Girl Scouts Of Manitou Council Inc v. Girl Scouts Of The USA. Inc

• Decision Date: 31 March 2010
• Docket Number: Case No. 08-CV-184.
• Parties: GIRL SCOUTS OF MANITOU COUNCIL INC., Plaintiff,v.GIRL SCOUTS OF the UNITED STATES OF AMERICA INC., Defendant.
• Court: U.S. District Court — Eastern District of Wisconsin

700 F.Supp.2d 1055

GIRL SCOUTS OF MANITOU COUNCIL INC., Plaintiff,v.GIRL SCOUTS OF the UNITED STATES OF AMERICA INC., Defendant.

Case No. 08-CV-184.

United States District Court E.D. Wisconsin.

March 31, 2010.

COPYRIGHT MATERIAL OMITTED

Gary W. Leydig, Riordan Fulkerson Hupert & Coleman, Chicago, IL, Tomislav Z. Kuzmanovic, Russell A. Klingaman, Hinshaw & Culbertson LLP, Milwaukee, WI, for Plaintiff.

David J. Harth, David E. Jones, Lissa R. Koop, Michelle M. Umberger, Perkins Coie LLP, Madison, WI, Gina Parlovecchio, Kenneth Kirschner, Lyndon M. Tretter, Hogan & Hartson LLP, New York, NY, for Defendant.

ORDER

J.P. STADTMUELLER, District Judge.

The Girl Scout Law is a pledge ritualistically recited and “shared by every member” of the Girl Scouts of the United States of America (“Girl Scouts” or “GSUSA”), the defendant in this action. See Girl Scouts of the United States of America, Girl Scout Promise and Law, http: //www. girlscouts. org/ program/ gs_ central/ promise_ law/(last visited March 31, 2010). The Girl Scout Law, described by the GSUSA as the “credo of girl scouting,” entails the ten tenets each scout must strive to fulfill in their daily lives. Id. In relevant part, the Girl Scout Law requires that every member must do their “best to be honest and fair.” Id. The plaintiff, Girl Scouts of Manitou Council, Inc. (“Manitou”), an organization that provides Girl Scouting to seven counties in eastern Wisconsin, contends that the national organization of the Girl Scouts has not been loyal to the terms of its own Law, in that the GSUSA has not been “honest and fair” in its dealings with the Manitou Council. Specifically, Manitou argues that GSUSA, acting pursuant to a national strategy that would eventually merge the council into a larger regional council, has violated the Wisconsin Fair Dealership Law (“WFDL”), Wis. Stat. § 135.01, breached the terms of the charter that created the council, and committed several related torts. (Docket # 120). After extensive discovery, on August 31, 2009, GSUSA, asserting that there were no genuine issues of material fact necessitating a trial in this case, moved pursuant to Fed.R.Civ.P. 56 for a summary judgment in its favor on all counts of Manitou's Second Amended Complaint (“complaint”). (Docket # 134). On that same day, Manitou moved for summary judgment in its favor on the breach of contract claim and the WFDL claim. (Docket # 141). After reviewing the voluminous record, consisting of hundreds of pages submitted by each party, and consulting the relevant law, the court is now prepared to make a ruling on the parties' cross-motions for summary judgment.

BACKGROUND

The court begins with an admittedly detailed, but necessary recounting of the undisputed facts animating the current litigation.¹

A. The Girl Scouts of the United States of America

Juliette Gordon Low founded the Girl Scouts on March 12, 1912, in Savannah, Georgia. From humble beginnings as a troop of eighteen girls, the Girl Scout movement has expanded rapidly, such that today hundreds of thousands of adult volunteers are helping nearly three million girl members participate in the organization throughout the United States and in more than ninety countries around the world. The organization has influenced the lives of more than forty million women since its inception and boasts alumni from all facets of American life, including, among other notables, Sandra Day O'Connor, Hilary Clinton, Lucille Ball, and Katie Couric. Currently headquartered in New York City, GSUSA reported in Fiscal Year 2008 revenues exceeding seventy million dollars derived from membership dues, donations, and the sales of Girl Scout merchandise.²

In 1950, Congress incorporated the organization as the “Girl Scouts of the United States of America” in order to promote the qualities of “truth, loyalty, helpfulness, friendliness, courtesy, purity, kindness, obedience, cheerfulness, thriftiness, and kindred virtues among girls.” 36 U.S.C. § 80302. The self-espoused purpose of the Girl Scout movement is to “inspir[e] girls with the highest ideals of character, conduct, patriotism, and service that they may become happy and resourceful citizens.” See Girl Scout Constitution, Preamble. Of particular note for this case, GSUSA has espoused as a central tenet of the organization that Girl Scout membership be “reflective of the pluralistic nature” of the populace and that membership should be “extended to all girls in all population segments and geographic areas.” See GSUSA Blue Book of Basic Documents 2006, at 21.

