United States District Court, D. Alaska
ORDER RE MOTION TO DISMISS AND MOTION TO
STRIKE
SHARON
L. GLEASON UNITED STATES DISTRICT JUDGE
Before
the Court at Docket 18 is Defendant Newtok Village
Council's Motion to Dismiss. Also before the Court at
Docket 27 is Newtok's Motion to Strike Answer to
Counterclaim. Plaintiff Alaska Logistics, LLC opposed both
motions at Docket 29. Newtok replied at Docket 31. Oral
argument was held on September 26, 2018 at Anchorage, Alaska
before Judge Sharon L. Gleason.[1]
BACKGROUND
Alaska
Logistics, LLC (“Alaska Logistics”) is a limited
liability company based in Seattle, Washington.[2] Newtok Village
Council (“Newtok”) is the governing body of
Newtok Village, a federally recognized Indian tribe located
in Newtok, Alaska.[3]
Alaska
Logistics' Complaint alleges as follows:
On
March 17, 2017, Newtok issued an Invitation to Bid
(“IFB”) prepared by contractor Goldstream
Engineering, Inc. (“Goldstream”).[4] The IFB stated
that Newtok was “accepting bids from Interested Bidders
to provide barge services from the Port of Anchorage to
Mertarvik, AK . . . on Nelson Island near Newtok, Alaska.
Barge services require transport of 25, 000 gallons of ultra
low sulfur diesel (ULSD) and diverse road construction
materials and equipment, including but not limited to
corrugated metal pipe (culvert), vehicles, fuel tanks, and
various heavy equipment.”[5] A planning manifest with
estimated shipping weights and dimensions of the construction
supplies and equipment was appended to the IFB.[6] The IFB specified
the Port of Anchorage as the “project Point of
Departure, ” and identified June 1, 2017 as the
estimated delivery date to Mertarvik.[7] It further stated that
“Bidders may choose to bid on one or both of
[Newtok's] transportation needs, ” and instructed
bidders to submit separate bid forms for “25, 000
gallons of ULSD fuel delivery” and “Construction
supplies & equipment.”[8] The IFB also instructed
bidders to “provide a proposed purchase agreement
between [Newtok] and the Bidder with project specific terms
and conditions as part of the bid.”[9]
In late
March, Newtok issued addenda to the IFB.[10] The addenda
included estimated dimensions and weight for the construction
materials and equipment cargo.[11] Alaska Logistics alleges that
“[t]he vast majority of the cargo set forth in the
Planning Manifest, as amended, consisted of ‘rolling
stock' or construction vehicles and freight which could
easily be rolled on and off barges with minimal
stevedoring.”[12]
On
March 31, 2017, Alaska Logistics submitted its bids to
Newtok.[13] Alaska Logistics included an unsigned
proposed “Alaska Logistics, LLC Transportation
Agreement” (“Transportation Agreement”)
with its bid.[14] The proposed Transportation Agreement
included a forum selection clause, which provided as follows:
Any action brought by either party to enforce any term or
provision of this contract shall be commenced in the United
States District Court for the Western District of Washington
at Seattle, as appropriate. The parties submit to the
exclusive personal jurisdiction of the United States District
Court located in Seattle, Washington with respect to any
litigation arising out of this agreement, with the
substantially prevailing party entitled to receive its
reasonable legal fees and costs.
Shipper hereby submits to the jurisdiction of the courts of
the United States District Court for the Western District of
Washington at Seattle and consents to service fo process by
certified mail, return receipt requested, addressed in
accordance with this contract.[15]
The
final page of the proposed agreement included unsigned
signature lines, which identified “Goldstream
Engineering for [Newtok Village Council]” as the
“Shipper.”[16]
On
April 16, 2017, Goldstream informed Alaska Logistics that it
was the apparent low bidder for the transportation of the
construction supplies and equipment.[17] After receiving notice of
the bid award, “Alaska Logistics repeatedly asked
Goldstream for an actual shipping manifest.” However,
Goldstream did not provide a shipping manifest until May 11,
2017.[18] Alaska Logistics alleges that this delay
“seriously impaired Alaska Logistics' ability to
plan for and arrange the appropriate labor, shipping
containers or flats, and other items necessary to load the
cargo.”[19]
On or
shortly before May 15, 2017, Alaska Logistics received the
cargo to be transported to Mertarvik.[20] Alaska
Logistics contends that this cargo “materially differed
from the representations set forth in the IFB and Addenda in
several respects.”[21] First, the cargo provided for
transport included modular housing units and refrigerated
food items in addition to construction supplies and
equipment. Second, this additional cargo required
considerably more space to transport than had previously been
indicated and did not consist of “rolling stock.”
