USCA1 Opinion

August 19, 1992

UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 92-1079
ROYAL CARIBBEAN CORP. AND CARIBBEAN CRUISE LINE, LTD.,
Plaintiffs, Appellants,
v.
PUERTO RICO PORTS AUTHORITY, ET AL.,
Defendants, Appellees.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Carmen C. Cerezo, U.S. District Judge]
___________________
____________________
Before
Breyer, Chief Judge,
___________
Lay,* Senior Circuit Judge,
____________________
and O'Scannlain,** Circuit Judge.
_____________
____________________

Francisco G. Bruno with whom Marisa Rivera Barrera and Sweet

__________________
_____________________
_____
Gonzalez Cestero & Bruno were on brief for appellants.
________________________
Jose Juan Torres-Escalera with whom Jiminez, Graffam & Laus
__________________________
_________________________
was on brief for appellees.
____________________
____________________
_____________________
* Of the Eighth Circuit, sitting by designation.
** Of the Ninth Circuit, sitting by designation.
-1-

BREYER, Chief Judge.

____________
question

whether

the

This

Puerto Rico

appeal

Ports

raises

the

Authority enjoys

Eleventh Amendment immunity from a tort action claiming that

it negligently maintained Pier No. 6 in San Juan Harbor.
hold that

the Authority,

San

docks,

Juan

government.
immunity.
contrary.

is

Hence,
We

not

in operating and
an

it does

reverse a

"arm"

of

not enjoy

district

We

maintaining the
the

Commonwealth

Eleventh Amendment

court judgment

to

the

I
Background
__________
On
Seas,

1988, the

Juan harbor.

pier broke,

whipped

Suddenly,

across the

ship,

pier,

snapped

and

struck

three mooring

seriously

another line, attached

injuring him.

a steel post at

setting loose

Then,

Royal

M/S Sovereign

of the

a Norwegian passenger ship, was docking at Pier No. 6

in San
the

November 15,

compensated the

Corporation,
crewmen.

lines, which

injuring

to another steel
second

Caribbean Cruise Line,

Caribbean

the end of

the

The crewmen

crewman,

crewman.

post on the
seriously

the ship's owner, and

ship's

operator,

assigned their legal

rights and claims against the Puerto Rico Ports Authority to

Royal Caribbean Corporation and Caribbean Cruise Line, which

then brought
The Ports

this tort action against

Authority

claimed Eleventh

the Ports Authority.

Amendment

immunity.

The

district

Authority's

court
favor.

granted

summary

Royal Caribbean

judgment

in

and Caribbean

the

Cruise

Line appeal.
II
The Standard
____________
The Eleventh Amendment

bars a federal

against a state without its consent.

court suit

U.S. Const. amend. XI.

The question before us is whether the defendant in this case

is

"'an arm

[or alter ego]

State's

Eleventh Amendment

treated

as

subdivision
extend.'"

a
to

municipal
which

of the State
immunity, or

corporation

the

Eleventh

partaking of the
is instead

or

other

Amendment

to be

political
does

not

Ainsworth Aristocrat International Pty., Ltd. v.

_____________________________________________

Tourism Co. of Puerto Rico,

___________________________

818 F.2d 1034,

1036 (1st Cir.

1987) (quoting Mt. Healthy City School Dist. Bd. of Educ. v.

__________________________________________
Doyle, 429
_____

U.S. 274,

We must answer

280 (1977))

this question in

[hereinafter Ainsworth].
_________
respect to the

particular

"type of activity" by the Ports Authority that is the object

of the plaintiffs' claim, Puerto Rico Ports Authority v. M/V
___________________________
___
Manhattan Prince, 897 F.2d 1,
_________________

10 (1st Cir.

1990), in this

case the operation and upkeep of the piers and various other
-33

facilities in San

Juan harbor.

In doing

so, we

consider

such matters as:

local law and decisions defining the
nature of the agency involved; whether
payment of any judgment will come out of
the state treasury; whether the agency
is
performing
a
governmental
or
proprietary
function;
the
agency's
degree of autonomy; the power of the
agency to sue and be sued and enter into
contracts; whether the agency's property
is immune from
state taxation
and
whether the state has insulated itself
from responsibility for the agency's
operations.
M/V Manhattan Prince, 897 F.2d at 9 (1st Cir. 1990) (citing
_____________________
Ainsworth, 818 F.2d at 1037); see also Lake Country Estates,
_________
________ _____________________
Inc. v. Tahoe Regional Planning Agency, 440 U.S. 391, 400-02
____
______________________________
(1979); Durning v. Citibank, N.A., 950 F.2d 1419, 1423
_______
______________
Cir.

1991); Figueroa-Rodriguez
__________________

v.

1044

(1st Cir.

not providing

1988).

