Southcentral Foundation v. Anthc ( 2020 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
SOUTHCENTRAL FOUNDATION, No. 18-35868
Plaintiff-Appellant,
D.C. No.
v. 3:17-cv-00018-
TMB
ALASKA NATIVE TRIBAL HEALTH
CONSORTIUM,
Defendant-Appellee. OPINION
Appeal from the United States District Court
for the District of Alaska
Timothy M. Burgess, Chief District Judge, Presiding
Argued and Submitted June 3, 2020
Seattle, Washington
Filed September 14, 2020
Before: Ronald M. Gould, Carlos T. Bea, and
Mary H. Murguia, Circuit Judges.
Opinion by Judge Murguia
2 SOUTHCENTRAL FOUNDATION V. ANTHC
SUMMARY *
Tribal Health Services/Constitutional Standing
The panel reversed the district court’s dismissal for lack
of standing of a tribal health organization’s action seeking
declaratory relief regarding alleged violations of a federal
law concerning the provision of health services to Alaska
Natives.
The Alaska Native Tribal Health Consortium
(“ANTHC”) is an intertribal consortium created by Congress
pursuant to Section 325 of the Department of the Interior and
Related Agencies Appropriations Act of 1998 to provide
certain statewide health services at the Alaska Native
Medical Center in Anchorage. Plaintiff Southcentral
Foundation (“SCF”), a nonprofit regional tribal health
organization, is a member of ANTHC. SCF sued ANTHC
for alleged violations of Section 325 in (1) forming an
Executive Committee and delegating to it the full authority
of the ANTHC Board of Directors; and (2) erecting
informational barriers in a Code of Conduct and Disclosure
Policy.
The panel held that SCF alleged an injury in fact
sufficient to confer Article III standing by alleging
infringement of its governance and participation rights under
Section 325, as well as deprivation of its ability to exercise
its governance rights intelligently and effectively. The panel
reversed and remanded for further proceedings.
*
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
SOUTHCENTRAL FOUNDATION V. ANTHC 3
COUNSEL
William D. Temko (argued), Munger Tolles & Olson LLP,
Los Angeles, California; Nicholas D. Fram, Munger Tolles
& Olson LLP, San Francisco, California; Louisiana W.
Cutler and Shane K. Kanady, Dorsey & Whitney LLC,
Anchorage, Alaska; for Plaintiff-Appellant.
James E. Torgerson (argued), Stoel Rives LLP, Anchorage,
Alaska; Brad S. Daniels and Rachel C. Lee, Stoel Rives LLP,
Portland, Oregon; for Defendant-Appellee.
OPINION
MURGUIA, Circuit Judge:
This case asks us to determine whether a tribal health
organization has alleged an injury in fact sufficient to confer
Article III standing to challenge alleged violations of a
federal law concerning the provision of health services to
Alaska Natives.
The Alaska Native Tribal Health Consortium
(“ANTHC”) is an intertribal consortium specifically created
by Congress pursuant to Section 325 of the Department of
the Interior and Related Agencies Appropriation Act of
1998, Pub. L. No. 105-83, 111 Stat. 1543, to provide certain
statewide health services at the Alaska Native Medical
Center in Anchorage, Alaska. Southcentral Foundation
(“SCF”)—a nonprofit regional tribal health organization that
provides health care programs and services to over 65,000
Alaska Natives—is a member of the intertribal consortium.
SCF appeals the district court’s dismissal of its
complaint against ANTHC for alleged violations of Section
4 SOUTHCENTRAL FOUNDATION V. ANTHC
325. We have jurisdiction under 28 U.S.C. § 1291, and we
reverse.
