A federal appeals court on Monday upheld a ruling that struck down a Florida law prohibiting the state and local governments from hiring companies with business ties to Cuba. The ruling continues to block the 2012 law from taking effect.
The law “conflicts directly with the extensive and highly calibrated federal regime of sanctions against Cuba promulgated by the legislative and executive branches over almost fifty years,” 11th U.S. Circuit Court of Appeals Judge Stanley Marcus wrote on behalf of a three-judge panel in the unanimous opinion.
The judges ruled in favor of Odebrecht USA, the Coral Gables firm that had challenged the law approved by a near-unanimous majority of state legislators and signed by Republican Gov. Rick Scott. The Florida Department of Transportation had appealed the preliminary injunction issued last year by U.S. District Judge K. Michael Moore, who opined the legislation interfered with the federal government’s power to set foreign policy.
The appeals court, Marcus wrote, had “little difficulty” in affirming Moore’s ruling. Signaling their eventual position, the three clearly skeptical appeals judges pointedly questioned FDOT’s lawyer at a hearing in March.
Odebrecht USA, a subsidiary of the Brazilian engineering and construction giant, sued over the law, which would prohibit any Florida or local government agencies from awarding contracts worth at least $1 million to U.S. firms whose foreign-owned parent companies or subsidiaries work in Cuba or Syria. Though Odebrecht USA doesn’t do business in either of those countries, an affiliate of its Brazilian parent company is significantly expanding the Cuban Port of Mariel.
On Monday, Odebrecht USA issued a written statement saying it was “very gratified” by the court’s ruling.
“We are extremely proud of our 23-year track record of performance and community involvement in Miami-Dade County and throughout Florida,” the statement said. “We will continue to defend our right to serve the State of Florida and its local governments, and remain fully committed to complying with all local, state and federal law…”
The governor’s office said it was reviewing the ruling. Scott stirred political controversy when he signed the law last year and suggested it was unconstitutional — a statement he later had to clarify to say his administration would defend the policy in court.
FDOT had argued that Odebrecht was not in a position to challenge the law because it had not bid for an FDOT contract in 15 years. But the law affects all government agencies, Marcus wrote.
In 2011, all of Odebrecht’s revenue — $215 million — came from public infrastructure and transportation projects. Since its creation in 1990, the firm has been awarded 35 public contracts across the state worth nearly $4 billion.
While Odebrecht would be “irreparably harmed” by the law, Marcus wrote, the state “is not harmed much, if at all, by the injunction.”
“Indeed, an injunction against enforcement of the [law] allows for greater competition in bidding, which decreases the State’s overall costs,” he wrote.
The law could have affected scores of firms across numerous industries. A preliminary analysis by a state agency last year listed 238 companies that the state invests in that could have business ties to Cuba, including big-name oil companies, pharmaceuticals, banks and airlines.