The opinion of the court was delivered by: Jeffrey L. VIKEN United States District Judge
ORDER DENYING MOTION TO DISMISS, DENYING MOTION FOR PRELIMINARY INJUNCTION, DENYING MOTION TO INTERVENE, AND ORDER COMPELLING ARBITRATION
On February 17, 2010, plaintiff ("Alltel" or plaintiff) filed a complaint (Docket 1) alleging that defendant, Oglala Sioux Tribe, (the "Tribe" or defendant) is in breach of an arbitration provision contained in the Tate Woglaka Service Agreement (the "Service Agreement") between the Tribe and WWC License LLC ("WWC LCC"). (Docket 1-1). The complaint sought injunctive relief to prohibit the defendant from conducting further proceedings in an action filed in Oglala Sioux Tribal Court ("Tribal Court") captioned "Oglala Sioux Tribal Court, Petitioners v. Alltel Communications, LLC, and Verizon Wireless, LLC, Respondents," Civ. #09-0673.
Plaintiff simultaneously filed a motion for temporary restraining order and preliminary injunction. (Docket 4). A hearing on Alltel's temporary restraining order motion was held on February 18, 2010. The Tribe received notice of the temporary restraining order hearing and participated. On March 1, 2010, the court entered an order denying the motion for a temporary restraining order. (Docket 16). In that order, the court retained jurisdiction but stayed any further action "for a period of [time] to allow the Oglala Sioux Tribal Court to determine whether it had jurisdiction to consider the [Tribe's] petition for preliminary injunction... with the proviso that this court will consider lifting the stay if it is satisfied that undue delays are causing irreparable harm to either party through the tribal court exhaustion process." Id.
On March 19, 2010, defendant filed its answer. (Docket 27). Among its affirmative defenses, defendant asserts the Tribe enjoys sovereign immunity against plaintiff's complaint. (Docket 27, ¶ 14). Defendant filed a motion to dismiss (Docket 33) asserting, pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6), the court does not have subject matter jurisdiction and the complaint fails to state a claim on which relief may be granted.
While defendant's motion to dismiss was pending, the Tribe consented to the filing of plaintiff's first amended complaint. (Docket 40). The amended complaint contained three counts: Count I: declaratory judgment under 28 U.S.C. § 2201 that the Tribal Court lacks jurisdiction to enjoin Alltel or any defendant named in case Civ. Nos. 09-0673 or 10-0104 from selling or transferring assets used to provide telecommunications service on the Pine Ridge Indian Reservation; Count II: declaratory judgment of arbitrability and order compelling arbitration under 9 U.S.C. § 4; and Count III: antisuit injunction precluding the Tribe from proceeding in tribal court. Id.
Plaintiff filed its memorandum in opposition to defendant's motion to dismiss (Docket 41) and defendant filed a renewed motion to dismiss (Docket 56) in response to plaintiff's amended complaint.
On April 22, 2010, plaintiff filed its motion requesting a date certain for hearing on its motion for a preliminary injunction. (Docket 36). In that motion, plaintiff reported the Tribal Court had not yet held a hearing on the jurisdictional issue, but that Alltel wished to proceed in this court on its motion for preliminary injunction. (Docket 36). The court set a hearing on the motion for Friday, May 7, 2010. (Docket 42).
On May 6, 2010, AT&T Mobility LLC ("AT&T") filed a motion to intervene as a plaintiff in the above-captioned matter. (Docket 69). Alltel consented to this motion. Id. The Tribe's time to respond to the motion has not yet expired.
On May 6, 2010, Chief Judge Patrick Lee of the Oglala Sioux Tribal Court filed a declaration advising the court that a hearing had been held on April 29, 2010, on Alltel's motion to dismiss. (Docket 62). Chief Judge Lee was still reviewing the extensive record and researching the applicable case law to determine whether the Tribal Court had jurisdiction to consider the Tribe's petition for preliminary injunction. Id. Chief Judge Lee indicated he would render a decision as soon as possible. Id.
The hearing on Alltel's motion for preliminary injunction was held on May 7, 2010. Out of deference to the Tribal Court, this court advised counsel it intended to defer decision on any pending matters until it received Chief Judge Lee's decision on Tribal Court jurisdiction.
On May 13, 2010, Chief Judge Lee issued an order denying Alltel's motion to dismiss the Tribal Court litigation. That order was filed with the court. (Docket 80-1). Plaintiff's motions for preliminary injunction (Dockets 4 and 40) and defendant's motions to dismiss (Dockets 33 and 56) are ripe for resolution by the court.
The following factual statement is drawn from the testimony and exhibits offered at the May 7, 2010, hearing, the amended complaint (Docket 40), defendant's answer to amended complaint (Docket 75), plaintiff's memorandum in support of motion for preliminary injunction (Docket 47), the declaration of Attorney Wiezcorek in support of plaintiff's motion for preliminary injunction (Docket 49), and defendant's brief (Docket 57) in support of its renewed motion to dismiss. While the interpretation or applicability of these facts to the motions presently before the court may be disputed, the parties generally are in agreement about the factual setting in this case.
