J.L. Ward Assocs., Inc. v. Great Plains Tribal Chairmen's Health Bd.

• Citation: 842 F.Supp.2d 1163
• Decision Date: 13 January 2012
• Docket Number: No. CIV 11–4008–RAL.,CIV 11–4008–RAL.
• Parties: J.L. WARD ASSOCIATES, INC., Plaintiff, v. GREAT PLAINS TRIBAL CHAIRMEN'S HEALTH BOARD, formerly known as Aberdeen Area Tribal Chairmen's Health Board, Defendant.
• Court: U.S. District Court — District of South Dakota

842 F.Supp.2d 1163

J.L. WARD ASSOCIATES, INC., Plaintiff,

v.GREAT PLAINS TRIBAL CHAIRMEN'S HEALTH BOARD, formerly known as Aberdeen Area Tribal Chairmen's Health Board, Defendant.

No. CIV 11–4008–RAL.

United States District Court,

D. South Dakota,

Southern Division.

Jan. 13, 2012.

Michael Frederick Tobin, Paul W. Tschetter, Boyce Greenfield Pashby & Welk, LLP, Sioux Falls, SD, for Plaintiff.

Jon Joseph Lafleur, Abourezk Law Firm, Rapid City, SD, for Defendant.

OPINION AND ORDER GRANTING IN PART MOTION–TO DISMISS

ROBERTO A. LANGE, District Judge.

I. INTRODUCTION

Plaintiff J.L. Ward Associates, Inc. (“J.L. Ward”) sued Defendant Great Plains Tribal Chairmen's Health Board (“Great Plains”), claiming that Great Plains committed a breach of contract and infringed on copyrights held by J.L. Ward. Doc. 14. Great Plains seeks, and J.L. Ward opposes, dismissal of the Amended Complaint under Federal Rule of Civil Procedure 12(b)(1) for lack of subject-matter jurisdiction. Doc. 16, 17, 21, 25, 28. For the reasons explained below, the Court grants in part the motion to dismiss and permits J.L. Ward twenty-one days from the date of this Order to amend its Complaint if it chooses to make a claim to compel arbitration of certain claims.

II. FACTS

Great Plains ¹ was incorporated in 1992 under South Dakota law as a non-profit corporation. Doc. 22–1 at 4, Sixteen federally recognized Indian tribes from the four-state area of South Dakota, North Dakota, Nebraska, and Iowa formed ² Great Plains in order to provide the Indian people of the Great Plains area with a single entity to communicate and participate with the Indian Health Service ³(“IHS”) and other federal agencies on health matters. Great Plains Articles of Incorporation, Art. III; His Horse is Thunder Aff. ¶ 3. In pursuing this policy, Great Plains' objectives are:

1. To improve the effectiveness of the Indian health program through responsible participation of the Indian people in making decisions about their health services, in order to improve their health status.

2. To assist the IHS in establishing program priorities and in distributing existing resources.

3. To advise and assist the Director, [Great Plains Area] Indian Health Service, in developing long-range program plans.

4. To represent the Indian interests and desires at all levels for health related programs.

5. To assist in development of Indian responsibility for community activities affecting health.

6. To assist member tribes in the development of health programs that will be beneficial to the Tribes.

7. To establish participation in any meetings that will provide clear and concise information to the Tribes.

8. To represent the organization and member tribes in the Congress of the United States at any hearings and at National Organization meetings regarding health issues and care.

Great Plains Articles of Incorporation, Art. III. The governing board of Great Plains includes the president or chairperson from each of the sixteen tribes, the chairman from the Rapid City Indian Health Advisory Board, and the chairman from the Trenton Indian Service Area Board. Great Plains Articles of Incorporation, Art. IV; His Horse is Thunder Aff. ¶ 3. Members of the governing board of Great Plains must relinquish their position “when they fail to be re-elected by their Tribal or other governing body to be an official delegate to the [Great Plains] Area Tribal Chairmen's Health Board.” Great Plains Articles of Incorporation, Art. VIII.

Although the tribal governing bodies of the sixteen tribes are not required to be involved with Great Plains, “decisions made by [Great Plains] on all on-going programs shall be final.” Id. at Art. DC Article X of Great Plains Articles of Incorporation addresses the finances of Great Plains as follows:

In the event this Board accrues any net earnings, no part of the net earnings shall enure to the benefit of, or be distributed to, the members, trustees, officers, or to other private persons, except that the Corporation shall be authorized and empowered to pay reasonable compensation for services rendered, and to make payments and distributions in furtherance of the purposes set forth in Article in hereof.

Art. X.

