Pohnpei Port Authority v Pohnpei [2008] FMSC 26; 15 FSM Intrm. 541(Pon. 2008) (24 March 2008)

FSM SUPREME COURT TRIAL DIVISION
CIVIL ACTION NO. 2008-013

POHNPEI PORT AUTHORITY, PPA'S BOARD OF DIRECTORS, IESKE IEHSI, in his official capacity as PPA's General Manager, and MICHAEL J. SIPOS, individually, and as PPA's General Counsel,
Plaintiffs,

vs.

POHNPEI STATE GOVERNMENT, JOHN EHSA, in his official capacity as Governor of Pohnpei State, and LORRIE JOHNSON-ASHER, in her official capacity as Acting Attorney General for Pohnpei State,
Defendants.
__________________________________________________

TEMPORARY RESTRAINING ORDER; MEMORANDUM

Dennis K. Yamase
Associate Justice

Hearing: March 21, 2008
Decided: March 24, 2008

APPEARANCES:

For the Plaintiffs: Michael J. Sipos, Esq.
Sipos & Berman
P.O. Box 2069
Kolonia, Pohnpei FM 96941

For the Defendants: Lorrie Johnson-Asher, Esq.
Acting Attorney General
L.M. Bacalando, Esq.
Assistant Attorney General
Pohnpei Department of Justice
P.O. Box 1555
Kolonia, Pohnpei FM 96941

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HEADNOTES

Civil Procedure  Injunctions

In exercising its broad discretion in considering a motion for a temporary restraining order, the court looks to four factors: 1) the possibility of immediate and irreparable injury if the TRO is not issued; 2) the balance of potential injury to the parties; 3) the likelihood of success on the merits by the party seeking the TRO; and 4) the impact of the requested action on the public interest. Pohnpei Port Auth. v. Pohnpei, [2008] FMSC 26; 15 FSM Intrm. 541, 544 (Pon. 2008).

Civil Procedure  Injunctions

The Pohnpei Port Authority has demonstrated irreparable injury by showing that the Governor's February 22, 2008 executive directive would require it to act inconsistently with the applicable state statutes because it purports to assert authority  that of obtaining legal counsel for PPA  that only PPA, acting by its general manager, may assert and it also potentially impairs the general counsel's contract with PPA by unilaterally terminating it and because, even though PPA may use the services of Pohnpei government attorneys to serve as PPA attorneys, this decision clearly lies with the PPA pursuant to its enabling statute and a decision to use the Pohnpei Attorney General's Office may not be imposed by an executive directive inconsistent with applicable state law. Pohnpei Port Auth. v. Pohnpei, [2008] FMSC 26; 15 FSM Intrm. 541, 544 (Pon. 2008).

Civil Procedure  Injunctions

The balancing of the harm to the parties favors the PPA plaintiffs when there is none resulting to the defendants, since they would be enjoined from engaging in conduct that is inconsistent with applicable state law, but the harm to plaintiffs is that they would effectively be compelled to act inconsistently with applicable state law and would be subjected to the potential consequences of doing so and that the PPA general counsel's handling of current court matters would also be potentially delayed and affected to PPA's detriment. Pohnpei Port Auth. v. Pohnpei, [2008] FMSC 26; 15 FSM Intrm. 541, 544 (Pon. 2008).

Civil Procedure  Injunctions

Success on the merits appears likely since the plaintiffs may not be forced to undertake action inconsistent with applicable state law either at their own instigation or under the guise of complying with an executive directive and since the PPA general counsel has a contract with PPA and certain rights flowing from that contractual relationship may not be impaired absent due process. Pohnpei Port Auth. v. Pohnpei, [2008] FMSC 26; 15 FSM Intrm. 541, 544-45 (Pon. 2008).

Civil Procedure  Injunctions

The public interest requires that laws be obeyed and the issuance of an executive directive, to the extent that it purports to interfere with the proper execution of applicable state law is against the public interest. Pohnpei Port Auth. v. Pohnpei, [2008] FMSC 26; 15 FSM Intrm. 541, 545 (Pon. 2008).

Civil Procedure  Injunctions

An application for a TRO must be verified only for temporary restraining orders entered without notice. Pohnpei Port Auth. v. Pohnpei, [2008] FMSC 26; 15 FSM Intrm. 541, 545 (Pon. 2008).