On August 21, 2000, the Tribe and WWC LLC entered into the Service Agreement. (Dockets 40-2 and 75 ¶ 3). The Service Agreement sets forth the terms under which WWC LLC provides wireless telephone service on the Pine Ridge Indian Reservation (the "Reservation"). In 2005, Alltel Corporation acquired the parent company of WWC LLC. (Docket 47, p. 15). WWC LLC's independent existence, however, was not altered, and WWC LLC continued providing service to the Tribe under the Service Agreement. Id. at 15-16. Alltel became an intermediate parent of WWC LLC.*fn1 Id. at 16.
Alltel and Cellco Partnership d/b/a Verizon Wireless ("Verizon") agreed to a merger in June of 2008. Id. As a result of antitrust review, the United States Department of Justice required the merged entity to divest operations in markets where Alltel and Verizon had significant overlap, including all of Alltel's markets in South Dakota. The divestiture requirements were embodied in a Consent Decree in United States v. Verizon Communications, Inc., 607 F. Supp. 2d 1 (D.D.C. 2009).*fn2
Once the Verizon - Alltel merger closed in January of 2009, Verizon proceeded with an auction for the sale of various groups of assets defined in the Consent Decree. Under the Consent Decree, Verizon was required to divest all of Alltel's markets in South Dakota to a single purchaser.*fn3
In an undated letter, Joe Red Cloud, Development Chairman of the Office of Economic Development for the Tribe "requested that Verizon divest the wireless assets currently held by Alltel and located within the exterior boundaries of the Pine Ridge reservation" to the Tribe. (Docket 40-5). The Tribe requested the assets, including cell sites, antenna towers, electronics and related equipment at a number of different sites, as well as microwave facilities and switching equipment, be sold to the Tribe for one dollar ($1.00). Id. In response, Verizon advised the Tribe that under the Consent Decree all of the South Dakota assets must be sold to a single buyer and encouraged the Tribe to "partner with someone so that together they could bid on and acquire the entire cluster...." (Docket 40-9). The Tribe did not submit any bids in that process. (Docket 47, p. 17).
On May 8, 2009, AT&T and Verizon announced that Verizon would sell to AT&T the assets to be divested in 18 states--including South Dakota-- for $2.35 billion. (Docket 47-2 ¶ 4). For customers in the acquired markets, AT&T, as a wireless carrier with greater resources than Verizon, will offer "broader choices of services, rate plans, handsets and data devices (including those with advanced capabilities), and also expanded network coverage." (Docket 47-2 ¶ 5).
On October 21, 2009, the Tribe filed a "Petition for Preliminary Injunction and Request for Hearing" against Alltel and Verizon Wireless LLC in Tribal Court, Civ. 09-0673. (Dockets 40 ¶ 32 and 75 ¶ 33). The petition sought the issuance of a preliminary injunction prohibiting Alltel "from selling the wireless spectrum, antenna towers, and associated electronics located on the Pine Ridge reservation...." (Docket 40-10 at pp. 5-6). Two licenses for spectrum issued by the Federal Communications Commission ("FCC"), areas defined by the FCC as Cellular Market Areas ("CMAs") 638 and 639, cover not only the Reservation, but a significant portion of southwestern South Dakota.*fn4 (Docket 47-2 ¶ 6).
Alltel approached the Tribe to discuss resolution of the Tribe's issues and together they agreed to postpone the Tribal Court hearing with no further proceedings in Tribal Court to occur without seven days advance written notice.*fn5 (Docket 40-6). On January 6, 2010, Alltel made a written request of the Tribe and its Economic Development Office to consent to the assignment of the Service Agreement, under Section 20(J), to a subsidiary of AT&T under the divestiture requirements of the Consent Decree. (Docket 8-10). On January 13, 2010, Mr. Red Cloud, on behalf of the Tribe and its Utilities Commission ("OST PUC"), wrote to Alltel declining the invitation to consent to the assignment. (Docket 8-11). Mr. Red Cloud renewed the earlier request that the Service Agreement assets be transferred to the Tribe. (Docket 8-12).