In addition to communicating with IHS on behalf of the sixteen tribes, Great Plains also enters into “self-determination contracts” ⁴ under the Indian Self–Determination and Education Assistance Act (“ISDEAA”). His Horse is Thunder Aff. ¶ 5. Congress enacted the ISDEAA in 1975 to encourage Indian self-determination by providing for the transition of federal programs and services for Indians to the control of Indian communities. See25 U.S.C. § 450(a); Cherokee Nation of Okla. v. Leavitt, 543 U.S. 631, 634, 125 S.Ct. 1172, 161 L.Ed.2d 66 (2005). Under the ISDEAA, tribes and tribal organizations ⁵ may enter into self-determination contracts with the Secretary of Health and Human Services or the Secretary of the Interior to take over administration of programs formerly administered by the federal government on behalf of the tribe. See Hinsley v. Standing Rock Child Protective Services, 516 F.3d 668, 670 (8th Cir.2008); Cohen, supra, at § 22.02[1].

J.L. Ward is an American Indian-owned corporation that works with tribes, Indian organizations, universities, and federal agencies to plan, develop, implement, and evaluate programs and services in the areas of primary health care, substance abuse and mental health care, and Indian affairs. Ward Aff. ¶ 2. In early 2006, Great Plains' Board of Directors passed a corporate resolution authorizing Great Plains to work with J.L. Ward to prepare and submit an application to the Substance Abuse and Mental Health Services Administration (“SAMHSA”) for a 2007 Access to Recovery (“ATR”) grant. Ward Aff. ¶ 4; Doc. 23–3. J.L. Ward prepared the 2007 ATR grant application, which was then submitted to SAMHSA in March or April of 2007. Ward Aff. ¶ 4.

In August of 2007, Great Plains and J.L. Ward entered into a contract for J.L. Ward's scope of work relating to Great Plains' 2007 application. Id.; Doc. 23–1. The 2007 contract provided that “[i]f the [Great Plains] 2007 ATR grant application is not approved and funded, this Agreement shall terminate and neither party shall have any further obligation to the other or duty under this Agreement, except that sections 12, 13, and 14 shall survive termination.” Doc. 23–1. Sections 12 and 13 of the 2007 contract addressed the parties' intellectual and copyright interests in the 2007 ATR grant application. Section 14 contained a dispute resolution clause, which stated;

14. Third Party Mediation.

If any dispute arises between the parties concerning the interpretation or enforcement of the provisions of this Agreement, the parties agree in good faith to promptly resolve the dispute through mediation, using a neutral mediator agreed upon by the parties. The expenses of mediation shall be borne pro rata by the parties for no more than a half day of mediation services. No other mediation expense shall be incurred by the parties unless agreed to in a separate writing signed by both parties. “Promptly,” as used in this section, shall mean within forty-five (45) days of either party making a written request for mediation. If the parties are unable to resolve the dispute within thirty (30) days after completion of mediation, then all matters in controversy shall be submitted to arbitration pursuant to South Dakota Statutes, using the offices of the American Arbitration Association or other neutral arbitration service agreed upon in a writing signed by both parties. The expenses of arbitration shall be advanced on a pro rata basis by the parties. Regardless of the arbitration service ultimatelyutilized by the parties, only one arbitrator shall be employed or empaneled to hear and decide the matter and no more than forty (40) hours of work shall be authorized to the arbitrator to perform any and all services related to the rendering of the arbitration award. These limitations upon the scope and expense of the arbitration may not be waived or modified unless in writing signed by both parties. The arbitrator shall make any award proper under the law; however, neither party shall be liable for consequential or punitive damages. In addition, the arbitrator shall award reasonable attorneys fees and costs to the prevailing party, as well as pre-judgment interest at legal rate running from the date of any breach of this Agreement. “Costs” as used herein shall, in addition to those ordinary costs allowed under law, include all actual costs reasonably and necessarily incurred in the action including (but not limited to) the expense of expert witnesses and consultants, the expense of pre-arbitration mediation services and the expense of the arbitration services. “Attorneys fees” as used herein shall include those attorneys fees incurred in the preparation for and/or attendance at pre-arbitration mediation, as well as the arbitration itself and in any court proceedings related to or arising from the arbitration. Either party making a written demand for arbitration on the other party shall initiate the arbitration process. The parties agree that either party may seek judicial review by way of a petition to the court to confirm, correct or vacate an arbitration award pursuant to A.R.S. § 12–1501 et seq. The mediation, the arbitration and any application to the court or other court proceedings shall be venued exclusively in Rapid City, South Dakota,

Id. Despite the efforts of J.L. Ward and Great Plains, SAMHSA did not award Great Plains an ATR grant based on the 2007 application. Ward Aff. at ¶ 5.

On August 12, 2009, James Ward (“Ward”), J.L. Ward's president and chief executive officer, and Great Plains' then executive director, Dr. Don Warne (“Warne”), had a conversation about the failed 2007 ATR grant application. Ward and Warne also discussed that funding for 2010 ATR grants was included in President Barack Obama's proposed...