,

the allegations in the complaint, supplemented with reasonable

inferences therefrom and matters susceptible to judicial notice,

must comprise a factual predicate sufficient to render it plausible

that one of these tests can be satisfied.                See Mead v. Indep.

Ass'n, 684 F.3d 226, 232 (1st Cir. 2012).

           Here,     the   plaintiff   stakes    her    section     1983   claims

solely on the public function test.4          But even when we take as true

all well-pleaded facts set forth in the amended complaint and draw

      4The plaintiff did not argue below, and does not argue in
this court, that either the state compulsion test or the
nexus/joint action test applies to her case.      Because no such
arguments have been made, we deem them waived.      See Teamsters
Union, Local No. 59 v. Superline Transp. Co., 953 F.2d 17, 21 (1st
Cir. 1992); United States v. Zannino, 895 F.2d 1, 17 (1st Cir.
1990); see also Mead, 684 F.3d at 231-32 (analyzing claims under
state compulsion test alone because plaintiff only made arguments
under that test).

                                   - 9 -
all reasonable inferences therefrom in the plaintiff's favor, the

function that the plaintiff has attributed to the defendants is

not plausibly a public function that, by tradition, is exclusively

reserved to the state.   We explain briefly.

          The public function test "is designed to flush out a

State's attempt to evade its responsibilities by delegating them

to private entities."    Perkins, 196 F.3d at 18-19.      This test

prevents a state from shirking its traditional and exclusive

sovereign responsibilities by the simple expedient of recruiting

a private party to act in its stead.   See Ponce v. Basketball Fed'n

of P.R., 760 F.2d 375, 379 (1st Cir. 1985).    So, too, it prevents

a state from turning a blind eye to unconstitutional conduct

committed by a private party carrying out traditionally exclusive

sovereign responsibilities under a contract with the state.     See

id.

          Importantly, the public function test does not turn

solely on whether a private party is performing some public

function (that is, a public purpose being executed on behalf of

the state).   It turns instead on whether the public function is

one that has been "traditionally exclusively reserved to the

State."   Jackson v. Metro. Edison Co., 419 U.S. 345, 352 (1974);

see Santiago, 655 F.3d at 69 (explaining that "[e]xclusivity is an

important qualifier, and its presence severely limits the range of

eligible activities").   The Supreme Court has found this aspect of

                              - 10 -
the test to be satisfied only in narrowly circumscribed contexts

— contexts in which a particular function rests at the core of a

state's sovereign responsibilities.         These contexts include the

administration of elections, see Nixon v. Condon, 286 U.S. 73, 89

(1932); the management of a town in which the private party serves

almost all the functions of government, see Marsh v. Alabama, 326

U.S. 501, 509 (1946); the administration and provision of health

care in prisons, see West v. Atkins, 487 U.S. 42, 54 (1988); and

— in special circumstances — the operation of a municipal park,

see Evans v. Newton, 382 U.S. 296, 301 (1966).

          Cases in which courts have rejected claims that the

public function test has been satisfied are equally illuminating.

Many of those cases involve services rendered by private parties

in areas that are highly regulated, proximate to social welfare

programs, or both.   For example, courts have held that the public

function test has not been satisfied when a private party has

assumed   responsibility   for   the      bonded   warehousing   of   guns

confiscated by state police, see Jarvis v. Village Gun Shop, Inc.,

805 F.3d 1, 11-12 (1st Cir. 2015); the involuntary commitment of

the mentally ill,    see Estades-Negroni       v. CPC Hosp. San Juan

Capestrano, 412 F.3d 1, 8-9 (1st Cir. 2005); the education of

disadvantaged high school students, see Rendell-Baker v. Kohn, 457

U.S. 830, 842 (1982); and the transportation of students to and

from public schools, see Santiago, 655 F.3d at 69-70.

                                 - 11 -
            These authorities guide our inquiry.           The plaintiff

argues, in effect, that low-income public housing, by definition,

is the exclusive responsibility of the state.            But placing the

adjective "public" as a descriptor of any service would operate to

place that service exclusively in the public domain.            We reject so

facile a use of a self-fulfilling prophecy.           It would defeat the

purpose of the public function test if qualifying functions could

be defined tautologically by plaintiffs.