Over the course of the next several weeks Alltel and the Tribe met or corresponded, attempting to resolve the Tribe's issues with the assignment of the Service Agreement. On February 15, 2010, the Tribe issued a letter to Alltel indicating that a hearing in Tribal Court would occur on February 18, 2010, concerning "matters relating to the compliance with the [Service Agreement]... and the transfer of various telecommunications assets on Tribal land... to AT&T." (Docket 40-3). Later that evening Alltel's counsel e-mailed the Tribe's attorney asserting that the Tribe's intention to hold a hearing in Tribal Court was a breach of the earlier stipulation which required seven days written notice. The Tribe's attorney issued a notice of hearing on February 17, 2010, the day before the scheduled hearing.*fn6
On February 17, 2010, Alltel filed its original complaint (Docket 1) and additional submissions in support of its motion for a temporary restraining order and preliminary injunction in federal district court. The court issued an order (Docket 10) setting a hearing on Alltel's motion for temporary restraining order ("TRO") for the next morning and required Alltel to serve its filed documents on the Tribe thereby giving notice of the TRO hearing. At the TRO hearing the Tribe's counsel advised the court the hearing scheduled in Tribal Court for that afternoon was being canceled because of inclement weather and would be rescheduled for the following week. (Docket 16). Defense counsel confirmed the Tribe would "give plaintiff not less than seven (7) days advance notice of the next tribal court proceeding and the sole purpose of that proceeding will be to address whether the tribal court has jurisdiction to consider the petition for preliminary injunction." Id. at ¶ 5. Because there was no urgency, as required by Fed. R. Civ. P. 65(b), the court denied Alltel's motion for a TRO, but retained jurisdiction. Id.
While the action before this court and the Tribal Court proceeding Civ. 09-0673 were pending, the OST PUC, represented by one of the attorneys who appeared before this court during the TRO hearing, initiated a new Tribal Court proceeding Civ. 10-0104, captioned Oglala Sioux Tribe v. Alltel Communications, LLC and Cellco Partnership d/b/a Verizon Wireless. (Docket 47-9). This March 1, 2010, Tribal Court filing also sought a preliminary injunction "[t]hat transfer of property subject to regulation by the Oglala Sioux Tribe Public Utilities Commission be stayed pending Tribal approval of the assignment of the [Service Agreement] or an agreement related to the transfer of property on the Reservation." Id. at pp. 6-7.
On April 12, 2010, the Tribe's attorney filed a First Amended Petition for Preliminary Injunction in Tribal Court Civ. 09-0673. (Docket 40-19). This first amended petition again sought a "temporary restraining order and permanent injunction enjoining the Respondents (Alltel Communications) from selling or transferring the assets acquired under the [Service Agreement]." Id. at p. 4. Chief Judge Lee held a hearing in that action on April 29, 2010.
In support of Alltel's motion for preliminary injunction before this court, Mr. Stephen Linskey submitted a declaration (Docket 47-2) and testified at the May 7, 2010, hearing. Mr. Linskey is the Executive Director of Business Development for Verizon. Preliminary Injunction Hearing Transcript, p. 44 (hereinafter "PIT at p. ___"). Over the past ten years he has been responsible for managing approximately twenty-five system transfers through a competitive bidding process, similar to the Verizon - AT&T divestiture. Id. He is responsible for the transition of the wireless communications systems in all eighteen states under the Consent Decree. Id. In the court's opinion, Mr. Linskey is an expert in the field of wireless communications and management of these systems, with substantial responsibilities and experience in this area. (PIT, p. 68).
In this divestiture, AT&T acquired 79 out of 105 markets for a purchase price of $2.35 billion. (PIT, p. 45). The Oglala Sioux Tribe and OST PUC did not submit a bid to purchase assets in this divestiture process. (PIT, p. 46). In Mr. Linskey's view, FCC approval of the divestiture to AT&T is going to be accomplished around June 1, 2010. (PIT, p. 54). The pending Tribal Court litigation is the only matter potentially holding up closing on the $2.35 billion transaction. Closing must occur within five days after FCC approval. Id.
If this litigation is not resolved before closing, it is anticipated that the regulators will require CMAs 638 and 639 be held back and Verizon would lose approximately $30 million in the purchase price from AT&T. (PIT, p. 56). Based on Mr. Linskey's experience there is no way these two small markets would independently bring a price near that again. Id. "[T]he value to AT&T is that [these markets] provide a strategic, operational, ubiquitous network that covers throughout the southwestern part of South Dakota. And without being part of a larger regional statewide and national network, the value to any other purchaser would be significantly lower." (PIT, pp. 56-7).
Mr. Linskey testified there has been no transfer of the Service Agreement from WWC LLC to Alltel, nor has there been a transfer of the Service Agreement to Verizon. (PIT, p. 71). Alltel, as the intermediate parent, has the right to direct WWC LLC to assign the Service Agreement to AT&T under the Consent Decree. (PIT, p. 72).
On May 13, 2010, Chief Judge Lee entered an order asserting the jurisdiction of the Tribal Court to consider the Tribe's request for injunctive relief in Civ. 09-0673. (Docket 80-1). The significant elements of Judge Lee's order are as follows:
1. Tribal Court customarily accepts petitions for preliminary injunctions and schedules them for hearing unless good cause is found to issue a preliminary injunction. In this case the matter was set for hearing because the petition does not on its face show that irreparable harm would result unless the Respondent [Alltel] was ...