Ruiz-Sanchez v. Goodyear Tire & Rubber Co.

2013 | Cited 0 times | First Circuit | May 31, 2013

United States Court of Appeals For the First Circuit

No. 12-1694

MANUEL RUIZ-SÁNCHEZ ET AL.,

Plaintiffs, Appellants,

v.

THE GOODYEAR TIRE & RUBBER COMPANY,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Jay A. García-Gregory, U.S. District Judge]

Before

Lynch, Chief Judge, Torruella and Selya, Circuit Judges.

Julio César Alejandro Serrano, with whom Eileen Landrón Guardiola, Eduardo Vera Ramírez, Luis A. Rodríguez Muñoz and Landrón & Vera, LLP were on brief, for appellants. Jorge L. Capó-Matos, with whom Alberto J. Bayouth-Montes and O'Neill & Borges LLC were on brief, for appellee.

May 31, 2013

SELYA, Circuit Judge. When a tire company closed its

plant in Puerto Rico, it offered its employees severance pay

contingent upon the execution of general releases. The plaintiff

acquiesced. Nearly a year later, he reversed direction and

asserted claims for unjust dismissal under Puerto Rico law. The

district court rejected these claims.

The plaintiff appeals the dismissal of a particular claim

under a protective Puerto Rico statute, P.R. Laws Ann. tit. 29,

§§ 185a-185m, known colloquially as Law 80. As framed, his appeal

implicates a fairly debatable question of first impression about

the meaning and purport of Law 80's anti-waiver provision. See id.

§ 185i.

If the answer to that question were dispositive of the

case in its present posture, we might well certify it to the

Supreme Court of Puerto Rico under P.R. Laws Ann. tit. 32, app.

III, Rule 53.1(f). But there is a logically antecedent issue about

whether Law 80 applies at all to the plaintiff's discharge. The

district court bypassed this issue, but we think that, in the

interests of comity and federalism, it should be decided first.

After all, if Law 80 does not apply, then there will be no need for

us to answer prematurely the vexing question of statutory

interpretation raised by the parties.

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For this reason, we vacate the relevant portion of the

judgment and remand for further proceedings consistent with this

opinion.

I. BACKGROUND

"Because this case was decided below on a motion to

dismiss, we rehearse the facts as revealed by the complaint and the

documents annexed thereto." Katz v. Pershing, LLC, 672 F.3d 64 , 69

(1st Cir. 2012).

For thirty-three years, plaintiff-appellant Manuel Ruiz-

Sánchez toiled for Kelly Springfield Puerto Rico, Inc., a wholly

owned subsidiary of defendant-appellee Goodyear Tire and Rubber

Company. During his tenure there, he attained the position of

general manager.

On April 7, 2009, Goodyear's human resources manager,

Emily Baranek, signaled the end of the plaintiff's long career when

she informed Kelly Springfield's work force that the plant would

cease operations at month's end. To ease the blow, she announced

that Goodyear was prepared to offer severance packages; provided,

however, that each recipient sign a general release of "all known

and unknown claims, promises, causes of action, or similar rights

of any type that [the employee] presently may have . . . with

respect to [Goodyear]." Anyone who disagreed with the proposed

amount of his or her severance payment was directed to contact

Baranek.

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The arrangement constructed a forty-five day window

within which an employee could "review and consider" the offer and

the release. Any employee who signed a release was given the right

to revoke it within seven days thereafter.

The plaintiff's response was less than enthusiastic. In

a letter dated April 23, he expressed dissatisfaction with the

amount of his proposed severance payment ($28,512) and suggested

instead a significantly higher figure ($105,742). In the same

letter, he inquired about avoiding severance altogether through a

transfer to a different position at Goodyear's office in Miami.

This inquiry was apparently prompted by the fact that some

employees were afforded the opportunity to transfer from Kelly

Springfield's Puerto Rico plant to Miami. Baranek responded

verbally; she rejected the more munificent severance payment

suggested by the plaintiff, explained that Goodyear was not willing

to increase the amount of its offer, and scotched any possibility

of a transfer. She later confirmed these advices in writing.

On April 30 (the day that the plant closed), the

plaintiff accepted the $28,512 severance package and signed the

proffered release. At that point in time, twenty-two days remained

in the forty-five day "consideration period." The seven-day

"rescission period" passed without incident.

Almost one year later, the plaintiff sued Goodyear in a

local court. His complaint asserted claims for unjust dismissal

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under both Law 80 and a Puerto Rico statute prohibiting age

discrimination. Noting diverse citizenship and the existence of a

controversy in the requisite amount, Goodyear removed the action to

the United States District Court for the District of Puerto Rico.

