On December 4, 2018 we blogged about the oral argument in this appeal involving the constitutionality of federal legislation enacted to address Puerto Rico’s restructuring. (CLASH OF THE TITANS) The question was whether the people appointed to the oversight board had to be appointed by the President with the advice and consent of the Senate. The district court said no, but the First Circuit has now spoken and ruled otherwise. In an opinion written by Judge Torruella, joined by Judges Thompson and Kayatta, the Court of Appeals said the appointments, not adhering to this process, had been constitutionally muffed. The panel declined, however, to unravel the many decisions issued to date by the board not-so-appointed, applying the “de facto officer” doctrine.  Aurelius Investment, LLC v. Commonwealth of Puerto Rico, Nos. 18-1671, 18-1746, 18-1787 (1st Cir., Feb. 15, 2019).

The decision runs through the maze of law relating to the Appointments Clause and Territorial Clause, and given that Judge Torruella cited law review articles he had written, he has the street cred to figure this all out, particularly vis-à-vis Puerto Rico. Here is a recent article from him on Puerto Rico’s status generally. U.S. Territories Commentary Series, Why Puerto Rico Does Not Need Further Experimentation with Its Future: A Reply to the Notion of “Territorial Federalism”, 131 Harv. L. Rev. 65 (Jan. 2018).  See also The Insular Cases: The Establishment of a Regime of Political Apartheid, 29:2 U. Pa. J. Int’l L. 283 (2007).

The remedy ordered is interesting – one of the problems with bankruptcy issues – and this is essentially a bankruptcy – is the speed at which many decisions must be made. This need to move fast often moots any legal issue litigants may want to appeal. When you have a lingering constitutional process question like this, however, the appellate court can’t just say “too late, too many things have happened.” So the panel dug back to 1431 in The Abbe of Fountaine, 9 Hen. VI at 32(3) to pull this “ancient tool of equity” out of its hat. (The de facto doctrine has been recognized after that – see, e.g., Ryder v. U.S., 515 U.S. 177 (1995).  Notably, the Supreme Court rejected its use in Ryder.)

The Court of Appeals also ruled that its mandate wouldn’t issue for 90 days, to give the President and Senate time to validate the current appointments now deemed defective or to reconstitute the board in accordance with its ruling, saying that the existing board could continue to operate during that period.

We’ll see if that satisfies the (many) litigants, and if Washington can act within that short period of time.  A messy matter may make its way up to the Supreme Court.