Third, the cargo was not ready for shipment when it was
provided to Alaska Logistics. Fourth, Alaska Logistics was
asked to make separate deliveries originating from Seward,
Alaska and Seattle, Washington, neither of which were points
of departure identified in the IFB or the bids.[22] In light of
these issues, Alaska Logistics contacted Goldstream president
Mark Sherman on May 15 and advised him that there would be
additional costs associated with shipping the
freight.[23] On May 18 - after the barges were
underway - Alaska Logistics sent a formal change order
request for $231, 391.[24] Goldstream offered $65, 000 in
response to the change order request, which Alaska Logistics
rejected.[25] On June 1, Newtok president Paul Charles
sent a letter to Alaska Logistics stating that “[t]he
Newtok Village Council is in agreement to pay the extra
charges which total[] $213, 391.00 per your May 18, 2017
request.”[26]
Meanwhile,
while corresponding with Mr. Sherman and Mr. Charles, Alaska
Logistics transported the cargo to Mertarvik.[27] Alaska
Logistics alleges that issues with the cargo “forced
[the company] to expend significantly more time and labor
unloading the cargo.”[28] It further contends that
Newtok and Goldstream were not capable of receiving 10, 000
gallons of fuel that Alaska Logistics had transported, which
forced Alaska Logistics to leave its fuel tanks at
Mertarvik.[29]
On June
19, 2017, Alaska Logistics sent a second change order request
for an additional $9, 755.[30] On June 29, Mr. Charles sent a
letter to Alaska Logistics requesting additional
documentation supporting its change orders.[31] The letter
also stated that Newtok “acknowledges that additional
freight costs have been incurred by Alaska Logistics . . .
and we are in agreement to pay the extra
charges.”[32] Alaska Logistics provided Newtok with
additional documentation to support its change orders on
September 28.[33] However, Alaska Logistics alleges that
Newtok and Goldstream have not “provide[d] any
additional compensation for the barge transportation services
Alaska Logistics provided to [Newtok] and
Goldstream.”[34]
Alaska
Logistics filed a Complaint against both Newtok and
Goldstream on April 25, 2018.[35] The Complaint alleges six
causes of action: (1) breach of contact against Newtok and
Goldstream; (2) breach of good faith and fair dealing against
Newtok and Goldstream; (3) quantum meruit against
Newtok and Goldstream; (4) misrepresentation against Newtok;
(5) misrepresentation against Goldstream; and (6) unfair
trade practices against Newtok and Goldstream.[36] Newtok filed
an Answer and Counterclaims on June 7, 2018. Newtok alleged
five counterclaims: one claim for fraud, misrepresentation,
and unfair and deceptive practices, and four claims for
breach of contract.[37] Newtok filed the instant Motion to
Dismiss on July 6, 2018.[38]
On July
13, 2018, Alaska Logistics filed an “Amended Answer to
Newtok's Counterclaims and Plaintiff's Counterclaims
to Counterclaims.”[39] The Amended Answer alleges six
counterclaims, which are identical to the causes of action
alleged in Alaska Logistics' initial Complaint. It also
restates factual allegations from the
Complaint.[40] Newtok filed the instant Motion to
Strike Counterclaims to Counterclaims on July 23,
2018.[41]
LEGAL
STANDARD
I.
Jurisdiction and Applicable Law
The
Court has diversity jurisdiction pursuant to 28 U.S.C. §
1332 because the parties are completely diverse and the
amount in controversy exceeds $75, 000.00, exclusive of
interest and costs.[42] The Court also has admiralty
jurisdiction pursuant to 28 U.S.C. § 1333 as Alaska
Logistics alleges the breach of a maritime
contract.[43]
II.