See 28 U.S.C. §§ 1332(a), 1441.

In due course, Goodyear moved to dismiss the complaint

both for lack of personal jurisdiction and for failure to state a

claim. The district court rejected Goodyear's jurisdictional

contention. Ruiz-Sánchez v. Goodyear Tire & Rubber Co., No.

10-1598, 2011 WL 4709875 , at *4-5 (D.P.R. Sept. 30, 2011). It then

ruled that the release foreclosed the age discrimination claim but

that the Law 80 claim could go forward. Id. at *5-7 (citing P.R.

Laws Ann. tit 29, § 185i).

Goodyear moved for reconsideration of the Law 80 ruling.

The district court reconsidered the matter and concluded, on

reflection, that the release barred the Law 80 claim as well.

Ruiz-Sánchez v. Goodyear Tire & Rubber Co., 859 F. Supp. 2d 225 ,

229 (D.P.R. 2012). The court proceeded to dismiss the case with

prejudice.

This timely appeal ensued. In it, the plaintiff

challenges only the dismissal of his Law 80 claim.

II. ANALYSIS

The district court's dismissal of the Law 80 claim

followed a motion to reconsider an earlier order. We normally

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review a district court's decision to grant or deny reconsideration

for abuse of discretion. See, e.g., Bennett v. Saint-Gobain Corp.,

507 F.3d 23 , 34 (1st Cir. 2007). Here, however, the parties'

arguments are directed to the underlying issue — the propriety vel

non of dismissal — so the Rule 12(b)(6) standard of review applies.

See Santiago v. Puerto Rico, 655 F.3d 61 , 67 (1st Cir. 2011). This

standard is familiar. We assay orders of dismissal for failure to

state a claim "de novo, assuming the truth of all well-pleaded

facts contained in the operative version of the complaint and

indulging all reasonable inferences in the plaintiff's favor."

Morales-Cruz v. Univ. of P.R., 676 F.3d 220 , 224 (1st Cir. 2012)

(internal quotation marks omitted).

In this case, the district court proceeded immediately to

the issue of whether the release, which was annexed to the

plaintiff's complaint, bars the maintenance of his Law 80 claim.

Release is an affirmative defense. See Fed. R. Civ. P. 8(c)(1).

Dismissal "on the basis of an affirmative defense requires that (i)

the facts establishing the defense are definitively ascertainable

from the complaint and the other allowable sources of information,

and (ii) those facts suffice to establish the affirmative defense

with certitude." Nisselson v. Lernout, 469 F.3d 143 , 150 (1st Cir.

2006) (internal quotation marks omitted).

Because this is a diversity case, the substantive law of

Puerto Rico controls. Erie R.R. Co. v. Tompkins, 304 U.S. 64 , 78

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(1938); Borges ex rel. S.M.B.W. v. Serrano-Isern, 605 F.3d 1 , 6

(1st Cir. 2010). It follows that the validity of the plaintiff's

Law 80 claim must be evaluated under Puerto Rico law.

Puerto Rico law generally allows for release or

settlement of a claim, referred to as a "compromise." See P.R.

Laws Ann. tit. 31, § 4821; see also id. § 4 ("Rights granted by the

laws [of Puerto Rico] may be renounced, provided such renunciation

be not contrary to law, to public interest or public order, or

prejudicial to the interest of a third person."). The type of

compromise at issue here is an "extrajudicial compromise" — a

compromise entered either "before the commencement of an action" or

"without the court's intervention." Neca Mortg. Corp. v. A & W

Developers S.E., 1995 P.R.-Eng. 905,586 (1995). A validly

consummated compromise has "the same authority as res []judicata"

as to the claims released.1 P.R. Laws Ann. tit. 31, § 4827;

Citibank Global Mkts. v. Rodríguez Santana, 573 F.3d 17 , 22 (1st

Cir. 2009). The Supreme Court of Puerto Rico has enumerated three

prerequisites for the release or settlement of a claim: (i) "an

uncertain legal relationship," (ii) "an intent to eliminate [the]

uncertainty," and (iii) "reciprocal concessions." Citibank v.

1 Although it may seem unconventional to use the res judicata label in this context due to the absence of an earlier judgment, Puerto Rico law nonetheless gives res judicata effect to extrajudicial compromises. See P.R. Laws Ann. tit. 31, § 4827. This doctrinal nuance derives from article 1816 of the Spanish Civil Code.