I. Background of Section 325
Until the 1970s, the federal government administered
health care programs and provided health services directly
to Alaska Natives and American Indians through the Indian
Health Service (“IHS”), an agency within the Department of
Health and Human Services (“DHHS”). Thereafter, federal
policy shifted towards empowering tribes and tribal
organizations to manage and operate federal programs
offered for the benefit of Alaska Natives and American
Indians. See 25 U.S.C. § 5301. With that goal in mind,
Congress passed the Indian Self-Determination and
Education Assistance Act of 1975 (“ISDEAA”) to promote
a “meaningful Indian self-determination policy which will
permit an orderly transition from the Federal domination of
programs for, and services to, Indians to effective and
meaningful participation by the Indian people in the
planning, conduct, and administration of those programs and
services.” Id. § 5302. In other words, the ISDEAA provides
Indian tribes with the authority, discretion, and funds to
administer programs that the federal government would
otherwise provide.
In the mid-1990s, IHS began constructing a new Alaska
Native Medical Center (“ANMC”) building in Anchorage to
serve Alaska Natives around the state. IHS planned to
transfer control of the ANMC to Alaska tribal entities, but
over 200 Alaska tribes and tribal organizations could not
agree on a management structure. To break the deadlock,
Congress enacted Section 325 in 1997, which created an
intertribal consortium “to provide all statewide health
services provided by the [IHS] of the [DHHS] through the
SOUTHCENTRAL FOUNDATION V. ANTHC 5
Alaska Native Medical Center.” Pub. L. No. 105-83, § 325,
111 Stat. 1543, 1597 (1997).
Section 325 outlines the formation and governance of the
consortium in the following key terms:
(a) Notwithstanding any other provision of
law, and except as provided in this section,
[thirteen regional tribal health organizations,
including Southcentral Foundation] . . . are
authorized to form a consortium (hereinafter
“the Consortium”) to enter into contracts,
compacts, or funding agreements . . . to
provide all statewide health services
provided by the [IHS] through the [ANMC]
Office. Each specified “regional health
entity” shall maintain that status for purposes
of participating in the Consortium only so
long as it operates a regional health program
for the [IHS] under Public Law 93-638
(25 U.S.C. 450 et seq.), as amended.
(b) The Consortium shall be governed by a
15-member Board of Directors, which shall
be composed of one representative of each
regional health entity listed in subsection
(a) above, and two additional persons who
shall represent Indian tribes, as defined in
25 U.S.C. 450b(e), and sub-regional tribal
organizations which operate health programs
not affiliated with the regional health entities
listed above and Indian tribes not receiving
health services from any tribal, regional or
sub-regional health provider. Each member
of the Board of Directors shall be entitled to
cast one vote. Decisions of the Board of
6 SOUTHCENTRAL FOUNDATION V. ANTHC
Directors shall be made by consensus
whenever possible, and by majority vote in
the event that no consensus can be reached.
Id., 111 Stat. at 1597–98 (emphases added).
ANTHC was established as the statutorily-authorized
Consortium to provide statewide health services under
Section 325 shortly after its enactment. ANTHC’s Board of
Directors (the “Board”) held its first meeting in January
1998 and concurrently adopted its original bylaws (the
“Bylaws”).
II. Factual Background
Many of the following facts are alleged in SCF’s
complaint, which we presume to be true on this appeal. See
Mont. Shooting Sports Ass’n v. Holder, 727 F.3d 975, 979
(9th Cir. 2013).
A. ANTHC’s Executive Committee
In November 2014, the chair and president of ANTHC’s
Board of Directors, Andy Teuber, sent an email to the Board
stating that it would consider certain amendments to the
Bylaws at the Board’s meeting in December 2014.
At the meeting, the Board—by a thirteen-to-two vote and
over the objection of SCF’s representative on the Board—
adopted an amendment proposed by Teuber that resulted in
the creation of a five-member “Executive Committee” of the
Board. The Executive Committee was to be comprised of
the Chair of the Board, and two or more additional Directors
appointed by the Chair. The Executive Committee was
authorized to “exercise the authority of the Board of
Directors in the management of the Consortium,” subject to
SOUTHCENTRAL FOUNDATION V. ANTHC 7
a few narrow exceptions. Importantly, actions taken by the
newly created Executive Committee were not subject to
ratification by the full Board. Furthermore, the Executive
Committee’s authority was not limited to acting between
Board meetings or in emergency situations.