Standard for Dismissal
A
defendant may seek dismissal of an action for lack of subject
matter jurisdiction under Federal Rule of Civil Procedure
12(b)(1). When such a motion is made, the plaintiff has the
burden of proving jurisdiction.[44] If the defendant raises a
factual challenge to a court's jurisdiction, as opposed
to a facial challenge based solely on the allegations in the
complaint, a court may consider matters outside the pleadings
in ruling on the motion.[45] Here, the record contains some
additional materials.[46] “[N]o presumptive truthfulness
attaches to plaintiff's allegations, and the existence of
disputed material facts will not preclude the trial court
from evaluating for itself the merits of jurisdictional
claims.”[47]
The
issue of tribal sovereign immunity is
“quasi-jurisdictional” in the sense that it
“may be asserted at any time.”[48]
“Although sovereign immunity is only
quasi-jurisdictional in nature, Rule 12(b)(1) is still a
proper vehicle for invoking sovereign immunity from
suit.”[49] “In the context of a Rule 12(b)(1)
motion to dismiss on the basis of tribal sovereign immunity,
‘the party asserting subject matter jurisdiction has
the burden of proving its existence,' i.e. that immunity
does not bar the suit.”[50]A court may “‘hear
evidence regarding jurisdiction' and ‘resolv[e]
factual disputes where necessary'” when determining
such a motion.[51]
Federal
Rule of Civil Procedure 12(f) permits the Court to
“strike from a pleading an insufficient defense or any
redundant, immaterial, impertinent, or scandalous
matter.” The function of a Rule 12(f) motion to strike
is “to avoid the expenditure of time and money that
must arise from litigating spurious issues by dispensing with
those issues prior to trial.”[52] “Motions to strike
are generally regarded with disfavor because of the limited
importance of pleading in federal practice, and because they
are often used as a delaying tactic.”[53] “Given
their disfavored status, courts often require ‘a
showing of prejudice by the moving party' before granting
the requested relief.”[54] “The possibility that
issues will be unnecessarily complicated or that superfluous
pleadings will cause the trier of fact to draw
‘unwarranted' inferences at trial is the type of
prejudice that is sufficient to support the granting of a
motion to strike.”[55]
In its
opposition to the motion to dismiss, Alaska Logistics also
seeks jurisdictional discovery.[56] Courts are afforded broad
discretion in allowing discovery when “pertinent facts
bearing on the question of jurisdiction are in
dispute.”[57] “[I]t is clear that a court may
allow discovery to aid in determining whether it has . . .
subject matter jurisdiction.”[58] However, a court may deny
jurisdictional discovery if a discovery request is
“based on little more than a hunch that it might yield
jurisdictionally relevant facts.”[59]
DISCUSSION
1.
Tribal Sovereign Immunity Protects Newtok From Suit.
Newtok
contends that the Court should dismiss Alaska Logistics'
claims against Newtok because the claims are barred by
Newtok's tribal sovereign immunity.[60] Alaska
Logistics responds that Newtok has waived its immunity from
suit.[61]
“Indian
tribes have long been recognized as possessing the common-law
immunity from suit traditionally enjoyed by sovereign
powers.”[62] This tribal immunity extends to tribal
governing bodies.[63] Suits against Indian tribes are barred
by sovereign immunity “absent a clear waiver . . . or
congressional abrogation.”[64] “There is a strong
presumption against waiver of tribal sovereign
immunity.”[65] Waiver of sovereign immunity may not be
implied and must be expressed unequivocally.[66]
A.
