In Dinh v. United States, Marzulla Law has once again brought a case of profound constitutional importance to the steps of the U.S. Supreme Court. The petition, filed on October 29, 2025, asks the Court to address a fundamental question: Can Congress, by creating and controlling an entity like the Puerto Rico Oversight Board under the PROMESA statute, orchestrate the destruction of private property rights without triggering the protections of the Fifth Amendment Takings Clause?
The answer, we believe, must be no. The constitutional guarantee of just compensation cannot be avoided through legislative design or statutory fiction. When the federal government creates, empowers, and supervises a body that carries out a federal purpose, it cannot disclaim responsibility for that body’s unconstitutional acts. The Dinh petition asks the Supreme Court to reaffirm that principle.
Background: PROMESA and the Puerto Rico Debt Restructuring
In 2016, Puerto Rico was in the midst of a deep financial crisis, burdened with billions of dollars in public debt. To address the situation, Congress enacted the Puerto Rico Oversight, Management, and Economic Stability Act—PROMESA. The Act created a federally appointed Oversight Board with sweeping authority over Puerto Rico’s finances. The Board was tasked with restructuring the island’s debt, overseeing budgets, and approving fiscal plans. Though formally designated as an entity within the territorial government, the Board’s powers and composition are defined entirely by federal statute. PROMESA even provides for the presidential appointment of Board members and federal funding of its operations.
Once established, the Oversight Board assumed control over Puerto Rico’s fiscal policy and debt restructuring process. Among its most consequential actions was its approval of a restructuring plan for the Puerto Rico Sales Tax Financing Corporation—known as COFINA. Bonds under COFINA had been issued years earlier and were secured by dedicated sales-tax revenues pledged as collateral to bondholders. Under Puerto Rican law, that pledged revenue was legally separated from general government funds and protected from diversion.
However, when the Oversight Board implemented Puerto Rico’s restructuring plan under PROMESA, it redirected those pledged revenues. The Board divided the COFINA sales-tax stream between the Commonwealth and new COFINA bondholders, effectively nullifying the original investors’ property and contract rights. The restructuring was confirmed pursuant to federal law and could not have proceeded without federal authorization and oversight.
For investors like the Dinh family—bondholders who had purchased COFINA bonds based on those pledged revenues—the consequences were devastating. The restructuring plan eliminated their contractual and statutory rights to repayment. As a result, they lost the value of their investments and their property interests that had been secured by law. The federal government’s role in authorizing and implementing that plan made it responsible for the taking of those rights under the Fifth Amendment.
The Federal Circuit’s Decision
The Court of Federal Claims dismissed the Dinh petitioners’ takings claim, and the Federal Circuit affirmed. The appellate court held that any taking of property was not attributable to the United States because it was carried out by the Oversight Board, which the court deemed to be separate from the federal government.
The Federal Circuit reasoned that although Congress created the Board and delegated authority to it, the Board acted as an independent territorial entity rather than as an instrumentality of the United States. In the court’s view, the bondholders could not satisfy the “third-party coercion” test—the rule requiring proof that the federal government coerced or directed another actor to take private property. Because the court concluded that the Board acted on its own authority, it held that the United States could not be held liable for a taking.
The result was a ruling that, if allowed to stand, would give the federal government a blueprint to avoid the Takings Clause altogether. By simply creating an “independent” body and empowering it to destroy property rights, Congress could achieve through indirection what the Fifth Amendment forbids it to do directly.
The Questions Presented
The Dinh petition presents two straightforward but far-reaching questions for the Supreme Court:
- Whether the United States is responsible under the Fifth Amendment when a federal entity created and controlled by Congress—here, the Oversight Board established by PROMESA—destroys private property rights.
- Whether the Court of Federal Claims erred in dismissing the case for lack of jurisdiction under the “third-party coercion” doctrine, where the federal government’s pervasive involvement and statutory control over the Board’s actions are undisputed.
These questions go to the heart of constitutional accountability. The petition argues that the Federal Circuit’s decision disregards the reality of congressional control and elevates form over substance. When the federal government creates an entity by statute, defines its structure and powers, and oversees its operations, that entity’s actions are federal actions. Congress cannot escape the Constitution by labeling its creature “independent.”
The Petition’s Core Argument: Accountability Cannot Be Outsourced
The Dinh petition explains that the federal government is responsible for takings carried out under its authority, regardless of whether those actions are executed through an agency, board, or delegee. PROMESA leaves no doubt that the Oversight Board exists solely by federal command and serves a federal purpose—the stabilization of Puerto Rico’s fiscal affairs in service of national economic interests.
The petition further argues that the Federal Circuit misapplied the “third-party coercion” doctrine. That doctrine is meant to prevent the government from evading liability when it coerces or directs another party to take property. In this case, the United States did more than coerce—it created the very entity that executed the taking. The government cannot both authorize and supervise an act and then deny responsibility for its constitutional consequences.
The petition emphasizes that this principle is especially vital where, as here, Congress has intervened in a territory’s governance. PROMESA vested the Oversight Board with power superior even to Puerto Rico’s elected officials. The Board’s budgets, fiscal plans, and debt restructuring decisions bind the Commonwealth and its citizens by force of federal law. For that reason, the Board’s actions are federal in nature and must comply with the Constitution.
Why This Case Matters
The implications of the Dinh petition reach well beyond Puerto Rico. If the Federal Circuit’s decision stands, Congress and federal agencies could replicate this model whenever politically or financially convenient—creating “independent” boards to take private property or void contracts, all while insulating the federal government from constitutional accountability.
This concern is not theoretical. The petition warns that such an approach provides a roadmap for Congress to evade the Takings Clause. In the future, Congress could delegate the power to destroy property rights to nominally independent corporations, commissions, or special-purpose boards, all under the guise of fiscal or regulatory necessity. The Fifth Amendment would become a hollow guarantee.
Moreover, the case carries significant consequences for investors and markets. The Dinh petitioners’ property rights were not speculative—they were contractual and statutory rights to pledged revenue streams. These assets were recognized by law and relied upon by individuals and institutions alike. Allowing the federal government to erase those rights through its own creation undermines the rule of law and confidence in federally authorized securities.
An Ideal Vehicle for Review
The Dinh petition explains that this case is an ideal vehicle for Supreme Court review. The facts are undisputed, the record is clean, and the question presented is purely legal: whether the federal government may disclaim liability for constitutional violations carried out by an entity it created, empowered, and directed. No procedural barriers or factual uncertainties stand in the way of resolution.
The petition also underscores the national importance of the issue. PROMESA was enacted by Congress to address a crisis of national concern, and the Board’s actions were taken pursuant to that federal authority. The constitutional accountability of such entities affects not only Puerto Rico but also any future federal intervention in economic or financial matters across the United States.
Conclusion: Reaffirming the Fifth Amendment’s Promise
At Marzulla Law, we have always stood for the principle that the Takings Clause protects every form of private property, and that the federal government cannot sidestep constitutional responsibility through technicalities or delegation. The Dinh petition asks the Supreme Court to reaffirm that when Congress acts—whether directly or through the entities it creates—it must act within constitutional bounds.
This case is about more than financial loss. It is about the integrity of the Constitution’s limits on federal power. The Fifth Amendment promises that no person’s property shall be taken for public use without just compensation. That promise cannot depend on the government’s choice of messenger. When federal law authorizes and directs a taking, the United States must answer for it.
The Supreme Court now has the opportunity to restore that principle. By granting review in Dinh v. United States, the Court can ensure that the Constitution’s protections remain real, enforceable, and binding on all who wield federal power—no matter the label Congress chooses to give them.