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Dependable Ins. Co., 21 P.R. Offic. Trans. 496 , 505-06 (1988). The

release at issue here satisfies these prerequisites.

With respect to the first prerequisite, the termination

of the plaintiff's employment necessarily created an uncertain

legal relationship. After all, "[t]he ubiquity of litigation that

surrounds the non-consensual termination of employment

relationships bears powerful witness to the myriad uncertainties

about legal rights and obligations incident to such terminations."

Cabán Hernández v. Philip Morris USA, Inc., 486 F.3d 1 , 12 (1st

Cir. 2007).

With respect to the second prerequisite, the language of

the release manifests an obvious intent to eliminate those

uncertainties. In pertinent part, the release memorializes the

plaintiff's agreement "to release all known and unknown claims"

arising out of his employment, and specifically lists Law 80 as one

type of claim which the plaintiff intends to forego. In this

regard, the release "acknowledge[s] that this Severance Payment is

more than [Goodyear] is otherwise obliged to provide."

With respect to the third prerequisite, the parties made

reciprocal concessions. The plaintiff agreed not to pursue any

claims that he may have had arising out of the aborted employment

relationship; Goodyear agreed to give the plaintiff a severance

payment to which he otherwise may not have been entitled.

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At first blush, then, the fulfillment of these three

requirements appears to warrant the conclusion that the release was

a valid settlement of the plaintiff's Law 80 claim pursuant to

Puerto Rico law. See Citibank, 21 P.R. Offic. Trans. at 505-06.

But appearances sometimes can be deceiving, and the plaintiff

resists this conclusion.

As an initial matter, the plaintiff suggests that his

execution of the release and his acceptance of the severance

payment should not matter because those acts occurred under duress.

In this connection, his brief dwells on "the compressed time frame"

and the imminence of the plant closure. But there are no facts in

the record (and, specifically, nothing plausibly alleged in the

complaint) to support a remonstrance that the plaintiff did not

have adequate time to consider the severance package. Indeed, the

known facts point in the opposite direction: the plaintiff had

forty-five days to decide whether to sign the release — and he

opted to act after only twenty-three days had elapsed. In the same

vein, he had available a seven-day rescission period, but he let it

expire. For aught that appears, the plaintiff had ample time to

consider the release fully and to make an informed judgment about

whether to sign it. Any claim of duress is woven entirely out of

flimsy strands of speculation and surmise and, thus, cannot survive

scrutiny. See Ashcroft v. Iqbal, 556 U.S. 662 , 678-79 (2009).

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If more were needed — and we doubt that it is — the legal

underpinnings of the "duress" argument are afforded only

perfunctory treatment in the plaintiff's brief. We have said

before, and today reaffirm, that "[i]t is not enough merely to

mention a possible argument in the most skeletal way, leaving the

court to do counsel's work, create the ossature for the argument,

and put flesh on its bones." United States v. Zannino, 895 F.2d 1 ,

17 (1st Cir. 1990).

This brings us to the much harder question that

undergirds the appeal. Law 80 contains an anti-waiver provision

stating that:

The right of an employee who is discharged from his employment without just cause, to receive the compensation provided in § 185a of this title, is hereby declared to be unwaiveable.

Any contract or part thereof in which the employee waives the compensation to which he is entitled to, pursuant to §§ 185a-185m of this title, shall be null and void.

P.R. Laws Ann. tit. 29, § 185i. The Supreme Court of Puerto Rico

has not authoritatively determined the relationship between this

provision and extrajudicial compromises of the kind embodied in the

release.

Nor are the contours of that relationship readily

apparent. Generally speaking, Law 80 requires employers to

compensate at-will employees who are discharged without just

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cause.2 Id. § 185a. Specifically, the law entitles such employees

to a form of severance pay known as "mesada," which is calculated

according to a formula based on the employee's salary and years of

service.3 Id.; Otero-Burgos v. Inter Am. Univ., 558 F.3d 1 , 7-9

(1st Cir. 2009). Section 185b describes the reasons that

constitute just cause for terminating an employee. If an employee

is discharged for one of these reasons, the employer will escape

liability under Law 80. P.R. Laws Ann. tit. 29, §§ 185a-185b. To

further protect at-will employees from "the inequality of

bargaining power" inherent in the employer-employee relationship,

section 185i provides that an employee may not waive the

prophylaxis of Law 80. See Otero-Burgos, 558 F.3d at 9 n.21.