Litigation Activity
Alaska
Logistics first contends that “Newtok waived its
immunity by asserting counterclaims against Alaska
Logistics.”[67] It notes that a tribe may waive its
immunity by “tak[ing] actions indicating consent to the
litigation, ” and that “participation in a
lawsuit can ‘effect a waiver for limited
purposes.'”[68]
Alaska
Logistics contends that courts have held that conduct similar
to Newtok's litigation activity constitutes a limited
waiver of sovereign immunity. Alaska Logistics first notes
that when a tribe files suit in state or federal court, it
waives sovereign immunity as to its own claims.[69] Alaska
Logistics further contends that “federal courts have
held that, by initiating a lawsuit in state or federal court,
a tribe also waives its sovereign immunity with regard to
counterclaims asserted by a defendant.”[70] It cites
several cases to support this proposition. In Quinault
Indian Nation v. Pearson for Estate of Comenout, a tribe
brought an action against several tribal
members.[71] After one member's death, his estate
asserted counterclaims.[72] The Ninth Circuit concluded that
“claims arising out of the same transaction or
occurrence and sounding in recoupment can be sustained as
counterclaims against a tribe” without violating the
tribe's sovereign immunity.[73] In Tohono O'odham
Nation v. Ducey, a tribe filed suit in federal district
court, and the director of the Arizona Department of Gaming
asserted several counterclaims.[74]The court concluded that
the tribe had waived its sovereign immunity with respect to
those counterclaims that did not “venture outside the
subject of the original cause of action.”[75] Alaska
Logistics next cites Battle Mountain Band v. United
States Bureau of Land Management and Cayuga Indian
Nation of New York v. Seneca County.[76]In Battle
Mountain Band, a court held that a tribe waived its
sovereign immunity as to an intervenor's cross-claims
that involved the “exact issue” raised by the
tribe's claims.[77] And in Cayuga Indian Nation, a
court held that “mirror-image counterclaims are
not precluded by sovereign
immunity.”[78]
Alaska
Logistics also cites United States v. Oregon, in
which the Ninth Circuit concluded that the Yakima tribe had
waived its sovereign immunity though its litigation
activity.[79] The United States had initiated an
action to apportion a fishery, and the Yakima Tribe had
intervened. The parties reached an agreement that provided
for continuing jurisdiction in the district court. The State
of Washington later intervened, asking the district court to
enjoin the tribe's fishing. The Oregon court
concluded that such an injunction would not be barred by the
tribe's sovereign immunity.[80] The Circuit Court
analogized the underlying suit to an equitable in rem action,
and concluded that the district court could enjoin any
interference with the fishery.[81] Accordingly, by intervening in
this equitable action and expressly agreeing to submit
later-arising issues to federal court, the tribe
“assumed the risk that any equitable judgment secured
could be modified if warranted by changed
circumstances” and “that [it] would be bound by
an order it deemed adverse.”[82]
The
cases cited by Alaska Logistics indicate that a tribe may
effect a limited waiver of sovereign immunity through its
litigation activity. None of these cases, however, addresses
whether a tribe waives its sovereign immunity as to an
opposing party's claims when the tribe files
counterclaims in response to those claims. Quinault,
Tohono O'odham, Battle Mountain Band,
and Cayuga all address situations in which a tribe
asserted that tribal sovereign immunity barred an opposing
party's counterclaims; in each of these cases, it was the
tribe that initiated the litigation. Tohono
O'odham, Battle Mountain Band, and
Cayuga suggest only that a tribe's filing of a
lawsuit “can constitute a limited waiver with respect
to issues the [tribe] itself has put at
issue.”[83] The Ninth Circuit's holding in
Quinault does not support even that limited
proposition; the Circuit Court held that the Quinault Indian
Nation did not waive its immunity even as to a counterclaim
that did not “go beyond the contours of the
Nation's suit, ” reasoning that the tribe
“did not consent to any
counterclaims.”[84] The Quinault court did state
that “counterclaims to recoup damages arising from the
same transaction or occurrence as a tribe's claims do not
violate the tribe's sovereign
immunity.”[85]However, Alaska Logistics' claims do
not sound in recoupment; Alaska Logistics seeks
“[d]amages in an amount exceeding $231, 391, ”
which would constitute “affirmative relief” from
Newtok rather than “an offset to [Newtok's]
requested relief.”[86]
In
Oregon, the Ninth Circuit concluded that a tribe
waived its sovereign immunity where, as here, the tribe
elected to participate in litigation that it did not
initiate. After intervening in the initial litigation,
however, the tribe in Oregon “entered an
agreement expressing its unequivocal consent to submit issues
to federal court.”[87] Newtok has not entered into such an
agreement; moreover, it has asserted its sovereign immunity
defense throughout this litigation.[88] Furthermore, the Ninth
Circuit has expressed reluctance to apply the Oregon
court's reasoning in distinguishable contexts; subsequent
cases have characterized Oregon as “test[ing]
the outer limits of [the Supreme Court']s admonition
against implied waivers.”[89] Accordingly, the
authorities Alaska Logistics cites do not establish that
Newtok waived its tribal sovereign immunity as to the claims
Alaska Logistics has asserted against it by asserting
counterclaims against Alaska Logistics.