While

Aquino, 863
______

(9th

F.2d 1037,
a mechanical

"test" for entitlement to Eleventh Amendment immunity, these

factors help us assess whether the Ports Authority has acted
more like a private company, or more like the Commonwealth's
government, in conducting
simple tort suit.
(immunity

depends

the activities

relevant to

this

See M/V Manhattan Prince, 897 F.2d at 10

___ _____________________
in

part

on

"nature

of

[plaintiff's]

claim"); Jacintoport v. Greater Baton Rouge Port Commission,

___________
___________________________________
762 F.2d

435, 442 (5th

Cir. 1985) (indicating

reasons for

-44

immunity are stronger where claim implicates "public policy"

or "public affairs"), cert. denied, 474 U.S. 1057 (1986).
____________

-55

III
The Standard Applied
____________________
Several
Authority,

critical factors

in running

and

suggest that

maintaining the

entitled to Eleventh Amendment immunity.

law

gives the

Authority the

operat[ing],
facilities,"

and

P.R. Laws Ann.

"public property docks," id.

___

tit. 23,

not
___

First, Puerto Rico

of "own[ing],
transportation

336, including the

2202, where Royal Caribbean's

ship docked and the crewmen were injured.

Authority to

docks, is

specific tasks

manag[ing]

the Ports

charge users of those

It authorizes the

docks fees "sufficient,

at least, to . . . cover the expenses incurred . . . for the

preservation,
conservation
principal

development, improvement,
and

operation"

of

those

extension, repair,
docks,

to

"pay

and interest on . . . the Authority's bonds," id.

___

336(l)(1), and to "acquire, . . . produce, sell, . . . and

otherwise
property

dispose
. . .

. .

id.
___

which, its

its operating expenses.

financial statements show that

years

1987 through

goods, and
activities,"

336(q),(s),(u), 2505.

does charge fees,

says, "cover"

services,

in connection with its

336(i); see also

________
Authority

of .

1989

The

. .
id.
___
Ports

Executive Director
(Indeed, its annual

its "net income" from fiscal

averaged more

than $5

million.)

-66

Taken

together,

activities
rather

these

that are

like those

factors

suggest

not "governmental"
of

a private

dock-operating

but "proprietary,"

company

that manages

office building and charges tenants for its services.

e.g.,
____

Ainsworth,
_________

818 F.2d

Company's "activities
machines are not

as a

at

1038

an
Cf.,
___

(Puerto Rico

Tourism

purchaser and supplier

of slot

alien to a proprietary function"); Paul N.

_______

Howard Co. v. Puerto Rico Aqueduct Sewer Authority, 744 F.2d

__________
____________________________________
880,

886

(1st

Cir.

1984)

(government

corporation

"established to provide drinking water and sewage facilities

. . .
(1985);

not normally

immune"), cert. denied,

____________

City of Long Beach v.

____________________

469 U.S.

1191

American President Lines,

__________________________

Ltd.,
____

223

F.2d

853,

856

(9th

Cir.

1955)

(proprietary

activity where government maintained harbor and charged fees

to users).
Second,
Authority, not
any

the

fees

is for

and

future

other

in

the full

But,

$531,812, plus
to the

The Ports

charges are

expenses.

that

plaintiffs' favor

payments

plaintiffs seek).
and

indicates

the

the Commonwealth treasury, would

eventual judgment

judgment

record

likely pay

(even if

injured

crewmen,

sufficient"

those "expenses,"

the

the

interest, costs,

Authority says that

"barely

Ports

that

its fees

to cover

its

Ports Authority's

-77

Executive Director says

of

judgments

public
that

in his affidavit,

entered against

financial statements
the

Authority

it."
tell the

deducted,

from

"include payment

And the

Authority's

same story,
its

annual

showing
revenues

(before "net income")

$1.2 million

for "litigation

claims

and settlements" in 1988, and $76,000 in 1989.

Moreover, the
Commonwealth

Ports Authority does

financing

for

its

income.

not depend on
Although

the

Authority points to nearly $2,000,000 in construction grants

it received from
record

and the

the Commonwealth in
public financial

Authority, normally

and in

substantial Commonwealth
must

pay the

statements show

recent years, has

financing.

Commonwealth

To

$400,000 per

taxes.

P.R. Laws Ann.

tit. 23,

permits

the

to

Authority

the late 1960's,

354.

reduce its

the

that the

not received

the contrary,

it

year

of

The
annual

in lieu

same statute
payment

of

$400,000 if its "net income is not sufficient" in any fiscal

year

(a circumstance

which,

as

far

as

the

record

and

statutes reveal, would include shortfalls due to payments of

court judgments).

Id.;
___

see also Canadian Transp. Co.