At the December 2014 meeting, Teuber also proposed an
evaluation of the compensation paid to the Directors, which
included the development of a plan to increase their
compensation retroactive to incorporation, despite the fact
that between 1999 and 2011 the Articles of Incorporation did
not permit Directors to receive compensation for their
service on the Board. Notably, this proposal followed a
settlement between ANTHC and IHS in June 2014, wherein
IHS provided ANTHC a one-time payment of $153 million
because of failures to pay certain contract obligations.
Shortly thereafter, the Executive Committee met for the
first time. Neither SCF’s primary Director, nor its alternate,
were members of the Executive Committee. The Executive
Committee approved lucrative employment contracts for
two senior executives of ANTHC—Teuber and CEO Roald
Helgesen. Notably, Teuber’s base salary increased from
$110,000 to $730,000.
Meanwhile, SCF’s designated Director was not informed
that the Executive Committee had even met until Teuber
summarized the results of the meeting in an email in
February 2015. Although the email disclosed the execution
of new contracts for Teuber and Helgesen, it did not disclose
the terms of the contracts, including the compensation
amount.
Then, in April 2015, the Board held a special meeting
during which it ratified the actions taken by the Executive
Committee in December 2014. According to SCF, by this
8 SOUTHCENTRAL FOUNDATION V. ANTHC
time Teuber’s and Helgesen’s new contracts had already
been signed.
Approximately two years later, in April 2017, the Board
amended the Bylaws to clarify that, moving forward, the
Executive Committee could convene only between meetings
of the Board and that “all actions of the Executive
Committee must be ratified and approved by a vote of the
Board of Directors . . . in order to be effective.”
B. ANTHC’s Code of Conduct and Disclosure Policy
A couple of years after the Executive Committee was
created, the Board amended its code of conduct (the “Code
of Conduct”) “to clarify expectations and processes
regarding handling conflicts of interest and confidential
information.” According to SCF, these changes clarified
that Directors could share with their designating entities
certain information such as Board resolutions and final
meeting minutes, but they stopped short of permitting full
disclosure of Board material. In order to share any
“confidential or sensitive” information with their
designating entity, Directors needed the permission of
Teuber or the Chair of the Ethics and Compliance
Committee.
The Board also adopted a Disclosure of Records and
Information Policy (the “Disclosure Policy”) in September
2016. According to SCF, the Disclosure Policy further
restricted the information that ANTHC could share with the
regional health entities and their designated Directors on the
Board by “drastically limit[ing] Directors’ access to what
ANTHC considered to be ‘[c]onfidential, proprietary, and
other sensitive information.’” Specifically, the Disclosure
Policy provided that Directors may “make reasonable
inquiries to fulfill their fiduciary responsibilities, including
SOUTHCENTRAL FOUNDATION V. ANTHC 9
their duty of representation,” but that the “disclosure of
confidential, sensitive, proprietary or privileged information
may be conditioned on adequate safeguards and assurances.”
The Policy stated that “[o]rdinarily, requests are
unreasonable to the extent they are unduly burdensome;
likely to disrupt operations; . . . or otherwise inconsistent
with the scope of a Director’s responsibilities.” The
Disclosure Policy also provided that “[c]onfidential,
proprietary and other sensitive information may also be
provided to Directors and other individuals, organizations
and agencies in appropriate cases if adequate safeguards are
in place to protect the integrity, confidentiality and use of the
information[.]”
In other words, according to SCF, the Disclosure Policy
gave unidentified ANTHC personnel absolute discretion to
determine what information could be shared, even with
ANHC’s Directors, with a rebuttable presumption against
disclosure.
III. Procedural Background
On January 20, 2017, SCF filed suit seeking a
declaration that ANTHC violated Section 325 when it:
(1) formed the Executive Committee and delegated to it the
full authority of the fifteen-member Board, and (2) erected
informational barriers in the Code of Conduct and
Disclosure Policy. ANTHC filed counterclaims seeking a
declaration that these disputed practices did not violate state
or federal law. In August 2017, the parties filed cross-
motions for summary judgment, and ANTHC also moved to
dismiss the complaint for lack of standing under Federal
Rule of Civil Procedure 12(b)(1). The district court granted
ANTHC’s motion to dismiss after concluding that SCF
failed to allege an injury in fact sufficient to confer Article
10 SOUTHCENTRAL FOUNDATION V. ANTHC
III standing. The court therefore denied as moot the parties’
cross-motions for summary judgment. SCF timely appealed.