The
Court has found few other cases addressing tribal sovereign
immunity and the effect of litigation conduct analogous to
that at issue here.[90] However, several courts have addressed
whether similar conduct constitutes a waiver of
state sovereign immunity. In Mescalero Tribe v.
State of New Mexico, a tribe filed an action against the
state of New Mexico; the state responded by filing an answer
and counterclaim while also “argu[ing] that it had
Tenth and Eleventh Amendment immunity.”[91] The Tenth
Circuit considered whether the state had waived its Eleventh
Amendment immunity by filing a counterclaim, and concluded
that it had not. The court acknowledged that a state may
waive its Eleventh Amendment immunity, but noted that such
waiver must be “unequivocal.”[92] It then
concluded that the state's continued assertion of its
Eleventh Amendment immunity was “hardly consistent with
the kind of unequivocal waiver necessary to waive that
immunity.”[93] Other courts have reached similar
conclusions.[94]
The
Court is unaware of any Ninth Circuit case that has held that
a tribe waives its sovereign immunity as to the claims in an
opposing party's complaint by asserting counterclaims.
Furthermore, any waiver of tribal sovereign immunity
“must be unequivocal and may not be
implied.”[95] Here, Newtok's counterclaims were
accompanied by its assertion that Alaska Logistics'
claims were barred by sovereign immunity.[96] In the
absence of controlling precedent, the Court finds the
Mescalero Tribe court's reasoning
persuasive.[97] Accordingly, Newtok has not waived its
sovereign immunity through its litigation activity.
B.
Forum Selection Clause
Alaska
Logistics next contends that Newtok waived its immunity by
agreeing to the forum selection clause in the proposed
Transportation Agreement.[98] No United States Supreme Court
opinion or published Ninth Circuit opinion has addressed
whether a forum selection clause constitutes a waiver of a
tribe's sovereign immunity. In C & L Enterprises,
Inc. v. Citizen Band Potawatomi Indian Tribe of
Oklahoma, the Supreme Court held that a tribe waived its
sovereign immunity by consenting to arbitration and to the
enforcement of arbitral awards in Oklahoma state
court.[99] The C & L Enterprises, Inc.
court rejected the tribe's contention “that an
arbitration clause simply ‘is not a waiver of immunity
from suit'”:
The clause no doubt memorializes the Tribe's commitment
to adhere to the contract's dispute resolution regime.
That regime has a real world objective; it is not designed
for regulation of a game lacking practical consequences. And
to the real world end, the contract specifically authorizes
judicial enforcement of the resolution arrived at through
arbitration.[100]
While
the opinion addressed only the effects of an arbitration
clause, the C & L Enterprises, Inc. court's
reasoning would also seem to apply to a forum selection
clause.
Even
assuming, however, that a forum selection clause may in some
circumstances constitute a waiver of a tribe's sovereign
immunity, there is no indication here that Newtok agreed to a
forum selection clause that “manifest[ed] the
tribe's intent to surrender immunity in ‘clear'
and unmistakable terms.”[101] The clause was
included in the proposed Transportation Agreement that Alaska
Logistics submitted with its bids.[102] In relevant part, the
clause states that “[a]ny action brought by either
party to enforce any term or provision of this contract shall
be commenced in the United States District Court for the
Western District of Washington at Seattle, as
appropriate.”[103] Elsewhere, however, the proposed
Transportation Agreement is characterized as an agreement
“by and between Alaska Logistics, LLC . . .
(“Carrier”), and Goldstream Engineering, acting
for the Newtok Village Council . . .
(“Shipper”).”[104] The last page of the
proposed Transportation Agreement includes signature lines
with space for two signatories: Alaska Logistics, identified
as the “Carrier, ” and “Goldstream
Engineering for [Newtok Village Council], ” identified
as the “Shipper.”[105] Even if the proposed
Transportation Agreement were binding on Goldstream, reading
the proposed Transportation Agreement as a whole, it is not
apparent that the forum selection clause would be binding on
Newtok. While the document characterizes Goldstream as
“acting for the Newtok Village Council, ” the
forum selection clause's reference to “either
party” suggests that the clause binds only the
two parties to the agreement - which are identified elsewhere
as “Carrier” Alaska Logistics and
“Shipper” Goldstream. There is no indication that
Newtok itself was a “party” to the proposed
Transportation Agreement; unlike the agreement at issue in
C & L Enterprises, Inc., the proposed
Transportation Agreement does not appear to have been signed
by the tribe.[106] Accordingly, the clause does not
constitute an “unmistakable” manifestation of
Newtok's intent to waive its sovereign
immunity.[107]
C.