The court below concluded that Law 80's anti-waiver

provision applies to prospective waivers of Law 80 rights, not to

waivers that come about when "an employee waives his Law 80 rights

in an agreement posttermination . . . in order to avoid

litigation." Ruiz-Sánchez, 859 F. Supp. 2d at 228. On this basis,

the court held that the anti-waiver provision did not override the

release executed by the plaintiff. Id. at 228-29. Because the

2 For reasons that are not immediately apparent, the official English translation of Law 80 uses the terms "just cause" and "good cause" synonymously. Compare, e.g., P.R. Laws Ann. tit. 29, § 185a, with, e.g., id. § 185b. 3 Based on the plaintiff's salary and years of service, the amount of his Law 80 severance benefit, if owed, would significantly exceed the amount ($28,512) paid to him by Goodyear in consideration for the release.

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release memorialized an otherwise valid extrajudicial compromise,

it foreclosed any claim of entitlement to Law 80 relief. Id.; see

P.R. Laws Ann. tit. 31, §§ 4, 4821, 4827.

Confining the application of section 185i to prospective

waivers of Law 80 claims, which has the effect of denying its

application to extrajudicial compromises that settle previously

accrued claims, may be a reasonable interpretation of the statute.4

It is, however, not the only reasonable interpretation. The choice

between these two reasonable interpretations is fairly debatable,

and the sources that we normally look to for edification — such as

the language and purpose of the statute, see, e.g., Arevalo v.

Ashcroft, 344 F.3d 1 , 10 (1st Cir. 2003); legislative history, see,

e.g., Passamaquoddy Tribe v. Maine, 75 F.3d 784 , 788-89 (1st Cir.

1996); analogous statutes and case law, see, e.g., Blinzler v.

Marriott Int'l, Inc., 81 F.3d 1148 , 1151 (1st Cir. 1996); and

policy considerations, see, e.g., id. — point in different

directions.

On the one hand, it is evident that Law 80 was designed

to provide economic protection from the ravages of arbitrary

dismissals; and the text of section 185i contains no distinction

between prospective waivers and waivers of previously accrued

4 By "previously accrued," we mean that at the time of the release, the employee has an actionable Law 80 claim relating to work performed in the past. Such a claim might arise, say, when an employee already has been discharged or when the decision to discharge him already has been communicated to him.

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claims. By like token, section 185i's reference to "[a]ny

contract" might be thought to imply that it applies unreservedly to

extrajudicial compromises.

So, too, it can be argued that a broad reading of section

185i is consistent with general trends in Puerto Rico labor law.

After all, judicial supervision of contracts between employers and

employees is not uncommon in Puerto Rico. See, e.g., P.R. Laws

Ann. tit. 3, § 320. Other provisions within Law 80 also may be

read to suggest a legislative preference for judicial or agency

oversight of Law 80 claims. See id. tit. 29, §§ 185h, 185k, 185m.

On the other hand, none of these conclusions is

compelled. Indeed, there are factors that support a narrower

interpretation of section 185i. It can be argued that the absence

of a distinction between prospective waivers and waivers of

previously accrued claims in the text of the statute is telling.

The same can be said for the absence of any mention of the anti-

waiver provision's applicability to extrajudicial compromises. On

at least one other occasion when the Puerto Rico legislature sought

to limit the availability of extrajudicial compromises, it did so

explicitly. See id. § 282 (imposing requirement that "[e]very

extrajudicial settlement in regard to the payment of [certain types

of] wages . . . shall be null" unless approved by the Department of

Labor and Human Resources). The absence of any such language in

section 185i may suggest the conclusion that the legislature, in

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enacting Law 80, did not intend to interfere with the rights of

employers and employees to settle previously accrued claims through

extrajudicial compromises.

The short of it is that the push and pull of these

competing centrifugal and centripetal forces muddy the waters as to

how the Puerto Rico legislature intended section 185i to be

construed vis-à-vis extrajudicial compromises of previously accrued

Law 80 claims. This interpretive question is difficult, and we

have no clear guidance on it from the Commonwealth's highest court.

In addition, this question is a potentially important one, and

prudence strongly suggests that a federal court — which is, after

all, not the final arbiter of state law, see Andrew Robinson Int'l,

Inc. v. Hartford Fire Ins. Co., 547 F.3d 48 , 51-52 (1st Cir. 2008)

— should not rush to answer it unnecessarily.