________ _____________________

Puerto Rico Ports Authority,

_____________________________
(D.P.R. 1971).

-88

333 F.

Supp. 1295,

v.

1297-98

Further,

the Ports Authority has insurance, which

would insulate the Commonwealth treasury from the effects of

an adverse judgment.
Finally,

Puerto

Rico statutes

provide

that the

Authority's debts are not "those of the Commonwealth."

Laws Ann. tit. 23,
These

333(b).

facts

weigh

heavily

against

immunity.

Compare Feeney
_______ ______

v. Port Authority Trans-Hudson Corp.,

___________________________________

F.2d

(2d Cir.

628, 631

(where "liability
that

is

"the

immunity);
Litigation,
__________

1989), aff'd
_____

will place
single

most

495 U.S.

the state treasury

important

factor"

873

299 (1990)
at risk,"
favoring

In
re San
Juan Dupont Plaza
Hotel Fire
________________________________________________
888 F.2d

940, 943-44

(1st Cir.

1989) (Puerto

Rico Tourism Company immune where Commonwealth supplied

75% of

P.R.

Company's

funds)

[hereinafter

70-

San Juan Dupont];

_________________

Culebras Enterprises Corp. v. Rivera Rios, 813 F.2d 506, 517

__________________________
___________
(1st Cir. 1987) (similar); Morris v. Washington Metropolitan
______
_______________________
Area Transit Authority, 781 F.2d
_______________________
(immunity

218, 225 (D.C.

where "the practical result

Cir 1986)

of a judgment

. . .

would

be payment

from [state]

Howard Co., 744 F.2d

__________

treasuries"), with
____

at 886 (that Sewer Authority

Paul N.
_______
did "not

seriously

dispute" plaintiff's claim that judgment could be

paid

of

out

Authority's

funds

supports

finding

of

no

-99

immunity); Jacintoport, 762 F.2d at 441 (similar, concerning

___________
government port

authority); Fitchik
_______

Rail Operations, Inc.,

_______________________
(Transit
funds,

873

F.2d 655,

Authority's dependence
and authorization to

v. New Jersey Transit

___________________
660-61

on state

(3d

for only

Cir.)
30% of

"purchase liability insurance"

strongly supported no immunity),

cert. denied, 493 U.S. 850

____________

(1989);

F.2d at

see also Durning,

_________ _______

liability"

of

state

950

treasury,

not

1424

agency's

n.2 ("legal
"practical

ability" to
Dupont,
______

pay is "applicable standard"); but cf. San Juan

_______ ________

888

Commonwealth

F.2d

at

943

not

liable

(statutory

provision

that

Tourism

Company's

debts

for

insufficient to outweigh other factors favoring immunity).

Third,

the

considerable degree
it

Ports

of autonomy.

Its

a "public corporation," gives it

personality

separate

Government."
"complete
constructed
determine

and

P.R. Laws

control
or
the

expenditures."

and

and dispose

operates

apart

form

Ann. tit.

23,

supervision

of

it, including

character

of

and

336(d).

of

Id.
___

-1010

those

of

the

333(b).

It

has

any

necessity

336(e),(f).
it

undertaking

the
for

It can sue and

property as

a "legal existence and

by

Id.
___

with

statute, which calls

acquired

makes its own contracts.

use

Authority

power

to

all

its

be sued and

It may acquire,

deems "necessary"

or

"convenient" in carrying out

336(i),(j).

its lawful activities.

It may "borrow money" and "issue bonds" as its

activities require.

Id.
___

336(n),(o).

discretion in setting fees.

Id.
___

kept in accounts separate from

Id.
___

338.

liable
Id.
___

Id.
___

The

336(l)(1).

Ports Authority, not

And, as

we

Its funds are

the Commonwealth's treasury.

for payment of principal

336(u).

It has considerable

the Commonwealth, is

and interest on its bonds.

have said,

its

"debts"

and

"obligations . . . shall be deemed to be those of" the Ports

Authority,

and not to be those

of the Commonwealth.

Id.
___

333(b).

We recognize that other

Eleventh

Amendment

autonomy

is tempered

factors argue in favor of

immunity.

The

Authority's operating

by the

fact that

several government

officials and one citizen appointed by the Governor comprise

its board of directors, that this board selects an Executive
Director,

id.
___

334, who

executive branch, and

the

communicates regularly

that this

arrangement (according

Executive Director's affidavit)

office to

of its

to

permits the Governor's

"exercise significant control

and administration

with the

over the

policies" (but not

planning

to "exercise

control

over

the

day-to-day internal

operations"

of the

-1111

Authority).

See also Port Authority Police Benevolent Ass'n

________ ______________________________________

v. Port Authority of New York and New Jersey, 819

_________________________________________
417

(3d

Cir.)

commissioners

(Governors'
and

veto

roles

over

in

their

F.2d 413,

appointment
actions

of

indicates

Authoritynot "independent"),cert. denied,484 U.S.953 (1987).

