May 11, 2023

Supreme Court Decides Financial Oversight Board v. CPI

On May 11, 2023, the U.S. Supreme Court decided Financial Oversight Board v. CPI, No. 22-96, holding that the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) does not abrogate sovereign immunity of the financial oversight board for the Commonwealth of Puerto Rico with respect to all federal and territorial claims.

Congress passed PROMESA in 2016 to deal with a fiscal emergency in the Commonwealth. PROMESA creates, at its centerpiece, the Financial Oversight and Management Board for Puerto Rico, which oversees various aspects of the Commonwealth’s fiscal plans, spending, and borrowing. With one exception not at issue here, PROMESA says nothing explicit about abrogating sovereign immunity. But PROMISA contains a general grant of jurisdiction to federal courts over claims against the Board and permits declaratory and injunctive relief. PROMESA also forecloses monetary liability against the Board, its members, and its employees for actions under the statute.

At issue in the suit is a request by respondent Centro de Periodismo Investigativo, Inc. (CPI), a nonprofit media organization, that the Board release various documents relating to its work. When the Board failed to answer the request, CPI filed suit seeking an injunction to compel the Board to turn over the materials. The Board moved to dismiss the suit on the basis of sovereign immunity. The District Court denied the motion, reasoning that Congress had abrogated the Board’s immunity in PROMESA. The First Circuit Court of Appeals affirmed. The Supreme Court reversed.

Assuming without deciding that the Board could partake in the Commonwealth’s sovereign immunity, the Court held that PROMESA does not abrogate the Board’s sovereign immunity with respect to all federal and territorial claims. The Court repeated its rule that Congress must make its intent to abrogate sovereign immunity “unmistakably clear in the language of the statute.” This “stringent” standard has been met only when a statute expressly strips immunity or when it creates a cause of action and authorizes suit against a government on that claim. PROMESA fits neither of these molds.

The Court also reasoned that PROMESA’s establishment of a judicial review scheme and litigation protections for the Board would serve important functions without reading an abrogation of immunity into the statute. Consequently, the Court concluded that nothing in the statute makes Congress’s intent to abrogate the Board’s sovereign immunity “unmistakably clear.”

Justice Kagan delivered the opinion of the Court, in which Chief Justice Roberts and Justices Alito, Sotomayor, Gorsuch, Kavanaugh, Barrett, and Jackson joined. Justice Thomas filed a dissenting opinion.

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