Given the interests of comity and federalism, we would be

inclined to certify this question to the Supreme Court of Puerto

Rico if answering it would be dispositive of this case. See Acadia

Ins. Co. v. McNeil, 116 F.3d 599 , 605 (1st Cir. 1997) ("[W]hen the

meaning of a state law depends on the decisionmaker's ability to

discern the state legislature's intent from an array of mixed

signals, considerations of federalism, comity, and practicality

suggest that the state's highest tribunal is best positioned to

make an informed and authoritative judgment."). But we cannot say

that answering it would be dispositive because the district court

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bypassed the seminal question of whether Law 80 applies at all to

the plaintiff's loss of employment. We believe that this logically

antecedent question should be answered before any inquiry is

attempted into the difficult interpretive question about the

meaning and purport of section 185i.

To put into better perspective why we hold this belief,

we pause to limn the parameters of the bypassed question. In its

motion to dismiss, Goodyear offered an alternative basis for

dismissal: it contended that Law 80 had no application in the

circumstances of this case. It rested this contention on

exceptions and exclusions contained in Law 80 itself,5 and it has

renewed this alternative contention on appeal.

We add that Goodyear's alternative contention, though not

yet proven, appears to be colorable. It does, however, require

further factual development — factual development that precludes

5 By way of elaboration, Law 80 provides that just cause for termination includes the "closing of the operations of the establishment." P.R. Laws Ann. tit. 29, § 185b(d). Goodyear argues that this provision inoculates it against the plaintiff's Law 80 claim. But the plaintiff counters that Goodyear transferred some less senior Kelly Springfield employees from the Puerto Rico plant to jobs in Miami. He notes that, in order for an employer to obtain the benefit of the plant-closing exclusion, the transfer of employees post-closing must be made according to seniority, as long as the transferred employees are in the same "occupational classification" and no "clear and conclusive difference in favor of the efficiency or capacity of the workers compared" exists. Id. § 185c. The parties dispute whether Goodyear's actions satisfied these fact-intensive conditions, and the plaintiff's complaint contains nothing that would permit a court to resolve this dispute on a Rule 12(b)(6) motion.

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resolving the contention through a Rule 12(b)(6) motion to dismiss.

See Morales-Cruz, 676 F.3d at 224. Under these circumstances, we

believe that the wisest and most practical course is to vacate the

order dismissing the Law 80 claim and remand so that the parties

may undertake the further factual development necessary to inform

a decision as to whether Law 80 applies. If the district court

determines, on a developed factual record, that Law 80 does not

apply, that will be the end of the matter (subject, of course, to

the usual right of appeal). If, however, the court determines that

Law 80 does pertain, the question of whether the release can be

given effect despite Law 80's anti-waiver provision would then come

front and center. Should the district court find itself faced squarely

with that question, the court can certify it to the Supreme Court of Puerto

Rico. See P.R. Laws Ann. tit. 32, app. III, Rule 53.1(f); P.R. Sup. Ct.

R. 25, P.R. Laws Ann. tit. 4A, § 25.

III. CONCLUSION

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

we vacate the order of dismissal as to the Law 80 claim6 and remand

for further proceedings consistent with this opinion.

Vacated and remanded. No costs.

— Concurring Opinion Follows —

6 The plaintiff has not appealed from the district court's dismissal of his age discrimination claim, and we leave the judgment intact as to that claim.

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TORRUELLA, Circuit Judge (Concurring). I agree with the

majority's result and its reasoning that we need not reach the

question of law regarding waiver of appellant's Law 80 claim.

However, I concur to briefly note my disagreement with

the majority's conclusion that Section 185i -- Law 80's anti-waiver

provision -- is ambiguous. In my view, a plain reading of that

provision indicates a categorical prohibition on the waiver, by

contract, of an employee's Law 80 rights to compensation,

prospective or accrued, including post-termination and in the

extrajudicial settlement context. The statute refers generally to

the rights of employees who are "discharged," in the past tense, as

coming within the coverage of those who cannot waive receipt of

compensation, indicating that contracts made by employees vested

with accrued rights are invalid if they contain waivers of those

rights. Further, the right that "is hereby declared to be

unwaiveable" is not conditioned or modified, supporting a reading

of categorical unwaiveability. Finally, the provision declares

that "any" contract waiving the right to compensation due under Law

80 shall be null and void. The use of such a categorical term

includes all contracts within its scope, rejecting any

differentiation between pre- and post-termination contracts.

Since, as stated, we need not reach this issue at this

stage, I leave the interpretation of Section 185i's scope to the

Puerto Rico Supreme Court.

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