            The short of it is that the outcome of the public

function test does not depend on creative labeling.                  It is the

historical facts that matter most.         See, e.g., id. at 70 (noting

history of school buses in public function test analysis); Rockwell

v. Cape Cod Hosp., 26 F.3d 254, 258-60 (1st Cir. 1994) (surveying

history of involuntary commitment of mentally ill persons when

deciding    whether    public   function   test   has   been    satisfied).

Although we do not gainsay that the state is the exclusive provider

of state-owned low-income housing, it is not — and has not been —

the exclusive provider of low-income housing writ large.

            The crux of the matter is that the provision of low-

income housing has never been exclusive to the government, either

in Puerto Rico or elsewhere in the United States.         The plaintiff's

amended    complaint   contains   no   facts   that   support    a    contrary

conclusion.    Nor does the historical record counsel in favor of

such a conclusion:      over time, much low-income housing has been

                                  - 12 -
provided by private landlords, operating in a wide variety of

guises.   See, e.g., AMTAX Holdings 227, LLC v. Tenants' Dev. II

Corp., 15 F.4th 551, 553 (1st Cir. 2021) (describing tax credit

incentivizing private development of low-income housing); One &

Ken Valley Hous. Grp. v. Maine State Hous. Auth., 716 F.3d 218,

220-21 (1st Cir. 2013) (discussing rental subsidies to private

landlords for low-income housing).

          In an effort to change the trajectory of the debate, the

plaintiff relies heavily on the purposes and functions of the PRPHA

under Puerto Rico law.        In particular, she cites a statute that

created the PRPHA.     See P.R. Laws Ann. tit. 17, § 1002.           That

statute, she notes, ascribes to the PRPHA the "purpose and function

of   achieving   a   highly     efficient    administration   of   public

residential projects."   Id.     And as the plaintiff points out, that

statute also declares that the PRPHA "shall have the responsibility

of making decisions and executing the programs, systems, methods

and procedures to . . . [p]lan, organize, direct and coordinate

all ordinary and extraordinary administrative activities."            Id.

§ 1002(a).

          We do not quarrel with the plaintiff's description of

what Puerto Rico law provides. But nothing in the statutory scheme

suggests —   let alone requires       —    that the   administration and

provision of low-income housing in Puerto Rico is the exclusive

prerogative of the state.       By the same token, the other housing

                                  - 13 -
regulations (federal and state) mentioned by the plaintiff, see,

e.g., Admission to, and Occupancy of, Public Housing, 24 C.F.R.

§§ 960.101-960.707; P.R. Regs. Vivienda Reg. 6391, repealed by

Reg. 8624, show little more than that the field of low-income

housing is subject to significant regulation. They do not indicate

that the asserted public function — providing low-income housing

— is an exclusive function of the state.

                 To withstand a Rule 12(b)(6) motion, a plaintiff must

plead "sufficient factual matter . . . to 'state a claim to relief

that is plausible on its face.'"            Haley, 657 F.3d at 46 (quoting

Iqbal, 556 U.S. at 678).              In this instance, the plaintiff has

failed to marshal facts sufficient to render plausible her claim

that       the    defendants   were     exercising    powers   "traditionally

exclusively reserved to the State."             Jackson, 419 U.S. at 352.      It

follows      inexorably    that   the    district    court   did   not   err   in

determining that the plaintiff's amended complaint failed to state

a claim under section 1983.           Consequently, the district court did

not err in granting the defendants' motion to dismiss.5

       Once the district court concluded that the plaintiff had
       5

failed to plead a plausible claim under section 1983, it
appropriately declined to exercise supplemental jurisdiction over
the plaintiff's state-law claims (count 3).       See 28 U.S.C.
§ 1367(c)(3); see also Rivera-Díaz v. Humana Ins. of P.R., Inc.,
748 F.3d 387, 392 (1st Cir. 2014).

                                       - 14 -
III. CONCLUSION

            We need go no further. For the reasons elucidated above,

the judgment of the district court is

Affirmed.

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