IV. Standard of Review
We review de novo an order granting a motion to dismiss
for lack of standing under Federal Rule of Civil Procedure
12(b)(1) and construe all material allegations of fact in the
complaint in favor of the plaintiff. Mont. Shooting Sports
Ass’n, 727 F.3d at 979.
V. Analysis
Standing is “an essential and unchanging part of the
case-or-controversy requirement of Article III.” Lujan v.
Defs. of Wildlife, 504 U.S. 555, 560 (1992). To have Article
III standing, a plaintiff must demonstrate that it has
“(1) suffered an injury in fact, (2) that is fairly traceable to
the challenged conduct of the defendant, and (3) that is likely
to be redressed by a favorable judicial decision.” Spokeo,
Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016) (citing Lujan,
504 U.S. at 560–61). Here, the only element of the standing
inquiry at issue is injury in fact.
“[A]n injury in fact must be both concrete and
particularized.” Id. at 1548. To be particularized, an injury
must “affect the plaintiff in a personal and individual way.”
Id. (quoting Lujan, 504 U.S. at 560 n.1). “Thus, a plaintiff
normally does not have standing where the only ‘asserted
harm is a “generalized grievance” shared in substantially
equal measure by all or a large class of citizens.’” Thomas
v. Mundell, 572 F.3d 756, 760 (9th Cir. 2009) (quoting
Warth v. Seldin, 422 U.S. 490, 499 (1975)). To be concrete,
an injury “must be ‘de facto’; that is, it must actually exist.”
Spokeo, 136 S. Ct. at 1548. In other words, an abstract,
theoretical concern does not suffice. However, “[a]lthough
SOUTHCENTRAL FOUNDATION V. ANTHC 11
tangible injuries are perhaps easier to recognize, we have
confirmed in many of our previous cases that intangible
injuries can nevertheless be concrete.” Id. at 1549.
SCF alleges an injury in fact in two distinct ways: first,
that ANTHC infringed SCF’s governance and participation
rights under Section 325 by delegating the full authority of
the fifteen-member Board to the five-person Executive
Committee; and second, that ANTHC erected informational
barriers in the Code of Conduct and Disclosure Policy that
deprived SCF of its ability to exercise effectively its
governance and participation rights. We address each claim
in turn.
A. Standing for Executive Committee Claim
To determine whether SCF has standing to bring its
claim for a declaratory judgment that the formation of the
Executive Committee violated federal law (the “Executive
Committee Claim”), we begin our analysis with the plain
language of Section 325. See United States v. Gallegos,
613 F.3d 1211, 1214 (9th Cir. 2010) (“The starting point for
our interpretation of a statute is always its language.”).
In no uncertain terms, Section 325 provides that the
“[t]he Consortium shall be governed by a 15-member Board
of Directors, which shall be composed of one representative
of each regional health entity listed in subsection
(a) above[.]” Pub. L. No. 105-83, § 325(b). In addition,
Section 325 expressly identifies thirteen regional health
entities that shall be represented on the Board, including
SCF. Id. § 325(a). Section 325 also guarantees that “[e]ach
member of the Board of Directors shall be entitled to cast
one vote,” provided that the regional health entities maintain
their status as such by operating a regional health program.
Id. § 325(a)–(b).
