Farthest North Girl Scout Council v. Girl Scouts of United States

          Appeal from the Superior Court of the State of Alaska, Fourth Judicial District, No. 4FA-17-01413 CI, Fairbanks, Bethany Harbison, Judge.

          Susan Orlansky, Reeves Amodio LLC, Anchorage, and Gary W. Leydig, The Law Firm of Gary W. Leydig LLC, Chicago, Illinois, for Appellants.

          James E. Torgerson, Stoel Rives, LLP, Anchorage, and Karin D. Jones, Stoel Rives LLP, Seattle, Washington, for Appellee.

          Before: Bolger, Chief Justice, Winfree, Stowers, Maassen, and Carney, Justices.

          OPINION

          CARNEY, JUSTICE.

         I. INTRODUCTION

         The Board of Directors of the Girl Scouts of the United States of America increased the amount of annual membership dues. Farthest North Girl Scout Council, its executive director, and the chair of its board of directors challenged this increase, claiming that the corporation's governing documents did not give the Board authority to increase membership dues. The superior court denied Farthest North's motion for summary judgment, ruling in favor of the Girl Scouts of the United States of America that the Board had such authority. Because the corporate governing documents vest authority to establish membership dues solely in the National Council of the Girl Scouts of the United States of America, we reverse and remand for further proceedings.

         II. FACTS AND PROCEEDINGS

         A. Facts

         Girl Scouts of the United States of America (GSUSA) is a congressionally chartered nonprofit corporation.^[1] Appellants (collectively Farthest North) are leaders of the Farthest North Girl Scout Council, a chartered Girl Scout Council responsible for promoting and organizing Girl Scouts programs in Fairbanks and northern Alaska.

         The governing body of GSUSA is the National Council, comprised of approximately 1, 500 individuals, including some elected by local Girl Scout Councils such as Farthest North.^[2] The National Council meets triennially^[3] and elects the members of the National Board of Directors (Board).^[4] The Board is comprised of the Chair of the National Board Development Committee, the Chief Executive Officer, 25 members-at-large, and officials elected by the Board members, including the President, Vice Presidents, Secretary, and Treasurer.^[5] GSUSA's governing documents are the codified Congressional Charter and the GSUSA Constitution and Bylaws.^[6]

         A person wishing to become a Girl Scouts member must pay membership dues to GSUSA.^[7] As a Girl Scouts Council, Farthest North is responsible for collecting dues from members in its jurisdiction; it then forwards those dues to GSUSA. The National Council voted to increase membership dues nine times between 1941 and 2009. In 2009 it established a requirement that every Girl Scouts member pay annual membership dues of $12. But in 2012 the Board increased the membership dues by $3, to $15 per member. And in 2016 the Board again increased the membership dues by $ 10, making the annual dues $25. In neither 2012 nor in 2016 did the Board present its dues increase to the National Council for approval.

         Farthest North objected to the Board's dues increases. Farthest North wrote to GSUSA that it would not participate in the collection of what it considered to be "unauthorized dues." Though Farthest North did collect $ 15 from each member, it only forwarded $ 12 from each to GSUSA.^[8] In response GSUSA informed Farthest North in late 2016 that it was in breach of its Charter Agreement and refused to enroll any Farthest North members, refused to allow any Farthest North members to participate in Girl Scouts activities, and refused to insure any Farthest North member who participated in any Girl Scouts activities.

         B. Proceedings

         In February 2017 Farthest North filed suit against GSUSA. Its complaint sought declaratory judgment that only the National Council had authority to increase membership dues and that the Board's increase was therefore without authority. Farthest North also moved for an injunction barring any future enforcement of the Board's increased membership dues. In addition Farthest North alleged wrongful charitable solicitation, unfair trade practices, tortious interference with fiduciary duty, and breach of contract by GSUSA.

