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Rivera-Corraliza v. Puig-Morales

United States Court of Appeals, First Circuit

July 22, 2015

PABLO JAVIER RIVERA-CORRALIZA, on his own behalf and as President of PJ ENTERTAINMENT, INC.; CARLOS CRUZ-ALVERIO; JAIME RODRÍGUEZ-VEGA; ELLIS LINFERNAL-CRUZ, on his own behalf and as President of the ASOCIACIÓN DE OPERADORES DE MÁQUINAS DE ENTRETENIMIENTO DE ADULTOS DEL OESTE, INC.; RICARDO HERNÁNDEZ-ECHEVESTRE on his own behalf and as President of RICARDO'S ENTERTAINMENT CORP., Plaintiffs, Appellants,
v.
JUAN CARLOS PUIG-MORALES; AILEEN DE LEÓN-GARCÍA; VÍCTOR R. PÉREZ-PILLOT; ZULMA I. RIVERA-GÓMEZ; DAVID CARABALLO-MALDONADO; MARÍA C. MEDINA-ORTIZ; ABIMAEL RODRÍGUEZ-LÓPEZ; ALFREDO E. PÉREZ-RIVERA; HÉCTOR O. GADEA-RIVERA; RAFAEL A. DIEZ DE ANDINO; MILTON VESCOVACCI-NAZARIO; MARISOL FLORES-CORTÉS; JOHN DOE I-XX, all in their personal capacities, Defendants, Appellees

As Amended July 29, 2015.

Page 209

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO. Hon. José Antonio Fusté, U.S. District Judge.

Christian J. Francis-Martinez, with whom JoséJ. Gueits-Ortiz and Francis & Gueits Law Offices, PSC, were on brief, for appellants.

Susana I. Peñagarícano-Brown, Assistant Solicitor General, Department of Justice, with whom Margarita L. Mercado-Echegaray, Solicitor General, was on brief, for appellees.

Before Howard, Chief Judge, Lynch and Thompson, Circuit Judges.

OPINION

Page 210

THOMPSON, Circuit Judge.

Overview

Ticked off that agents of the Puerto Rico Treasury Department had seized their " adult entertainment machines" (" AEMs," to save keystrokes), today's plaintiffs sued the supposedly responsible parties for damages under 42 U.S.C. § 1983, alleging (as relevant here) violations of the First, Fourth, and Fourteenth Amendments as well as several commonwealth laws. The district court granted defendants summary judgment on the federal claims and dismissed the commonwealth claims without prejudice. And plaintiffs are now here asking us to undo the court's ruling. Agreeing with some of what they say, we vacate in part, affirm in part, and remand for further proceedings. We will explain our thinking shortly. First, the facts, which we present in the light most favorable to plaintiffs (the summary-judgment losers), drawing all supportable inferences in their favor. See, e.g., Soto-Padróv. Pub. Bldgs. Auth., 675 F.3d 1, 2, 5 (1st Cir. 2012).

Background

Games People Play

Plaintiffs hold licenses from the Puerto Rico Treasury Department (" Treasury," for short) authorizing them to own and operate AEMs. Plaintiffs are also members of " EMPRECOM," a business association of AEM owners.[1] AEMs are nothing more than coin-operated arcade-game-like machines found in small businesses (liquor stores, gas stations, etc.) that are not supposed to award cash prizes (winners get bonus games) -- which makes AEM games different from gambling machine games

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(more on this later).[2] But unscrupulous owners (we are told) occasionally convert AEMs into illegal gambling machines (say, for instance, slot machines), which is a major worry for Treasury.

According to plaintiffs (whose account we accept for purposes of summary-judgment review), here is how the suit arose:

Sometime in early 2009 -- possibly in February or March (the record is not exactly clear) -- plaintiff Pablo Javier Rivera-Corraliza (EMPRECOM's president) met with Treasury Secretary (and defendant) Juan Carlos Puig-Morales, a big backer of a movement to install video-lottery terminals islandwide; as we understand it, these terminals are noncasino gaming machines that would connect to a system designed to collect tax revenue. Anyway, the two had a friendly conversation about issues affecting AEMs. They, for example, touched on a bill pending in the Puerto Rico legislature that would require that all AEMs connect to a central system at Treasury for monitoring purposes. And they talked about Puig-Morales's desire to go after AEM operators holding forged licenses -- something EMPRECOM applauded.

But Puig-Morales was anything but friendly at a follow-up meeting the next month, telling Rivera-Corraliza point blank that every AEM was " illegal" and had to be " confiscated." Hold on, said Rivera-Corraliza, Treasury had issued " 8,000" AEM permits yet there are roughly " 14,000" AEMs " out on the streets" -- just go after the fake-license holders, he implored Puig-Morales. " We'll see about that" was Puig-Morales's reply.

Treasury started seizing AEMs around this time. But none belonged to plaintiffs -- Treasury did not start seizing theirs until February 2010, as we will soon see.

Around the spring of 2009 (the record does not reveal when) Puig-Morales told plaintiff Jaime Rodríguez-Vega (EMPRECOM's treasurer) that AEM owners should exchange their machines for the video-lottery machines of Caribbean Cage, Inc., a company that specializes in gaming systems. Puig-Morales promised to stop the seizures if they made the switch to Caribbean Cage's machines. And Puig-Morales said essentially the same thing to Rivera-Corraliza, telling him that AEM owners would not have to worry about seizures if they " signed up" with Caribbean Cage.

So Rivera-Corraliza inked a deal with Caribbean Cage on behalf of EMPRECOM (when, we do not know). Under the agreement, EMPRECOM members were to provide the venues for the video-lottery terminals. And Caribbean Cage promised to pay any fees EMPRECOM members might owe Treasury.

In August 2009 Puig-Morales issued a letter of intent to negotiate with Caribbean Cage about installing video-lottery terminals islandwide. For this to work, though, EMPRECOM and its members had to be on board, as Puig-Morales well knew. But EMPRECOM members became distinctly unhappy when Puig-Morales told EMPRECOM representatives during that same month that they had to pay a $2,250 license fee for each video-lottery machine. And when EMPRECOM members balked, Puig-Morales slammed his hand on a desk and screamed that they had until the end of the day to resolve the problem -- and if they did not, then all their AEMs would " disappear." Ultimately (for reasons this record does not illuminate) the deal between EMPRECOM and Caribbean Cage

Page 212

fell through and Treasury installed no video-lottery ...


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