12 SOUTHCENTRAL FOUNDATION V. ANTHC
Based on this language, we have no difficulty concluding
that SCF has met its burden to demonstrate that the injury it
asserts—infringement of its governance and participation
rights under Section 325—is sufficiently concrete and
particularized. It is clear that the alleged injury is
sufficiently particularized, as Section 325 allocates the right
to govern the statutorily-authorized Consortium to a Board
of Directors that expressly includes a representative from
SCF. It is also clear that the alleged injury is sufficiently
concrete. SCF alleged that the creation of the Executive
Committee, and the delegation to it the full powers of the
Board, infringed on SCF’s right under Section 325(b) to cast
its vote in the management of the Consortium, thereby
depriving SCF of the ability to effectuate the “meaningful
Indian self-determination” envisioned by Congress when it
enacted the ISDEAA. 25 U.S.C. § 5302; cf. Lapidus v.
Hecht, 232 F.3d 679, 683 (9th Cir. 2000) (shareholders had
standing under Massachusetts law to bring direct action for
violation of their voting rights).
We are not persuaded by ANTHC’s argument that SCF’s
right to “participat[e] in the Consortium” referenced in
Section 325(a) pertains only to SCF’s right to participate in
the Consortium’s “provi[sion of] all statewide health
services.” The clause in Section 325(a) referring to the
“provi[sion of] all statewide health services” merely
describes the types of “contracts, compacts, or funding
agreements” that the Consortium is permitted to enter into;
it does not limit the scope of the regional health entities’
right to “participat[e] in the Consortium.” Rather, the clause
in Section 325(a) regarding the regional health entities’ right
to “participat[e] in the Consortium” relates to preserving
each regional health entity’s status as such in order to serve
on the Board of Directors. In other words, so long as the
regional health entities operate a regional health program,
SOUTHCENTRAL FOUNDATION V. ANTHC 13
they can appoint representatives to the Board to
“participat[e] in the Consortium.”
Nor are we persuaded by ANTHC’s argument that
Section 325 grants rights of governance only to Directors.
ANTHC highlights that Section 325(b) references persons
specifically—as opposed to entities—when it mandates that
ANTHC “shall be governed by a 15-member Board of
Directors, which shall be composed of one representative of
each regional health entity . . . and two additional persons
who shall represent Indian tribes.” Pub. L. No. 105-83,
§ 325(b). Had Congress intended that the regional health
entities exercise governance rights themselves, ANTHC
argues, Congress would have specified how to allocate
decision-making power among the regional health entities.
But Congress did just that when it created the right to
have a “representative” on the Board. A representative is
“[s]omeone who stands for or acts on behalf of another.”
Representative, Black’s Law Dictionary (11th ed. 2019).
“The preeminent canon of statutory interpretation requires
us to presume that the legislature says in a statute what it
means and means in a statute what it says there.” Steinle v.
City & Cty. of San Francisco, 919 F.3d 1154, 1164 (9th Cir.
2019) (quoting In re HP Inkjet Printer Litig., 716 F.3d 1173,
1180 (9th Cir. 2013)). Had Congress meant, for instance,
that regional health entities were merely “advisory,” it could
have used this alternate language. Instead, Congress
endowed each specified regional health entity with the right
to have a “representative” on the Board that stands in the
shoes of the designating entity by acting on its behalf.
We briefly pause to note that ANTHC does not meet its
“heavy burden” to establish mootness by virtue of the
subsequent Bylaws amendment. Friends of the Earth, Inc.
v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 189
14 SOUTHCENTRAL FOUNDATION V. ANTHC
(2000). ANTHC argues that, after the Bylaws were
amended in April 2017 to require Executive Committee
actions to be ratified by the full Board to be effective, there
is no reasonable likelihood that the alleged violation will
recur. We have explained that “the mere cessation of illegal
activity in response to pending litigation does not moot a
case, unless the party alleging mootness can show that the
‘allegedly wrongful behavior could not reasonably be
expected to recur.’” Rosemere Neighborhood Ass’n v. U.S.
