Puerto Rico teachers want challenge to Plan of Adjustment reheard

Puerto Rico teachers’ associations took an additional step to challenge the court-approved Plan of Adjustment Tuesday, filing a petition for rehearing en banc with the U.S. Court of Appeals for the First Circuit.

A three-judge panel unanimously struck down the teachers' challenge to the Puerto Rico Plan of Adjustment in late April in a step that, if it is ultimately upheld, would improve the local government’s financial status.

The plan freezes future accruals under the defined benefit plan held by those teachers hired prior to August 2014 and eliminates certain cost-of-living adjustments going forward.

By filing the petition, the teachers are asking for the court’s nine judges to consider and rule on the case. 

The petition charges the court "misapplied the preemption doctrine pursuant to [the Puerto Rico Oversight, Management, and Economic Stability Act] and the inequity of the Insular Cases,” teachers’ attorney Jessica Méndez Colberg wrote. The Insular Cases are a series of U.S. Supreme Court decisions from the early 1900s that allow the federal government to treat territories not contiguous with the states differently and are widely regarded as racist. 

“PROMESA’s express preemption does not preempt the retirement laws [of Puerto Rico],” said Méndez Colberg. “These laws do not directly conflict with PROMESA’s text because PROMESA does not regulate public retirement systems.”

She pointed to District Court Judge Laura Taylor Swain's statement about an “awkward power sharing arrangement” between the board and local government. And while Swain said the board cannot legislate, Méndez Colberg says in this case the board is operating as if it can legislate.

“If PROMESA is read to allow the board to legislate, it leaves the entity unbounded and turns PROMESA into another organic law in the tradition of the first wave of the Insular Cases,” Méndez Colberg said.

Puerto Rico attorney John Mudd said, “The First Circuit’s opinion does not mention the Insular Cases or the Territorial Clause of the U.S. Constitution. The Federación, by referencing them in their request for rehearing en banc, is signaling its strategy to seek a certiorari to the Supreme Court of the United States and trying to garner the votes of First Circuit judges who decided Vaello. The strategy is unlikely to succeed.”

Three of the First Circuit’s judges decided the USA vs. Jose Luis Vaello-Madero case in April 2020. They struck down a federal law denying residents of the island eligibility for the Social Security Supplemental Income program for the severely disabled. The Supreme Court has since overruled the First Circuit.

The teachers’ associations filing the petition were: Federación de Puerto Rico; Grupo Magisterial Educadores(as) por la Democracia, Unidad, Cambio, Militancia y Organización Sindical; and Unión Nacional de Educadores y Trabajadores de la Educación.

Along with the teachers’ group challenges, separate challenges to the Plan of Adjustment were filed by Puerto Rico credit unions, by an eminent domain/inverse condemnation claimant against Puerto Rico, by the Puerto Rico Oversight Board, and by a few other parties. All are seeking to undo certain aspects of the plan and not to completely reverse its implementation. 

The board said covering the teachers' claims would be expensive, estimated at over $1 billion. It has said accommodating reversals on the credit unions or eminent domain/inverse condemnation treatment would be more affordable for Puerto Rico’s government. The teachers’ claims and the other claims are being treated in separate cases.