S.D. S.Ct.: Mixed decision on prisoner contract claims

The South Dakota Supreme Court rejected a prisoner’s third-party beneficiary claim under a contract between the state and a food service provider but nevertheless upheld the same claim under a settlement agreement between the state and a former prisoners. Sisney v. Reisch, --- N.W.2d ---, 2008 WL 2842057 (No. 24683); --- N.W.2d ---, 2008 2842050 (No. 24684) (S.D. Jul. 23, 2008).

The court, taking a more restrictive approach to third-party beneficiary rights than some other state supreme courts, required express language in the contract indicating an intent to benefit the prisoner, and the court found this language in the settlement agreement but not the food service provider contract. 

 

          This decisions contrasts with recent cases from Alaska and Virginia that favored third-party claims against private prison contractors. These and other third-party beneficiary cases are discussed in my and Rochelle Bobroff’s article in the new Clearinghouse Review (available in PDF here). Recent decisions from the intermediate appellate court in Massachusetts also suggest receptivity to such claims by prisoners. Sullivan v. Correctional Medical Servs. et al., 2008 WL 2552982 (Jun. 27, 2008) (No. 07-P-964); Kilburn v. Dept. of Corrections et al., 2008 WL 2566382 (Jun. 30, 2008) (No. 07-P-987).

 

          The South Dakota suit was brought by a Jewish prisoner who sought a diet of certified kosher food. The State contracted with a private food service provider, which promised to make “food substitutions…available to accommodate food avoidances due to relief beliefs,” and to provide “an average caloric base of 2700 to 2500 calories per day.” The contractor had stopped providing prepackaged, certified kosher meals in favor of uncertified kosher meals prepared on site. The plaintiff alleged these meals did not satisfy his religious observance and fell well short of the “average caloric base.”

 

          The court stated that under South Dakota law, third-party claims are permissible only when that contract is “made expressly for the benefit of a third person.” Trouten v. Heritage Mut. Ins. Co., 632 N.W.2d 856 (S.D. 1982). The court further stated that “when a public contract is involved, private citizens are presumed not to be third-party beneficiaries,” and that “it is generally held that inmates lack standing to enforce public contracts.” The court cited Gay v. Ga. Dept. of Corrections, 606 S.E.2d 53 (Ga.App. 2004), but did not mention contrary cases from other states.

 

          The court concluded that the food service contract “did not expressly indicate that it was intended for Sisney’s direct benefit or enforcement,” and instead “reflects that it was made for the express benefit of the State, and the collective benefit that inmates may have received was only incidental to that of the State.” Accordingly, the court dismissed the third-party claim. The court also dismissed claims under 42 U.S.C. §§ 1981 (race discrimination in contractual relationships) and 1985 (conspiracy to violate civil rights), because both claims “are dependent upon Sisney’s right to sue for breach of contract.”

 

          In a separate opinion, the court nevertheless allowed Sisney to sue under a 2000 settlement agreement with a former prisoner, who had sued on Free Exercise grounds. The settlement language provided that the State “agree[d] to provide a kosher diet to all Jewish inmates who request it,” and that this would include “[p]repackaged meals which are certified kosher.” The court held that this agreement “clearly expressed that the [State] agreed to provide a kosher diet to an identifiable class of which Sisney was a member.” Furthermore, under state law the State had waived its immunity by signing an agreement that created such third-party rights. 

 

          The court’s differential treatment of the private service contract and the settlement agreement illustrates the restrictive approach that this and some other states take to third-party claims under public contracts. Under such restrictive approaches, contractual provisions must be framed in terms of the individuals served (like the settlement agreement here), rather than in terms of the general provision of services to the State (like the service contract here), in order to support a third-party claim. Because state courts’ approaches on this issue vary widely, advocates should give careful attention to their state’s case law and the language of the contract at issue. Unless the contract specifically excludes third-party claims, some states take a much more generous approach to such claims.