Jurisdictional Discovery
In the
alternative, Alaska Logistics contends that it should be
permitted to take jurisdictional discovery on the sovereign
immunity issue.[108] Alaska Logistics contends that the
Mertarvik construction project “has spanned for over a
decade and has involved dozens of state and federal agencies
as well as numerous private contractors, ” and that
“Newtok has routinely waived its sovereign immunity, by
contract, to qualify for government grants or enter into
agreements with various contractors” as part of the
project.[109] Accordingly, Alaska Logistics contends
that it “has a reasonable basis to believe that Newtok
has waived its sovereign immunity in other contracts or grant
applications with government agencies and private
contractors, and that some of those waivers may extend to
Alaska Logistics['] claims and counterclaims to
counterclaims.”[110]
Alaska
Logistics does not point to any “pertinent facts
bearing on the question of jurisdiction [that] are in
dispute.”[111] Instead, it contends that Newtok may
have entered into a contract with another entity in which it
waived its sovereign immunity as to a broad range of claims
that might extend to Newtok's claims. To support this
contention, Alaska Logistics cites contracts between Newtok
and two other entities involved with the Mertarvik
construction project.[112] However, both contracts waive
sovereign immunity only as to disputes between the
contracting parties, and only as to disputes related to the
contracts in question.[113] While it is possible that Newtok
has effected a broad waiver of sovereign immunity in relation
to the Mertarvik construction project, Alaska Logistics'
request for jurisdictional discovery is “based on
little more than a hunch that it might yield jurisdictionally
relevant facts.”[114] Accordingly, Alaska Logistics will
not be permitted to take jurisdictional discovery on the
sovereign immunity issue.
2.
Alaska Logistics' “Counterclaims to
Counterclaims” are Redundant.
Newtok
asks the Court to strike Alaska Logistics' “Amended
Answer to Newtok's Counterclaims and Plaintiff's
Counterclaims to Counterclaims.”[115]Newtok
contends that “the Federal Civil Rules do not
contemplate any pleading that might be styled as a
‘counterclaim to a
counterclaim.'”[116] Newtok further contends
that “the Court should strike the pleading because it
is largely redundant as to [Alaska Logistics'] original
complaint.”[117] In response, Alaska Logistics cites
several cases in which courts have held that
“counterclaims to counterclaims” are permissible
under the Federal Rules of Civil Procedure.[118] However,
Alaska Logistics does not address Newtok's contention
that the pleading is redundant.
Because
the Court concludes that Alaska Logistics' pleading
should be stricken pursuant to Federal Rule of Civil
Procedure 12(f), the Court assumes without deciding that
“counterclaims to counterclaims” are permissible
under the Federal Rules of Civil Procedure.
Pursuant
to Rule 12(f), a court may “strike from a pleading . .
. any redundant, immaterial, impertinent, or scandalous
matter.” A claim is redundant if it repeats another
claim in the complaint.[119] “'Redundant'
allegations are those that are needlessly repetitive or
wholly foreign to the issues involved in the
action.”[120] Here, Alaska Logistics'
“claims and counterclaims” consist of claims and
allegations that are almost identical to those in its
Complaint.[121] This portion of Alaska Logistics'
pleading is redundant under Rule 12(f). The inclusion of
counterclaims in Alaska Logistics' amended answer that
are identical to Alaska Logistics' original claims would
unnecessarily complicate this proceeding and would prejudice
Newtok.[122] Accordingly, Newtok's Motion to
Strike will be granted as to the redundant portions of the
pleading at Docket 25.[123]
CONCLUSION
In
light of the foregoing, IT IS ORDERED that Newtok
Village's Motion to Dismiss at Docket 18 is GRANTED. IT
IS FURTHER ORDERED that Newtok Village's Motion to Strike
Answer to Counterclaim at Docket 27 is GRANTED as to Alaska
Logistics' “counterclaims to
counterclaims.”[124]
In
light of the foregoing, the parties shall each file a status
report as to the procedural posture of this case ...