First Circuit Nixes Puerto Rico Police Civil Rights Claims 'Forever Barred'

The case arose from allegations that the Puerto Rico Police Department illegally retaliated against officers Jimmy Villalobos-Santana and Jimmy Colón-Rodríguez after they filed age discrimination complaints with the EEOC. Villalobos claimed the department eliminated his off-duty days, withdrew his authority over subordinates, disarmed him without reason and placed him in dangerous shifts while unarmed. After Colón provided testimony supporting Villalobos's complaints, the department allegedly changed his shift to a more dangerous time period and filed a false administrative complaint against him.

Chief Judge Barron concluded that the retaliation claims qualified as "administrative expenses" under PROMESA, which incorporates sections of the Bankruptcy Code. "Puerto Rico maintained its police force, including by employing the plaintiffs, while it was undergoing reorganization under PROMESA," Barron wrote, noting the harm stemmed from the employment relationship and constituted "costs ordinarily incident to operation of" the government. The court relied on Reading Co. v. Brown and other circuit decisions holding that employment discrimination claims can constitute administrative expenses subject to discharge if not timely filed.

The department litigated the case for over two years after Puerto Rico's reorganization plan took effect in March 2022, engaging in discovery and defending against summary judgment before filing a "Notice of Injunction" in May 2024. The officers argued that the department should be judicially estopped from raising the discharge defense after years of litigation, but the district court rejected this argument and permanently stayed the claims. The officers' motion to alter the judgment under Rule 59(e) was also denied.

The First Circuit rejected the officers' judicial estoppel argument, finding no directly inconsistent positions by the department, which had consistently reserved PROMESA defenses in its filings. Circuit Judge Thompson wrote separately, expressing concern that the officers may have lost their jury trial rights but noting they could still pursue their claims in the Title III bankruptcy court by filing late "for cause" under 11 U.S.C. § 503(a). The ruling demonstrates PROMESA's broad reach in discharging claims against Puerto Rico government entities, even civil rights claims that arose largely after the reorganization petition was filed.