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.
Florida’s largest foreign-trade partners, Brazil and Canada, expressed concern about the law to the state last year. And the European Union, Norway, Switzerland and Singapore also raised alarms at a World Trade Organization meeting last summer, Marcus revealed in his ruling.
Two Miami-Dade Republican state lawmakers, Sen. René García of Hialeah and Rep. Michael Bileca of Miami, had sponsored the legislation targeting Odebrecht, which has had a hand in some of Miami-Dade’s biggest projects, including the Adrienne Arsht Center for the Performing Arts, the stadium at Florida International University and the expansion of Miami International Airport.
A disappointed García said Monday that he disagreed with the ruling and would approach the attorney general to find out what more the state could do.
“I’ll reach out to Pam Bondi tomorrow and see what recourse do we have, and if we do have any, I want to make sure that we proceed with it,” he said.
Odebrecht’s latest political skirmish involves Airport City, a major, $512 million project that would have the firm would develop 33 acres around MIA. A handful of Miami-Dade cities have approved legislation opposing the development, and the Latin Builders Association skipped an information session on the project for construction trade organizations. Both cited Odebrecht’s parent company’s subsidiary work in Cuba.
Several county commissioners, who must ultimately approve the project, said after hiring Odebrecht to rebuild wharves at PortMiami in 2011 that they did not want to award any more contracts to the firm. In last year’s general election, 62 percent of voters approved a nonbinding ballot question asking whether Miami-Dade should ban hiring companies that “actively” do business with state sponsors of terrorism. Both Cuba and Syria are on that list.
Airport City’s paperwork has been in order for weeks, Odebrecht has said, but the project has yet to come before commissioners for review.
County Attorney Robert Cuevas issued an opinion last month saying the county could proceed normally with the project, despite the ongoing federal litigation.
Monday’s ruling upholds the lower court’s preliminary injunction blocking the law from taking effect. Odebrecht could ask the lower court to impose a permanent injunction, or the state could ask for a trial to try to show why the preliminary prohibition should be lifted.
Success at trial would be an uphill battle. The basic facts of the case are not in dispute, and both the district and appeals courts extensively analyzed how the law runs afoul of federal precedent.
In his ruling Monday, Marcus wrote that the Florida law conflicts with federal law in at least three ways: by affecting companies that do not directly work in Cuba and therefore do not violate the U.S. embargo against the island’s Communist regime, or that are exempt from the embargo; by imposing penalties on those companies beyond the ones set in federal law; and by undermining the authority Congress has given the president to set foreign policy.
“Federal policy towards Cuba is long-standing, it is nuanced, it is highly calibrated, and it is constantly being fine-tuned,” the opinion says. “It is designed to sanction strongly the Castro regime while simultaneously permitting humanitarian relief and economic transactions that will benefit the Cuban people.”
When the state passed its law, Marcus wrote, “it was plainly not operating in an area where the federal government has been asleep at the switch.”