         GSUSA moved to dismiss Farthest North's complaint pursuant to Alaska Civil Rule 12(b)(6).^[9] Farthest North moved for partial summary judgment on its request for declaratory judgment. GSUSA opposed Farthest North's motion for summary judgment and cross-moved for summary judgment, arguing that "[a]s amatter of law, the authority to set membership dues is shared." The superior court ruled in favor of GSUSA and concluded that the Board had authority to increase membership dues, thereby denying Farthest North's motion, rendering GSUSA's motion to dismiss moot, and granting GSUSA's motion for summary judgment.

         Farthest North appeals.

         III. STANDARD OF REVIEW

         We apply de novo review to a superior court's decisions on motions for summary judgment," 'reading the record in the light most favorable to the non-moving party and making all reasonable inferences in its favor.' A party is entitled to summary judgment only if there is no genuine issue of material fact and if the party is entitled to judgment as a matter of law."^[10] "When applying the de novo standard of review, we apply our 'independent judgment to questions of law, adopting the rule of law most persuasive in light of precedent, reason, and policy.' "^[11]

         IV. DISCUSSION

         A. Choice Of Law

         The superior court applied Washington, D.C. law to interpret GSUSA's corporate documents because GSUSA was incorporated there. The court based its decision on § 302 of the Restatement (Second) of Conflict of Laws, which provides that "[i]ssues involving the rights and liabilities of a corporation" will be determined by applying "the local law of the state of incorporation." Neither party disputes this choice of law on appeal, so we also apply the law of Washington, D.C.

         B. Congressional Charter

         Congress has constitutional authority to charter a wide range of organizations with patriotic, educational, or charitable purposes;^[12] they are generally referred to as "Title 36 Corporations."^[13] Title 36 corporations are not federal agencies, ^[14]but a special type of corporation that "do[es] not receive direct appropriations, . . . exercise[s] no federal powers, . .. [is] not covered by the full faith and credit of the United States, and . . . do[es] not enjoy original jurisdiction in the federal courts."^[15] GSUSA is a Title 36 corporation.^[16]

         Farthest North argues that the Congressional Charter grants the Board only those powers specified in the GSUSA Constitution and Bylaws, including the power to manage the activities of the corporation. GSUSA, on the other hand, argues that "[t]he Congressional Charter does not restrict [the Board's] authority regarding membership dues or reserve such power to the National Council" because "[i]t makes no mention whatsoever of membership dues."

         When reviewing "charters granted by special acts of a legislature," including Congress, Washington, D.C. courts "use the same rules of construction that [they] use to examine articles of incorporation adopted pursuant to general law."^[17] And because the GSUSA's congressional charter was a special act of the legislature, "[p]rinciples of statutory construction guide our interpretation" of the Congressional Charter.^[18]

         Where "the statutory language at issue is 'plain and admits of no more than one meaning, '" Washington, D.C. courts will "give effect to the plain meaning of a statute."^[19] "Common rules of statutory construction require [Washington, D.C. courts] to avoid conclusions that effectively read language out of a statute whenever a reasonable interpretation is available that can give meaning to each word in the statute."^[20] Further, Washington, D.C. courts "may also look to the legislative history to ensure that [the court's] interpretation is consistent with legislative intent."^[21] Legislative intent "governs the interpretation of both a special and a general act of incorporation, as both constitute legislative acts."^[22]

         The Congressional Charter establishes that the governing bodies of the GSUSA are the National Council and the Board of Directors.^[23] It grants the National Council authority to "adopt and amend a constitution and bylaws and elect a board of directors, officers, and agents, "^[24] and it grants the Board "the powers of the Council" but only "[t]o the extent provided in the constitution and bylaws."^[25] The operative language we must interpret is "[t]o the extent provided." The superior court interpreted this language to mean that the Board has all the powers of the National Council, unless provided otherwise in the Constitution and Bylaws. Farthest North argues this language plainly means that "[i]f the power is not provided to the Board in the [Constitution and [B]ylaws, [then] the Board does not possess it."

         We agree with Farthest North. Because a plain reading of the Congressional Charter supports Farthest North's interpretation, we must look to the GSUSA Constitution to determine what, if any, ...