According to the GSUSA's congressional charter, the organization is headed by a National Council of Girl Scouts (“National Council”), which includes delegates from every local Girl Scout council and is empowered to adopt and amend a constitution, create bylaws, and elect a board of directors for the organization. 36 U.S.C. § 80303. Accordingly, the National Council created a constitution (“Girl Scout Constitution”) for the organization in November of 1957. The National Council has since amended the Girl Scout Constitution ten times.

The current manifestation of the Girl Scout Constitution outlines the basic means by which Girl Scouting is provided throughout the country. Specifically, Article VII of the Girl Scout Constitution states that “local Girl Scout councils shall be organized to further the development of the Girl Scout Movement in the United States; to establish local responsibility for leadership, administration, and supervision of the program; and to develop, manage, and maintain Girl Scouting in accordance with the terms of their charters.” The Girl Scout Constitution further authorizes the National Council to establish requirements that an organization must comply with in order to become an official Girl Scout council.³ GSUSA Const. art. VIII, § 2. In turn, the National Board of Directors (“National Board”), a body authorized by Article X of the Girl Scout Constitution to “manage the affairs” of the GSUSA,⁴ is broadly empowered to issue credentials to a given council and revoke such credentials when “the terms and conditions [of the credentials] or requirements ... are being violated or when the best interests of Girl Scouting are not being furthered.” GSUSA Const. art. VIII, § 3.

The net result is that the GSUSA, much like other charities and businesses, operates as a federation, carrying out its goals through individual councils, separate legal entities who are empowered to act through a “charter” granted by the national organization for a nominal fee.⁵ The charter outlines each council's rights, duties, and obligations, which are derived, in part, from the GSUSA's official bylaws, policies, and other guidelines as contained in the Blue Book of Basic Documents (“ Blue Book ”).⁶ In relevant part, the credentials section of the Blue Book outlines both the requirements that a potential Girl Scout council must comply with to receive and retain a charter and the obligations a Girl Scout council assumes in accepting a charter. See GSUSA Blue Book of Basic Documents 2006, at 25-26. Specifically, the Blue Book commits a Girl Scout council to act “in accordance with and to be limited by the policies so identified, published, and distributed to councils by [the GSUSA].” Id. at 26. Moreover, the Blue Book states that the charter of a Girl Scout council can be “revoked or terminated” by the GSUSA per the terms of the Girl Scout Constitution, extinguishing the ability of the council to exercise any rights conferred by the grant of a charter, including the right to use the Girl Scout program, be identified with the Girl Scout movement, or use the Girl Scout name or trademark. Id. at 25. The Blue Book further details the procedures for revoking a council's charter and for changing a Girl Scout council's jurisdiction.⁷ Id. at 26-28. Each council, per its charter, is assigned to a specific, non-overlapping territory or “jurisdiction,” in which it operates. A given council survives financially through donor solicitations, sales of Girl Scout cookies, sales of other Girl Scout branded products and services, and from fees charged for use of council-owned facilities. By 2005, approximately 315 Girl Scout councils existed in the United States, each with their own board of directors, officers, and professional staff.

To ensure that individual councils are successful in achieving the organization's central goals, every council's charter has a term of four years. Eighteen months prior to the expiration of a council's charter, a council will send to the GSUSA an “Application for a Girl Scout Council Charter.” Id. at 26. In addition to an application, the individual council will conduct a performance assessment and submit a final report to the GSUSA in the year before its charter expires. Id. The GSUSA, in turn, will review the results of the council's performance assessment, compare the results to national standards for what constitutes an effective Girl Scout council, assess the council's performance and progress, and then make relevant recommendations to a council. Id. The council, in turn, acts on those recommendations and submits its own recommendations to the National Board of Directors, who makes a final determination on whether to renew the council's charter. Id. at 27. If a council is not “developing, managing, and maintaining Girl Scouting” in its jurisdiction, “fully meeting charter requirements,” or “is seriously deficient in one or more critical priorities,” the council will either receive a charter with qualifications, be subject to a Charter Compliance Audit by the National Board of Directors, or will have the charter revoked. Id. at 26-28.

B. The Manitou Council

The plaintiff, Girl Scouts of Manitou Council, is the Girl Scout council charged with carrying out the Girl Scout mission in seven counties in Eastern Wisconsin. Specifically, Manitou's jurisdiction stretches from the affluent northern Milwaukee suburbs of Mequon and...