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COURT'S OPINION

DENNIS K. YAMASE, Associate Justice:

I. Background

On March 21, 2008, the court held a hearing on the plaintiffs' March 12, 2008, Motion for Temporary Restraining Order and Preliminary Injunctive Relief and March 20, 2008 Supplement to Motion for Temporary Restraining Order and Preliminary Injunctive Relief. The hearing was on the temporary restraining order (TRO) portion of the motions. Present at the hearing was Michael J. Sipos for the plaintiffs. L.M. Bacalando and Lorrie Johnson-Asher were present for the defendants.

The plaintiff Pohnpei Port Authority ("PPA") is a statutorily created "body corporate" pursuant to 32 Pon. C. § 1-104 et seq Its purposerpose is to plan, establish, and maintain the sea ports within Pohnpei State. 32 Pon. C. § 1-105(2). All o poweted in d in the Authority is exercised by its Board, 32 Pon. C. § 1-106, whi, which is alsoai plaintiff. Section 1-109itle 32 of the Pohnpei Code provides that the Board "shall appoint a manager," who is the pthe plaintiff Mr. Ieske Iehsi, and who is ring in his official capacity. The last named plaintiff is f is Michael J. Sipos ("Sipos"), who is PPA's general counsel pursuant to 32 Pon. C. § 1-111. Mros is appearing bong both in his capacity as general counsel and in his personal capacity. The defendants are the Pohnpei State Government, its Governor the Honorable John Ehsa ("Ehsa"), and Ms. Lorrie Johnson-Asher ("Johnson-Asher"), who is Pohnpei's Acting Attorney General.

II. Preliminary Matters

On March 20, 2008, the plaintiffs filed a supplement to their March 12, 2008, motion that requested additional relief. The court heard evidence and argument relating to both the March 12, 2008 motion and the March 20, 2008 supplement, with the proviso that the defendants will have until Thursday, March 27, 2008, to file their written response to the plaintiffs' argument and evidence presented relative to the March 20, 2008, supplement. The court will then rule on the March 20, 2008, supplement relating to its request for a TRO. The instant order disposes only of the March 12, 2008, motion for TRO.

Further, on the morning of the hearing, the defendants filed a request for abstention. That request was denied with regard to the two pending motions for injunctive relief. The request was denied because this matter is still in its preliminary stages and no substantive issues of state law were being disposed of during the court's deliberations on the injunctive relief. The defendants may reassert their request for abstention at a later and more appropriate time in this matter.

III. Arguments For and Against TRO

The plaintiffs' March 12, 2008, Motion for Temporary Restraining Order and Preliminary Injunctive Relief, pursuant to Rule 65 of the FSM Rules of Civil Procedure seeks to enjoin the application of Executive Directive 01-2008 that was issued by the defendant Governor of Pohnpei, the Honorable John Ehsa, on February 22, 2008, with regard to the plaintiffs. The directive provides in relevant part that

all legal representation of the Executive Branch shall henceforth be done by the office of the Attorney General in the following manner:

1. All pending and future legal cases and or legal matters arising in the domains of the departments, office, agencies, authorities, public corporations, commissions and bureaus shall be immediately handled by the Office of the Attorney General for legal representation.

The plaintiff's specific challenge to Executive Directive No. 01-2008 is that it violates PPA's statutory authority to obtain legal representation. Section 1-111 of Title 32 of the Pohnpei Code provides in part that "[t]he general manager shall, upon consultation with the Board, appoint a . . . general counsel [who] . . . shall serve and may be removed for good cause by the general manager and whose duties and compensation shall be fixed by the Authority."

Plaintiffs urge that, as applied to them, the subject executive directive is in violation of both relevant state statutes and also unlawfully impairs the contract that PPA has with Mr. Sipos.

In response, the defendants argue that the executive directive expresses a valid policy decision made by Pohnpei's Governor to help conserve scarce financial resources and does not preclude PPA's continued use of Sipos for legal work.

IV. Analysis of Four Factors for TRO

In exercising its broad discretion in considering a motion for a temporary restraining order, the court looks to four factors: (1) the possibility of immediate and irreparable injury if the TRO is not issued; (2) the balance of potential injury to the parties; (3) the likelihood of success on the merits by the party seeking the TRO; and (4) the impact of the requested action on the public interest. Ambros & Co. v. Board of Trustees, [2003] FMSC 65; 12 FSM Intrm. 124, 127 (Pon. 2003); Yang v. Western Sales Trading Co., [2003] FMSC 83; 11 FSM Intrm. 607, 617 (Pon. 2003); Foods Pacific, Ltd., v. H.J. Heinz Co. Australia, [2001] FMSC 70; 10 FSM Intrm. 409, 417 (Pon. 2001); Palik v. Henry, [2000] FMKSC 1; 9 FSM Intrm. 309, 312 (Kos. S. C. Tr. 2000).