____________
In

addition, the

reports to the

Authority

must submit

various

Governor and the Legislature; it must follow

other Treasury-prescribed accounting rules; it must keep its

funds in Commonwealth-approved depositories.
tit. 23,
sovereign)

345, 338.
exercise the

336(h); see also

________

id.
___

P.R. Laws Ann.

Further, the Authority

power of

eminent

339, 339a.

And,

can (like a

domain.

Id.
___

it is immune from

Commonwealth taxes (although it must, as we have noted,

an annual $400,000 fee in lieu of taxes).
Finally,

as the

district

Id.
___

pay

348, 354.

court found,

relevant

statutes and their legislative histories stress the "public"

objectives

of

the

Authority, including

promote "the general welfare,"

and

prosperity," id.
___

motivat[e] the
drive
Puerto

the present
Rico,

1989

of the

Puerto

economic

65,

(Statement of Motives for S. Bill

at

300

to

commerce

"to facilitat[e]

Rican economy,"

Act No.

mandates

to "increase . . .

348(a), and

development

its

and

sectors

that

Legislature

of

(Aug. 17,

1989)

269, H. Bill 446).

These

-1212

express

statutory

and

Authority's activities
"proprietary."

legislative
seem

purposes

more "governmental"

make

the

and

less

Nonetheless, these provisions are consistent

with "proprietary"

activities and findings of

See Durning, 950 F.2d at

___ _______
immune despite
shortage

of

1421 (Development Authority is not

statutory purpose

adequate

no immunity.

housing"

to

and

redress

"to

"critical

promote economic

welfare"); Ainsworth, 818 F.2d

_________

at 1038 (Puerto Rico Tourism

Company not necessarily immune

despite a statute

it an
of

"instrumentality of the Government"

"promot[ing]

Riefkohl v.
________

tourism

Alvarado, 749 F.
________

(Puerto

Rico Electric Power

statute

declaring it a

the

purpose

increas[ing]

and

of

with the purpose

overs[eeing]

Supp. 374, 375

Authority not

gambling");
(D.P.R. 1990)

immune, despite

"governmental instrumentality" with

"promot[ing]

commerce

declaring

and

the

general

prosperity").

welfare
After

all,

and
a

private entity might operate a hotel or

restaurant, in part

with the

economic prosperity

object of

helping to promote

and development.

Overall, the factors

predominate.
entity that

militating against

They indicate that the Ports

enjoys a considerable degree
-1313

immunity

Authority is an
of autonomy, that

provides

service

facilities) that it,

it

here

faces a

judgment likely

(maintaining

and

operating

in effect, "sells" to users,

lawsuit in

which

docking
and that

the plaintiffs

to be paid from the

seek a

Authority's funds, not

from the

Commonwealth's Treasury.

immunity

on facts very similar to those present here.

e.g., Feeney, 873

____ ______

Numerous cases

find no
See,
___

F.2d 628; Jacintoport, 762 F.2d 435; City

___________
____

of Long Beach, 223 F.2d

______________

853; see also

________

Paul N. Howard Co.,

__________________

744 F.2d 880; Durning, 950 F.2d 1419.

_______
We

recognize that,

in M/V Manhattan Prince,

_____________________

we

found that this same Ports Authority enjoyed immunity from a

tort suit claiming negligence by
harbor pilot.
relevant

In that case, however, the Ports

"type

of

activity,"

fundamentally different.
services.

a Ports Authority-licensed

It did

897

F.2d

Authority's
at

10,

was

The Authority did not "sell" pilot

not "train pilots"

revenue from the . . . pilot

the shipowners, required to

system."

or "derive[]
Id. at 12.
___

. .

Rather,

use the pilot service, paid

"a

fee

directly to

the

created by [the Ports

Id.
___
37

pilot and

also

into a

trust

fund,

Authority], for the pilots' pension."

at 10 (quoting district court opinion, 669 F. Supp. 34,

(D.P.R.

1987)).

control the

actions of

The

Authority lacked

the pilot

while he"

the

"power to

performed his

-1414

duties.
pilot

Id.
___

The Authority's role was not

services, but,

licensing

of

pilots

retirement benefits).
governmental, not

rather,

was that

(and

regulating

Such

regulation is

a proprietary,

that of selling
_______

of regulating
__________
pilot

function.

fees

the
and

traditionally a
Id.
___

at 10-11.

The difference between the primarily "governmental function"

at

issue

in

M/V
Manhattan Prince,
_______________________

and

the

basically

"proprietary function" here at issue explains the difference

in result.

For

these reasons,

the summary

Port Authority's favor is

Reversed.
________

-1515

judgment in

the