Envtl. Prot. Agency, 581 F.3d 1169, 1173 (9th Cir. 2009)
(quoting Friends of the Earth, 528 U.S. at 189). Here,
however, ANTHC does little more than point to the fact of
the April 2017 amendment as evidence of mootness, which
does little to assure that the amendment is not merely “a
temporary policy that . . . will [be] refute[d] once this
litigation is concluded.” Smith v. Univ. of Wash. Law
School, 233 F.3d 1188, 1194 (9th Cir. 2000) (quoting White
v. Lee, 227 F.3d 1214, 1244 (9th Cir. 2000)). This is
especially true where ANTHC is not entitled to a
presumption of good faith that its cessation of the disputed
conduct will not recur. As we recently explained, the
voluntary cessation of challenged acts by a private party is
not entitled to the presumption of good faith enjoyed by
legislative bodies when they repeal or amend a challenged
legislative provision. Bd. of Trs. of the Glazing Health &
Welfare Tr. v. Chambers, 941 F.3d 1195, 1199 (9th Cir.
2019) (en banc). Therefore, without more, ANTHC has not
met its burden to establish mootness.
In sum, while we express no views on the merits of
SCF’s claim that the formation of the Executive Committee
violated Section 325, we conclude that Section 325 granted
SCF governance and participation rights in the management
of ANTHC to be exercised through SCF’s representative on
SOUTHCENTRAL FOUNDATION V. ANTHC 15
the Board and that SCF has alleged an injury in fact
sufficient to confer Article III standing to bring its claim.
B. Standing for Information Claim
Relatedly, SCF argues that it suffered an injury when
ANTHC amended the Code of Conduct and adopted the
Disclosure Policy, which together deprived SCF of its ability
to exercise its governance rights intelligently and effectively
by prohibiting SCF’s Director from sharing certain critical
information with SCF.
Consistent with our foregoing conclusion that SCF has
standing to bring its Executive Committee Claim, we
likewise agree that the alleged deprivation of information
necessary to exercise effectively the governance and
participation rights allocated to the regional health entities in
Section 325 constitutes an injury in fact sufficient to confer
Article III standing. Indeed, the right to govern would be a
hollow promise absent the information necessary to exercise
that right intelligently.
ANTHC relies on Wilderness Society, Inc. v. Rey,
622 F.3d 1251 (9th Cir. 2010), however, to argue that
because Section 325 does not create an express right to
information, SCF cannot establish standing as to this claim.
That argument is unavailing. In Wilderness Society,
environmental groups argued that they had standing to
challenge various regulations issued by the United States
Forest Service that “significantly limit[ed] the scope and
availability of notice, comment, and appeals procedures” for
proposed decisions concerning projects under the Forest
Service Decisionmaking and Appeals Reform Act (“ARA”),
thereby allegedly causing the environmental groups an
“informational injury.” Id. at 1253, 1258–59. We observed
that in order “[t]o ground a claim to standing on an
16 SOUTHCENTRAL FOUNDATION V. ANTHC
informational injury, the ARA must grant a right to
information capable of supporting a lawsuit.” Id. at 1259.
We concluded that plaintiffs failed to assert an informational
injury because “Congress’s purpose in mandating notice in
the context of the ARA was not to disclose information, but
rather to allow the public opportunity to comment on the
proposals.” Id. at 1259.
ANTHC argues that because the purpose of Section 325
was to allow participation in decision-making—not to
provide information—SCF does not have standing to assert
an informational injury, even if information may act “as a
predicate” for participation in decision-making. However,
unlike the plaintiffs in Wilderness Society, SCF alleges an
informational injury that is inextricably tied to its interest in
exercising its governance and participation rights, not
merely the right to participate in the public comment
process. Cf. Lapidus, 232 F.3d at 683 (shareholders had
standing under Massachusetts law to bring direct action for
violation of their voting rights). This is a meaningful
difference in kind. Accordingly, we conclude that SCF has
demonstrated injury in fact sufficient to confer Article III
standing to bring its informational injury claim.
VI. Conclusion
Because we conclude that Section 325 conferred
governance and participation rights to SCF, which
necessarily includes an entitlement to information necessary
to effectively exercise those rights, we reverse the district
court’s dismissal of SCF’s complaint for lack of Article III
standing and remand for further proceedings consistent with
this opinion.
REVERSED and REMANDED. Defendant-Appellee
must bear all costs.