A. Irreparable Injury

PPA has demonstrated irreparable injury by showing that the February 22, 2008 executive directive would require the plaintiffs to act inconsistently with the applicable state statutes. It purports to assert authority  that of obtaining legal counsel for PPA  that only PPA, acting by its general manager, may assert. It also potentially impairs the contract that Sipos has with PPA by unilaterally terminating it. While Ms. Johnson-Asher argued at the hearing that 32 Pon. C. § 1-111 provthat PPA "may usey use the services of the attorneys for the Pohnpei Government to serve as attorneys for the Authority," the main point in this regard is that this decision clearly lies with the PPA pursuant to its enabling statute. The decision to use the Pohnpei Attorney General's Office may not be imposed by an executive directive inconsistent with applicable state law.

Ms. Johnson-Asher also directed the court to a February 25, 2008, memorandum from Mr. Salomon Saimon, Esq. to various Pohnpei State agencies. The memorandum states that "[i]t must be clear that contracts for current in-house or retained counsel are not being altered by [Executive Directive No. 01-2008]." This memorandum reflects an interpretation about how the executive directive should be applied. It is not, however, an amendment to the terms of the executive directive and does not alter the terms of Executive Directive No. 01-2008. Thus the conduct required by the executive directive still exposes PPA to such legal consequences as may flow from that conduct. PPA has demonstrated irreparable injury. This factor favors PPA.

B. Balance of Possible Injuries

Balancing of the harm to the parties is a factor that the court considers. Plaintiffs argue that there is none resulting to the defendants, since they are being enjoined from engaging in conduct that is inconsistent with applicable state law. On the other hand, the harm that would result to plaintiffs is considerable, since in the absence of injunctive relief, plaintiffs would effectively be compelled to act inconsistently with applicable state law and, as just noted, subject plaintiffs to the potential consequences of doing so. The handling of the court matters currently being handled by Sipos would also be potentially delayed and affected to the detriment of PPA. This factor also favors the plaintiffs.

C. Possible Success on the Merits

The factor of success on the merits favors the plaintiffs. Success on the merits appears likely. It goes without saying that plaintiffs may not be forced to undertake action inconsistent with applicable state law either at its own instigation or under the guise of complying with an executive directive. Sipos has a contract with PPA and has certain rights flowing from that contractual relationship that may not be impaired absent due process. Ponape Construction Co. v. Pohnpei, [1993] FMSC 23; 6 FSM Intrm. 114, 128 (Pon. 1993). This factor supports the plaintiffs' request for injunctive relief.

D. Public Interest

The last factor is that of the impact on the public interest. The public interest requires that laws be obeyed. The issuance of the executive directive, to the extent that it purports to interfere with the proper execution of applicable state law is against the public interest. This factor, like the preceding three, favors issuance of the TRO.

At the conclusion of the hearing, Ms. Johnson-Asher also raised the fact that the plaintiffs' application for a TRO was not verified. However, as plaintiffs pointed out, this requirement applies under FSM Civil Rule 65(b) to temporary restraining orders entered without notice. It does not preclude issuance of the TRO in this case.

For the foregoing reasons, the plaintiffs' application for a TRO is granted in the form set out below. No bond is required under FSM Civil Rule 65(c), which provides that the court may require such bond as the court deems proper. It appears that the defendants will suffer no injury cognizable in law by being required to obey the state statutes at issue herein.

As a last point, the court discussed at the hearing that in the event that a TRO was issued, the court would not be in Pohnpei at a time 14 days hence, which is April 4, 2008. Fourteen days is the maximum period, absent consent, for which the TRO may be effective under FSM Civil Rule 65. The court will be in Chuuk at that time. A telephonic hearing may be set by later order for a designated time on or about April 4, 2008, to consider the matters then before the court.

V. Temporary Restraining Order

The defendants Pohnpei State Government, Governor John Ehsa, in his official capacity as Governor of the State of Pohnpei, and Lorrie Johnson-Asher, in her official capacity as Acting Attorney General for Pohnpei State, are enjoined from:

1. Enforcing or otherwise seeking to implement Executive Directive No. 01-2008 with relation to the Plaintiffs;
   
2. Interfering with the contractual relationship between PPA and its General Counsel;
   
3. Attempting to take control over any lawsuit or legal matter presently being handled by PPA's General Counsel; and
   
4. Dictating PPA's choice of legal counsel in any legal matter now pending or that may arise hereafter.
   

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